CHANGING THE GAME RULES

When Prime Minister Narendra Modi addressed the nation from the ramparts of Red Fort on India’s 69th Independence Day, it was a marked change from what we have been used to listening on this day, including his own speech of last year.The address didn’t have the usual grand announcements of new plans or policies, many of which never saw the light of the day. The speech focused more on presenting a report card on the government’s last one year performance. 

Besides, PM Modi announced a new campaign of “Start-Up India, Stand Up India” during his Independence Day speech, which will hopefully solve the basic problem that India is currently facing and needs to be solved urgently. The campaign aims to promote bank financing for start-ups and offer incentives to boost entrepreneurship and job creation. It is estimated that every month more than a million young Indians will join the workforce in India for the next 15 years. This is what people call as demographic dividend; however, this dividend can only be reaped profitably if we can provide the right opportunity to them, else, managing this will become a nightmare for any government. Therefore, this new campaign shows the change in attitude and thought process at the centre.

What is more important is that the talks are transforming into concrete action. In a push for assisting start-ups and SMEs, the government has launched two new investment and loan programs with a combined budget allocation of Rs 12,000 crore. So we can see a trend emerging that is following a definite path to make India a global growth engine and propel India’s growth into a higher orbit.

Last year the government announced its commitment to improve its ranking on ‘ease of doing business’ and create an enabling environment so that the country can attract the much needed capital. Then came the “Make in India” campaign, that will help India to become a manufacturing hub. PM Modi, leading from the front, has made frenetic foreign visits since he assumed office at the centre to convince people around the world about how the situation has changed in India and has invited them to be a part of the India growth story. The ‘Skill India’ and ‘Digital India’ initiatives are also part of the same story.

His promise to do away with the current practice of interview-based selections for low-skilled government jobs will go a long way in containing corruption at various levels of the government, and in turn ensure better governance. All these will have a direct bearing on the capital market, which remains one of the best places to raise risk capital that will fund new ventures. This will definitely attract foreign investors that are constantly looking for growth avenues. Moreover, if we see the major trend globally, we find that India is uniquely positioned now to attract smart money. Major emerging economies like Russia and Brazil are either contracting or witnessing a subdued growth due to slump in commodity prices and the way the situation is unfolding in China, I really see more downgrade there.

Till now all the efforts taken by the government have not given the desired results and the stock market is still falling easily without much support. The Indian equity market, however, has performed well relatively since the start of the year. The MSCI India Index is up 1 per cent since the beginning of the year, compared with a 10 per cent fall for the MSCI Emerging Markets. This is despite a weak earnings’ season. For the first quarter of FY16 we have witnessed India Inc. reporting a decline in topline; however, with a marginal uptick in bottomline on a yearly basis. Our cover story this time will explain in detail about the aggregate performance of Indian corporates along with an in-depth analysis of 11 major sectors.

In addition to this, we have also analysed Force Motors, the share price of which has more than quadrupled in the last one year and doubled in the last couple of months. We have also tried to cover all the IPOs that are hitting the market in the next one week. However, you can always visit our website if we have missed any of them due to lack of detail by the time we have gone to the press.