Tryst With Subsidies

Let me begin by wishing all of you a very happy and prosperous new year. 2014 has begun on a truly encouraging note for us, thanks to the response and feedback that we have received from our readers across the country on the revamped Dalal Street Investment Journal. I have always believed that the real force that compels us to excel in our work is the appreciation and acceptance that we receive from our readers. I am glad that the new and improved version of Dalal Street Investment Journal has been liked by all of you. Let me assure you, it doesn’t stop at that. Our endeavour would be to continuously upgrade the quality of the product so that it helps us achieve our true objective of democratising wealth creation.

Many of our readers have suggested some very good points to upscale the quality of the magazine even further. Our editorial, design and product teams are working seamlessly to ensure that all these suggestions are worked upon and the changes implemented. This may happen in stages, and you will certainly see them over a period of time. Just to give you an example, the Company Index, which gives the stocks recommended in an issue at a glance will find its way back to the issue, as many of our esteemed readers have desired it to be. There are also many other qualitative suggestions that have come in. We have taken due cognisance of them all and will surely up the ante on the quality front as we move forward. After all, being the true voice of investors brings with it as much as responsibility as it fills us with pride.

Talking of the new year and the days ahead, the markets have really not begun the year on a good note, so to speak. The benchmark indices have lost almost two to two-and-a-half per cent since the beginning of the year. It seems rather strange that after having ended the last year on a rather positive note on expectations of a change at the helm of governance very shortly, the markets have actually sunk. It all began with the Aam Aadmi Party assuming power in Delhi. To begin with, the alliance (though they call it outside support) between AAP and the Congress seems completely unholy. It has rather emerged as a bid to capture power at all costs.

Further, the way AAP has been doling out freebies to the population of Delhi by way of free water and slashing power tariffs, it looks like economics has been thrown out of the window to concentrate on politics of populism. AAP has been provided with a golden opportunity to change the paradigm of Indian politics. Ideally with such a mandate, it would have been prudent for it to focus on the opportunity in hand and demonstrate how governance can be improved in the state of Delhi. However, the lust for power has tickled the greed glands of AAP members, who are stretching the boundaries of their success in a dubious manner to acquire more power to fight the LS elections.

This decision of theirs will surely help the UPA, as their contesting in many seats would result in a fractured mandate, a weak government and a continuation of the sorry state of affairs. IF this happens, the AAM aadmi will be convinced for another few decades that the Mango people would remain Mango people and that the government is better run (in comparison) by the non-Mango people. What is being looked upon as a game-changing political scenario will soon be looked upon as a severe let-down by the junta, who were hoping to bring in change by exercising the power to vote.

It is time that Arvind Kejriwal, the honourable Chief Minister of Delhi, recognises the need of the hour and heeds the mandate of the people. Governance cannot take precedence over the greed for power. As a former bureaucrat, it is the right time for him to figure out what is good and bad for the country, the economy and hence the aam aadmi, whom he and his party stand to represent. Instead of feeding them for some time by doling out freebies, Kejriwal and his government should rather focus on creating the means through which the aam aadmi can feed himself perpetually. If this can happen in Delhi, it can be replicated throughout the country as well. However, judging from the kind of governance that AAP is promising the people of Delhi, it could well turn out to be India’s Tryst With Subsidies if it gets a chance to rule at the centre as well (as it dreams to).

While all of the above will be charting the long-term course of the markets, here is another issue of Dalal Street Investment Journal which tells you the extent and the reasons, why FIIs will play the Indian market to their advantage this year.

As the markets enter a new phase, we also look at whether IPOs are likely to revive, especially in the final quarter of the financial, year with the government getting serious on its divestment backlog. Another interesting story in this issue and more or less connected to fund raising through the capital markets is the government’s plan to raise close to Rs 5000 crore by issuing ETFs with PSU stocks as the underlying asset. The story gives you a complete overview of these instruments and suggests what you should be doing when they hit the market.

We recommend Asahi Songwon, a chemical manufacturing company as our Low Priced Scrip, while engineering major Elgi Equipments is our Choice Scrip this fortnight. Both these stocks have promising future prospects. Apart from these, you would surely benefit from the Kerbside recommendations, which promise some quick returns. As an aside, we bring to you a brief view on the real estate market in India. This includes views from prominent institutions including Jones Lang LaSalle and Knight Frank on what can be expected in 2014 from real estate investments.

As usual, let me wind up by seeking your valuable feedback on the content that our team brings out for the benefit of you, our readers. Do write in with your comments on comment@dsij.in