About 20 days back 2 senior politicians told me the trust vote would go through comfortably. One was from Congress and the other from BJP. One senior journalist also told me that the trust vote would go through.

However, none of them were correct about the margin of votes. That is the problem about predictions – on TV you need to predict that “the markets will go down” – to make money you need to be far, far smarter than that. Simple, you need to get the direction, speed, intensity ALL correct every time. This is not just difficult, it is impossible.

If there are 542 Members of Parliament,  and they do represent the country, it is fair that some of them (most) of them will be  honest, some dishonest, some will have criminal intentions, and some of them will be actual criminals. If 5 of them are criminals – it is only being representative, is it not? The media however plays some much on our minds about the negative elements that it would like us to believe that all Parliamentarians are criminals. It is not so, not by a mile. The media should show some restraint and not chase TRP so desperately. It sucks.

Impact on the market because of the trust vote can at best be marginal – buy on rumors and sell on news – so today (23 July) the market may actually give up some of the gains that it built yesterday and earlier! That is the market. Also the market would surely have known that the congress would be returned safe.

The nuclear deal is of course a superb market story…if India sign the nuclear treaty TODAY, it will mean Indian companies can start talking about nuclear power. Then the government of India will have to come up with the guidelines – eligibility, criteria, locations, financial safeguards, physical safeguards etc. Given out track record this will take about 2 years. Once that is out, and say Tata Power, NTPC, National Nuclear Power Corporation are the 3 companies which are “eligible” for nuclear power. They will then scout for partners – the whole process will take 1 year to become a JV.

Then they will choose a location – remember Tatas could not put a car plant so easily, so a nuclear plant (thank you Green Peace) will not be the easiest thing in life! So add 5 years to set up the plant. Then that plant has to go critical – generate power. This will be then sold and the cost  (incurred in crores) will be now recovered from end users –  frankly I think the impact on the  EPS will be felt  after about  12 years, but we will buy now. What will we buy ? We will buy Areva, Tata Power, Esab, L&T, NTPC – because the nuclear deal is done….hoping that the next quarter will see an upsurge in earnings. God bless us.

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  1. Subramoney

    While Nuclear Power may have worked as the catalyst to seek a trust vote in Prime Minister Sardar Manmohan Singh (SMS) polices, it has been able to segregate froth from the coffee.

    Your argument about expecting EPS of Areva Tata Power etc holds but as I see it the whole exercise was not about the deal at all.

    Free market forces that were facing resistance because of the left ideological concerns like permitting more FDI in insurance and telecom, opening up pension funds etc were caged because of the veto powers that the communists held over this government for such a long time.

    Suffocation of SMS could be seen when he told The Telegraph, a few months ago, if the communists want to withdraw support, so be it.

    So much of money was lying locked up because of no clear direction where the reforms are headed to that ruling political combination may not have spent any money to buy political power.

    Business houses, instead may have done the job on their own and surely the market which stays ahead of political events knew about it.

    UPA’s victory was a foregone conclusion. but the drama needed to be played out.

    I agree that the media to boost its TRPs played to the gallery and it truly Sucks.

  2. why do you say it sucks? people get what they want 🙂 be careful about whom you vote for.
    frankly the only thing one wants from the government is infrastructure, external affairs, security – Immaterial of which state in which you live, I am sure you feel cheated on all these counts. However Gujarat’s Modi (I know in India secular means anti – hindu!) has done a good job on Children’s education and the Boys:Girls ratio.

    How many such examples can we quote? Look at Vrao Deshmukh – state like Maharashtra which was a great industrial state has a 5k Mw shortage!! And for all you know, he might get re-elected 🙂

  3. I say ‘it Sucks’ because for one I belong to the media and like Somnath Chatterjee also know where to draw the line.

    Secondly the TRP game has kept me off TV for a long time now.

  4. Nuclear deal will a disaster to India! Under 123 agreement, either country can cancel the agreement with one year notice. US law makers have already said loud and clear that if India ever tests a nuclear device, or makes advances in it’s weapon’s program, they will cancel the agreement, and demand the return of all the nuclear equipment purchased under the agreement. At that time, they will not accept any depreciation of the value of their equipment, and will demand full costs. It is common sense that the Indian companies will lose their market value, and stock prices will come down. So the Sensex bubble will burst with big bang, and Subramoney will close this blog, and have a new blog explaining his new readershop on how to profit from the burst bubble!

  5. After my earlier post, I realized my mistake. I neant to say the opposite. When US sells the equipment, it will sell at exhorbitant prices. When they cancel the agreement with one year notice, under the previously described circumstances, the US will demand the equipment back and will only pay highly depreciated value. Indian stock market will lose it’s value with disastrous consequences. Bigger problem, where will India dispose off spent fuel? Agreement specifically says that US will under no circumstances will accept spent fuel.

    More reasonable approach is for India to put confidence on it’s scientific community, and find renewable sources of energy with no hydrobarbon emmissions, and no nuclear waste.

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