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    Market outlook through the eyes of a Bollywood lover

    TAX PROPOSALS
    1/15

    TAX PROPOSALS

    • Tax proposals in the budget have caused anguish and disappointment

    • For investors this is the second blow post introduction of LTCG and has dampened sentiments

    • There have been public statements questioning the rationale for the same

    • FM has had multiple meetings with various constituents of the economy and has taken feedback. Few steps look imminent now to address the concerns

    (SOURCE: Text and Concept by Sunil Singhania, Founder – Abakkus Asset Manager LLP)

    Guest contributor and other agencies
    CYCLIC SLOWDOWN
    2/15

    CYCLIC SLOWDOWN

    • Path breaking reforms like GST and demonetisation have caused near term disruption

    • Things have stabilised after the initial confusion. GST collections have already started to report Rs 1 tn a month run rate

    • NBFC issues also led to slowdown in real estate and auto sector

    • Hopefully, NBFC liquidity issue resolution and GST rates rationalisation should happen soon

    • Structurally India continues to be the most promising consumption market in the world

     LIQUIDITY NOT A CONCERN, WILLINGNESS TO LEND AND INVEST IS ABSENT
    3/15

    LIQUIDITY NOT A CONCERN, WILLINGNESS TO LEND AND INVEST IS ABSENT

    • Daily liquidity surplus in the banking system has hit Rs 2 trillion for now, highest since Nov 17

    • G-sec rates are down to ~6.5% levels vs ~7.8% a year back

    • However, NBFC’s are continuing to face tight liquidity as banks are reluctant to lend due to lack of trust and confidence

    • Transmission of rates is still lagging and RBI is monitoring this

    • Corporates and investors both sitting on the sidelines

    CLEANER WAY TO DO BUSINESS AND ACCESS TO CAPITAL
    4/15

    CLEANER WAY TO DO BUSINESS AND ACCESS TO CAPITAL

    • The old rules of doing business have changed

    • Crossing of lines to grow business not working anymore in the country

    • Cleaner business will find it easier and get access to capital at lower rates eventually

    • The interim transition phase has impacted demand and will eventually get addressed

    SLOW NPA RESOLUTION: IBC POCESS DELAYED
    5/15

    SLOW NPA RESOLUTION: IBC POCESS DELAYED

    • NCLT and IBC are good reforms and bold steps in the right direction for NPA resolution

    • Quite a few legal challenges have led to delays in implementations

    • Successful resolution of widely tracked cases like

    Essar Steel can act as triggers

    STRONG AND DECISIVE GOVERNMENT
    6/15

    STRONG AND DECISIVE GOVERNMENT

    • Strong mandate for the second term

    • PM publicly has highlighted growth, ease of doing business and buoyancy in economy as the major focus areas

    • With recent success on the political front, focus now should return towards addressing economic issues. Execution on promises should start happening

    ENTERPRENEURSHIP AND JOB GROWTH
    7/15

    ENTERPRENEURSHIP AND JOB GROWTH

    • India is a land of entrepreneurs who have the hunger and determination to succeed

    • All the unicorns we see today started small and as an idea
    • Start-up culture pick-up has been very strong

    • FDI inflows should continue to be buoyant

    • Companies like Swiggy, Ola, Quess are now the largest employment generators

    MONSOON BACK TO NORMAL
    8/15

    MONSOON BACK TO NORMAL

    • After a muted June, monsoon have picked up pace

    • Whole of India now has normal monsoon, after a gap of almost 4 years

    • Good harvest along with higher crop prices can lead to rural economy strengthening

    SOMEONE ELSE's LOSS, IS OUR GAIN!?
    9/15

    SOMEONE ELSE's LOSS, IS OUR GAIN!?

    • Low global growth has led to lower crude prices which have been a boon for India

    • Benign interest rates globally also should reduce the interest costs in the domestic markets

    • India’s export share being low in overall global context and can also be a significant beneficiary of trade war due to shifting of sourcing

    GLOBAL RELATIONSHIPS AND STRONG FDI INFLOWS
    10/15

    GLOBAL RELATIONSHIPS AND STRONG FDI INFLOWS

    • India enjoys good foreign relations

    • PM’s effort in building relationships have led to cordial relations with large economies such as Canada, Russia, Israel, Japan, Saudi Arabia and UAE amongst others

    • Record FDI inflows in sectors such as real estate, roads, power, technology, finance, etc is already visible

    MARKETS ARE DRIVEN BY EARNINGS
    11/15

    MARKETS ARE DRIVEN BY EARNINGS

    • Stock prices are a slave to earnings

    • Last few years, earnings have disappointed

    • Despite challenges, June ‘19 quarter earnings growth has been stable

    • Valuations now discounting muted earnings growth

    • Any uptick in earnings can lead to a meaningful move

    INVESTORS HAVE TURNED RISK AVERSE
    12/15

    INVESTORS HAVE TURNED RISK AVERSE

    • While Nifty is flat, mid & small-caps are down 30-70%

    • Stocks in many cases at 2014-15 levels despite size of
    businesses having almost doubled

    • Mid-caps and small-caps are now shunned and are
    heavily under-invested

    • Fundamentals and technicals both indicating favorable
    risk reward opportunities

    WORST IN PRICE?
    13/15

    WORST IN PRICE?

    • It is in times like this when investor’s mettle is tested

    • Decent companies also participating in the sharp correction because of absence of buyers

    • Either remain in doubt and fearful or overcome the fear and be courageous keeping in mind the impending return of growth, choice is yours

    OVER LONG TERM, THINGS NORMALISE LIKE ALL THE CONCERNS AND CRISIS WE SEE
    14/15

    OVER LONG TERM, THINGS NORMALISE LIKE ALL THE CONCERNS AND CRISIS WE SEE

    • We always have some or the other concerns

    • We have seen many highs and lows in the markets

    • But always, in hindsight, things were never as good as they appeared at highs and never as bad as when they looked during the lows

    Guest contributor and other agencies
    GET COURAGE, TELL YOUR HEART 'ALL IS WELL'
    15/15

    GET COURAGE, TELL YOUR HEART 'ALL IS WELL'

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