INDIAN ECONOMY IN A SWEET TINA SPOT

 “It’s the TINA factor sweetheart”, I quipped when my 12 year old was emphatic over her social science & biology grades. I explained that there was no other alternative for her than to study. “Really! You are funny Ma”. She has no idea that these days even stock market surges are being attributed to this renowned acronym, TINA (There Is No Alternative). Well Indian Stock markets are soaring these days and people i.e investors, hedge fund managers, brokerage houses, analysts are not finding any reason for it. How long can they keep giving UP election results as a reason for the REASONS why our NIFTY might touch 9300 in few months? So for most of them when the markets go up its ‘TINA’ and when the market goes down its TRUMP. And mind you both TINA & TRUMP are mutually exclusive.

Stock markets were once considered as barometer of economic prosperity & financial health of a country. But this theory has long been forgotten in the era of liquidity & uncertainty. As a result investors are more driven by sentiments & information flow within the market than by its fundamentals. With respect to India, there is no uncertainty left, so no reasoning left for upside risk for the economy. Analysts keep on harping on policy continuity on reforms and predicting 2019 general elections and even beyond that as if they were discussing some telecom company’s extension offer. Have the macro fundamentals just gone up after UP assembly elections or have we started using prism glasses. But the question remains, why the Indices are moving up without any backing from corporate earnings. I think most of us have forgotten what we learnt in our graduation days.  PEST.

PEST is nothing but Political, Economic, Social & Technological external factors that influence any company or industry. These factors are analyzed by any sane serious investor before putting his hard earned money in stocks or companies. And India has all these factors in the right place at the right time. So when the dollar seems to be confused about its own divergent economic & fiscal policies, Indian Rupee is gaining strength over the convergence of its socio-economic-political policies. Now for pragmatists who need facts, IIP for January was 2.7%, PMI above 50, controlled inflation at 3.65% within RBI limit, forex reserves have gone up to $367 billion, exports grew 17.50% in February which is a sixth consecutive rise this year and last but not the least GDP at 7.1% is the fastest growing in the world.  Now coming back to corporate earnings, growth is definitely not anemic but in single digits which is expected to rise in double digits by financial year 2018 and investors both domestic & foreign are betting on this growth as evident from FPI flows of Rs.22268 crore this month, highest since February 2013. Government is moving with GST implementation by July this year, NPA resolution policy next month and other land, labor and agricultural reforms. So foreign analysts are rightly calling us of being in a SWEET TINA SPOT. But I really love this word TINA, which I am planning to give it to my newborn niece. Yes, you guessed it right, I didn’t find any other name!!