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Friday, October 21, 2011

Dictators and the "Equity Affect"

So Gadhaffi has gone...finally and this will ring a lot of bells around the World.Gone are the days when the US propped up a Batista in Cuba and Marcos in Phillipines and sundry other tinpots in Africa and Latin America.having to fight the mujahideen the CIA created in Af-Pak belt is a good lesson.

Having strong men rule respective countries is easy for the politicians as they have to deal with one alpha personality.What is really does is hide the character of the majority of the country,its traditions and cultures.In the short term there might be confusion till the country finds an internal balance between its various regionisms!

Are we headed for a more egalitarian world.....the "Occupy Wall Street" movement shows that the people are tired of being ruled by representatives who seem to lose their heads and sense of responsibilty once they enter the legislature.It bodes well for the checks and balances that make the final difference to any policy.

Be it cloud computing,people's revolution,right to information or the global co-operation to trace unaccounted money...the 21st Century is turning out to be a century of change.From the enivornmentalists who till a decade were thought of as a idealistic dandys with stars in their eyes to those doing research on tech etc,there is a new found respect.

In this situation,the investors are in my mind in a better position to judge where to go and on what to do.Although there is a lack of depth to the Indian equity markets at the moment,I see no reason to doubt that growth will happen,even with government inertia the sheer pressure to create a PPP model that benefits the citizens as well as the public services will really push things along.

For now I would prefer to buy a Bharti(PE 26,PBv 3)-play on growth in Africa in telecom as well as their retail food business

Reliance(PE 13,PBv 1.6)-their presence across sectors,their zero debt status and the sheer power of their balance sheet(their budget is bigger than a state like Uttaranchal).One can also look at Larsen&Toubro.

I am a big believer that the fall in banking is overdone and Indian banks remain highly capitalized,their CAR being above 10% on average and the lack of banking in rural areas that form a vast catchment area.Axis Bank,SBI,PNB remain my top picks.

Invest when the bad news is flowing or you will invest at the top levels and any correction will demotivate you from equities.I continue to remain bullish on crude and bearish on Gold and Silver at the moment.