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By:

C.S. Krishnamurthy

21 June 2025 at 7:45:51 pm

Strong India, Cautious Investor

The Indian economy appears stronger than the nervousness visible in the stock market might suggest. Corporate earnings are improving, domestic demand remains reasonably resilient and several sectors are reporting healthy growth. Yet investors are facing an unusual mix of risks: crude oil is moving towards $100 a barrel, global bond yields are rising, foreign investors have turned sellers again and parts of the Indian market remain expensive. That leads to a simple investment message: India's...

Strong India, Cautious Investor

The Indian economy appears stronger than the nervousness visible in the stock market might suggest. Corporate earnings are improving, domestic demand remains reasonably resilient and several sectors are reporting healthy growth. Yet investors are facing an unusual mix of risks: crude oil is moving towards $100 a barrel, global bond yields are rising, foreign investors have turned sellers again and parts of the Indian market remain expensive. That leads to a simple investment message: India's growth story remains intact, but investors should not mistake a strong economy for a risk-free stock market. The latest corporate results offer considerable comfort. The economic momentum built over the past few quarters has not been derailed by geopolitical tensions. The margin pressure feared across several industries has also been less severe than expected. More importantly, earnings growth has been reasonably broad based. Large, mid and small companies have all shown healthy growth. If oil-related businesses, which are somewhat different in their earnings pattern, are excluded, the gap between the three market segments is not particularly wide. Financial services have been among the strongest performers, with banks, NBFCs and capital-market businesses reporting good growth. Capital goods, metals, telecom and power have also done well. For investors, this is significant. A stock market supported by genuine improvement in corporate profits has a much stronger foundation than one driven merely by enthusiasm. Domestic Risk The monsoon, however, remains an important domestic risk. Rainfall has been below normal so far, although the impact on the rural economy has not yet been alarming. Tractor and two-wheeler sales remain reasonably strong, suggesting that parts of rural India continue to spend. At the same time, increased demand under the rural employment guarantee programme suggests that weaker rainfall may be affecting poorer rural households more severely. Food inflation adds another complication. Higher food prices may improve the income of farmers who sell their produce, but they also increase the expenses of families who buy food. Therefore, higher food inflation cannot automatically be interpreted as stronger rural purchasing power. India is nevertheless better prepared than it once was. A healthy IPO market is a positive development. It allows companies to raise capital and gives investors fresh opportunities. But there is a point at which too much supply begins competing for the same pool of money. The current market provides a striking example. The much-awaited IPO of the National Stock Exchange is reportedly being considered at a size of around Rs. 24,000 to Rs. 25,000 crore, down from earlier expectations of Rs. 30,000 crore but a very large issue nonetheless. The message is not that investors should avoid IPOs. It is that an exciting new issue should not automatically be preferred over an established company merely because the new issue is attracting headlines. The bigger uncertainties are global. Brent crude has moved close to $100 a barrel as tensions in the Middle East have intensified. For India, which imports most of its energy requirements, expensive crude can mean higher inflation, a wider trade deficit and pressure on economic growth. US bond yields are another concern. Higher yields make dollar investments more attractive and can reduce the appetite for emerging markets such as India. This does not necessarily mean that global investors have abandoned India. It shows how quickly investment decisions can change when oil prices, interest rates and currencies move. Domestic investors, particularly mutual fund investors, therefore have an important role in providing stability. Their regular investments can partly offset foreign selling, although domestic flows cannot make the market immune to global shocks. Faster Growth The enthusiasm for small and mid-cap stocks is understandable. Many of these companies offer faster growth and have rewarded investors handsomely. But if investors pay too much for expected growth, even a good company's share price can disappoint. Large-cap companies, after a period of relative underperformance, may offer more comfortable valuations and greater stability. The right mix will depend on an investor’s financial goals, investment horizon and ability to withstand market fluctuations. India’s economic story remains encouraging. Corporate earnings are healthy, domestic demand has resilience and the economy has become better equipped to absorb individual shocks. But the stock market is not the economy. For the common investor, therefore, the most useful question today may not be, “What should I buy?” It may be, “Is my portfolio balanced enough to withstand what I cannot predict?” (The writer is a retired banker and author. He can be reached at krs1957@hotmail.com. Views personal.)

Clever seat selection helped BJP to secure historic win

Writer: Ruddhi Phadke
Ruddhi Phadke
Nov 29, 2024
2 min read

The party won 65 seats against Congress, 37 against NCP (SP) and 29 against Shiv Sena (UBT)

Clever seat selection

Mumbai: The BJP’s strategic seat sharing with the allies has proved beneficial for the party. An analysis of the Assembly election results show that the BJP has scored over its main rival, the Congress, in a big way because of the direct fights.


The analysis shows that BJP defeated all three constituents of the Maharashtra Vikas Aghadi (MVA) – Congress, Shiv Sena (UBT) and NCP (SP) – in the direct fights. This is attributed as one of the reasons for the BJP’s historic poll success.


The BJP contested 147 out of 288 seats. In 76 constituencies, it faced Congress. BJP secured victory in 65 seats and lost only 11 seats, making it a whopping 86 per cent of the total direct fights. This was followed by an even stronger performance against NCP (SP). Of the total 39 fights with Sharad Pawar’s party, BJP captured 37 seats making it 95 per cent of the total fights with NCP (SP). BJP and Shiv Sena (UBT) were head-to-head in 32 constituencies, of which BJP emerged victorious in 29 seats, making this 91 per cent of the total direct contests.


According to a BJP strategist the party had bargained hard with its allies, Shiv Sena and NCP to get the desired constituencies in the seat sharing formula. “We had studied to potential candidates of the MVA. That helped us in choosing the seats where we can register comfortable victories,” the strategist said.


BJP spokesperson Niranjan Shetty attributed the success to all the party workers who worked hard to boost development, infrastructure in the state. He gave credit to Deputy Chief Minister Devendra Fadnavis for his contribution to the party’s success.


Shetty pointed out that in 2019, Uddhav Thackeray had stalled all the “novel” and “legendary” projects that Fadnavis had started when he had taken over as CM, making it very easy for the people of Maharashtra to strike a comparison between both the leaders and the potential they had for serving the people. “Devendra Fadnavis gave up his post very easily for the larger good. There are many such examples like Venkaiah Naidu who was BJP National President and later worked as the Vice President of India because that was the need of the hour. We seldom care about our posts,” Shetty told The Perfect Voice.


Congress spokesperson Atul Londhe refused to call the election results as the people’s mandate. “This is not at all a Janata mandate. Despite Maharashtra struggling with so many basic social issues, how can BJP acquire such a huge mandate is the question. If a student copies and fails with just passing marks, it can go unnoticed, but if a student copies and bags the number one position, something is fishy. Why is the BJP scared of ballot papers?” he said.

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