Thursday, May 9, 2019

India:A Dance with Democracy or a Brush with Fascism?

The Political Game➥

The jamboree culminates on 23rd may 2019.On one side a diffused upper crust leadership battling hard to prove their relevance. The incumbent - brash,politically incorrect,banking on the faceless masses who feel a sudden uplift in their Hindu identity,wanting to brandish religion as a sword that gives votes.

Both sides are corrupt. It is only the degree to which the differential lies.I do not find any party having a coherent policy to create jobs,manufacturing,infrastructure so I am not very positive on post election outcomes.

If I was to predict I would say that the BJP would be back for another 5 year tenure but with allies.I am a bit wary if the high decibel media backed BJP campaign can overcome the rural angst and whether the village folk can be Harry Potterized into believing that another 5 years to this Government will let them achieve all the things they did not even come close to doing since 2014. 

Trump's Tweets➽

If ever the adage that "the pen is mightier than the sword" was true then Don Trump has brought it to fruition. A simple tweet and a few hundred billions get wiped off the market cap!All said and done he does have the Chinese over a barrel as they stand to lose more than the USA in this trade war.The trade deficit with China was approximately $ 470 billion in 2018 and the Chinese will be hard pressed to manage getting away without paying a penalty

Oil Falls➴

The precipitous fall in Oil from $75 to $60 although helpful for import dependent countries like India will be negated in the long run by Iran sanctions,Libyan war and Venezuela bankruptcy and a big fall is not expected.With the USA no longer dependent on outside supplies it can afford to utilize that advantage in political muscling of Iran

Our Markets🔺

On the risk to reward front I am a firm believer that traders should either wait out the event of sell short term holdings as I see a 5-7% upside if all goes as per expection but a steep 20-25% correction over a period of time if even the slightest unthinkable happens on the political front.

A succession of indicators - low auto sales,low GDP(even after window dressing),almost nil manufacturing growth added to the likelihood of another El Nino. India cannot afford a third successive uncertain monsoon.

The markets I think will surprise many investors as the volatility will last the entire year. I also feel that the Indian markets will give those who have the gumption to back themselves a massive opportunity in value buying in 2019.

Nasdaq and Dow🔀

The US markets have been super performers price wise over the last one year.This year will be sideways so do not be tempted into investing simply by looking at One to Three year returns.Do the research and if ever there was a time for value buying,it is now.

Getting stuck in good stocks at high prices is the surest way to average portfolio returns.Like every year this year too has its own unique challenges and many crocodiles lie in wait so tread the water carefully.