How to be millionaire through stock investing in Indian Market?

Indian investor can draw following lessons:

Lesson # 1: No company even with high quality management, products and services can successfully
grows its business and market share successfully over decades continuously and at some point of
time it is likely to decline or hit upper limits of its growth potential. So investors never wed for life to a
security investment and analyze the size and future growth potential of the business before making
their potential investment decisions.

Lesson # 2: It is highly unlikely for any investor to make a living out of security market investment
because there is hardly anybody who was able to do that successfully by depending on such activities
alone (including Warren Buffet). However working in financial industry as professional is altogether a
different ball game. So involve yourself in real business activities which contribute to growth of Indian
economy and not rely on speculation as a way of living because in long run it may not likely to
succeed.

Lesson # 3: Stages of Indian economy and security market has important bearing on investment
success and considering current economy scenarios and market conditions it is not likely that in next
decade Indian investor as a class can able to generate and preserve value of their investment (after
adjusting for inflation) like they did in last decade (during 2000-10) so diversify your investments
significantly in other financial instruments including debt and commodities.

Lesson # 4: Nobody can time the market entry/exit successfully most of the times even with insiders
information on state of economy in general, so focusing on business fundamentals of companies may
be more worthwhile than trying to time the market.

Lesson # 5: It is almost impossible to beat the market over long period of time and even Buffet find it
difficult to achieve this feat. So for most investors investing in Index fund may be best choice over
long term. Also yearly return of portfolios may be small but compounding over long period of time is
what causes actual creation of wealth. To put this in prospective if every human in year 1600 had
foresight to invest only Rs 1 and should have grown that amount to CAGR of only 5 % (by passing to
their next generations off course) that amount should have more than 80 crore in 2020 and no person
in the world should have been poor today. This also tells us how difficult it is to pass even small
amount of wealth through generations or grow the money consistently over long period of time (This
can be a good advise for our politicians , businessman, bureaucrats and greedy promoters who
indulge in corruption at the expense of country and common investors in false hope of amassing
wealth for their future generations)
Lesson # 6: Never invest in commodities or commodities related stocks like mining, metal, oil etc close
to peak of economic cycle or when they are available at close to peak of their historical valuations
otherwise it may lead to major loss in your investment value (like ConocoPhillips for Buffet)

Lesson # 7: While investing base your investment decisions on your analysis and understanding of
business fundamentals of the company and don’t loose heart if some of your investments turn out to
be bad and be quick to recognize and exit such investments at the earliest favorable opportunity.

To conclude financial market is a very complex and futuristic system whose predictions based on past
history for investment purpose always carry some amount of risk and Indian investors should make their
investment decisions in financial market based on his risk profile and by analyzing & learning from past
mistakes of investment gurus like Warren Buffet.

Steps/ Checklist for finding good company for Investment in Indian Stock Market
(1) Equity Capital should be below 1000 cr
(2) Debt should be less than 25 perc of equity ie less than 250 cr
(3) Total Capital employed is less than 1500 cr
(4) Working capital scenario of the company and industry
(5) Trading volume of company stocks , their past history and variation and trend on important
announcement and important event day
(6) Sales should be at least 1.5 times equity capital or more than total capital employed
(7) Cash Flow from operating activities and net profit variation should not be more than 20 perc
(8) Annual sales growth of 15 perc
(9) Promoters holding of more than 50 perc for nonfinacial company
(10) Per unit cost of production and cost of selling of the product or service and their competitor cost
for similar product
(11) Few factors which is value drivers for the company or industry
(12) Contribution of each customer in sales of the company and their nature (for example repeat buy
item or long term once buy item or discretionary item)
(13) Quality of management
(14) Quality of company product or service and their pricing with respect to the market
(15) New product or service or new capacity creation by company and their future contribution in
overall sales of the company
(16) Marketing and advt spend by the company and their effectiveness in relation to company size
and scale
(17) Customer response about company product or service
(18) Employee satisfaction level of the company and their culture
(19) Market share gain/loss trend of the company in various category of product
(20) History and evolution of the company , promoters background and industry evolution
(21) Peer Company historic performance in the industry and their profitability and capital intensity
evaluation
(22) Competitive intensity of the particular sector or industry
(23) Market share of the company within industry
(24) Supply demand dynamics and market condition of company product and services
(25) Future growth projection of the industry
(26) Trend of disruption in the industry and market size of various players
(27) Global and national size of industry and their competitive landscape
(28) Stage of industry in Indian and global context
(29) Global and national interest rate cycle stage
(30) Regulatory and govt interventions and their policies change risk

Nano moment for Indian Housing?

In India currently there is demand of around 5 lakhs housing units which includes new
houses/apartments/flats and secondary sales of housing units (Around 3 lakhs new housing units
and 2 lakhs secondary sale units). This data is based on average number of registrations done for
housing, lands etc per year however do not include construction of houses on parental properties
or renovation of exiting houses. In contrast total number of car sales in India is around 25 lakhs
while two wheelers sales is around 2 crores which broadly give an indication of purchasing
power of Indian public which varies between 2 cr to 25 cr people (this number can be arrived by
multiplying total number of annual car sales by 5,6 or 7) and this group constitute about 20% of
our population and can afford these products (to buy these products both white and black money
can be used freely so this is near perfect reflection of true purchasing capacity of our people).
It is believed that Maruti 800 car launched in around 1985 is priced at Rs 45000 is beyond
purchasing capacities of even high position employees during that point of time (it is believed
that to purchase that car requires 2-3 years of annual savings) which progressively reduced to
about 6-9 months of annual savings of senior employees and increased demand of car from
merely around ten thousand to 25 lakh as of today. Tata Nano was bold attempt to expand that
market few years back to make it affordable to motorcycle buyers however it not able to got
desirable result due to lack of perceived quality by customers and poor design. So indian
consumers is just not looking for cheap products but cheap products with reasonable quality.
Similar story can be seen for housing in India currently. Above Rs 50 lakhs housing units with
reasonable quality is available across country currently however affordability for such houses is
only about 5 lakhs per years or only total around 50 lakhs people has capacity to afford such a
house. Below 50 lakhs houses are either of very poor quality (even govt housing schemes for
poor like Indira Awas Yojna funded through budgetary support mired in very poor quality ,
execution and massive corruption so unable to make any impact to provide basic housing to poor
people).
Govt of India since last two year taken various policy initiatives to expand the housing market
from current around 5 lakhs unit to multiply it by 4-5 times and increase affordability of houses
from current around 50 lakhs people to around 2-3 crore people. Some of steps taken by govt can
be summarised as
* Allowing REITs(Real Estate Investment Trust) in India market which can pave the way for
investing in commercial properties with small some of money like mutual fund investment is
possible with stocks and broaden the market reach for properties
* Various Interest rate submersion schemes: Which effectively bring down interest rate on
housing loan for first time home buyer to around 5-6% per annum (For example: Govt recently
announced 4% reduction in housing loans of upto 9 lakhs and 3% reduction in interest rate for
housing loan of upto 12 lakhs and if one includes tax benefits on housing loans than upto 12
lakhs housing loans in available for effective interest rate of 2-3% only.)
* Income tax benefits for builders: Any builders selling houses of size upto 645 square ft in non
metro cities and upto 320 sq ft in four metro cities dont need to pay any income tax on profit
earned from such development. Now considering even Rs 4000 per sq ft cost it effectively mean
that any builders dont need to pay any tax on selling houses upto 50 lakhs rupees in four metroes
and upto 30 lakhs in other places
*Infrastructure Status to Affordable Housing: Affordable housing is granted infrastructure status
(houses with size of 645 sq ft in non-metro and 320 sq ft in four metro cities). Benefit for getting
infrastructure status is anybody building affordable housing can get long term loan of 10-15
years duration with interest rate of around 9-10% only for financing such projects while
previously without such status interest rate is around 14-15% for such financing which help in
reduction of financing cost of affordable housing
* RERA Bill (Real Estate Regulation): Effectively this bill aim to provide home buyers with
some protection if builders dont provide houses as promised and within timeline provided which
likely to reduce fraud in real estate transaction to some extend and make real esate market more
transparent for buyers however no significant improvements is proposed by govt for approvals of
housing projects
All these steps collectively means that housing market in India is likely to expand from currently
about 5 lakhs per annum to around 25 lakhs per annum (around 5 times expansion in size of
housing market) and it is profitable for developers to build houses in price range of Rs 20 lakhs
to 50 lakhs per unit which in turn likely to increase demand also in ancilliary sectors like cement,
steel, other building products, paints etc apart from giving boost to affordable housing segment
in the country. Already most leading developers in the country like Lodha, Oberoi etc has
announced their intention to enter affordable housing segment in big ways after these incentives.

Long Term Wealth Creation: Some Thought?

In our everyday life all of us face dilema of which among following investment modes like Stocks,
Fixed Income (includes fixed deposits, bonds etc), real estate and gold offer best return over long
term. While managing personal finance depends upon individual risk appetite, family needs, his stage
in life and his/her overall objectives and financial goals, many times people prefer one type of
investment over another out of seer lack of knowledge or believe some higher return from some
assets based on hearsay without any scientific basis for the same. Below fig display long term return
in USA of 200 years (from 1801 to 2003 a period which best capture return in modern times since
modern financial system got developed across the world). Some of us may argue that Indian
conditions may be different however i like to believe that current financial system followed in india
either capitalistic or socialistic are mere adoption from western world in its current form and so
chances of any different return over long term is not likely. In reality it is likely that return in india is
less than what return is possible in USA because of higher level of productivity, good business
friendly overall environment and highly skilled humane resources. Summary of the diagram can be
expressed as if anybody invested 1 US Dollar in 1801 than by 2003 in about 200 years) return from
stocks is around 100 million dollar (annual return of around 6.3%), fixed income return of 1 lakh
dollar and gold return of around 10 us dollar only. Where return of real estate falls is somewhere
between fixed income and stock return (annual return of around 3%). All these returns are after
adjusting for inflation i.e. real returns per annum and not nominal return.
Why returns appear in India bit distorted?
Since independence India running on huge deficit (i.e. spending is more than ability to earn), lower
level of productivity and inefficiency due to various reasons which caused high inflation and
devaluation of rupees on average of around 8% per annum. So any financial assets on average giving
return of upto 8% annually is not giving any real return and its just psychological return and actually
paying price for inefficient economic scenario in our country. If extrapolated for indian conditions
than it can be expected that stocks can deliver return of around 12 - 15% per annum, Real estate
around 10-11%,
fixed income of around 7-8% and gold of around 6-7% per annum in India which means that only
stocks and real estate can deliver positive return. We also need to keep in mind that real estate return
can never exceed return from stocks or increase in salary for simple reason that real estate is also an
important unit of production and ratio of average income to real estate is already among highest in
the world (higher by scale of around 10 times), rental yield to cost is among lowest and rental cost
for industries and commercial activities is among highest in the world (for example a typical retail
shop rental cost in other countries varies from 6-8% while in india already it is 10-15%. It is true that
demand for real estate is huge in india but there is question of affordability. Currently annually there
is affordability or around 4 lakhs unit of residential units in India(here again demand of low end
residential homes of less than 50 lakhs is more than 80%) while same for cars is around 25 lakhs per
annum (however among them more than 90% car sales demand is for below 5 lakhs bracket and high
end car demands cost of more than 20 lakhs is still few).

Effect of Demonetization on Indian Economy?

Economy consists of multiple transactions. In each transaction goods or services exchanged with
money or credit. It is widely reported in various media that cash transactions in indian economy
is around 70% and currency in circulation as percentage of GDP is around 11% which is among
highest in the wold among major economy. Also some estimates about black money in indian
economy varies from 20% to 40% (for example World bank study on black money in India
estimates that black money is around 23% of India GDP). By definition black money is any
transactions where due direct and indirect taxes is not paid and tax to GDP ratio in India is
around 15% which is among lowest in the world however tax burden in India for honest tax
payers is close to 60% (including both direct and indirect taxes) which is among highest in the
world.so tax payers in India is paying for luxury of tax evaders and corrupts indirectly in form of
higher inflation, higher prices for goods and services, poor quality of govt services and
infrastructures and causing promotion of rent seeking culture in general population and general
degradation in moral values of society and reward is not commensurate with risk and efforts
which is hindering economic growth of the country. It is believed that about 10% black money
hold in cash, around 33% in real estate, 15-20% in gold and remaining goes into funding various
luxury items and general spending (for example: it is not uncommon in India to find lowest level
political workers roaming in SUV mid range luxury automobiles). Now black money hold in
cash, gold and real estate is among most harmful as it decreases velocity of transactions and
money without adding much to society and country and just seating idle as personal
psychological possession and creating culture of arrogance and disrespect towards citizens and
working class. There can be various categories of black money however among them more
serious is mismanagement of public fund (for example: road, hospital, educational institution and
loot of govt fund meant for poor people) and rent seeking where most govt offices creating
artificial scarcity of services like approval, filling of FIR in police station, PAN card/ passport
/birth/fitness certificate and shamelessly asking from citizens money for which they are already
paid by govt through tax payer money. There are other kind of black money where businesses in
order to avoid tax accepting payment in cash only where many people with duly paid taxes
money also forced to pay in cash (for example many big hotels insist on cash payment for room
rent and food services etc). There is other categories of people who due to lack of proper
infrastructure, knowledge and habit forced to deal in cash (for example auto drivers, rural
farmers, laborers etc).
In short term (6 -12 months) as credit and money supply likely to be significantly impacted
demand for goods and services likely to reduce which can cause lack of trust in the system and
may lead to recession in the economy. As informal sector constitutes about 45% of gdp of india
which largely deal in cash due to lack of proper infrastructures likely to effected most which can
increase NPA level of Non-banking financial institution and increase NPA level of already
stressed baking sector. There is some media reports and company sales report already pointing to
fall in demands for real estate, automobiles (car,motorcycles etc), white goods (refrigerators ,
TV, Washing machine etc), Jewellery, Discertionary consumer goods (like movie watching,
restaurant and hotel services, perfumes, biscuits etc) in last 2 weeks of around 40-60% which
may led to non payment of loans to NBFC and banks in these sector of the economy and job loss
to contractual and informal sector labor. Companies margin and profitability in these sector
likely to decline considerably in next two quarters as materials already supplied and
manufactured is lying in stocks and inventories whose consumption to clear may take at least
two quarters. However as our honorable Prime Minister and Finance Minister has pointed it can
clean economy of many accumulated excesses, improve tax compliance, create social and
psychological fear in mind of black money holders, improve cash deposit of banking system and
reduce inflation of goods and services in short to medium term, reduce interest rate which can
lead to boom in indian economy during 2018-2020 period and finaly general public can feel
much promised Acche Din.
Real Value of Real Estate?
Yesterday decision of our honorable PM to discontinue Rs 500 and Rs 1000 notes from circulation is
courageous and historic one in many respect and it has great consequences for our country where by
some estimates it is believed that 30-40% economy run on black money. Real estate and gold are two
areas where maximum amount of black money is hiding apart from cash. According to some report
there is around 15 lakh crore money in circulation in the country out of which around 75% is of
denomination of Rs 500 and Rs 1000. It is interesting to watch how much of those money going to
return in the banking system in next 50 days. It is difficult to anticipate how much effects this step of
govt in reducing generation of black money can have however it is clear that in next 6 months atleast
new generation of black money is significantly reduced and it likely to give psychological and social
blow to people holding black money and take out their pride which till recently are happy to openly
flaunt their ill gotten wealth. It also likely to create fear in minds of such people for future such
generation. In anycase more than 90% of people in india has networth of less than 10 lakhs and
majority of black money holds by less than 1% of population predominates among them is political
class, senior govt officers and business man serving them and helping run the parallel black money
economy.
Apart from directly affecting cash components of black money this step also likely to affect
industries like Real estate, gold & jewellery, consumer durables, automobiles, luxury consumers
items like costly watches , smartphones etc in short to medium terms as most of generated black
money enter in these areas among others. As most of black money holders keep significant portion of
their wealth in real estate this step of govt is likely to affect prices in real estate sector in near to
medium term thus giving them additional indirect blow and making real estate market more
transparent and affordable to many other people.
Long term real estate return research in US markets reveal that real estate prices give return of about
2-3% over inflation in long term. Also some of other important benchmark about real estate prices
are
(1)Prices of land should not be more than 25% of total value of house
(2)Prices of real estate should not be more than 10-15 times of annual rental collected from the
property
(3)Real estate prices should not be more than 5 times of average annual income of the citizens of the
country
(4)Home, buildings, flats etc are depreciable assets with useful life of around 30 years so its value
depreciates around 3.5% every year and only land can be considered as store of value for longer
period. Also with newer and better technologies of home building and design and improved
productivity of raw material industries like cement, steel etc cost of building homes, flates etc keep
declining in real term over medium to long term.
(5)Real estate prices increases because of govt/public investments in infrastructure in around real
estate properties like Railways, airport, roads, drinking water, hospitals,educational institutions etc
and new creation of industries and job opportunities in around areas and contribution of person
buying land/properties in its value increase is almost negligible so their is strong case of increasing
taxes on real estate buy by govt
By applying any of these criteria independent house with land even in 2nd and 3rd tier cities in good
localities is not likely to cost less than 2 cr what to say about metros cities (like Mumbai, Delhi,
Bangalore etc)where buying land is out of reach even for dollar millionaires and most people at best
can hope for buying flats and black money is major reasons for many of those increases inspite of the
fact that supply of real estate has improved considerably in most cities of India in recent times. It is
likely that if black money attempt of govt succeed even partially in next 6-12 months real estate
prices may correct about 20-25% in most places in the country and real estate market can go further
illiquid as sellers may not get easy exit from their real estate assets. However real estate prices need
to correct about 50% from current level to justify true fundamentals of Indian economy and their real
value.

Story of Sugar and Sugar Industry in India!

India is world largest consumer of sugar with consumption of around 26 million tonne per
annum(with including Gur and other traditional form of sweeteners around 30 million tonne) and
second largest producers with production which fluctuates between 20 to 28 million tonne per annum
depending upon condition of monsoon among other factors. In most years when monsoon is good
India is net exporter of sugar around 1-2 million tonne while every 4-5 years once monsoon is bad
India become net importers of sugar of around 2-3 million tonne. For comparison China which has
more population than India consumes sugar of around 15 million tonne per annum which explain
among important reason why diabetes is so common disease in India (Any form of direct
carbohydrates like sugar can give instant energy so good for people who need to do lot of physical
work but as importance of physical work in our life is declining due to automation and several other
factors consumption of any direct carbohydrates causes imbalance in insulin level and digestion
mechanism which lead to accumulation and creation of fat cells in our body).
Brazil is least cost producer of sugar in the world and largest exporters accounting for about 50% of
total world sugar trade. Other important exporters in the world market includes Thailand, Australia
etc. Cost of producing 1 lb of sugar in Brazil varies between 10-12 cent while in India it varies
between 15-18 cent. So Indian sugar industry is inefficient of about 40-50% in comparison to brazil
and so not competitive at global level. So to protect Indian sugar industry govt of india has to levy
import duty of around 20-40% (for example current import duty on sugar in india is 40%). 10% is
transportation cost of sugar from international market to India

Forbes richest indian list some interesting observations?

India GDP currrently is about 2 trillion US Dollar (it keeps fluctuating a bit due to US Dollar INR
currency movement) and it is believed that wealth in any economy is about 3 times its GDP based on
that observation total wealth (includes company, personal, govt , gold, real estate etc combined) in
India is around 5-6 trillion US dollar. My guess is that due to lot of inefficiencies in many sector of
economy India total wealth can be around 4- 4.5 trillion US dollar.
We know that in many global indicators of economy like per capital income, ease of doing business,
corruption perception index, quality of govt services, number of people below proverty line etc India
falls in lowest quartiles (below 75% of the country in the world) at global level. However there are
few indicators in which india does quite well which includes saving rate (which is more than 30%
among highest in the world) and highest concentration of dollar billionaires in the world (considering
that india is considered developing country it is bit surprising and previously domination of so called
crony capitalist is very high which is showing considerable decline in last decades and domination of
export oriented industries like IT,Pharma etc has increased considerably in the economy).
Top 100 richest indian individuals has total wealth of around 380 billion US dollar which is around
9% of total wealth (4.5 trillion dollar) of the country. Regional distribution wise majority of these
individuals business activities is located in metro cities (Mumbai, Dehli, Bangalore, Chennai etc) and
only two individuals belong to Bihar/Jharkhand region while their main business activities fall
outside these regions (Samprada Singh with 2.7 billion dollar and Anil Agrawal of Vedanta with 1.86
billion dollar). There is some other interesting fact about net worth in India is that individual with
networth of 1 lakh dollar (around 70 lakh rupees) is only about 50 lakhs and more than 90%
individual in India has networth of less than 10 lakhs INR.
As discussed above importance of sector directly related with govt agencies like real estate, mining,
power, steel, energy, metals is declining considerably in last decades and sectors like IT, Pharma,
healthcare, FMCG, private banks , automobiles etc is increasing considerably where govt agencies
has minimal influence or interference and these sectors are usually free from govt pricing control.
Also most of billionaire list individuals age is more than 50 years and in many cases more than 60
years unless they have inherited some company (their number in any case is small and most of
individuals have created their wealth in their life time and usually started with small amount of
capital though many of them have strong family business background). So when it comes to wealth
creation and rich list people with age group of more than 60 years have upper hand over younger
people with below 40 years age group.

Contrary to popular opinion stock investing in india can be highly profitable provided one has
required knowledge and skill to do so. Primary reason for the same may be because cost of debt in
india is usually very high (more than 11 - 12 %) which means that any company not earning more
than 15 % on capital employed is not likely to survive for long. But those which likely to survive for
long have to generate return of atleast 15% per annum for long term. Another important point to
consider here is that investing is highly scalable business i.e. with same amount of skill and
knowledge one can invest in lakhs or crores or even billions. Also it is highly tax efficient as long
term capital gain (long term capital gain in stock is defined as holding period of more than 1 years) is
0 and short term capital gain is only 15 %. Even after recent imposition of dividend tax for dividend
income of more than 10 lakhs per annum still you dont have to worry if your investment capital is
less than 5 cr as average dividend payment in indian stock market is only about 2 %. How much gain
one can make from stock market investing? It has no limit it is just limited by your imagination. This
i can say from my personal experience. In last one and half year with invested income of about 20
lakhs i have generated about 1 cr 40 lakhs. Ofcourse i have to pay taxes and spend money for my day
to day expenses which is roughly around 20 lakhs during the same period. Now think of this that
during same period sensex (barometer of indian stock market) has not given return of more than 20
%. I think of it while employed in good job i was working very hard to save 10 lakhs per annum after
all expenses. So to focus on investing in terms of financial return is no brainer for me though i have
to face some difficulties in convincing others about its benefits. Though this kind of strategy cannot
work for others unless you have required knowledge and skill and willing to make efforts with high
degree of courage , patience and conviction.
Note: This is just my random thought about stock investing. I have not done any proof reading of the
material.

Why farming is such a bad business?

Farming community in India is always in distress and every 6 years their
problems compound due to severe drought conditions due to el nino weather phenomenon (last major
drought in India happened in 2002, 2008 and 2015).However some people claim
that they earns in crores doing farming which most likely to be myth and way to shield their illegal
wealth (agricultural income in India has 0 tax and which allows some famous celebrities, political
leaders and govt officers to pass as farmers).It is believed that more than 55 % people in our country
depends upon agriculture for their livelihood.
Few points about farming as a business:
(1)Over long term prices of farming products in real term decline while cost of production always
keep rising.Any govt don't have capacity to alter basic supply demand equations of any commodity
though for short term they can influence it temporarily.
Research revealed that prices of agricultural commodities from 1865 to 2010 has actually declined by
about 50% in real term.
(2)Any technological or productivity enhancements in agriculture benefits only consumer due to
lower prices of such commodities. While any new innovation in goods based on agricultural
commodities benefits producers of such innovations only( like businesses who sales oil or biscuits).
(3)Any kind of govt support to farmers don't likely to benefit them in long run but likely to benefit
only political class or govt officers engaged in these activities. Only long term solution is to reduce
drastically percentage of people engaged in agricultural activities from about 55 % currently to below
10 % over long term and provide them with some alternate employment opportunities in other value
add activities.
(4)Now we know that for poor plight of farmers we should not blame our farmers but try to help
them in finding alternate source of employment and encouraging them to do so.

Market leadership for business success is very important. Many times market leadership in business
narrowly defined in terms of volume or value but sustainable market leadership includes performance
attributes such as technology, innovation, quality and reputation. It is widely believed that market
leadership in business is among most important attributes for long term value creation.

Poor quality of govt services in india ?

If a poll on quality of various govt services in india is taken than overwhelming majority of citizens
without a doubt likely to vote in the broad range of average to poor to very poor. If we compare
quality of govt services offered by different countries across the globe than our country is likely to
figure in lowest quartiles without doubt. My personal experience is that in many countries there is
hardly any difference between quality of services provided by govt and private sector. One major of
good quality services is how comfortable is provider of the services to consume his own services and
on this kind our govt fail miserably. For example given a choice we find most of our political and
senior govt officers enjoying services of private sector in education, healthcare, airlines,bank, hotel
etc where these services are easily available for themselves and their family and even services in
foreign countries in place of improving these services in our country itself for our citizens. There are
various basic govt services which as a citizen we have right to get and to provide these services only
a very large number of public servants get paid from citizen money (i.e. tax payer money both direct
and indirect taxes). Some of the popular govt services which needed by every citizens may be
classified as birth certificate, PAN card, passport, education services, healthcare services, road,
electricity, drinking water, land related services, law and order related issues reporting, need to get
speedy justice through court of law etc. Traditionally many other industrial services like banking,
insurance, communication and post, airlines, railways, energy and coal, steel etc are also assumed by
govt in the past through various outdated regulation is now importance of govt in those areas is
declining abruptly and in next decades many of the former services are also likely to move out of
govt control. There can be book written on these issues and these issues are not new. However my
prime motivation for writing in in this post is due to my personal experience of dealing with two
issues concerning govt services which i would like to highlight.
(1) I went to govt office related with tax issues (income tax dept) of one of my relatives few months
back and IT officers shamelessly raising frivolous issues and asking how many sim cards we hold. In
response I asked him how many sim cards your family members hold and whats your salary and from
where you and your family enjoy such luxurious life , guys went silent and started looking at each
other face. They are not expecting this kind of response from a common citizen and neither they are
used to this kind of response. It is responsibility of us citizens to claim govt services as matter of our
right, dont expect preferential treatment and dont receive these services as if somebody lording
providing your these services are doing you any favor. They are getting paid for proving these
services by citizens only.
(2) One of my close friend himself is a senior govt officers in other state, seem always busy to seek
help from other govt services in his home state and literally looking for favor while he himself may
be busy doing same in his position as a public servant in his place. Moral of the story is even govt
servants need to improve these services for their own sake as they are also consumers of many of
these services themselves, So why not start improving on services which you through your good
offices offering to citizens than expect flawless govt services from other places.
One other bizarre thing you can find that in majority of these govt services you hardly find any
transparent system to provide feedback or complain or suggestion for improvements. I suppose this is
by design and attempt to deny just and fair govt services to common citizens of this country. We as a
citizens must learn to demand these services as matter of right otherwise our next generations also
need to deal with these kind of poor services.

Important global political events and their impact on financial market?

Recent event of UK citizens decision to exit of EU is a landmark historical event in global
context. In last century few political events which has enormous consequences for global
economics and its people can be summarized as
(1) World War 1 (1915) - Basically this war triggered many changes in world order and equation
of power which ultimately lead to reduction in power of Britain and France and created
situations for rise of USA, Russia and Germany, Japan as major global power which ultimately
lead to independence of many Asian and African countries including India. During this period
demands of many industrial products and efforts to do innovation and research by govts and
industries increased multifold which ultimately lead to invention and large scale
commercialization of many consumer products like TV, Washing Machine, Car, aero plane,
banking and financial market etc. Also most of science developments like physics, chemistry and
biology in last few centuries become got mass practical acceptance in form of medical science,
engineering and many of the social sciences like economics, psychology etc started getting
developed.During this phase only formal acceptance as labor and management as important
source of unit of production is duly recognized which ultimately lead to labor union and
socialism as important political and economic phenomenon across the globe. Also importance of
formal technical (both engineering, medical) and management institutes was started across the
globe. It is important to note that theories about socialism and labor union is developed more
than centuries before by Carl Marx but its practical manifestation started happening during and
after world war 1 only. It is also period of moving away from feudal society and rule by king and
kingdom and paved the way for democratic rights across the globe. During this period very high
rate of inflation happened in Germany and other parts of world which lead to boom in financial
market from 1924 to 1929 and subsequent depression from 1929 to 1931 across the world. Also
due to some of these challenges lead to development of dictatorship in many parts of world. It is
believed that value of various assets (including stock market) during 1929 to 1931 (in about 2.5
years) in USA is declined by 80 to 90 % from their peak level and it took almost 20 years to
achieve the same level of financial asset value again (upto 1949).
Note: Thought presented here may have some factual errors and my attempt here is to just
understand effect of important global political events on economics and financial market and try
to understand their interdependence.

Important global economic and political events and their impact on financial market?
Some of the other important political events at global level which has enormous impact on financial
markets are:
(1) World War 1 (1915) - We have already briefly discussed about its effect in previous post
(2) Second World War (1939 - 45)
(3)Fall of Berlin Wall and economic collapse of Soviet Union(1989 - 1991)
(4)Attack on World trade center in USA (2001)
(5)Financial crisis of 2008
(6) Brexit (2016)
Importance thing to understand here is that economic and political events are interdependent and
reflexive. Increasing economic effect causes political event. A typical cycle of political or economic
events start in following sequence:
(1) It causes turmoil in currency market across the globe and devaluation of currency in center of
event
(2)Devaluation of currency has effect of reduction of real wealth of the country and its citizens which
reduces purchasing power of the country and reduces demand in the economy
(3)All companies and countries exporting to affected country profitability reduce because in short
term they are not in position to pass on the prices in local currency
(4) Devaluation of currency also lead to inflation as foreign supplied goods become more expensive
to buy which further reduces the demand
(5)To come out of this kind of scenarios country invariably need to further devalue their currency to
make their export more competative in global market and able to earn foreign exchange. Now to earn
same level of foregin exchange they need to supply more goods and services many times
(5) Which lead to fall in financial stocks (for example banks) and lead to job losses. Job losses lead
to further reduction in demand and causes recession
(5) A typical recession last for 12 to 24 months. During this phase most of financial assets value
decline by 20 to 60 %.
(6)Again at the bottom of cycle as industries stop investing in creating new supplies, supply of goods
reduces. As supply reduces less than demand again prices of goods start rising, which lead to
increase in profit for the company and again they start investing in newer capacity which lead to
more demand of loans from banks and hiring of employees for expansion of newer capacities. It
typical causes expansion phase for 3-5 years in the country and the world
(7) Stock market is a complex futuristic system which try to forecast these events and discount to
current time and price. In short term stock prices of the company depends on demand and supply of
the share but in long term its only its earning power and profitability which determines its value.
However due to humane psychology of greed and fear (as real money is involved) in short term
prices of many companies can fall below their true worth or increase more than their true worth,
which can present opportunities for knowledgeable investors. This kind of behavior is true for almost
all financial assets and in areas where money is involved
(8)Understanding of financial market requires multidisciplinary knowledge and skill and high degree
of knowledge and skill in one areas may not be necessarily make you better in investing. Also more
learning can happen through practical experience than by doing any courses which requires
considerable time and effort. Also stock market is very democratic system in the sense that it does
not differentiate between people who are investing because it does not know or care about the person
who is investing but only about his ideas and its correctness. Also unlike many other systems where
you continuously need feedback from others in this system itself give feedback after some times.

Effect of Govt policy on basic economics?

To understand these point clearly lets take a basic example of pulses in India. India has pulses
consumption of about 24 million Tonne per year. Being essential commodities and because of habit
forming nature of eating habits even if prices increases considerably pulses consumption dont fall
much. So demand for pulses is inelastic however supply is elastic, so due to last year drought pulses
production in India is likely to be around 15 million Tonne only. So there is massive shortfall in
supply because of this prices of pulses has moved between Rs 150 - 200 rupees per kg from last 1
year from earlier prices of around Rs 80 - 90 per kg. Govt authorities know that high pulses price can
affect outcomes of elections as it touches life of almost everybody so in last 1 year they have tried
almost all available policy instruments to control pulse prices. Some of the policy instruments govt
tries in this conditions is increase/decrease in export/ import duties, ban in export etc however till
supply of pulses exceed demand of 24 million Tonne it will not likely to have any effects on the
prices of pulses which is strongly correlated with outcome of monsoon rain on which no govt has any
control. That's why most of economic policies driven through govt policy fail to have any impact on
prices. In reality many of these govt policy initiative causes prices to increase further as market
participant is certain that govt don't have any tool to control the prices. That is a simple explanation
of basic economics and why govt
cannot have much effect on financial market.
My view on investing as a career option?
In my opinion it is better to work in industry and contribute to growth of the economy. Already in
last 3-4 decades lot many people than necessarily have entered into this field (for example before
1980 investment as a career is not popular even in USA and till 2000 in India it is not considered
good career choice). My guess is that we are already near peak of investment as a career and it
cannot sustain any longer at this level of activity and across the world it is seeing declining trend.
After all ideally we don't need more than 1000 good investor for stock market and 10 good mutual
funds.If same level of energy is put in creating a new company in rising sector it is more worthwhile
which can be wealth creator of future. Too much emphasis on any thing is not good for society and
least of all in investing which is at end of day is zero sum game. Any youth put 3-4 years of efforts in
any activities likely to succeed in today India as global skill, knowledge and market is open to
everybody. Most of current star of Indian stock market belong to era when Indian market is very
inefficient and not very popular and this activities was confined to some cosy club in and around
Mumbai and Gujarat because information access is not very transparent (for example formation of
NSE and SEBI after Harshad Mehta Scam is opposed by all broker of BSE at that point of time). Still
in India in most lucrative areas like business, politics, bollywood, traditional media, lawyers,
education, healthcare, banking and finance, access of govt fund and services etc is not democratic
and dominated by cosy clubs and we need to work towards reduce influence of these cosy clubs. For
example it is common occurrence in govt services to follow the line of political class and than
various services lobby so much common economic interest override all other form of prejudice
prevalent in Indian society like caste etc from centuries is overcome over night. Most of influence of
any group is mainly due to creation of lobby and self interest group in general loss to society and
country and our constitution dont grant any such special privilege to anybody and we as a society
need to enforce this legal activities and reject illegal activities. If history is any guide than cosy clubs
dont contribute much for better of society and country.It is true that few people from time to time do
succeed in breaking barrier of these cosy clubs but they end up promoting themselves after entering
the club and thus exclusivity of the club continue. Only after popularity of online trading platform
investing becomes more democratic and information access becomes more transparent across still
insider trading and manipulation of stocks is very common in market. Still some people can earn big
money through investing but earning money only cannot be top priority of humane endiviour but
impacting life of society is much more fulfilling. I do understand that due to peculiar nature of India
education system and job market many people get struct in job which they don't enjoy for long and
unlike west we don't have good career opportunities for career shift in latter phase of life. I guess
popularity of investing is mainly because it don't need much infra investment to start with and most
people perceive it as easy activity.

Holiday With Objective?

There is concept in management called Management by Objective (MBO). It is believed that
companies who follow concept of MBOs are more likely to succeed in their short term and long
term objectives. I am curious to understand if similar concepts can be applied to our holidays.
After all like companies holidays also consume our significant personal consumption budget in
many cases and my personal experience as tourist in many tourist destinations across India in last
2 years (previously as i was working in IT companies so don't have much luxury of time to enjoy
my holidays as tourist). Measure of cost of holidays can be judged from the fact that currently in
India even in Ashrams no good yoga retreat for a month is available below $ 1000 dollar (around
Rs 70000 per month) who is supposed to be cheapest places of stay compared to hotels. Based on
my limited exposure and even talking with few foreign tourist friends i have reached the opinion
that doing holidays in India is currently more expensive than similar or even better tourist
destinations like Thailand, Srilanka, Maldives etc so in that sense cost of holidays is truely global
in nature. that Also because now i can plan my holidays based on my own convenience so it has
its own advantages as you have luxury of time and don't need company permission to go on
holidays and as i get more experienced i have chance to plan my holidays better. Also my current
work profile is location agnostic so i can work as per my convenience while on holiday.
Few points about my personal profile: I have worked for about 8 years in IT companies and
during this short duration i have caught up with many diseases like BP, cholestrol, Overwight,
back pain linked with neurology and partial paralysis in my right hand fingers and so i am on
constant meditation from last 3-4 years to control these issues. Many of these diseases may be
interlinked and own can cause others in due course. After my resignation from job after few
months my BP and cholestrol is within under control without medicines. During peak of these
issues about 1 year back my weight
is topped out at 103 kg which got reduced to 97 kgs after some changes in food habits. In
January 2016 i went for yoga retreat of 2 weeks in Rishikesh after that time my weight has got
reduced to around 93 kgs range and hovering around these levels since then. So my expectation
from my upcoming holidays is to reduce my wight in the range of around 80 kgs so my
upcoming holidays in that respect is likley to to be longest in my life (already planned for around
2.5 months and can be extended based on how it progress).
In first phase i plant to go to Bangalore for my medical checkup with hospitals and take their
advise about need for medicines etc. Then i am going to Sri Sri Ravishankar Ashram in
Bangalore for 3 days Yoga course (this activity consume about 1 week time) than i plan to visit
Baba Ramdev ashram in Haridwar for ayurvedic treatment and advise than move to Rishikesh
for 2 months yoga retreat in a ashram. During yoga retreat i am also planning to go for trekking
in and around Rishikesh, plan dieting and go for short visit to Gangotri.
In conclusion my current weight is around 93 kgs and i expect to bring it to around 80 kgs during
my this long holiday and yoga trip and love to update my final status after my returning back
from holidays.
Category of company in Indian market
Type Market Capitalization
Micro Cap Upto 500 cr
Small Cap 500 cr to 3000 cr
Mid Cap 3000 cr to 15000 cr
Large Cap More than 15000 cr