Monday, January 1, 2018

Lessons for 2018

Another year fades into memory.New words that entered our lexicon - 'demonetization' and "GST" seem like known devils that may yet cause strife.

The highlight offcourse has been the cow saving brigade and only years later will be come to know if indelible scars have been left in Indian citizens of different faiths?How can a Government that calls itself progressive and for reforms hark back to a baser and more parochial view is beyond me.

The ordinary citizens are more affected by jobs,food prices,infrastructure as the results in the Gujarat elections points too and going forward that will remain the main issue and not a temple to Ram.

The Indian equity markets have remained robust and a time and price correction is much required as the Nifty PE ratio continues to close in of 25X kind of valuations.

Will corporate earnings catch up in January 2018?Although expectations are positive,I do not see it moving above the 15% range on average.

We need roads,we need ports,most of all we need an organised market mechanism,affordable storage chains to minimise wastage and keep perishable food prices from spiking.60+ years and counting yet that is yet to happen.

Corporate taxes still too high in India.No sign of investments kickstarting new entrepreneurs and lack of imagination in implementing "Make in India" has really not created any buzz even after 3 years of majoritarian government.

The opportunity in the infrastructure,road-ports and cold storage sectors is vast.The turnaround in airlines looks here to stay even with ATF inching up.

The new shift in power in Saudi Arabia will keep the prince interested in having crude prices on the higher side to fund his deficit.

I think value buyers will find plenty to think about as well as fund managers will find that they are having to work harder to eke out benchmark beating returns in 2018.

Just hope that Kim Jr's missiles do not malfunction and land over Japan.
Just hope that The Donald doesn't get bored and looks to start a war in the middle east
Just hope the Inran backed Houthis do not come into possession of ICBM.

Domestically any hike in "Long term Capital gains Tax " or change in tenure from 1 year to 3 years will lead to a short sharp negative reaction......but the kind of returns that the markets have generated will mean that investors will have no other option than to invest.

Happy investing in 2018.

Monday, September 25, 2017

Hi Nifty or Hai Nifty !!!!

Well after a stupendous run and more the Indian markets have begun a descent.

Will it be a perilous steep one or will the markets find a ledge to recuperate,revitalize and try to climb their way back up the cliff that is 10K only time will tell?

However the murmurs about growth not panning out and DeMon(etisation) and GST taking the blame is really not the true story.

Mr Modi and his PR team started taking themselves too seriously and their agenda of cleanliness and anti-corruption while a very good one never really created any jobs in the past three years.Not just that their attempt to change every process right down to trying to bring in far right RSS obscurantists back into the history books has been nothing short of a massacre.

Yogi as CM is a disaster.In India's largest state there is utter business paralysis,children die like flies,people are beaten on the streets,women raped yet the Government only gently chides him from time to time.

I seriously think Mr Modi is a secret admirer of Late Indira Gandhi and has embarked on a course where he wants to be remembered by historians as a "tough guy".

The little rocket man and trump sideshow is just a secondary act that could any day turn vicious.

I am told by some very knowledgable folks that crude will never get back to its old prices again but I see a sustained breakout above $50 that could cause some damage to India's BoP.

Hi is a somewhat upbeat greeting......and means good times wherein Hai connotes a more negative or mournful expression....so its anybody's guess at this point.

However I am very upbeat on specific stocks that will see earnings catch up with valuations and many ignored stocks that have withstood the tests.Nifty should see 9600 levels before getting back into the swing post January corporate results which are likely to be more 15% rather than the expected 20%+

Sunday, August 20, 2017

Infosyian Roads....!!

One of the companies that has never been out of the Nifty 50 since the incepton of the Nifty is at tipping point.

INFOSYS                                                                                                                 CMP Rs 896

Considered the bell weather of the Indian Information technology industry since ages and a laggard of late is still an impressive business.Established in 1981 and listed on NYSE its a US $ 10.4 billion company with a market cap of approximately USD 35 billion.

From 2004 to 2016 it has moved from a revenue of USD 1 billion to USD 10 billion which Mr Sikka when he joined promised to double by 2021.From banking software to ERP to now getting into Cloud computing there are few things that Infy has not been doing.

I strongly feel that the ouster of Mr Sikka will not have any material long term impact on Infosys bottomline or strategy.The executives at the top level have been trying to find strategies to counter the change in environment especially after the election of President Trump.

Promoters of Indian companies do not know how to let go and Mr Murthy moving out of executive roles on turning 60 was a welcome change where children and grandchildren acquire an early role in management of family companies.It is not surprising that he too was unable to let go.

Mr Seshadri the chairman had been some scrutiny in his previous company Essar and elevating him was Mr Murthy's biggest blunder.Was it friendship or something else is not clear but it was an irrational decision from a logical person.

Mr Sikka with his MNC background and capitalist business methods were bound to clash with the orthodox tamil brahmin culture at Infosys. And it has happened.

Yes there will be attrition and short term disruption again depending on who becomes the new CEO.Going ahead my feeling is that in a couple of years infosys will adapt and change to its environment and become a better ROI generating business.

They have the pedigree and long term investors can buy a solid business at disruptive prices !!

( I have not taken into account the buyback offer at Rs 1150 which is at a whopping 26% premium to today's price)

Tuesday, July 25, 2017

Nifty 10,000:From Here to Where and the China factor?

So the indexes have hit another new high.Since December 2016 its been one way traffic not just in India but globally too.With crude prices hovering at historic lows and the general situation appearing to be better the markets have not found any reason to go down.

Its funny how every time there is a new high the "experts" come out of the woodwork predicting all kinds of numbers in the next 5 years.Everytime.

Yet its been a slow journey to reach new peaks.From 5K in 2007 its taken a decade to double yet during the heady bull run of 2006-07 there was talk of nifty getting to 25000 by 2020.

That dream remains a dream.

I have a feeling that the Indo-China standoff,the Fed and regulatory action by the Indian government will become the reason for some profit taking in August - September 2017.

For long term investors that would be a chance to add some more quality businesses to their portfolio but i fear for those dealing in penny stocks that will once again leave them holding worthless stocks at improbable prices.

Pharma,infrastructure,some Banks,some NBFCs look like continuing the positive trend and the focus once again will shift to quality managements,moats,margins(3Ms).

A level of 9400 -9500 would be a comfortable entry point for those with a longer term view and the inability to not look at prices daily.

Employment generation has been poor,infrastructure development has been poor,the Cow was made the central issue by this government and it might become its achilles heel.

PM Modi is not the maverick everyone thought,he is a dyed in the wool bureacrat who despite his thumping majority believes in the traditional ways and means with policies that are more PR than reality.Disappointing.

Yet India and its economy will continue to grow and with slight management a growth rate of 7-8% should continue.

Xi Xinping the Chinese president is a throwback to medieval princes and I worry about a new belligerent China that has discarded its victim approach and appears set to be a bully in the mould of imperial Japan and Nazi Germany of yore.

"Made in India" has been a complete failure till date and unless the trade imbalance and the growing clout of Chinese companies in the domestic economy is taken care of we might lose the economic war with China before losing militarily,because surely this is war.

Other than Modi there are no leaders in India,only cattle.

Hence there is no plethora of ideas just the ONE way.Sad to say.

Yet the inherent energy of India and its people will prevail.A lot needs to be done and that is where opportunity lies.In building roads,ports,heavy industry and human values!

Wednesday, July 19, 2017

A Tale of Two Brothers:Losing my Sandy

December 2015.It is a strange but common tale I am about to tell.

Three weeks ago my daughter brought home two stray pups from the road outside.Of a mother dog that survived and scavenged on the streets.We fed them and tucked them in our room at night.In two weeks they developed the curiousity to venture out on the streets.To try anything that looked new.

How important environment is I have learned at this age.They adapted to the TV in the room,the doormat and towels that provided warmth and slept in my daughter's arms.Ate out of a bowl.

In their naivete there was no difference between pampered pets and these survivors.

I have learnt a lesson in attachment.Soon we as a family were worried if they looked sick,if we did not see them for a few hours.Calling up from office to ask after their welfare.

I have learnt a lesson that intelligence and talent is everywhere,even in those whom we disparage.In the curiosity of these two fluffy brothers one a little plump the other a runt we found two lovable rogues with their individual personalities.

There is no cast,no creed,no religion.Just the necessity to survive Life.They have given us such a time,chewing sandals as their teeth developed.Running at each other,mock fighting to develop the skills they would need to live.

And I have learnt the hard lesson that Life is unpredictable.One of the brothers sickened yesterday,did not see him for the night and today my daughter came home crying that our 'chottu'was dead.

This while we were busy as its brother was already sick and we were feeding it with specially bought chicken(my wife is a vegetarian).Sacrifice.

In one day our routine was devasted.How one can love and lose and feel an abyss.All in four weeks.Just shows its not the quantity but the quality of the relations in our life that matter!!

As I write the surviving little pup has eaten a little and drunk some water.It seems a small victory.

Today I know why I have always supported all the 'underdogs' of the world.

Why I have never cared about the rich - poor,insider or outsider.People talk of building legacies and long term views but who knows what tomorrow will bring.

I can but try to understand a microcosmic bit of what Buddha or the other Indian sages have tried to say.Its not difficult to hold on.

Its most difficult to let go.

17th July 2017.The surviving little pup now one year and nine months old just died from jaundice.By the time we realised he had sickened and his usual naughtiness was missing it was too late.

12 days of IV and a host of antibiotics and a tale of doctor negligence latter my Sandy is gone.Gone the verve with which he welcomed us back home from work.Gone the morning biscuits,gone the running like a greyhound from one side of the house to another.
Gone the standing on table and nibble the ear.Gone standing on two paws on the balcony  to see us of to office.

He came into our life as a storm and left as a tempest,coming to us sick and weak and dying of a heart attack quietly on the bed surrounded by his foster family - us.What moments of affection of sheer joy of(especially)for me coming to know through him so many purely humanistic traits - a love of bengali sweets,a love of mutton.

The sense of loss is beyond belief.The house seems empty and I keep expecting him to pop up out of the other routine.Not having to get up on time to cook chicken or fish or mutton for him,his empty food bowl and water container stares at me accusingly.Too young,too full of life to go so suddenly leaving behind the memories of his shadows.

Somewhere up there he waits to be reunited......

Friday, June 23, 2017

Ask Yourself "Do Memories Affect Your Routine?"

I write this post not as an expert but as a layman who just feels strongly as I have personally experienced the affect that memories have on our decisions and our everyday life.

I am no psychologist or psychoanalyst so here it goes....

Today I heard of the demise of  a gentleman who was Principal when I was in school in 1988.An immensely knowledegable lookalike of Omar Sharrif with a fantastic sense of humour,integrity and the ability to give a shy teenagers the space to discover themself.

Its been 29 long years since those days but i still ask myself if Mr Mcready would approve of my decision whenever i have to decide on something big!

The people one meets and those who influence us leave behind memories and though the saying goes that "time heals",there are always certain event memories created by such people that remain pristine bright while other memories curl at the edges like paper stored for too long and vanish in wisps over the years.

But I guess everyone has someone they encountered in their life who left an indelible(and hopefully positive) impression on them and one felt like imbibing their best qualities?I know I did(at one point I wanted to be Clint Eastwood !!).

So a lot of values that we hold and the thoughts that we have are not really ours.Scary but true.Who are we if not a collection of our memories intepreted in a way unique to each individual and I guess that makes us,us - from the way we walk to what we consider right or wrong.

I used to think that it was only a passing summer fancy,a childhood fad but now i realise that trully we never grow up,its just a patina or a gloss put on for public affectation - a serious mien but underneath seethes the contradictions of yore.(Shakespeare you were right!!)

Do certain smells or music recall certain incidents from the past.Why on sudden days or particular times?Why this year and not the year before?

Truly the human mind is an enigma and its power frightening in its avatar to create or destroy.Hinduism has a god-symbol for each emotion.

I wonder if Shiva of the legends is simply our brain.


You the Life that infuses its breath in Me
Did you reach in by itself or was it I that asked
And return me you shall to that nothingness that is Death

let the breeze of sweet remembrances refresh the musty relics floating on the Past
To do,to believe,to Act
Let this silent breath raise me beyond oblivion

Friday, April 28, 2017

30,000 is Just A Number

So a lifetime high for the Indian markets !!I have stopped counting.A lot of other stockmarkets across the globe are also at or near historic highs.

The last Two Years have seen a sustained drive to new highs matching the spread of the BJP in the political landscape of India.

This is also that time when even those with no relation to stocks or financial news talk of great things and how they have started investing too and how things look really truly positive which actually is never true.There are always some dark clouds on the horizon.

It does not presage to be totally pessimistic.More dangerously,it does not pay to be outstandingly positive either !

Liquidity by Central Banks has driven stock prices higher and it does not seem that this tap will be quickly turned off.Keynes was always for deficit funding but I dare say not at the cost of  fiscal discipline which many keynesian supporters seem to be forgetting.Valuations have gone up with earnings yet to catch up and I see many IPOs lined up at exorbitant sums and the demand to lap them up continues?

As a Fundamental value investor I may feel negative about (a)valuations (b)prices (c)PE ratios but the trader in me wants to follow the old dictum of 'THE TREND IS YOUR FRIEND".

Right now the trend is positive and any dips should be an opportunity to invest.But opportunities rarely stay the same.A small slip by the US armada or a moment of madness by North Korea's mad dictator could turn geopolitics into the World War III.China's issues with almost all neighbours,Spratly island,Syria,Iraq all hold the seed of a terrible future.

Details of Tax cuts announced by president trump,British relations with EU post BREXIT,the bonhomie between Russia and China are to be watched.

In India with interest rates very low,many companies are raising a lot of capital without any visible avenues of deployment or rising sales?yet I am heartened by the Startup bubble leaking and the over the top values toning down although I see many startups without a disruptive idea still commanding(or pretending to command)high prices.

Even well known ones like BigBasket and Grofers do not have enough manpower to service demand as I found out myself post demonetisation in the November - December period.Yet they have recieved millions of $ in funding but the services are pathetic.Will skeletons tumble out of startup founders cupboards because some of them have started thinking that they are beyond questions and can burn cash any way they feel as with the Stayzilla case.

I have been slightly positively surprised by Adityanath's handling of the Chief Minister's chair in Uttar Pradesh but this harsh rhetoric and 'hard hindutva' is disappointing.

In a democrasy it so often becomes the Tower of Babel,yet,every citizen has the right to choose what to eat,drink,wear of SAY.That is non negotiable.That is what separates this idea of India as a Nation from Pakistan or China or Libya or Saudi Arabia.

And we should keep it thataways.Keep investing in solid businesses,Infrastructure looks like picking up.India will always need good roads,warehouses,resthouses for its vast hinterland and topography composed of mountains,deserts,tropical jungles and plains.

It is our responsibility to uphold that legacy.