Do it yourself

(A couple of years ago, one central minister got confused between Isaac Newton and Albert Einstein and erroneously attributed theory of gravity to Einstein. The Enforcement Directorate of Social Media (EDSM) immediately took cognizance of the mistake and forced the minister to correct his mistake. The minister in reference also happened to be a Chartered Accountant by professional qualification, like me. It is reasonable to believe that the minister, like me, does not understand the nuances of the theory of relativity and laws of motion, and got confused. Nonetheless, learning a lesson from that episode, I want to upfront clarify that my knowledge and understanding of the theory of relativity and laws of motion is zilch. Any references to relativity and gravity herein is just plain English and should be read as that only.) My investment advisor often motivates me to invest in stocks having “valuation cheaper than the industry average or significant valuation discount to the industry ...

 The yields curve in India has been moving higher for past few months, despite the efforts made by the Reserve bank of India to anchor the benchmark yields at lower levels. In past one year, the RBI has used most of the arrows in its quiver to manage the bond yields, apparently with the three targets in view – (a) to help the government fund its fiscal expansion at reasonable rate; (b) to keep the financial markets calm in the times of adversity; and (c) to keep the rate environment supportive of growth. However, last week the RBI appears to have changed the trajectory of its policy by accepting higher coupon (6.10%) for the new benchmark security (6.10GS2031). This move is widely expected to result in India’s yield curve inching little higher, and perhaps flattening a bit. The debt market traders have largely seen the latest move of RBI as the rise in its tolerance for higher yields. Though the governor has maintained that RBI is committed to keep the borrowing cost for the go...

While discussing the present state of affairs in the markets, especially the valuations, two statistical parameters are used most often – (1) The price to earnings (PE) ratio of the benchmark (e.g., Nifty50) and (2) the market capitalization to GDP ratio (popularly known as Warren Buffet indicator). Both these indicators may soon lose their relevance, particularly in the context of Indian markets. In next couple of years a large number of new economy stocks may get listed. Many of the new economy stocks that listed earlier may get included in the benchmark indices. Obviously, the old economy stocks, especially PSU and cyclical commodity stocks will pave the way for these new economy stocks. The point here is that the new economy stocks are valued at multiple of revenue not profits. For example, it is expected that in the next Nifty reshuffle Avenue Supermart (198x PE) or Info Edge (500x PE) may replace Indian Oil Corporation (5x PE). This will obviously inflate the composite valu...

 Three decades ago, on 24th of July, 1991, when Pallath Joseph Kurien, Minister of State for Industry in Government of India, tabled the New Industrial Policy (NIP) in the Lok Sabha, not many would have realized how big was the moment in the socio-economic history of Independent India. After six years of preparation and facing political challenges, the new policy, which sought to end the Nehruvian Socialism in the country, finally saw the light of the day. The process of economic reform was set in motion by Vishwanath Pratap Singh, the finance minister in the government of Rajiv Gandhi (1984-1987). It gained further impetus when Ajit Singh, the MIT educated, tech savvy industry minister of National Front’s government assumed the charge (1989-1990). The original draft of NIP was prepared by Amar Nath Verma (then Industry Secretary) and Mohan Rakesh (then Chief Economic Advisor to Industry Minister Ajit Singh) in 1990. The proposal to radically reform the industrial policy of Ind...

  The prime minister Narendra Modi carried out one of the largest cabinet changes today evening. Twelve of the incumbent ministers were asked to resign from their respective posts and 43 new ministers were sworn in. Most of the omitted ministers are senior politicians with vast political and administrative experience. Whereas many of the newly inducted ministers are young and relatively less experienced. The media has been running live debates and discussions since evening to analyze the import of the latest cabinet reshuffle. A number of political experts, senior journalists and observers have been intensely discussing the inductions and omissions. The participants in debate include many of the so-called liberal intellectuals who have been critical of the Modi government performance on various parameters. The most unfortunate part is that discussion totally exposes the bankruptcy of participating experts. Most of the participants are refusing to believe that India is a secular...

 The city of Merrut in Western UP is famous for many things. In the ancient history, the town finds mention in both Ramayana and Mahabharata. In Ramayana, Merrut is the birth place Ravana’s wife Mandodari; while in Mahabharata it is part of the Hastinapur, the Pandavs’ kingdom. The medieval history of the town goes back to Indus Valley Civilization. In the modern history, the town was an important cantonment of British. It was in Merrut, where the first organized uprising against the British started in 1857. In post independent era, Merrut emerged as one of the famous education centers in UP. However, it became more notorious for the infamous Hashimpura massacre by the Provincial Armed Constabulary (PAC) in May 1987, when Virbhadra Singh of Indian National Congress was the Chief Minister of Uttar Pradesh. With that one incident started the decline of Indian National Congress. Congress lost power in the key States of UP and Bihar forever after that and could never form a majority go...

The status of Covid19 may no longer be that of a pandemic anymore. A large majority of countries have seen significant decline in the number of active patients, after having experienced the peak of infection cases. The fatality rate has declined materially, especially due to acceleration in the vaccination drive. However, in past few weeks, many countries in the world have seen reemergence of Covid19 cases in some clusters. Scientists are claiming that the rise in number of cases may be due to mutated variants of the Sars-CoV-2 virus. A fear has been expressed that we may soon see a third wave of the pandemic, primarily due to the emergence of new variants of Sars-CoV-2 virus, some of which might be immune to the vaccines available presently or the doses of vaccine being administered presently. The pandemic has changed a lot of things in past one year. The lockdown and mobility restrictions have materially impacted our personal, social, and economic lives. There is a great deal of ...

In its latest Annual General Meeting, Mr. Mukesh Ambani, Chairman of Reliance Industries announced an ambitious plan for setting up new energy business. The plan includes building four Giga factories to produce photovoltaic modules, advanced energy storage batteries, electrolyzers for the production of green hydrogen; and fuel cells for converting hydrogen into motive and stationary power. The announcement has added more energy to the already popular trade in alternative and new energy. Even though the media narrative has been more focused on the renewable energy and electric mobility, from stock market perspective, the most popular trade has perhaps been in the sugar manufacturers who have set up decent ethanol manufacturing capacities in past one decade or so. The Government of India had announced an ambitious ethanol blending program (EBP) in 2018, through a National Policy on Biofuels-2018 (NPB-2018) . The program included interest rate subvention for setting up molasses and gr...