Politics sink low
Switch on any news channel and you will see endless debates on demonetization (DeMo). Open any newspaper and you will see endless columns on the merits and demerits of DeMo. It’s been a year since DeMo and both the NDA and UPA are in celebratory mood. Each has its own take on its success/failure. One celebrates it as a black day in the Indian economy while the other celebrates it as the day that broke the backbone of corruption. Both parties are loudly vocal raising their pitch for the bitter electoral fight in Himachal Pradesh and Gujarat. The aftermath of DeMo and the execution of GST has slowed down the GDP growth and this is being played up at the electoral battle fields. The war of words is getting terse day after day. While the politics is sinking to a new low, the economics of the country is on long leave. This hesitation was visible in the market moves of late. The marginal negative in the pre-market SGX Nifty would end up at nearly 0.5-0.75% fall in one session. On observing these movements closely, one will find the changed direction of political winds. The over exposure of politics, to the hundreds of news media and the noisy debates between the same personalities of the Congress and BJP make a mockery the actual reality! The common man is tortured by such political commentators as an idiot as they think he believes every word of theirs. Change in the direction of the political wind can be gauged from the well-written scripts read out by Rahul Gandhi. Of late, the story remains meaningless but Rahul’s script may have sensible punches. The PM’s ‘mitro’ rhetoric hardly rings the warmth and sincerity. In fact, the moment you hear the word ‘mitro’, you safeguard your belongings. The market is so mercurial that it can measure NaMo’s nervousness about winning the polls by his sudden meeting with Karunanidhi of all the political leaders and that, too, on a day before the verdict of the 2G telecom scam! Was this meeting a courtesy call or an invitation to come together for 2019 elections or a warning to get AIADMK get its act together and join hands with the BJP! Either way, it reflects NaMo’s nervousness and the Congress has no choice but to join hands with any or every party be it ‘Paatidaars’, OBC, Muslims, Dalits, etc. It is hell bent on cooking a tasteless khichdi just like the one it cooked a decade and a half back.
Our prime concern is how investors react to such mishaps or happenings? Getting our portfolio to this height of 10.4K Nifty or 33500 Sensex is in vain if we show complacency and sleep over such silent but sure indicators. Thus, in all prudence, investors need to stay put with no further buys in such testing times. Instead, consider off-loading in small lots at every rise and bulk dumping when the indications get louder and stronger.
One has to consider that the NDA participants, too, may make bolder outbursts at the weakening of NaMo and seek their pound of flesh in the imbroglio. Also, the fragmented opposition though of no avail will put the economy into reverse gear and lead domestic as well as foreign capital to exit the market. God forbid but if that happens, the wheels of the economy will stand deflated flat tyred. Recall the 2008 scenario if in case it has faded from your memory. So, carefully watch every move of the bigwigs in politics. Await the poll outcome of Gujarat and Himachal Pradesh. If both spell problems for the NDA or BJP, be prepared for a steep fall. There is no point awaiting the state poll outcomes of Madhya Pradesh, Rajasthan, Chattisgarh or Karnataka amid 2019 general polls as well. In case the BJP wins in both
states in Mid-December, then await similar victories in at least 3-4 states going to the polls. In this case, general elections may be held by end 2018 or early 2019 as the BJP may not allow the advantage to slip from its hands. Till then, be careful of the sinking polity.