New WPI Series Paints a Rosier Picture

May 13, 2017

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Around two years ago, the Government came up with a new methodology to calculate GDP. This exercise did little to change things on ground level. However, it did help the Government's report card look good. The GDP growth numbers as per new calculation were higher than as reflected by earlier method. Even RBI had trouble digesting this artificially inflated performance. In the monetary policy report dated April 2015 and released on April 7, the central bank said: "The new GDP data...came as a major surprise as it produced significantly higher growth at constant prices."

Cut to 2017... Something similar is happening to inflation data (WPI) and industrial production data (IIP). The Government has launched an updated series for both. And the new numbers suggest better factory output growth and lower price pressure as compared to old numbers.

The boost in the performance is the result of change in base year, change in items and their weightages and calculation methodology...An academic exercise at best and has nothing to do with anything real. It even manages to write off the impact of demonetisation. In the coming days, it could influence monetary policy as well.

For those investing based on macro clues, these are times to be a little skeptical. What you see could be too good to be true. And could be a very slippery premise for one's investment thesis. Ask superinvestors who have consistently beaten benchmark indices. A US study examines the record of every large investor who has outperformed markets from the start of 2001. One thing that it finds common in all these superinvestors is they ignore macro forecasting. Trying to estimate macro data is waste of time for them- an exercise that offers no edge.

But then what exactly are they doing differently to have such glowing track records? Is it possible for a retail investor to replicate this performance?

My colleagues Kunal and Rohan have been working on a project to answer this. They have travelled the length and breadth of the country to interview a bunch of value-oriented investors who've had tremendous success with investing.

Who are these super investors? And more importantly, how do they pick stocks? Which stocks are they picking?

To get an insight, download your free copy of The Super Investors Of India today. Over 15,000 readers have already claimed their free copy of Rohan and Kunal's new guide. If you are really serious about investing in the stock market, I strongly suggest you do too.

Data source: Financial Express
Note: New and old series data not comparable due to changes in base year, method of calculation, items and composition

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