Well, if you are an investor, you have to be an optimist. Rather, ONLY if you are an optimist will you look at equity investing.

Let us look at what is happening in the Indian economy under Narendra Modi.

Here is a man who has a clean, blemishless track record and whom the Congress could not tarnish in its UPA regime. He is the man who brought a lot of investments to Gujarat, and improved Gujarat in almost all its parameters. I had the luck of meeting a few officials of the Gujarat government, and the enthu that they had was awesome.

I have no personal interaction with anybody in the Na Mo government but I am assuming that the same level of enthu must be prevailing at the PMO too. No, namo has not done anything path breaking if you ask the Congress, but some of the initiatives stand out.

After 66 years of independence it required a PM to ask Indians to keep India clean, so over a 5-10 year period, we will be physically cleaner. Let us hope this extends to our economy, government, and environment too.

The coal auction, spectrum auction, etc. have been closed brilliantly. Our media does not have enough time to write about these things. Impact of this will be felt over a longish period of time, measured in terms of quarters and years. The media wants something hourly. That is unnecessary for a government. Clearly the PM is running the country for good results, not brownie points. Not sure how many people are calculating the ABSOLUTE numbers in our growth. A 8% growth of 2015 is a much, much bigger figure than say 10% growth of say 2002. Please remember the size of the economy has become much bigger. The question is when does India cross China as the  fastest growing economy – 2016 or 2017. NOT WHETHER.

Political ownership of banks, crony capitalism, Trade unions – a horrible combination while dealing with banks! However creating the banking Board, bringing outside talent at the board level, allocating capital on the basis of good ratios, …hey the ingredients are all fine and right sounding. Let us be optimistic about this (not as optimistic as Morgan Stanley which has already called for a higher pe for the state owned banks).

Remember it was Atal Bihari Vajpayee who rescued the Telecom industry from the bureaucratic shackles of high bid, and low volumes. It was in 1999 that a committee headed by Jaswant Singh came to the revenue share model.

Today it is the turn of State Minister of Petroleum and Natural gas that the energy industry is being freed for gas pricing, and reducing the crony capitalism. How many of us remember that C Rangarajan wanted to recommend $ 8.4 for Reliance’s gas? Now it is 5.6 and is ready to fall to 4.3….well, let us appreciate what NaMo has done.

The national fund for Infrastructure has a corpus of US $ 3 billion EVERY YEAR. Please see the enormity of this fund. This fund is also expected to raise money from the private sector for investment in infra.

Remember the Rs. 150,000 crore that Suresh Prabhu has been able to borrow from LiC for investing in the Railways?

These are some of the initiatives. When the Trade Unions keep calling for a bandh you are sure that something right is happening in the labour front also. GST will become a reality in 2016 if not in 2015.

The DII is able to match the FII in terms of size. The Indian life insurance sector, the domestic mutual funds, PMS, etc. are really rocking. See the compensation in the banking, mutual funds and insurance sectors. See their bonuses, and their vacations. Fairly obvious that the industry is booming.

What next? Na Mo wants to improve the ranking of “best places to invest / ease of doing business”. We are at the nadir. He wants India to move from 189 to a score of sub 50.

Jim Rogers saying India has no hope. There is a risk that interest rates in India will go UP, especially if growth picks up. Fed could increase interest rates. The falling SIP returns could cause panic and the flow into MUTUAL FUNDS could go down, reducing demand.

In an uncertain market gold prices could go up. The joker in the pack Oil could go up to say $ 80 if not 130! The quality of debt in bank portfolios is shitty. My portfolio has Cholamandalam, and Hdfc Bank, and Hdfc. Many of the banks have too much shit in their portfolio. Kingfisher and Amtek are out in the open. GVK, GMR, Adag, …steel, other metals, Real estate …there are too may skeletons.

What if the index falls to 23000? I am still buying. What if it falls to 21000? I am still buying 🙂 …but remember mine is an mnc dominated portfolio 🙂

Yes I am worried too. However the money that I do not need for the next 10-20-30 years goes into equity. Period.

 

What more signals are you waiting for? And what ability do you have to read the signals? I have NONE.

 

 

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  1. Long back I read a blog praising credit cards in subramoney. I felt some doubts in my mind. By reading this also I feel same doubts on the intentions of the author.

  2. Thank you sir for giving a detailed and classic example of NOISE that we have to ignore while being a individual investor

  3. Subra today I read in TOI that Adesh Shrivastava died due to cancer. I felt sorry coz we lived in his time, could connect. But the question related to us is that he can manage the costs related to cancer treatment but how we as a common man could plan for such emergency. Are critical plans any good or they too restrictive?
    Not sure if you want to do a post on this.

  4. Well its easier said than done. (i mean be greedy when others fearful). i have not come across anyone do that. however the other way around is not tough though. ie not buying when the valuation is way too high. (stock specific valuation. not the index). with so much of global uncertainty, there will always be doubts in your mind. and you start thinking that it might go the 2008/2009 way. (in any case, the valuation is not cheap despite the fall from 30k.).
    i doubt anyone had the courage to buy when the sensex went to 9k. (including yourself). everyone was talking of the depression during that time.

  5. When you want to switch Mutual Funds, how should you do it?
    Submit the redemption forms, wait for the money to come to your account, once the money had been credited, submit a lump sum/additional purchase request (for the entire amount that has been credited)?
    That simple?
    In that case all transactions must be completed in a maximum of 5 working days right?
    1. What if you want to switch from Mid Cap to Large Cap?
    2. What happens if you submit your redemption request on a day the market tanks (like Aug 24th)?

    Or in other words, even while executing a switch, what should one be aware of?

  6. Dear Subra

    I love your blogs for their philosophical approach. So far it has been apolitical. I hope it remains so in the future.
    Thank you

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