Tata, India's Obama? - The 5 Minute WrapUp by Equitymaster
Investing in India - 5 Minute WrapUp by Equitymaster

Tata, India's Obama? 

A  A  A

In this issue:
» Tata, India's Obama?
» ECB cuts rates
» Buffett's market calls
» News channels thump soaps
» ...and more!

Our 5 Minute Wrapup of 6th November raised the question - Will India's Obama stand up please? Forbes has tried to answer this by calling Mr. Ratan Tata as the beacon of change in India, as our country's Obama. Robyn Meredith, a senior editor at the magazine writes - "As an American, I don't get a vote in India, but if I did, mine would go to Ratan Tata. He's not a politician, but he is the country's most respected business leader. His Tata Group owns the Taj hotel that was just attacked, but his family is just as connected to India's proud history as its shell-shocked present. Should there not be a way to involve him in government at the highest level? A fractured India would benefit immeasurably from his acumen, his managerial skills, and his very obvious - but always constructive - patriotism."

Rightly said, Ms. Meredith! Mr. Tata has been the quiet and understated reformer of the Indian economy through his and his teams' initiatives over the past few years. His group now includes Asia's largest software company (TCS), the world's second largest tea business (Tata Tea), the world's fifth largest steel manufacturer (Tata Steel), the world's fifth largest truck maker (Tata Motors) and a plush hotel chain (Indian Hotels). And he has accomplished all this without compromising on ethics and honest business practices.

The Forbes reports mentions - "India is at the crossroads. It can turn to past enemies, to yesterday's memories, or it can look to the future and new hopes that could unite the nation's Hindus and Muslims. Its leaders can rain attacks on shadowy enemies, or they can rise up to defend the very ideas India stands for - secularism, pluralism, tolerance and openness."

We need leaders like Mr. Tata for India to rise to this occasion. As he once said - "I am proud of my country. But we need to unite to make a unified India, free of communalism and casteism. We need to build India into a land of equal opportunity for all. We can be a truly great nation if we set our sights high and deliver to the people the fruits of continued growth, prosperity and equal opportunity."

-----------Subscriber Speak-----------

Have been an avid reader of J.Mulraj's columns from the days he used to write in Times Of India..and how lucid and rationale they were..Haven't seen such clarity and unbiased views...
- Rajiv, a Straight From The Hip Subscriber.

Click here to read and sign up for the Straight From The Hip! It's free!

The global financial turmoil continues and amidst numerous repercussions, the axe is set to fall on many employees of Merrill Lynch and Bank of America. Readers would do well to recollect that in the same week that Lehman announced bankruptcy, Merrill Lynch made known its decision of merging itself with Bank of America (BoA). Both Merrill Lynch and BoA are still in the process of evaluating the number of reductions, but most likely the cuts will come through reducing overlap between the two institutions particularly in areas such as technology and support services. Similarly, duplication in Merrill Lynch's brokerage arm and BoA's private client business will also be hit. The total number of cuts has been pegged at 30,000 though BoA has maintained that it will have a final plan ready only by early 2009. Not surprisingly, given Merrill Lynch's subdued performance, many of the senior executives will not be getting their yearend bonuses. Some tough challenges indeed that these banks will have to face in the coming months!

Source: Economist.com
Governments have tried their best to revive credit markets in the past few weeks. Huge rescue packages have been announced. But the response has been lukewarm at best. In another bid to stimulate the credit markets, the European Central Bank (ECB) cut interest rates yesterday. As per the IHT, the ECB has cut its benchmark interest rate by 0.75% to 2.5%. This is the largest cut by the ECB in its entire history and provides the signal that it is worried about the magnitude of the economic downturn. What is even more worrying is that bank did not rule out further cuts in the future. In fact, the ECB expects the recession to continue beyond 1HCY09.

The Bank of England also cut rates by 1%, bringing it down to 2%, the lowest in half a century. It may be noted that financial services, which has been at the centre of the crisis, is one of England's main industries. Sweden, New Zealand and Indonesia have also cut rates.

It is said that they don't ring a bell at the top and the bottom of a stock market. But occasionally, someone, out of public service climbs up in the belfry and does exactly just that, knowing quite well that very few people are likely to pay heed. That someone is Warren Buffett and the reason he is one of the richest man in the world is because he understands asset values and those values as they relate to human behavior perhaps better than anyone else in the world. These are the words of Bill Miller, a mutual fund manager in the US, who has the distinction for beating the S&P 500 for 15 years in a row. He is indeed right. The Oracle of Omaha rarely takes a call on the movement of the stock markets, but whenever he has done so, he has been spot on. Of course, we are talking about a reasonably long term period of 3-5 years. Wanting to know when exactly did the legend make those calls and what were the underlying considerations? You can get all those articles here, compiled in a nice easy to read format. So, has Buffett made any market prediction recently? He has indeed. Barely a few weeks back, he had written an article in the New York Times with the title, "Buy American. I am". This pretty much sums it up, doesn't it?

What will be the impact of the global financial turmoil on the Indian IT industry? This is the billion dollar question often asked. There are those who think that the Indian IT industry will suffer because much of its revenue has traditionally come from clients from the financial sector, especially those based in US. Then there are those who believe the industry will actually benefit from a slowdown. Clients will face severe cost pressures and will ship out even more jobs than earlier.

There are indications that the first scenario is playing out. As per reports in several leading business dailies, many IT companies are now increasing working hours, freezing salaries, easing exit policies and even laying off existing employees. Targets for fresh recruitment have been cut. As per the New York Times, the reason Indian IT companies might be vulnerable as compared to their global counterparts is because they handle the front and back office functions. They have not graduated to the point where they could help develop new products, sharpen marketing techniques and evolve corporate strategies for their clients.

"Finest piece of TV journalism in a decade" were the words of Mr. Narayan Murthy on the coverage by the news channels of the recent Mumbai attacks. 60 hours of live TV coverage enabled the news genre to gain immensely during this period. As per Indiantelevision.co.in, TAM media data shows that Hindi news channels occupied 22% of the entire TV viewership for the four days (26 to 29 November) . Within Hindi news genre, Aaj Tak gained 6% to enjoy a market share of 23% for the week ended 29 November, while Zee News saw a 3% rise to report a market share of 11%. On the English news genre, NDTV 24 X 7 led the pack with a 5% gain in market share (now stands at 30%), followed by Times Now which also earned a 5% jump in market share to touch 28%.

While the news channel benefitted, the Hindi general entertainment channels were hit hard. They were not showing any fresh content due to the dispute between TV producers and workers. With news hogging the limelight, the viewership ratings of the general entertainment category slid to 22%, down from around 32% in the earlier weeks. Star Plus, which is the market leader among the 12-odd Hindi general entertainment channels took the biggest hit as it slipped to the number three spot behind Colors and Zee TV for the first time in several years.

While this was a one-off case, where two extraordinary events collided, one wonders whether strong viewer loyalty is now a thing of the past.

Have you ever found yourself in a nasty traffic jam for hours together? Surely you've wished if you could just fly your car over the jam in such a situation. If so, you are definitely not alone.

Source: Carlist.com
Since the Wright Brothers came up with first plane, people all over the world have been fascinated with the idea of owning a flying car, one that can zoom over all the traffic. Enter Carl Dietrich. His vehicle, the 'Transition', will be available to customers for US$ 194,000 a piece by 2010. The Transition is a roadable aircraft, a plane that folds up its wings on landing and takes to the highway. You can then merrily proceed to drive it like any other normal car and park it straight into your garage.

Concerns over future oil supplies and global warming have pushed nuclear energy to the forefront in recent times. This was not always so. As recently as 2002, a government report in France, which now generates about 80% of its electricity from nuclear energy, called the industry as a "monster without a future".

As per the Economist, some of the best markets for suppliers of nuclear technology are the emerging economies of Brazil, China and India. In fact, India has recently been allowed to access civilian nuclear technology from other countries. And many Indian companies are making inroads through joint ventures to grab the opportunity. In a recent development, Punj Lloyd, an engineering and construction major, has signed a joint venture agreement with Thorium Power, a US-based nuclear energy company. The JV aims at providing thorium fuel technology for light water reactors to come up in India. Going forward, we expect more companies to come forward and attempt to acquire the two major competitive advantages useful in the nuclear energy industry - experience in building and operating nuclear plants and the latest technology.

Stocks in India were trading lower at the time of writing, although the other Asian markets were better off. Software, metal and energy stocks were leading the fall as the benchmark BSE-30 index was trading lower by 3%. Key Asian indices - Hong Kong and Korea (2% each) - were in the green. Stocks in Europe are deep in the red as investors speculated a report will show that US employers cut jobs last month at the fastest pace in 25 years.

04:51 Today's investing mantra
"When the price of a stock can be influenced by a 'herd' on Wall Street with prices set at the margin by the most emotional person, or the greediest person, or the most depressed person, it is hard to argue that the market always prices rationally. In fact, market prices are frequently nonsensical." - Warren Buffett.
The 5 Minute WrapUp Premium is now Live!
A brand new initiative of Equitymaster, this is the Premium version of our daily e-newsletter The 5 Minute WrapUp.

Join us in this journey to uncover the sensible way of managing money and identifying investment opportunities across various asset classes including Stocks, Gold, Fixed Deposits... that over time can help you realize your life's goals...

Latest EditionGet Access
Recent Articles:
Why Hasn't Warren Buffett Rung the Bell Yet?
August 22, 2017
It's surprising Warren Buffett hasn't warned investors about the expensive stock market? Let us know why.
How Unique Are the Companies You Invest In?
August 21, 2017
One of the hallmarks of successful investing is to look out for companies that have a unique and enduring moat.
You've Heard of Timeless Books... Ever Heard of Timeless Stocks?
August 19, 2017
Ever heard of Lindy Effect? Find out how you can use it to pick timeless stocks.
Why NOW Is the WORST Time for Index Investing
August 18, 2017
Buying the index now will hardly help make money in stocks even in ten years.

Equitymaster requests your view! Post a comment on "Tata, India's Obama?". Click here!



Copyright © Equitymaster Agora Research Private Limited. All rights reserved.

Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement

Disclosure & Disclaimer: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. The Author does not hold any shares in the company/ies discussed in this document. Equitymaster may hold shares in the company/ies discussed in this document under any of its other services.

This document is confidential and is supplied to you for information purposes only. It should not (directly or indirectly) be reproduced, further distributed to any person or published, in whole or in part, for any purpose whatsoever, without the consent of Equitymaster.

This document is not directed to, or intended for display, downloading, printing, reproducing or for distribution to or use by, any person or entity, who is a citizen or resident or located in any locality, state, country or other jurisdiction, where such distribution, publication, reproduction, availability or use would be contrary to law or regulation or what would subject Equitymaster or its affiliates to any registration or licensing requirement within such jurisdiction. If this document is sent or has reached any individual in such country, especially, USA, the same may be ignored.

This document does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Our research recommendations are general in nature and available electronically to all kind of subscribers irrespective of subscribers' investment objectives and financial situation/risk profile. Before acting on any recommendation in this document, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice. The price and value of the securities referred to in this material and the income from them may go down as well as up, and subscribers may realize losses on any investments. Past performance is not a guide for future performance, future returns are not guaranteed and a loss of original capital may occur. Information herein is believed to be reliable but Equitymaster and its affiliates do not warrant its completeness or accuracy. The views/opinions expressed are our current opinions as of the date appearing in the material and may be subject to change from time to time without notice. This document should not be construed as an offer to sell or solicitation of an offer to buy any security or asset in any jurisdiction. Equitymaster and its affiliates, its directors, analyst and employees will not be responsible for any loss or liability incurred to any person as a consequence of his or any other person on his behalf taking any decisions based on this document.

As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407