NILKAMAL LTD Q1 FY18 - RESEARCH REPORT

AMARA RAJA BATTERIES LTD - RESEARCH REPORT Q1 FY18

 MUTUAL FUNDS, MIDDLE CLASS, & MODI DRIVING THE INDIAN EUPHORIA

On the eve of our Independence day, I read a very interesting article by one of my favorite analysts, whom I have been following over the last few years. But for once, after going through his discourse on our Indian economy, I disagreed. The bone of contention is that whether Indian economy’s performance since 2014 has been motivated or driven by our new found political stability. My revered peer stated that our economy would move at the current rate irrespective of whoever is at the driver’s seat in Delhi in front of the control panel. May be we all have been so much soaked in our new found Reforming Digital & Un-Scandalous India that we have completely forgotten the era of Policy Paralysis, when India was functioning only on five pillars of our democracy, RBI, SEBI, LIC, SBI and our Judiciary. Oh, May be this is something like, “Eternal Sunshine of a Spotless Mind”, blotting past painful memories not to influence the future. If this is the case we should immediately update the Britons who would like to go through similar treatment to blot 23^rd June 2016. 

Is our soaring stock markets touching lifetime highs and crossing psychological barriers completely disconnected from who is there at Delhi. No, they cannot afford to be disconnected. The stock market on every day basis discounts and prices in future estimated growth rates of every sector and industry. It is not possible to disconnect economics from politics in any country, even if it is India which in the past has been swayed emotionally in general elections.  Now coming back to our stock markets, so who is responsible for this ever surging tide of liquidity? They are not just the FPIs hungry for yields and arbitrage profits. These are the people repairing their own roofs and fencing their homes to fight anything from flood or earthquake or unforeseen illness or tax structure or even unwanted personal expenditure which just knocks the door like a neighbor asking for anything which you don’t want to give. Yes you guessed it right. It’s US the MIDDLE CLASS, responsible for these stock market jumps making headlines every morning. Now how did this happen, the central government has very shrewdly reduced the interest rates of various small savings options available and with gold and real estate out of reach for many of us, Mutual Funds became our saviors. With SIPs and various other balanced, debt and equity schemes, the Indian middle class has at-last gathered enough courage to invest in the stock markets. The figures are amazing. With about Rs. 4600 crore coming in through equity mutual funds every month, stock markets are bound to make the so called higher highs and higher lows. Scams, scandals, political slander is no more dominating the precious dinner table talk any more. It has been replaced by interest rates movements, digital apps, demonetization, GST, stock market updates, PAN – Aadhaar link up, Aadhaar Mobile link up, foreign policy etc etc etc….. the list can go on because every day there is some movement somewhere in our otherwise obnoxious administrative machinery.

Now coming back to Indian growth rate, we are moving at a respectable rate taking into consideration our NPA woes, low credit take off and poor private sector investment. Inspite of all of this, the government is moving head on with its capex and a number of private sector companies are surviving on government public expenditure plans. In addition to that governments initiatives like ‘Go electric by 2030’ is a catalyst for Indian corporate which have already started moving towards making Indian roads free of pollution and smog.  According to Marc Faber, India will outperform US markets in the next five -ten years. Now this is with respect to the economic reforms and political stability in India. So for this undaunted goal to achieve, Sir ji, I think we need an able driver at New Delhi.  

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