Forward earning

2014 provided clues if India should cling to the time-tested model of state benevolence or look forward to uncertainty

By Mohan Sule
It is not only investors who face the classic dilemma of choosing between a glorious past and a hazy outlook while zeroing in on a stock In the fading year, even the Grand Old Party had to confront this existential dilemma. Nothing brought the turmoil in sharp focus than the celebration of the 125th birth anniversary of our first prime minister. The giveaway was the jaded overseas dignitaries gracing the occasion as the great man’s great grandson without an iota of charisma of his illustrious lineage gave an angry speech about the angry new rulers of India that was becoming not recognizable day by day from the era of royals dipping into the public coffers to write off loans, subsidize essential items and distribute freebies. In return they got unquestioned loyalty from the common man, believing that remaining poor and deprived was an un-escapable fate, brushing aside any doubts of a cynical ploy to nurture vote bank politics. It was left to the worldwide web to chip at this wall of resistance, tweet by tweet. Acerbic and irreverent, Indians at last found a platform to listen to others’ opinionated voices and give vent to the innermost and often seditious thoughts about the serial scandals of the UPA government. So there was a strange spectacle of the silent troika of mother-son-and-loyal retainer being downgraded to ordinary politicians from their sanctimonious pedestal by a raucous citizenry discovering its new power to effect change. And India took a U turn.


No one understood the power of communication better than the vendor selling hot brew on a railway platform in Gujarat. If an ordinary commodity like tea could be packaged and marketed with the promise of a shakeout from the slumber of pessimism, then surely the country was ready to buy a dream of electricity on tap, smooth roads, low-cost houses and jobs aplenty. The capitalization of the demographic dividend paid off in May, at least for the investors. After the scare of food inflation going out of hand due to below-normal southwest monsoon, the market surged on expectation of bumper earning going forward. Steps to open up to more FDI were seen as transformational, never mind the small issue of retail. The surest sign of a bull market is when tech company incubators switch to dishing out stock tips guised as investor services startups offering clarity on macro mumbo jumbo. Like the mesmerizing babas, some of them now ensconced behind bars after revelation of their human foibles, how many corpses are littered behind the barricade of pay walls built by these Internet investment gurus, with their attention spanning intra-day, will be known only after a Sebi crackdown. Serendipitously, oil prices nearly halved from the peak and the wholesale price index growth dropped to zero by mid December. The taunts of missing-in-action acche din by the opposition soon lost resonance as bond buyers made merry at the expense of a stubborn central bank. Instead the attention of the nation was riveted by celebrities taking the broom for a Swachh Bharat. The Digital India, smart cities and Make-in-India campaigns reverberated around the globe despite no breakthrough on land acquisitions, environmental clearances and labor laws. Yet, the social inclusion program of Jan Dhan Yojana, without a rupee of giveaway, proved to be a smashing success, shutting up the nitpickers, and throwing up the nation’s first Teflon head of the government and second only to the US president of the Good-Morning-America fame.


But every dream has to end. Even after six months of an energized establishment, Corporate India is still awaiting a trickle, leave alone the anticipated gush, of infra orders. The market that seemed unconcerned about the US central bank raising interest rates next year and the resultant slowing of foreign inflows into emerging economies, got panicky on Chinese blues and Russia’s rouble rout and skidded along with the currency. Eruptions in the euro region fuelled anxiety about how oil exporting countries would cope as their revenues shrink. A low-cost airline appeared to be grounded soon after the aborted takeoff a high-cost one. Hardly had one PSU sale flagged off than the market looked poised to upend, raising worries about fiscal deficit, on the mend due to the commodity price crash, if the divestment target is not met and if the exercise is jinxed. Once coveted, then becoming a laughing stock, the global turbulence hinted of a comeback of gold as a safe haven just as the dollar was post-2008 credit crunch. Why stocks are tumbling despite low inflation and loss-making digital businesses getting cash infusion, while offline entities are not sure if the primary market will be enticed by historical performance, perhaps answers the question nagging investors whether to cling to the past or look forward to an uncertain future.