– MarketFastFood – 110515 – The Economist headed government has finally delivered yet another blow to the Aam Aadmi by hiking the petrol prices by an unprecedented sum. The diesel prices may also go up as per the reports by Rs.3 to Rs.4 in the coming week. This jolt to the common man has come in, just a day after poll result announcements! One can read the motives themselves.
– Government needs to kick in reforms. Now their partners have been battered out of shape in Tamil Nadu, the central government will not have any immediate threat even if the corrupt lady is arrested in the 2G scam. Hence if the congress wants to remove the corrupt tag from its name the government should not spare anyone even if he or she is their own party person.
– Big reforms are required in the oil sector.
1) Reduce the taxes! Almost half of what we pay as the fuel prices goes as taxes hence instead of appeasing people by decisions like Rs.73000 Crs farm loan waivers govt. can pass on the money to the public by way of reducing taxes on the fuel.
2) Promote usage of Gas (CNG/LNG). India atleast has some reserves of gas compared to almost nil crude. Cairn has reserves in Rajasthan but that’s not enough. Usage of CNG/LNG and even Solar Power can go well with the country in a longer term. Why shouldn’t government be subsidizing solar parks?
3) It’s high time even the diesel is deregulated. Charge personal petrol and diesel cars on a different rate (though my own family owns three cars) and charge the goods carriers at subsidized rates! Why should car owners enjor government subsidy for their joy rides?
4) Develop the local transportation system. The DMK govt in Chennai when took up the Metro rail project it was costing around Rs.4000/- Crs now when they finally decided to implement it after many years the cost escalated to around Rs.11000/- crs (don’t remember the exact numbers but they are near them)
– We are happy that people have shown maturity and smartness this time. They took the money (the money anyways belonged to public) but voted smartly against corruption and has downsized the major ruling party out of shape to third place. Amma should thank the BJP for their campaign on 2G at Delhi and the outburst of Supreme Court helped here simply sweep the state. Let’s wait and watch what she does in nxt 5 years!
– The fuel price hike is surely keep the Inflation high. The RBI on one side is fighting it by way of rate hikes. We have seen earlier also that No Policy decisions from the government will not help curtail inflation what ever rate the interest rates go to. On the contrary it would Kill the growth! Hence a recession with low commodity prices will help none.
– The results announced till now were fairly satisfactory except for a few negatives. This shows that the corporate are able to wither out the negative business environment created by the unproductive policies. Going by the trend we can expect a Sensex EPS of anywhere between Rs.1100-1200 for the fy 2012.
– The market will soon start focusing on the Monsoon and hence expect no big movement on the indices. As per the current situation we feel the maximum downside on Sensex may be 17500 and 5250 on Nifty. We also have launched probably the “Most Transparent & Most Economical” product for investing called EPCS. Click Here for Details.
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VIVEK KARWA, CFPCM
Investment Strategist & Retirement Planner
Desk Mobile: +91 – 98405-40575