Quarterly results

The Goldman results have again shown what the firm can do even in tough times... Intel also has beaten the estimates..

I have become positive on equities

Another day in the market

Days in the slowly falling equity market becomes very borning. I come in the morning, see the market opening gap down and the trend continuing throughout the day.. What to do?? wait for the right price..

Indian debt saw some action today and yields of some paper actually fell... I hope it continues as we have taken a large exposure to income funds.. what to do here?? remain invested and let the up run continue..

Investment in Indian debt vs equity

I think debt might be on its way to come back... This is relatively contrary to what market has been saying... where people are expecting yields to go up as growth would resume...

i have slightly different view point...

commodity markets are typically lead indicator and are saying that demand is slowing down. oil has corrected more than 15% in the last few weeks.. Typically, if growth is happening, demand should increase and oil should go up.

US yields are falling.. the 10 yr is at 3.30%, way off from the peak of 3.9%+.. The US government is talking about second stimulus.. my assumption is that if things are improving, why would the government talk about second stimulus when they know the risk of printing money. so it means that things are not imroving..

Equity market is typically the last to follow and may have gone ahead of itself... so should it fall... the inevitable answer might be "yes". And as usual, the tpyical retail or HNI investor who came in the last two months, will loose.. I hate to say, but the probability of this happening is high.

What to do ahead of quarterly results

Jun 09 quarter results will start from tomorrow with infosys coming out with its numbers. What to expect... a big surprise - on the positive / negative side or status quo.

Market has been on the downfall post the budget but still expecting growth. If growth in earnings is lower than expected, we might see a big fall as valuations are still high.

So, I dont see much upside unless results really surprise. Higher multipes in the recent past have been compared with 2003 - 07.

The time in 2003 was not the same. Results surprised every quarter. Even if valuations became expensive and correction happened, higher growth helped market pushing higher. Interest rate continued to be low.

Things are different now. Demand is low, interest rates are not low enough, credit is not easily available..

So, i would wait and watch..

A historic opportunity lost

New Indian government presented its first budget on 6th July and what a waste of opportunity... there was nothing in the budget to cheer about... the finance minister doled out a number of measures for masses - increase in NREGA payout, increase in social sector spending, reduction in surcharge etc... no mention of where he is going to get the money from.. no mention of administrative reforms...

Because of the borrowings, interest rates will not fall and country will face monumental debt in the future... and this debt + interest will need to be paid by the future tax payers...

This was probably one of the few times I was personally hopeful that the politics may rise and look beyond popularity and could try to steer the country towards better tomorrow.. i have been proven wrong again..

Government has shown that it is very difficult for it to do a balancing act... it cant manage a stable process wherein higher spending is matched with higher resources... since higher resources is political taboo, why to mention in the budget... and does any body care if instead of raising resources, the money is borrowed...

in my view, unless the country faces serious issues, politics will not rise to the occassion.. may be this is the way democracy evolves..

Auto fuel price hike...

This is the first time that there was no debate about the auto fuel price increase. The government announced on a day in the afternoon that petrol will be increased by Rs 4 and diesel by Rs 2, increase effective mid night.. It is a sea change from last 5 years when there were consultations with left and other coalition partners before any decision is ..

By increasing the price without consultation, government is indicating that it means some business and Congress is in control and will run its show. I hope it continues...

Budget on 6th will be first policy statement by the new government and I hope it is a mix of social and right economic initiatives, so that economy can continue to grow with right balancing act. No body has expectation of big economic reforms and structural changes... people expect it to be aam aadmi budget.. but if government can show measures to channel the subsidies and reduce pilferage, it will be a welcome relief...