Stock market tumbled to 3600 levels from 4,200 a fortnight ago. Nearly 15% wiped off & analysts are once again out with the laundry List of excuses. To table a few: (1) Pro electoral budget is back & the industry was not ready to face any such measure by FM at this juncture, (2) Inflation is a concern and high interest rates are a big dampener for growth (3) & a whimper global alibi, its the yen carry getting unwound and FIIs funds are getting withdrawn
As a practice lets get back to dissection table:
NIFTY moved from 2600 levels to 4200 in less than 12 months time frame, a whopping 70% jump. Given NIFTY the barometer of economy and supposedly a bellwether index, the growth needs to be in sync with economy. Even economy manages to grow at double digit for five years; does this justify the rise in index?
Lots said about India, an emerging market and growth story in place, fundamental is strong, industry firing on all cylinders and running on autopilot. All the optimism gets tucked away under carpet once the fall starts.
Four pillars of the economy; a benign political environment, cheaper funding cost, a good infrastructure & a sound management. A country where the financial hub (Bombay) undergoes deluge every year, Industry shuts for two days every week due to power cut and regulatory bodies lacking policy directions, inflation touching as high as 7% & even after 15 years of liberalization country FM decides cement pricing
Even if the growth is there, the question here is are we prepared for this. We have come to conclusion that the burgeoning population is an asset but what about the quality. The growth needs qualified manpower & skill sets. Budget showed huge revenue collections & boasts about meeting fiscal deficit target & FM brags about industry on autopilot but drivers seems missing
As a practice lets get back to dissection table:
NIFTY moved from 2600 levels to 4200 in less than 12 months time frame, a whopping 70% jump. Given NIFTY the barometer of economy and supposedly a bellwether index, the growth needs to be in sync with economy. Even economy manages to grow at double digit for five years; does this justify the rise in index?
Lots said about India, an emerging market and growth story in place, fundamental is strong, industry firing on all cylinders and running on autopilot. All the optimism gets tucked away under carpet once the fall starts.
Four pillars of the economy; a benign political environment, cheaper funding cost, a good infrastructure & a sound management. A country where the financial hub (Bombay) undergoes deluge every year, Industry shuts for two days every week due to power cut and regulatory bodies lacking policy directions, inflation touching as high as 7% & even after 15 years of liberalization country FM decides cement pricing
Even if the growth is there, the question here is are we prepared for this. We have come to conclusion that the burgeoning population is an asset but what about the quality. The growth needs qualified manpower & skill sets. Budget showed huge revenue collections & boasts about meeting fiscal deficit target & FM brags about industry on autopilot but drivers seems missing
Time was ripe to invest in infrastructure & education heavily but we missed to popular tunes. Once the economy grows at double digit for couple of years, shortage of skill set would kill further growth
Inflation is a concern true and there could be three ways to curb: fiscal, monetary & supply side. Monetary policy seems to lack a long-term approach and continues with only operational tools targeting liquidity. Supply side sees a crazier approach when FM urging companies to cut prices and prohibits them from accessing market
And here comes the global bang, the country that still prepares for full convertibility gets serious bouts of global incidents. Hope the yen carry does not impact much and Central bank had preempted the situation. Moot point here is not the affect of global market or Stock market movements but are we prepared for the growth. Economy is bound to grow but is it sustainable? It needs a strong infrastructure, pro developmental policies & freer play for industry and most importantly a developed demography
Lets not wallow in the happiness of short-term growth and get sanctimonious about the same. Whatever goes up has to come down & only thing we can do is to control the fall or elongate the upward & downward move.
So leaders, industrialists, regulators & investors, its time to wake up before the gas runs out of the cylinders and the firing growth turns into smoke
1 comment:
Forces to reckon..... Any thought how to manage this?
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