Akash Prakash is the founder of Amansa Capital, a FII based in Singapore. He manages a portfolio worth in excess of Rs. 4000 crore. His superb stock-picking skills have ensured that the portfolio comprises of only top-quality winner stocks (See Akash Prakash’s investment philosophy and portfolio).
In an earlier article, Akash Prakash was gung ho about Indian equities and urged investors to buy stocks without worrying that there are “too expensive” or that there is no “margin of safety”. (See Debunking two worries).
However, in his latest piece in Business Standard (A test of conviction), Akash Prakash has done a somersault.
He points out that “there are clear cracks in the thesis” and that “over the coming few months, India bulls are going to have their conviction severely tested”.
Akash Prakash gives several reasons in support of his thesis and also pins the blame for this state of affairs on NAMO.
“Not enough change has happened at the ground level, little progress has been made in improving the ease of doing business or simplifying our web of rules and regulations” Akash Prakash says.
He adds that “the biggest disappointment for most investors has been on the reform front”. He criticizes NAMO for “very little out-of-the-box thinking or desire to break the mould”. “The hope for root-and-branch reform that fundamentally changes the way government functions and takes decisions now seems only a forlorn hope” he laments.
The fiasco over the applicability of minimum alternate tax (MAT) for foreign institutional investors has also irked Akash Prakash. He calls it a “big blow to investor perception” and that foreign investors are “convinced that the government is acting in an arbitrary and illogical fashion, and that India is once again back to doing funny stuff on taxes”.
Towards the end, Akash Prakash has sent the clear warning that “India is no longer the only game in town”. “It is only a matter of time before money moves, and the India overweight reduces among global emerging market as well as regional managers” he warns in a chilling tone.
Interestingly, even Samir Arora of Helios Capital who had come out with all guns blazing in support of NAMO at an earlier occasion (when NAMO was being attacked by Jim Rogers and Deepak Parekh for ‘inaction’) appears to be getting restive. He retweeted a comment by Debashis Basu that “MAT illustrates how maddening, hypocritical & unfair Indian politicians and tax babus can be. This govt no different’.
Samir Arora was also blunt about the clumsy manner in which the issue of taxation of foreign investors was handled. “What’s going on? Now govt says notices only for 600 crores of MAT. Then how did the 40,000 crore number come?” he asked irately.
If Akash Prakash and the other ace fund managers act on their threat and pump out billions of dollars from the India, it will spell doom for the stock markets. Will NAMO pay heed of these criticisms and take appropriate action to salvage the situation before it is too late?
He has also critized governor rajan for not cutting interest rates & media for creating an image that reforms are anti poor; maybe he was expecting too much
Another clear difference visible in opinion of Singapore based FII’s ( akash ,sameer) & indian mutual fund guys is that later are still looking much confident while FII guys are clearly angry over MAT & clearly trying to arm twist govt. The recent fall in market is being further used to create this fear that FII’s will run away. I think Govt. should not bow down to these pressure tactics
I agree with Siddhant…this demand is basically pertaining to previous years. The FIIs and media are colluding to show that this is great negative, as if government is unfair. Any country has a right to set its tax laws. Yes retrospective taxation is unfair but all legitimate demands are not retrospective taxation .
It is said that if you have passed out from an ivy league college, you are likely to be a poor trader, as you will always say that you are right and the markets are wrong.
Our finance ministers also suffer from that arrogance of power.our present finance minister and as well as mr p. Chidambram suffer from the same malaise.both were and are extremely succesful lawyers and in their glibness think that they can not be wrong.
One had hoped that mr jaitley would have been humbled by his great error in judgement in shifting his constituency to punjab.
Mat is basically an act of doublespeak.The govt boldly announces that capital gains are tax free and then comes the fine print that however you shall have to pay mat
On it .
We indians have to suffer in silence but for fiis we are not the only game in town.
Our new government boldly announced that they shall make every thing simpler but little has happened.
More the changes they may announce but nothing changes at ground.tax terorism is part of culture of indian goverment.complicated tax laws enrich the lawyers.
One is reminded of pramod mahajans statement”government is govenment and can do anything”
I think I concur with Rk’s observations. The Govt is slowly tightening its noose. Reforms are very slow. Saral is a joke on Income Tax payers.
I totally agree with all the restlessness that financial giants are showing. Patience comes in limited quantity and business have to perform to create value for shareholders, they are accountable and answerable to their shareholders.
It’s been almost a year and nothing concrete has happened on the ground that contributes to growth or is visible. How long does the govt expects patience and cooperation ? It definitely can’t be forever. Fii’s have a choice by way of other markets what about retail investors ? He is limited by avenues to move his money.
Lately lot of arrogance has creep-ed into this govt at most levels. From being most deserved FM, Jaitley is proving himself to be very irrational, plus his arrogance. No point in Modi pitching across the globe for investment when the house is not set right. Modi and his team are proving themselves to be the guys with big talk but no substance.
There is so much in air and in AIR too, but nothing is happening in acts from the Govt, side. RBI Governer and Govt. are acting like laymen and they think inflation came down on their own measures. Evey dog running through street knows the fact that, fall in crude prices helped a lot in fall of inflation and helped Govt for making claims as well. RBI is loosing chances of rate cuts and later they regret for their idelness. Crude prices connected with many reasons like political, geographical etc and it may go out of control of all even producers. Then RBI won;t have a ny room for cuts, Seems a disaster for financial market is nearby
What is the actual intention of this New Govt?
Sabka Saath…Sabka Vikaas
the second stage of bull market is through earning growth. it will come. may be in the next quarter or the next. then, fiis will be the first ones to enter the market again. May be the govt knows that. And they also dont want to be labelled as pro- corporate by leaving out this tax opportunity. Its just that the timing is not working well for them.
These so called IIT AND IIM AHEMDABAD guys must know.
For success and making money in stock markets commonsense is much more important then IIT and IIM degrees.
Money making id in fact very easy in indian stock markets.
I can take their class any time.
I do hope he sells all his HIGH QUALITY names at distressed prices and runs away. I would love to add more stocks at lower valuations.
These people talk rubbish. Nifty was up more than 5x during the UPA tenure when everything was wrong.
The Nifty will fall and again make a new high…..simply because India’s GDP will always grow at 6-9% range for next 15-20 years.
These short term issues are always blown out of propotions. Investors should only look at their company’s bottomline….and not whether dumb FIIs buy or sell lol.