Archive for April 10th, 2015

RIP: RIchie Benaud

April 10, 2015

What to say?

Such a terrible day for folks who have grown up to the great commentary by Benaud. I for did not get the privilege to see him tweak leg spinners but it did not matter. He was  so good behind the mike that one thought he was just a commentator.

Great tribute by Tony Cozier and another one by Daniel Brettig. I was also reading just a week ago on good cricket commentators. Benaud crossed most ts and dotted is..

 

 

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India’s stock market boom..much ado about nothing

April 10, 2015

Blogging has been absent for few days and likely to remain weak for sometime. ME is on a longish break and blogging shall not be as regular.

Anyways, Dhiraj Nayyar has a piece in Bloomberg on what is the the single most important achievment of India’s new govt – stock market boom. He calls it giving  electricity to India’s stock markets.

If Prime Minister Narendra Modi has delivered one thing in his first ten months in office, it’s been electricity to India’s stock markets. India’s benchmark Bombay Stock Exchange (BSE) Sensex recorded a31 percent jump in 2014. Only the insane runup in Shanghai’s bourse — up 90 percent in the past 12 months — has overshadowed the Indian rally.

Unfortunately, very few actual Indians stand to benefit from the boom. The proportion of retail investors in India’s equities markets is strikingly low. Less than 1.5 percent of the population invests in securities, compared with almost 10 percent in China and 18 percent in the U.S. Just 2 percent of India’s household savings are exposed to equity; in the U.S., the long-term average is 45 percent.

This is ultimately bad news for India’s economy. The country desperately needs to channel more household savings into equities — which are a vital source of corporate finance — and away from unproductive investments in gold and real estate. India also needs more local funds if it’s to sustain the strength in its equities market while avoiding macroeconomic imbalances. At the moment, around 70 percent of the market isdominated by foreign institutional investors.

Consider this statistic. Between September 2008 and October 2014, those foreign investors made net purchases of $45 billion. In the same period, domestic institutional investors (mostly funded by retail investors) made net sales of $16 billion. This imbalance creates serious side effects. The billions of dollars flowing in produce upward pressure on the rupee and a decline in India’s competitiveness. When they flow out, usually at short notice, markets collapse and the exchange rate grows volatile. That scenario is almost certain to play out in coming months when the U.S. Fed tightens monetary policy.

Well, all this has been known for a while now.

This blog itself has regularly written on how stock markets have become the single most important agenda for any govt and particularly this govt. How so few Indians are connected to stock markets but still it gets priority as media and views are shaped by people who have such large stakes in the stock market. In the 1.5% of population, majority is all the big powerful guys. It is all about media shaping views as likes of Chomsky have shown over the years.

Infact this is how all we look at economic policymakers. The music should just go on. Those who enable the show get all kinds of accolades and praises. Those who don’t or are ublucky are just ignored no matter how much their contribution is..


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