Category: Politics

Categories
Policy Politics

Why multi brand retail is good news for ADA Stocks

The Centre has taken two key decisions today-one is allowing FDI in multibrand retail and the other is 49% FDI in aviation.

This leaves the Trinamool Congress in a very difficult position as they had publicly opposed these measures.In fact, these measures were shelved/rolled back as the Govt felt that without Trinamool Congress backing it, the Govt would fall.

This time it appears to be different as Dr.Singh in the cabinet meet said “If we have to go down, we have to go down fighting”

So with rollback not in sight and the Congress determined not to back down, TMC will probably withdraw support.

Now this event has a probability of 50%.But what is sure to happen with a 100% probability is that the Govt will turn to the Samajwadi Party for support for these measures.

The Samajwadi party has bailed out the government multiple times in the past.It is quite likely it will bail out the govt again.

Whenever the Samajwadi Party is in a position of power,industrial groups close to it benefit.As everyone knows, Anil Ambani is fairly close to Mulayam Singh having being the Rajya Sabha member of the party.

So, in the banana republic of India where politics and business are bedfellows, expect ADA stocks to rally in the coming weeks on news of multi brand retail !!

Categories
Politics

The Chill of Politics

In a previous article, we had discussed the impact of politics on rail stocks.

Politics plays a key role in deciding the fates of companies and sectors.As such, it can lead to plenty of warning signals for seasoned investors.

Take for instance, Jayalalithaa’s massive win in 2011 Tamil Nadu Assembly elections.

Since then (14th May, 2011) to now, shares of Sun TV (considered close to DMK) have tanked by a third.

A Raja was arrested on 2nd Feb, 2011.Since then, perceived losers such as RCom (-30%), GTL Infra (-75%) etc had to suffer devastating losses in their market capitalizations.

In 2012, assembly elections in Gujarat are scheduled towards the end of the year.Narendra Modi is widely expected to win but if he doesn’t you can be sure some corporate entities will be affected.

Categories
Politics

What if Israel attacks Iran?

Read an article in Bloomberg which underlines the case why Israel attacking Iran is historically inevitable.(see article here).

The odds of this event happening in the next 6 months is around 50-50

If such an event were to come to pass, what will be the implications for the Indian markets?

In case of a surprise attack, the following will happen as a knee jerk reaction:

  1. Oil prices will go up
  2. FIIs will sell
  3. Rupee will weaken considerably
  4. Nifty will crash
  5. Interest rate sensitives will crash-Banking,Infra,Long term Financing,Auto etc

What happens next depends on the duration of the war.

If it is a short lived war (like the First Gulf War), then it can set the stage for a rally in equities.

If the war turns out to be a longer one and one where the Straits of Hormuz are threatened,then oil prices will continue to remain elevated and the market will slowly and surely grind downwards.

Lesson for long term investors:Keep your powder dry, better opportunities may be round the corner !