INSUBCONTINENT EXCLUSIVE:
Markets may be in Trishanku mode again
They look to neither want to rise to heavens, nor fall down into pits
stand point, the macros may be weakening
CPI Inflation is on the rise
Oil prices are pinching again
Fiscal deficit could be under pressure
Current account deficit may possibly slip and the rupee, too, is sliding.
But there may be another side to it
Roads, railways and power are to a country, what veins, arteries and nerves are to the body
Smooth flow of energy and supplies to all parts creates a healthy functioning whole
The same may be happening with taxation through GST
Quite similarly, the Jandhan-Aadhar-Mobile-based delivery system has sought to provide a relatively uniform delivery of government
assistance and create financial inclusion.
Likewise, the universal health insurance scheme is also an attempt to initiate a minimum
necessary social security net across the country.
The nation is seeing some institutional response to resolve the NPA problem
The incentive-disincentive structure may be slowly favouring responsible enterprise
We, who considered 6 per cent WPI as moderate inflation earlier, have now begun to call 4.6 per cent CPI as high
Credit growth is now at around 12 per cent year-on-year, and capital formation too has begun to move up marginally.
The risk that growth
faces from high oil prices is real
High international oil price is a fact
Somebody would have to pay for the cost of oil
The question is who
In the first method, India may decide to subsidise oil price
Here, the government might need to take the impact and transfer the cost to people by borrowing from banks (making interest rates to go up),
through taxes and through high inflation
In this method, the poorest people possibly pay more, since the credit, subsidy and inflation divert resources from them to fund the gas
bill.
The alternative method is those who use fuel take the burden of fuel cost
Here again, capital and operational efficiencies would need to be brought in; price rationalisation would be required, and oil dependency
The former method is perhaps relatively easier and populist
The latter may be difficult and unsung.
Having said that, India needs to bring its gears and levers together
The debate on policies, causes and factors that lead to growth and prosperity are more or less known globally
Capital, policy and energies need to be invested in creating productive capacities, predictable legal framework and an honest work ethic.
On
the industry front, Indian mutual fund mart is seeing a flurry of activity, as scheme rationalisation and categorisation comes to close
During this period, the performance momentum may get disrupted for a few months, as recalibration of investment gets under way
It will, therefore, be important that partners appreciate the long-term value-creating skill of a fund house rather than a 1-2 month
imbalance.
To put it differently, the ball and pitch have been changed, and its a new ground now
In such a time, the fund manager may rather play a defensive game and take shots opportunistically, rather than take a wild swing.
Avoiding
mistakes is important at this stage
Because, when the ball and pitch get old, the time to score will also come
But it is the captain-investor who has to decide as to how long the fund manager must be allowed to stand on the pitch
The longer he is on the pitch, the higher the probability of a high score.
