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Tuesday, March 4, 2014

Early 2014 Themes...

This is going to be a short post but something I really feel needs to be said...

Indian Elections:The crux or fulcrum so to say on which the outlook for the entire economy depends.Mr Modi wishing to turn every state into Gujarat(hope he doesnt intend to turn it into the Kutch desert!),Prince Rahul wants to learn how to give more sops to the poor,AAP just bothered about bringing out lists naming corrupt politicians,businessmen,bureaucrats and sundry.Conviction -  Null.

Stock Markets:Lacklustre,in wait and watch mode till the new financial year.The fiasco with United Bank of India(UBI),highlights the inherent faults in PSU firms-used as pin cushion for various bureacrats,ministers.The PSU banks need recapitalization to bring them upto par with Basel III norms.

Global News Factor:The Russian shadow on Ukraine will not go away quickly or quietly.President Putin in his desire to leave a legacy that will make Russians proud of him.He controls the natural gas supplies to Europe but the brutal plummet in Bond prices on the rumoured Russian invasion shows that the economy faces huge headwinds.
The quiet rise in terrorism related incidents in China are spreading from Uighur province to neighbouring areas as well.Pakistan and China use it as strategic policy and shows that some amount of blowback is happening.Although small and controlled at present it could give security forces a huge headache in the future.

US:With a new head Fed(pun unintended!)its upto Janet Yellen to bring up the US economy to speed.Jobs,manufacturing are still nascent and will take time to turn around.Important to see if she still feels like rolling back the liquidity tap as per schedule.

Fashion Sells:In the Indian context the amazing sales of the 'Bullet' motorbike by Eicher Motors show how an old brand can be revitalized by competition.In my travel across major metro and non metro cities I found so many new 'Bullets',a once has been with limited fuel efficiency and strained maneuverability on narrow Indian roads.BUT the entry of Harley Davidson and the return of 'machismo'has resulted in aspirational buys.Eicher looks like a good investment.

Somewhere in mid 2014 all these factors will come together to either propel or retard the Indian growth story.The "Fragile 5" and all that makes good copy but as seen through the decades,India endures.There are enough resources and (I hope)enough sensible leaders to ensure that the country can keep the Manmohanomics story going.......

Qui Desideret Pacem
Praeparet Bellum
                                - Flavius Renatus
<Let him who desires peace,prepare for War>