Dec 27, 2004|
The resilience left understated
Just 5 days remain before the calendar year 2004 comes to an end. While the stock market will be welcoming the year 2005 with all smiles, we take a look back at three major issues of 2004 and how the resilience of the Indian economy has gone understated.
The first and foremost is the fact that the Indian economy has witnessed a change in leadership. While investors may ignore the fact that it is 'usual' for India that every five years (assuming that way) there is a change at the top, the transition has been smooth (for now atleast). Though there was a knee-jerk reaction from the stock market on the day the election results were announced (which is common anyways), it is often heard on the street these days that the new government has taken the reform process forward. In all this, investors have to an extent failed to give due credit to the fact that India, as a country, is democratic and despite the change in leadership, which is significant, 'we' are moving forward.
Secondly, the stock market crash in itself was an event. As Mahesh Vyas of CMIE puts it "the institutional framework today in India is so good that in spite of such a severe stock market crash, there was no payment crisis". While there are still 'ifs and buts', the fact that the stock market and the financial system as a whole were able to manage this jerk was commendable indeed. Once again, probably, due credit was not given by investors in this context.
For a developing country like India that is growing at an average of 6% per annum, crude prices are of significance. As per an International Energy Agency report, "India, for example, uses more than two and half times as much oil as developed countries per unit of GDP". With the country depending on imports to the tune of 70% of its domestic crude requirements, rise in oil prices impacts domestic prices and government finances. Though the after effects of the sharp rise in crude prices are yet to reflect completely, the fact that the economy was able to ride through this issue is of big significance. The confidence to overcome this factor is higher now as compared to the past.
While there are a number of other developments on the macro side, the issues that we have discussed above are of very high significance and the same could have created tremors amongst investors and policy makers alike before 10 years. While there have been intensive debates on these issues, quite often the way India as a democracy, and a developing economy, has managed to ride through these fundamental issues have been understated. Probably, it is time to acknowledge this fact and look forward to the New Year with the same resilience!
Watch out for our special section 'Reflection 2004' and what to look for in 2005.
More Views on News
Jun 10, 2017
Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.
Aug 18, 2017
Buying the index now will hardly help make money in stocks even in ten years.
Aug 18, 2017
Donald J Trump, a wrasslin' fan, took a 'Holy Sh*t!' blow on Tuesday.
Aug 17, 2017
PersonalFN simplifies the mutual fund account statement for you.
Aug 17, 2017
A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.
More Views on News
Aug 7, 2017
The data tells us quite a different story from the one the government is trying to project.
Aug 10, 2017
Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.
Aug 8, 2017
Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 7, 2017
Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...
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. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. 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: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407