Are battle lines drawn?
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.