Pall of gloom over Dalal Street after GDP crumples
Yesterday’s announcement that the GDP growth has slumped to 5% sparked panic in Dalal Street.
This is the lowest growth in the past six years.
India GDP growth crashes to six-year low of 5% in April-June quarter.
— BloombergQuint (@BloombergQuint) August 31, 2019
Dr. Manmohan Singh, the renowned economist, described the situation as “deeply worrying“. He blasted NAMO for “all round mismanagement“.
Ex-PM Manmohan Singh: The state of economy today is deeply worrying. Last quarter's GDP growth rate of 5% signals that were in midst of a prolonged slowdown. India has potential to grow at a much faster rate but all round mismanagement by Modi govt has resulted in this slowdown. pic.twitter.com/q6AS08l0PA
— ANI (@ANI) September 1, 2019
Dear Modi Govt, Wake up
– GDP growth falls to over six-year low of 5% in April-June quarter.
– Manufacturing (0.6%), Agriculture (2%) & Construction (5.7%) suffered the lowest drop.
– Almost every sector is down
– Rupee on Ventilator
– Unemployment rate rose to 7.51% in July
— Anshul Saxena (@AskAnshul) August 30, 2019
Subramanian Swamy, the firebrand RSS leader, sent the chilling warning that the aspirations of a “$5-trillion economy” would remain a pipe dream if emergency remedial steps are not taken.
Get ready to say good bye to ₹ 5 trillion if no new economic policy is forthcoming. Neither boldness alone or knowledge alone can save the economy from a crash. It needs both. Today we have neither
— Subramanian Swamy (@Swamy39) August 31, 2019
The shocking and intolerable aspect is that even a junkyard country like Pakistan, which is roaming around the World with a begging bowl seeking alms, reported a higher GDP growth than that of India.
Fastest growing economies in Asia:
Bangladesh – 8.13%
Nepal – 7.9%
Bhutan – 7.4%
China – 6.9%
Myanmar – 6.8%
Philippines – 6.7%
Malaysia – 5.9%
Pakistan – 5.4%
Indonesia – 5.1%
India – 5%
Narendra Modi is India's first PM in 72 years to take India's #GDP growth below Pakistan's
— Rukshmani kumari (@KumariRukshmani) September 1, 2019
Shock therapy required to wake up comatose economy
The pundits of Dalal Street are naturally alarmed at the sorry state of affairs.
Shankar Sharma opined that the economy is “comatose” and needs to be given “shock therapy“.
#MegaETNOWExclusive | Shankar Sharma of First Global says that if he was the Finance Minister of the country, he would devalue the currency sharply and give shock therapy to the comatose #Market situation. Listen In!@AyeshaFaridi1 @1shankarsharma @FinMinIndia @nsitharaman pic.twitter.com/KZX9fPiAJW
— ET NOW (@ETNOWlive) August 26, 2019
Basant Maheshwari advised that a “multi pronged approach” requires to be adopted to catapult the economy into higher productivity and growth.
Need multi pronged approach:
1) Embark on a big privatisation scheme. There’s no opposition let’s not misuse this mandate to get rid of our past sins. A company in Govt hands and a company in private hands will add at least 5% – 8% to productivity and growth. https://t.co/t09IZNHs6y
— Basant Maheshwari (@BMTheEquityDesk) August 31, 2019
He also warned that inaction is not an option.
India is like an aircraft carrier not a speed boat anymore – once it turns it won’t turn again quickly. Inaction might just let the game slip away. https://t.co/WkhbUROBKS
— Basant Maheshwari (@BMTheEquityDesk) September 1, 2019
Samir Arora outlined a few “bolder steps” that the Govt should take to lift the economy and market sentiment.
'Bolder steps expected from govt to help economy and market sentiment.'
— ETMarkets (@ETMarkets) August 29, 2019
We need policies to improve liquidity for consumer lending, boost consumer purchases of auto, housing;lending by nbfc’s @nsitharaman @sanjeevsanyal @PMOIndia @RajivKumar1 Q2 is gone too,no growth:Q3 needs a boost now! @surjitbhalla https://t.co/CUWw3OBKgB
— Mohandas Pai (@TVMohandasPai) August 31, 2019
“I got completely hammered“: Raamdeo Agrawal
Raamdeo Agrawal has always been an inspiration for the novices of Dalal Street.
His earthy style of talking coupled with a modest attitude endears him to novices.
Of course, the fact that he has raked in a mammoth fortune in excess of Rs. 1,000 crore from the stock market through a common-sense approach to investing makes him irresistible to all inhabitants of Dalal Street.
In his latest interview, Raamdeo was missing his usual optimism and confidence.
Instead, he appeared to be somewhat diffident.
“Never has been in my 40-year experience in the market, did I see wealth destruction like the one we are seeing now,” he mumbled in a whisper.
“Yesterday was quite scary and I am getting to feel that we are into papa bear market,” he added.
“A bear market is like death by multiple cuts. Every day, it depresses you. The pain is there but it can actually hurt more,” he muttered.
“You have to be very cautious and now you do not have to pre-empt any news fundamentally. After hearing everything, after analysing also if you are going to buy, you get 5% cheaper than before the result kind of thing. So this is a very different market than what it was just a year back you can say,” he added in a soft tone.
“This time, I got completely hammered by my good amount of auto holdings which turned out to be cyclical,” he continued, lost in his thoughts.
“It was cyclical but I did not know it was coming and it was coming so severely. We had to take 40-50% knock from Eicher, Maruti. We had 7%, 8% allocation each and just between these we had 15%, 15%. It has come down to say half so 6-7% decline in the entire portfolio has happened because of these two“.
“So yes, we have suffered,” he stated, his shoulders slumped and eyes moist, with an air of resignation.
Sahab, bahut kharab hai, yeh hai, woh hai
Raamdeo explained that the talk about the slowdown in the economy has become a self-fulfilling prophecy and a vicious circle.
The bad news is discouraging people from buying new products because of fears of their own future and is leading to a slowdown which in turn is increasing fears.
He pointed out that when he grilled a dealer in Jabalpur about the economic situation, he got a somewhat evasive reply.
“Sahab bahut kharab hai, yeh hai, woh hai (Sir, the situation is very bad)“, the dealer said.
However, when Raamdeo probed further, the dealer revealed that though his order book is healthy, the atmosphere of gloom is causing negativity in the minds of the buyers.
Buyers are worried about the safety of their jobs, their income and their ability to service the EMIs, Raamdeo explained.
“The buzzword in the media is that there is a lot of problem!,” he emphasized.
“That kind of fear is unnecessarily creeping in,” he added.
Raamdeo’s theory is corroborated by the fact that the Google search for the term “slowdown” in India is at nearly the highest for this decade.
Spotting a herd, realtime. Google search for the term 'slowdown' in India is at nearly the highest for this decade. As a financial markets participant if you playing for a slowdown then it's what everyone is playing for.
Jump to the image pic.twitter.com/yIb9tACXd6
— Sahil Kapoor (@SahilKapoor) September 1, 2019
Government is trying to tax too much
Raamdeo made it clear that he is not much impressed with the manner in which NAMO and Nirmala Sitharaman have handled the situation.
He blasted the Govt for raising taxes, insurance and registration rates with no regard to ground realities.
“There is a slowdown. The inflow of the customers, footfalls and all are lower and half of it could be only because of the general negativity in the system. There is pessimism. There is no mood of optimism. The government is trying to tax too much. Even the insurance costs are up, as did the higher registration costs,” he stated.
Even the fiasco about the electrical vehicles (EV) disrupting the automobile sector was inappropriate, he added.
In fact, the entire EV situation was handled in such a frivolous manner by the Govt that Billionaire Rajiv Bajaj of Bajaj Auto had to rap them by reminding that the “Automobile industry not a “Chai ka stall“.
— CNBC-TV18 (@CNBCTV18Live) July 11, 2019
Industry veteran Rahul Bajaj hits out at the govt for its inability to arrest falling demand and boost private investments. He also says Centre is sending out confusing signals regarding the EV policy pic.twitter.com/uLHaP0HBxD
— ET NOW (@ETNOWlive) July 30, 2019
“These things are not helping the businesses, particularly in the environment of slowdown,” Raamdeo fumed.
Raamdeo also found fault with the Govt over the (mis)handling of the NBFC crisis.
“The entire architecture has broken down because there is a doubt now on the rating agencies, on the banks and the NPAs and so the whole thing is somewhat disoriented right now,” he stated.
This is scary for me.
Nearly Rs 1.3 lakh crore of NBFC borrowing from MFs coming up for repayment in Q1. NBFCs under stress will face serious issue for repayment. pic.twitter.com/Id9w6lxy2N
— Varinder Bansal ?? (@varinder_bansal) April 26, 2019
Jitni badi mandi utni badi teji
Raamdeo did not get to amass a fortune in excess of Rs. 1,000 crore by adopting a defeatist attitude and bemoaning his losses.
“I am a bull in bear market,” he roared, his eyes flashing in defiance.
“I am still bullish and I am fully invested. I will go down with the market only. I am not a guy who is sitting on 10% cash and things like that so that is not the issue,” he added emphatically.
“Jitni badi mandi utni badi teji to woh hone wala hai (The bigger the slowdown, the greater will be the surge),” he said.
“The journey from current $3 trillion to 5 or $6 trillion, doubling of GDP, will happen in the next seven, eight years for sure,” he opined.
Pessimism is overdone. Time is ripe to buy stocks
It is worth noting that Rakesh Jhunjhunwala, the Badshah of Dalal Street, has also sent out the clarion call that the pessimism in the market is overdone and that the time is ripe for us to tuck into high-quality stocks.
Speaking exclusively to ET Now, Big Bull Rakesh Jhunjhunwala says pessimism in the market is overdone and the 10,500-10,750 level in the Nifty would act as a floor.https://t.co/AK0O9lwGbe
— TIMES NOW (@TimesNow) August 26, 2019
— CNBC-TV18 (@CNBCTV18Live) August 13, 2019
Rakesh Jhunjhunwala on govt support to revive markets: A lot needs to be done
— ETMarkets (@ETMarkets) August 26, 2019