Are bat­tle lines drawn?

Money Times - - -

The bor­der be­tween In­dia and China is wit­ness­ing some acute bat­tle scenes. Right now, it may be a one-to-one en­counter lim­ited to mi­nor ex­cur­sions in the other’s claimed ter­ri­tory. It ap­pears that, the drill in which China has en­gaged it­self into is in re­tal­i­a­tion to In­dia’s ‘ Mal­abar drill’. The Mal­abar drill in the wa­ters South China sea was a joint naval ex­er­cise by USA, Ja­pan and In­dia to dis­play their naval might and keep the red dragon in check. And, China did not like our De­fence Min­is­ter’s state­ment that this is not the In­dia of 1962. China’s supremacy in the world econ­omy on the eastern side of the globe is un­der se­ri­ous threat of be­ing chal­lenged by In­dia’s eco­nomic growth. The very fact that In­dia has of late im­proved its re­la­tions with cross sec­tions of the world and has started at­tract­ing di­rect and in­di­rect in­vest­ments is en­vied by China. Bat­tle lines seem drawn but both coun­tries know for sure that a war be­tween them is a dis­tant re­al­ity. But nurs­ing a hurt ego for sure are the ‘Hindi Chinib­hai-bhai’ of yesteryears!

In fact, China’s sup­port to Pak­istan on Kash­mir is a clear ex­am­ple of ‘Dush­mankadush­man dost ho­ta­hai’. Pak­istan comes very handy for China to up­set In­dia’s speed of eco­nomic growth and the re­cent Pak ter­ror­ist at­tacks on the Indo-Pak bound­ary in Kash­mir is a pointer in that di­rec­tion. This threat is more real than the small Indo-China push and pull at Bhutan or Ti­bet. In­dia’s eco­nomic ex­panse and growth is so broad-based and strong that the do­mes­tic growth ac­cel­er­a­tion can with­stand the

Pak trou­ble with ease.

For a change, bat­tle lines are also drawn be­tween NDA and the so called united op­po­si­tion. The bat­tle of words be­tween the Trea­sury benches and the Op­po­si­tion on the floor of both Houses is more danger­ous than those with China or Pak­istan. The man- hours lost in the pan­de­mo­nium in the LokSabha and Ra­jyaSabha is a big­ger na­tional loss than the up­set of the cart by our ‘Love thy neigh­bors’.

The Nifty hov­er­ing above 9500 and the Sen­sex above 31500 shows that In­dia’s eco­nomic growth has with­stood well against all the bat­tle lines. In fact, the prepa­ra­tions for the grand celebration of the Nifty hit­ting 10K on Mon­day at the stu­dios of ET Now were badly punc­tured with the gov­ern­ment

re­struc­tur­ing the duty on cig­a­rettes be­cause of which bench­mark heavy­weight stocks like ITC lost 12-14% in a sin­gle trad­ing ses­sion. Reliance In­dus­tries, too, fell in sym­pa­thy to ITC. The pre-des­tined party celebration, how­ever, has only been post­poned for now. Con­se­quent to all these de­vel­op­ments, this could be the best time to give a mi­cro fo­cus test to all the cor­po­rate themes and an­nounce­ments. Such a fo­cus could avail us of great in­vest­ment ideas and lead to cre­ation of wealth. Some ma­jor mi­cro fo­cus views are dis­cussed be­low. An­a­lysts eye in­ner­wear and lin­gerie com­pa­nies as they stand to gain the most post GST. Not only will the or­ga­nized play­ers get the mar­ket share of the large un­or­ga­nized play­ers but the merg­ers and amal­ga­ma­tions be­tween play­ers is also another big pos­i­tive.

Vedanta is on way to carve a niche of its own. Its dream of cre­at­ing a nat­u­ral re­source gi­ant an­chored in In­dia has just be­gun. It plans to in­vest $6-7 bil­lion in ex­pand­ing its over­all ca­pac­ity in the next 3-4 years. With the gov­ern­ment’s thrust on nat­u­ral re­sources, Vedanta’s fu­ture is full of a grand prom­ise. Mini-truck sales will wit­ness healthy growth this year. Sale of light trucks is of­ten seen as the most ac­cu­rate growth bench­mark of In­dia’s real econ­omy. The mini-truck seg­ment dom­i­nated by

Tata Mo­tor’s Ace and Mahin­dra & Mahin­dra’s Jeeto and Supro is ex­pected to record 12% growth in FY18.

FMCG as a sec­tor is quite promis­ing. HUL with Q1 re­sults will scale new heights. The likes of Go­drej Con­sumer Prod­ucts, Dabur

In­dia are mak­ing moves with a rise in vol­umes at the bourses.

With the mon­soon pro­gress­ing well, the con­sump­tion story, es­pe­cially the ru­ral one should be great.

The Au­to­mo­biles sec­tor, too, is slowly inch­ing up. Tata Mo­tors and Ashok Ley­land are in a con­sol­i­da­tion phase. While Hero Mo­toCorp and Ba­jaj Auto are do­ing well, the vol­umes of TVS Mo­tors have sur­passed both of them, which is a note­wor­thy change. A 35% rise in sales at TVS Mo­tors not only races ahead of its peers but is a huge pos­i­tive when the over­all fig­ures of the sec­tor are marginally lower. The no­table change of late is the rise in sale of scoot­ers com­pared to mo­tor bikes. 1 of ev­ery 3 two-wheel­ers is a scooter on the road.

The great re­tail pres­ence of HCL In­fos­ys­tems makes it part­ner with big­gies like Ap­ple Inc, which is about to sign a dis­tri­bu­tion part­ner­ship with the com­pany for its prod­ucts. Reliance Jio’s dom­i­nance in the tele­com sec­tor was vis­i­ble at the 40th birth­day of Reliance In­dus­tries. MukeshAm­bani’s pas­sion for his tele­com project has sent shiv­ers down the spine of Idea, Bhar­tiAir­tel, etc. The launch of a 4G in­stru­ment at Rs.1500 (re­fund­able af­ter 36 months) would cap­ture more than 50% of the tele­com mar­ket to be­gin with. The film of last 40 years of Reliance In­dus­tries at the AGM re­lived each mo­ment of its growth and a strong ova­tion to Dhirub­hai’s vi­sion of Reliance In­dus­tries and mod­ern In­dia. The 1:1 bonus is just the right ic­ing on the cake. The Cen­tral Gov­ern­ment cab­i­net cleared the sec­ond phase of the ‘Bharat Net’ project of lay­ing op­ti­cal fi­bre in 1.5 lakh vil­lages cost­ing Rs.2900 crore. Its im­pact was vis­i­ble in Ster­lite Tech­nolo­gies, which rose from Rs.160 to Rs.245 last week. The mar­ket ex­pects this com­pany to be the main ben­e­fi­ciary of this out­lay. The stock is worth a closer look even at its peak. Hi­machal Fu­tur­is­tic Com­mu­ni­ca­tions is another com­pany which is at an ig­ni­tion stage and may see a break­out from its five-year old range of Rs.12-18.

Keep an eye on Q1 re­sults and the guid­ance, read be­tween the lines and peep into the pic­ture of to­mor­row. The real bat­tle is here.

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