Will India also be dead in Long Term?

Lot of water has flown under the #DeMonetisation bridge since our last article. Standing at the bank ATMs became order of the day since the announcement, and almost for a fortnight since 10-11-2016, almost looked like the woes of people would never end. Thankfully the situation is much under control now, and the cash, and the change is available at most places. Certain rural areas are still facing problems but they also would not last long either.

Whatever the problems, the public support has been amazing till now. Every honest tax payer, poor person and the middle class is happy with the decision. Need proof?

In spite of such hardships people were seen standing in queues without any problem. They knew it will benefit them in long term.

Political parties wanted riots to happen, SC warned of riots but none happened!

The Bharat Bandh called by those parties supporting Black Money was ruthlessly rejected by people.

Yes some politicians have been badly affected. Just assume that the Decibel of Noise they make is equally proportional to the amount of Black Money they have lost.

Yes, I totally agree that the implementation could have been better so that the woes of people could have been a bit less, but these people shouting for poor people are only shooting from their shoulders for their own black money. None of them are actually interested for our welfare.

For this size of operation and for the guts shown by the government, we need give them some room for mistakes. Anyway almost everything is settled now.

In our previous article we had said that we should find a good support around 26300 which was tested the next trading day after demonetisation announcement. Later on with the fear of slowing GDP and FII selling, we again tested the range for good amount of time and recovered back sharply.

We maintain that any testing of recent lows of around 26000 will provide a good investing opportunity. The valuations will be fair in this area and should not be missed.

We also believe that the impact of demonetisation will not be too huge on the GDP. Any number above 7% will bring back the FII’s with a vengeance and the markets would remain stable.

Yesterday in an election rally in Uttar Pradesh, Prime Minister Narendra Modi said this:

Rich people are using the Jan Dhan accounts to deposit their Black Money. They are remembering the poor now.

He further said: I request you not to withdraw this money and give it back. If they ask for the money, tell them you will inform about this to the authorities. If they threaten you, ask for the proof that the money is theirs and give me that proof.

He further added: There are few ideas running in my mind, I’am checking if there is any possibility that these people are prosecuted and the money is left for you to use!

Though he has not promised, the announcement will send shivers in the opposition. Though he has not promised, it would be big move to let the money remain in the hands of Jan Dhan account holders who are by default below BPL.

Now, no one knows if this would be done or not, no idea if its legal, and if it is done how much money will the govt allow these accounts to keep and how much they may seize back.

I’am of the opinion that any such move by PM Modi may be will be Inappropriate, Unethical and Morally Incorrect, since it will be kind of Legal Bribery of the voters. But PM Modi will be Politically Cent Percent correct! And this will make him Morally Correct too, How?

Loan waivers, Freebies and other Electoral benefits are not new to this country. Hence helping the poor alone in this way, will not be morally incorrect! Remember Jan Dhan account holders are poor people!

Modi never said he will deposit 15 Lac in all accounts. But morally corrupt politicians always spread this narrative to attack him falsely. Hence now, if he ends up depositing this money, these people will have to praise him else face the wrath of people.

You must be wondering why am I talking about this.

As an Investor and Investment Adviser, I see this as a big boost to Indian Economy, just like how we saw the 7th Pay Commission.

‘The money deposited by every individual in their bank account now will be available to invest or spend in the formal economy. The money in the Jan Dhan Accounts, if not taken back fully, will also be spent in the formal economy. This will boost the company balance sheets.’ Hence good for the Stock Markets!

Hence Investors now need to look at the Long Term Picture. This will benefit our country and our future generations in big way. Should not we dream to see our economy compete with mighty China?

Don’t say ‘In the Long Term we all are Dead’, if we have such sadist attitude, none of us will think well for our future generations! It is up to us, if we want to remain selfish or make the world better for everybody. We are there or not, our country will be there eternally.

Interest Rates may be cut in the coming week by the RBI. Fed rate hike is expected in mid December. Though I feel the chances of Fed Rate hike is just 50:50, the market will remain Cautious and Volatile until then.

Hence remain Bullish. Be very Stock Specific. In 2018 you will appreciate that I told you this today! Take help of your Financial Adviser and, as said in our Diwali post, we would charge just 25% of our regular fee for our Armed Forces. Please inform them about this.

*The above are Vivek Karwa’s personal views. Feel free to contact us on the below details.

Thanks and Regards

Vivek Karwa


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