INDIA 2012

(This is something I had written on 21/04/2011, but forgot to post it. When I read it today, found that situation has only changed for worse.)

It has been some time since I have written on my blog. But time and again I have been revisiting my statement on the elections of 2010 and what it holds for India. The verdict that was handed to the Congress party was very clear. It was a chance given to them to put the country on right track and was a chance to rule as they deemed correct and in the interests of common man. 

What we have seen instead is a confused lot more interested in one upmanship and maybe a completion to show how he can be more corrupt then the one in the next office. An average Indian has come to terms with corruption on the corridors of power. But what he had not bargained for was the skeletons tumbling one after another with such rapidity that a scandal of a month past was a history. In the current context people have either forgotten Commonwealth Games scam, Adarsh scam, or that has been pushed at the back of minds due to blockbuster scams happening almost every month.

Congress has squandered a chance to show how the country has to be run. Currently the way the things are happening, we are not far from being called an “Italian Mafioso” run country. Everyone has been toppling over each other while giving a lip service, but when it comes to delivering, each one of them has been found wanting. The current tenure for the PM has done more harm than benefit. The aura of an upright person is diminishing fast for Dr. Manmohan Singh.

This is bringing me to the conclusion that the financial situation of the country will also be coming under stress. Hence my view on the stock market has been bearish. I have been bearish on this market since November and continue to be so. I am looking at the current rally as an opportunity to sell rather than buy. The inflation is not in the control of the people who are supposed to control it; the infrastructure boom is only on paper as 75% of the roads in Mumbai have some work or other going on for years. The budget is fixed on an assumption of “average monsoons” with no back-up plan. The financial reforms are wanting. No clear cut guidelines on eligibility for new banking licenses. No alarm bells seem to be sounding on the jump in equity prices due to overhang of liquidity.

I feel the market will try to test the 16000 levels again. With so much of uncertainity in the global markets India will at some point of time be adversely affected. The best place currently to invest funds is commodity. While Gold and Silver are the ones that come to mind immediately, the challenge will be to identify the metals that will outperform the market.

INDIA 2010

Year 2009, turned out to be much better than expected for India as a whole. The economy is looking in a better shape, stock markets are giving stupendous returns, people are talking about India overtaking China in a few years time.

This is a good time to introspect and look at how 2010 will fare for India.

I would begin with a very cautious note. The best way to find out if India will do well in 2010 is to go to the grass root level and find how the average Indian is doing. There has been a deficient rainfall this year. To compound this, the rainfall was delayed and hence did more harm than any good. So the farmers are not in a good mood. The scanty rainfall has given rise to huge increase in the food grain prices, with some of them having witnessed a 100% rise in a span of 6 months. So the “aam admi” is also not happy. The economy has started picking implies that the working class would not have witnessed a hike in his pay this year and hence he has had to bear the brunt of all this.

To top it all the government was not seen to be doing anything. The expectations that were built up after the clean mandate the UPA received in the elections seem to be misplaced, with not one clear policy that has seen the light of the day.

It seems people have stopped being pragmatic and take a stock of the situation. Rather they have learnt to ignore the uncomfortable aspects. The stock market is going up, but why? Is it the India money that is driving it higher? Is the overseas money that seems to be pouring in based more on the liquidity currently there? What has given rise to such liquidity? What will happen when the stimulus plans start getting withdrawn in USA and other European countries? Is India really decoupled from the rest of the world? Then why did we go from 21000 to 7000 on sensex?

I feel the 2010 lies as much in the hands of Government as in the hands of the industry. It is high time the government started moderating the growth that is happening more due to the stimulus package and the external funds than due to internal growth. It will help to be in tune with the world rather than be 2 steps ahead and then stumble.

M&A

The news of Fortis buying over Wockhardt hospitals is a preview of things to come. Healthcare is the next big thing that is going to happen in India. With the majority of population expected to be in the earning category in the coming few years, expect a lot of attention and growth happening in this area. Going ahead, again I expect lot of debates happening and attention being paid to this sector as is the case now in Unites States.