Monday, March 12, 2018

Indexes Rise But Prices Fall

There is divergence in what the Government says and what people are feeling on the ground(at least those whom I am talking to).Its like the weather where some feel oppressive while others are merely uncomfortable.

There is definitely within the BJP government a section of policy makers who feel that the simple formula of rhetoric,some public pro-poor measures and blaming all ills on previous governments(non BJP) going back some 60 years is the surefire way to win elections.

The farmers are agitated and with reason,till date no support system in place to insure against crop failure,lack of proper education facilities,lack of irrigation,no scientific support to the majority of them and a general apathy makes migration and living on city foothpaths seem a better alternative?

Taxes - no country has a more complex or multitudinous number of taxes than India.Those who pay tax are over burdened with a plethora of cess etc that is suffocating,those who do not pay still get away and you have shams like India's leading billionaire actor pretending to be a farmer to avoid paying taxes!

GDP numbers have grown but probably in sale of combs because employment generation is at an all time low.The textile and agricultural segment that used to provide opportunities can no longer be depended upon.

There are hardly any original ideas,the much fetted 'entrepreneurs' like Ola or Flipkart are mere copycats.I am very pessimistic about the new crop of IIT and IIM graduates.Just 1 in a 100 things of doing good for those at the bottom of the pyramid.

How long will the goodwill between Trump and little rocket man last?Trade wars?Syria?Russia?

Many variables but I feel that the Indian markets are looking at internal conditions and rebalancing accourdingly and there is still a lot of pain left.Nifty can easily fall to 9700 but truth be told I think its real value is close to 8700 right now if we remove private sector banks,Reliance and the I T pack.The mid and small cap pack has lost approximately 30% in price terms and liquidity has dried a sure sign of investor fatigue.

GST remains a work - in - progress.Where are the other structural reforms?The index may merely be down 8% ,it does not give atrue picture as most non index stocks have lost 30-35% of their value and I do not mean the PNBs of the world.

Wait and watch how the situation unfolds and I would only look at investing on the long side sometime in the month of April 2018.Not before.