"Without continual growth and progress, such words as improvement, achievement, and success have no meaning" – Benjamin Franklin Yesterday the Finance Minister doled out her fifth and the last tranche of the 20Lakh crore economic package to lead the economy out of the current corona crisis and fire its growth engines. PM in his address to the nation on 12 th May had laid lot of emphasis on Self Reliant India. And this package seems to be addressing the same to a good extent. It had almost all the provisions that industry had been asking for quite some time and also a desire to push SMEs on path of growth including micro enterprises. But does it serve the purpose of the moment – we think a lot has been left to be desired. Presently it’s not the question of lack of money with businesses that has put them on the path of degrowth, but the lack of demand or consumption. Now we are in lock-down v4.0 and a lot of activities have been allowed including the sale of goo...

"Remember not only to say the right thing in the right place, but far more difficult still, to leave unsaid the wrong thing at the tempting moment" - Benjamin Franklin All of us have just finished hearing out our prime minister’s address to the nation. If I have to sum up his speech in three words, it would be ‘ Adversity Offers Opportunities ” and he seems all ready to create and encash the opportunities out of this corona crisis. He announced that government will pump in 20 lakh crores into the economy to ensure that it fires on all its engines and grow exponentially from here on. His focus is not only on becoming self-reliant but also on revival of SME sector which is the largest employer of the workforce. During his address mention of Khadi should give indication the preference area for the government’s stimulus package. While we wait for the Finance Minister to detail out the complete package and read the fine prints how exactly it will get rolled out and ...

The rich invest in time, the poor invest in money. – Warren Buffet Stock markets enjoyed large swings on either side in March-April. Markets came tumbling down heavily by around 40% from their peaks in March and then rising again by around 30% from their recent lows. These numbers look very fancy for statisticians but for investors they become meaningless as despite markets rising by around 30% from the recent lows, their investments made over last 2-3 years are still showing losses. Do these recent upsurge means markets have recovered and chances of going further down again are over? WE DON’T THINK SO. Stock markets are regarded as leading indicator for future state of affairs of the economy. With economy under lock-down for over a month now, where economic activity on even basic needs of ‘Kapda & Makaan’ can’t be carried out with sole exception of ‘ Roti’. Even for healthcare, except for maternity and emergency no other diseases are being attended by the doctor...

Markets Tumbling, Recovering – What to do?? "The best time to plant a tree was 20 years ago. The second best time is now." - Chinese proverb. In times like present most people flock towards safety. Most do it because they don’t know how long this doomsday atmosphere will last, some even feeling like there will be No Tomorrow. But hunger for good returns on our investment never ceases. Kin Hubbard satires, "The safest way to double your money is to fold it over and put it in your pocket." On investment and earning good money from them, Warren Buffet – the legendary investor says, "If I buy a farm, I don't know whether there's going to be drought next year, but I know that there are not going to be 20 straight years of drought, and I know there's not going to be 20 straight years of great rainfall." It is a proven fact that no matter what, in long term best returns come from stock markets only. And as Seth Klarman says, “The stock mar...

In May 2017, at InvestmentMitra we advised caution on lumpsum investments into equity. In our communication Is Stock Market History Repeating we had found similarity in pattern that developed during August 2007 & January 2008. It repeated, with markets giving good returns against high valuation and then falling freely on introduction of long term capital gains tax on equity. Since then it is almost three years and we at InvestmentMitra always took cautious approach while investing even for long term by investing money majorly in balance advantage and balanced funds. All thorugh this period it was only in October 2018, March &   August 2019 we found equity markets to be little attractive with advising profit booking in April 2019 when markets spiked too fast with no support from fundamentals. In our communication Green Shoots in Economy & Coronavirus – Should you invest in Equity   on 16 th February, we talked of possibility of Coranavirus turning ...

Spread of this Pandemic - Data on worldometers’ website shows that so far 89,081 cases have been reported as infected from coronavirus with 3,057 confirmed deaths and another 7,375 in serious condition. Coronavirus cases have been reported in 64 countries including India. China, South Korea, Italy, Iran, Japan, Singapore & France reporting more than 100 cases. That’s the gloomy side of this pandemic. Is Situation Improving – Of the 89,081 reported cases, 48,205 cases have recovered and been discharged. Only two countries China & South Korea have new cases. 9 of 68 affected countries have no active case of coronavirus including our own India. More than one third of these countries have reported just one case and another one third reporting less than 10. WHO has estimated 2% fatality rate for coronavirus patients. Since 19 February number of active cases are on decline. Impact of Coronavirus on World Economy – China, the epicenter of this pandemic contributes to a...

In our communication of 16 th February, we had cautioned against the spread of coronavirus and its probable impact on stock markets. With this epidemic now converging into pandemic and spreading across continents, this fear seems coming true. This epidemic has caused 5 or more deaths in South Korea & Italy and reporting more than 800 infected people in South Korea and over 150 in Italy.   This has for sure impacted output and sales for the current quarter for already reeling world economy. But real assessment of the probable loss and amount of time and efforts that will be required to recover from it will be known once this come under control and life travels back to normalcy in affected geographies. Major markets across world over fell by over 3% today. Indian markets also joined them and were down by almost 2%. Indian markets are down by over 4% from their peaks. We reaffirm our position – this might turn out to be a black swan event and cause considerable lo...

"You only have to do a very few things right in your life so long as you don't do too many things wrong" - Warren Buffett In our previous commentary we talked of some green shoots emerging in the economy. And as a precursor to revival of the economy, stock markets had started showing broad-based positive movements across large cap, mid-cap and small cap stocks and indices over the last couple of months. After the budget, RBI provided a much needed Sanjivani without cutting down the policy rates. They provided the required liquidity especially to focused sectors – home & retail auto loans and MSME sectors – a sector that is largest employment provider in the country and is suffering most post demonetization and credit crisis. With crude oil prices softening and good harvest expected for Rabi crops – inflation should remain stable in near future. Even the finance minister, RBI governor and many global reports are also talking of emerging green shoots and expect...

"The market does not trade upon what everybody knows, but upon what those with the best information can foresee" – William Hamilton Budget is an annual exercise by union government to present it’s sources and application of funds. Sources include taxes and non-tax revenue that accrues to the government and planned borrowings. Application reflects areas where government will spend its sources and the same includes capital and non-capital expenditures. As an investor it becomes important to know the provisions of the budget to the extent that one can plan his income & investments to receive higher post tax income in hand. All other provisions of the budget are not of much relevance to an investor except to know and understand how the budget will impact the economic activity in the country. In our earlier communications we had stated that very high expectations have been set from the budget which for any Finance Minister will be near impossible to fulfill. We ma...

“Constitution is not mere a lawyer’s document, it is a vehicle of life and its spirit is always the spirit of Age” – BR Ambedkar A constitution primarily is a document that details the rights, obligations, privileges, duties and responsibilities of the people living within the corridors of, and leading that country. It details the rule of governance. Without a constitution it will be difficult to live like a civilised society. We would be living like in stone-age where “Might was Right” and jungle raj prevailed all over. Like a country, each individual should also have his or his family’s own financial constitution detailing various financial objectives and the process to achieve those financial objectives, rules that will govern the way its finances will be managed etc. This applies to all individuals without exception and is more popularly known as “Financial Plan”. Like a constitution your financial plan should have a Preamble and different schedules. Preamble -...