Writing Room
2020 – 03 Investment Update
As the global COVID-19 pandemic evolves, from an investment research perspective the key question n our mind is what are stocks in India pricing in and to what extent? This is because,in episodes of uncertainty and volatility, markets have historically been least efficient in pricing securities thereby enhancing our ability to potentially generate excess returns through our remit of investing in quality businesses at attractive valuations. The update is divided into four short sections. The first part provides some data points as context for the second part which is an outline of what expectations we believe are baked into the current prices, which will inform part three – what are we doing about it from a portfolio perspective. Finally there is an appendix which goes deeper into the methodology and assumptions we have made.
The Great Indian Budget ‘Tamasha’ II
“Tamasha” is a Hindi word that can mean either a “grand show” or alternatively a “fuss” or a “commotion”.
Every year, on February 1st, the central government presents the Union Budget. It is just an account of the receipts and expenditure for the current year and the Budget for next year. Ceremoniously, market participants and the business world line up a plethora of sops and incentives that they desire from the Finance Minister. This year expectations centred on “fiscal compromise” (i.e. a higher fiscal deficit), either through measures to reignite demand (personal tax cuts) or higher spending.
Evolution; Perfect storm (in a teacup); fragility and Goldilocks
2019 was an eventful year for India which included a national election, a liquidity crunch, a botched budget, the biggest tax reform in a generation, and an equity market characterised by divergence and volatility. It has been a testing period for many investors, Ocean Dial included, and whilst the view point that the dust has started to settle is up for debate, it is timely to have a discussion on how our research approach has evolved over this period and our broader outlook for the coming years.