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.

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