The global risk-off trade as we approach the summer months is reminiscent and repetitive phenomenon.
Clearly the macro India news hitting the headlines is worrying people. Investors need to throw away those rose-coloured glasses that portrayed India as a super-power. That 8%, 9%, and 10% rate of growth in GDP is a fiction that will only be achieved in spurts. It may be achieved on a sustainable basis only when some of our suggestions – and others that aim to clean the system – are taken seriously.
From Macro to Micro
Subsidies are here to stay – you cannot wish away the responsibility of looking after 350 million poor people for the next few decades. With a solid domestic savings rate of over 30%, India has the capital to achieve a 6% plus rate of growth in GDP even in a troubled global environment.
Ultimately, it's the micro
The key is to focus on the companies and their managements. There are managements with great power points. There are many with great accents. But there are few building good long term businesses with good intentions.
Our challenges remain: to understand and analyze the businesses; to decipher the valuations ascribed to these businesses in the stock market; and to understand the ability of the management to guide these businesses in uncertain times - the unflinching question of leadership is crucial.