Archive for August 9th, 2016

Debate between efficient finance school and behavioral finance school…

August 9, 2016

The two leaders of both the schools – Profs. Eugene Fama and Richard Thaler – debate over financial markets (HT MR blog) .

Nice bit..

BSE Sensex changes in 25 years..

August 9, 2016

Lokeshwarri S.K of Business Line has a piece on movers and shakers int he 25 year period. Some stories have remained the same and others have changed:

Twenty-five years have been completed since economic reforms were set in motion by the Narasimha Rao government, and guided by then Finance Minister Manmohan Singh. These far-reaching reforms transformed the economy and set it firmly on the growth path. The stock market, which is called the barometer of the economy, also underwent a sea-change during this quarter century.

We analysed the constituents of the Sensex in 1992, based on data provided by Capitaline Database, and their financial parameters then, to highlight how the Indian stock market has changed with the economy.

Of the 30 stocks that are part of the Sensex today, only seven were in the Sensex in 1992 — ITC, Larsen & Toubro, Mahindra & Mahindra, Reliance Industries, Tata Motors and Tata Steel.

With the technology sector in its early stages, not a single technology company was part of the Sensex basket in 1992. Manufacturing companies held sway, with 27 of the 30 companies belonging to this segment.

MNC stocks were still in vogue then with Nestle, Philips, Siemens and Glaxo SmithKline Pharma finding a place in the top 30 stocks. PSU stocks were also conspicuously absent as they were just emerging from a socialist era, where making profits was not the top priority.

With the country then driving around in Ambassador cars, Hindustan Motors was also one of the trading favourites, though it was already bleeding at the bottom-line. Other stocks that have bitten the dust since 1992 are Zenith Birla, Mukand and Great Eastern Shipping.

Banking stocks, which currently dominate the Sensex, had zero presence 25 years ago. State Bank of India listed on the stock market only in 1995 and private sector banks such as HDFC Bank and ICICI Bank were established only in mid-1990s and were yet to make a mark.

Nice bit..

The Warren Buffet economy: How Central Bank enabled financialization divided America

August 9, 2016

David Stockman points to this amazing figures on rise in wealth of a few and inequality for others:


How old cities of politics/capital are becomig the new centres for start-ups…

August 9, 2016

ET has a series of articles on this. Right from Coimbatore to Belgavi, Udupi and Mysore to Ahmedabad/Baroda. the once old centres of politics and capitalare making a come back in the start-up space. As the existing cities like Bangalore. NCR Delhi, Mumbai etc just crumble under pressure, people are looking at options elsewhere.

So where do you go? Places which have some history for entrepreneurship, capital, some available infrastructure and so on. These cities are fitting the list as they have been doing these for ages.

No mention needs to made of Baroda and Ahmedabad. Their history as commercial and political capitals goes back a long long way. Coimbatore was first the textile hub and then emerged a leader in machinery goods as well. Mysore was one of the most progressive princely states and this led Bangalore to emerge as a tech hub till all hells broke loose in the city. Belgaum was always a key political place which became a commercial one as during British era. It is now being promoted as the second capital of Karnataka.

Some might wonder what Udupi is doing in the list? Well, there are few places in the country which have given us three service industries – restaurants, education (Manipal is a stone throw away)  and banking (this might be surprising but place was home to two big banks – Syndicate and Corporation). Given most start-ups cater to services business and need capital, Udupi is where these cultures have always been. Just that they were lost as most of development has been around big metros.

This is all interesting and fascinating stuff. We have so little knowledge of city based economies which is ironic given ultimately this is what matters. It isn’t economics in India but economics in urban and rural centres that matters. All this eventually adds to become Indian economy. We need to encourage more scholarship and research around city/regional economies. We have very little sense of these critical economic ideas. Ultimately it is rise and fall of certain industries/services in these places which determine the fate of any national economy..



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