The Irreversible Reform Process

India has a way of defeating dogmas. Some things never seemed easy to do in our country. Disinvestment was one such. It remained a politically contentious issue every time the government even tried to talk about selling PSUs. Yet, none of the usual fuss was seen as the Indian government recently raised its targeted sums from its major dis-investments. Clearly, reforms seem to have gained political acceptance. And, the markets seem to be lapping up whatever paper is on offer. This should give the government more leeway and leverage to accelerate the reforms agenda. The markets may be nervous about the budget… but, the government has enough reasons to smile. Who knows? The markets may soon have reasons to smile too.

            Money doesn’t grow by simply spreading it around. Decisions count.

Invest speak:

Economic turnarounds get prefaced by two terrible quarters of corporate results. These two quarters usually see the best of companies show the worst of results. Valuations fall the most during these quarters. When companies report results way below expectations and a sell-off inevitably results. We are seeing a bit of that drama in select spaces. But, the results seasons seem to be hardly throwing any negative surprises as the markets are mostly anticipating the worst. It is this aspect that will favor a swift recovery in the markets if we have some unexpected good news. The policy is where the action will be in the coming weeks and the markets are only too willing to put the disappointing numbers behind. Clearly, policy holds the key to which way the indices are headed. For now, the results season heads to a lazy, lackluster close.

           When bad news is already in the price, it is good news for the bulls.

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