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Monday, December 30, 2013

2014:Looking through Google Glass!

Despite talk of curtailment in US Government support for the economy,the latter half of 2103 proved decently profitable for market traders on India as well as Europe and the US.If there was no rapid improvement at least the economies of France,Italy and Ireland did not degenerate further.Kinda positively negative!
 
Indian equities rallied to their all time highs but it was an empty victory as most stocks(especially the midcaps) lagged and even the PEs of large caps remained modest.
 
Looking forward to 2014;Elections are the key.A majority for any party is critical for reforms,new processes and policies to be shaped.With the AAP win in Delhi legislative elections the picture for the Lok Sabha seems complicated.The BJP and Congress strategy to let AAP form the government in Delhi and (maybe)fail in keeping its promises is the main plank.
 
However that is a double edged sword.Even a 50% achievement of its electoral manifesto by AAP will make it a serious player without doubt.I don't think any political leader in India understood the depth of frustration of the middle class,both urban and rural.Not One!!
 
The RBI Governor showed his maverick streak and kept rates unchanged.Food inflation still shows no sign of abating.The Banking system as per RBI report is suseptible to fallout if a big corporate group bankrupts.Kingfisher Airlines was but one small example.
 
So risks in the system exist.The economy remains fragile.Political future uncertain.
 
On the positives,the exports have started climbing once again.Gold imports are under control and the biggest issue of them all:depreciation of the Rupee versus $.The Rupee has stabilized in the 61-64.50 range although I am sure the RBI would be happy to see it around 60.
 
 
Rural demand remains strong and going ahead Autos and Steel will see demand growth of around 10%.Infrastructure needs a push from the Government and many beaten down stocks of such look like a good investment but do read the Balance Sheets carefully for the debt stats!
 
IT might show some upward trends on currency depreciation only as otherwise there is pressure on margins and new contracts are shrinking.Midcap IT stocks -  Mindtree,Igate are better bets as they try to enter new segments of robotics,data analysis rather than the traditional outsourcing mode.
 
A large number of gourmet restaurants have thrived and those like Oh Calcutta that listed its holding company on the exchanges will be good investment with more urban and semi-urban folks enjoying their fine dining experience along with the Jubilant Foods which have been a craze selling Pizzas.
 
It promises to be a different year with a lot of news expected.Wars still rage in Syria and South Sudan.No big crude finds in 2013 and the slow emergence of electrical cars(which are yet to make an impact in India as we speak) will keep us guessing.
 
Happy investing...!!