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Opportunity knocks - Views on News from Equitymaster
 
 
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  • Jun 13, 2003

    Opportunity knocks

    The benchmark Sensex has gained nearly 5% till date in the month of June. Add that to May's gains and the Sensex is up over 12% in the last 45 days. Going by the undercurrent, the momentum looks set for further strength. This is good news for Indian investors who have had more or less a dry couple of years.

    Difficult market conditions have done a ton of good to India Inc. It has forced them to look inward, bringing in efficiencies, both operating and strategic. In effect, the liberalisation that India embarked upon in 1991, with a view to become a part of the global community, is showing its effects. It was feared at that time that Indian companies would not be able to compete with global giants. It was the financial muscle that domestic companies feared the most.

    After more than a decade of liberlisation, in most sectors it is the domestic companies that rule the roost. Of course, there have been some laggards, as well as some new entrants, but on the whole India Inc. is looking competitive, agile and set for growth both in India and abroad.

    What is encouraging is that in the last few years, India Inc.'s vision has gone global. Companies like Telco have taken their first steps to sell cars abroad (in a deal with Rover). More than half of pharma major Ranbaxy's turnover comes from outside India. Same is the case with laminated tubes major, Essel Propack. Among commodity companies, Tisco, Nalco and Hindalco are among the lowest cost producers globally. India has also emerged as a software services hub with significant potential going forward. Of course, global MNCs too are making their presence felt in consumer durables as well as passenger car segments. So competition is here to stay, but probably India Inc. is better geared now to take them on.

    In most categories, India's per capita consumption is among the lowest in the world. But that is probably because nearly 35%-40% of population is living in poverty. As India takes strides towards development in terms of better connectivity in roads, rails as well as electricity and water, much of Indian hinterland will become aware and more tuned into the overall pulse of the nation. This in itself is an opportunity, not only business wise, but for the country's strategic development.

    This could well be an Asian century, powered by both India and China. In that sense, investment opportunities for the long term are immense. As always, pick and choose.

     

     

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