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?