Indian IT Services Sector – Add the Digitals

Here is an Industry report on the Indian IT Services sector. It’s a sector that is growing at 8-10% annually and has significant share in global outsourcing. An ecosystem of good college education and a large pool of talent, feed a clutch of globally competitive Indian IT Service firms. The digital demand has only grown post-covid, so the industry is looking at many years of global growth in early double digits. See the Conclusion section for our recommended IT Services portfolio.

We make our 11th Jan 2021 IT Services sector report public for your investing pleasure and success.

jainmatrix investments, IT Services

Additional sector reports:    Happiest Minds IPO – Ride the Digital Wave – Sept 2020    

                                               LT Tech Services IPO – The Make in India Firm – Sept 2016

Introduction and Profile

  • Indian IT services industry started over 30 years ago, but is now very large with revenues US$ 191 billion (INR 14 lakh crores). About 81% of revenues are from exports. See Fig 1a.
  • It has 17,000 firms & is an emerging global hub for Digital Skills, with 75% of global digital resources.
  • IT Services have contributed 7.7% to the India GDP in 2019 which is expected to grow to 10% by 2025 (IBEF). In FY19, the industry employed 41 lakh people. It is also fueling innovation, as there are around 5,300 tech start-ups in India.
  • Exports rose at a CAGR of 8.05% during FY16-19. Export of IT services has been the major contributor, accounting for 54% of total IT export (including hardware) during FY19.
  • Globally, the sector is headed towards achieving USD 1 trillion (INR 75 lakh crores) of revenues by 2022.

Fig 1a – Market Size in India and Fig 1b – Share of Demand by Country

  • USA dominates global Country Share of demand, with EU, China and Japan coming next, see Fig 1b.
  • In Fig 1b, market share of Indian IT industry looks small but this is domestic demand in USD. India is a dominant supplier of IT services globally and has the fastest growing industry in the world with most key players having a HQ or development centers here.
  • BFSI is a key business vertical for IT & BPM industry, in terms of major revenue-share. Adoption of new technologies is needed for growth & competitive advantage in Banking & Insurance domain.
  • Other important sectors are Life Sciences & Healthcare, Retail & CPG, Communications & Media, Manufacturing, Telecom and Technology & Services.
  • Indian IT industry’s USP is cost competitiveness, good skills, resource availability and project management skills for providing IT services.  
  • Tier II and III cities are gaining traction among IT firms aiming to grow business in India, facilitated by skilled local resources, affordable real estate, favorable Govt. regulations, tax breaks and SEZ schemes. A hub and spoke model is developing with Tier I city as hubs and tier II, III and IV as spokes.
  • India is a top location for Global Capability Centers (GCCs), which concentrate on workers and infra to handle operations (back-office, corporate business-support, accounting & finance, transaction processing and contact centers) and IT support (app. development and maintenance, remote IT infra, and help desks), to enhance productivity. Some large companies use GCCs as a center of excellence for innovation and research.
  • About 70% of India-based GCCs belong to US companies, 20% European and 10% Asia-Pacific.
  • According to Nexdigm, India is home to over 1,750 GCCs, which is 50% of all such centers globally. GCCs here employ over 10L employees, generating a total economic value of around $28.3 billion.
  • IT Services in India are growing at a fast pace due to the globally competitive firms that provide world-class services. The Human talent pool available in India is highly skilled and trainable, a key strength of the IT Services sector. The IT infra here has also developed to global standards.

IT Sector Progress and News

  • NASSCOM (National Assn. of Software & Services Cos.) launched an online platform to up-skill 40 lakh tech professionals. It partnered with GE Healthcare for digital healthcare solutions for the market.
  • IT service firm DXC Technology, will set up its first global analytics unit in Bengaluru.
  • Govt. of India (GoI) announced a national program on AI (artificial intelligence) and a new National AI portal. GoI has identified IT as one of 12 champion service sectors for developing an action plan. It has set up a ₹5,000 crore ($ 745 m) fund for realizing the potential of these champion service sectors.
  • As of Feb’20, there were 421 approved SEZs (Special Economic Zone) across the country, and of these, 276 are from IT & ITeS. These provide tax incentives for exports. Software Technology Parks of India (STPI) has set up 57 centers for single window clearance and infra facilities, and for Excise Duty exemptions on buying local goods.
  • Technology for many businesses was considered a support function. This has changed as tech. has become business critical, enabling employee productivity, revenue growth from eCommerce, cost savings and faster customer support & communication.
  • TCS took the #1 spot with M-cap of $144 b among IT Services organizations, dethroning Accenture which is trailing by just $1b (Dec ‘20).

Impact of Covid

  • In Q1FY21, Indian IT sector has emerged as a winner post lockdown. With Work from Home (WFH) at 95%, all the big IT firms saw robust demand from clients, particularly cloud & automation. Infosys gained in revenue and profits; IT index gained 22% in July. Similarly in Q2FY21, IT sector gained due to increased tech spending by clients in digital transformation.
  • Due to automation, spending on IT infra has outpaced HR. Job creation has been limited with offers being rolled out more on contractual basis than full-time, in both emerging & developed markets.
  • Many firms found that WFH employees are equally productive & this saves real estate costs as well. It also relieves firms of covid related responsibility and litigation.
  • IT Deals – Indian IT stocks jumped by 50%, on an average, between Mar-Sept ’20. Top IT firms have been closing deals – Infosys closed 2 big deals, Vanguard and Consolidated Edison (digital transformation); TCS won deals from Phoenix Group (life insurance and pension) for client analytics tool, and Morrisons (retail); Wipro from Marelli (auto software engg.) and HCL Tech from Ericsson.
  • Broker comments: Girish Pai of Nirmal Bang said that global clients shifted spending from internal IT, selling, general and administrative (SG&A) and hardware, to outsourcing and digital, to speed up the digital transformation processes such as migration to cloud.
  • Motilal Oswal, a brokerage firm, said that demand & utilization has normalized to pre-Covid levels with discussions being revived for deferred deals and margins expected to be resilient as well.

Relative Price Performance

  • The graph in Fig 2 – Relative Share shows the stock returns given by listed Indian IT Services firms over Oct’18 – Jan’21.
  • We can see that performance was steady for these firms till early 2020 in a +25 to -10% ranges, then there was a sharp fall due to Covid. Recovery came by July’20 and in next 6 months there was a dramatic price rise for many of them.
  • On the right side we can see the resultant share performance by order for the 2+ years.
  • Among large caps, L&T Infotech is #1, marked L1, Infosys #2, HCL Tech #3 and next are Wipro #4, TCS #5 and Tech Mahindra #6. Among mid-caps, the rankings are Persistent is #1, marked M1, others are Mindtree #2, Mphasis #3, LTTS #4 and Sonata Software #M5.
  • Even so, the entire IT Services pack has performed very well as even the lowest performance was 42% gains over 2+ years, while the highest is an amazing 179% gain.

Fig. 2 – Relative Share Price

Large Cap Firms – Benchmarking and Sales Charts

Fig 3a – LC revenue and Fig 3b – MidCap

In Fig 3a we map the FY20 revenues for Large Cap Firms. Revenue from exports is the major source.

  • TCS has the highest sales by value, almost two-fold to the nearest competitor Infosys.
  • In terms of India revenues, Tech Mahindra has the highest domestic sales followed by TCS.

Fig 4a – LC Benchmarking

  • In Fig. 4a – Benchmarking, we compare large cap IT services firms on key financial parameters.
  • The leader is marked in green and the laggard in red. The sum total of these parameters is the Score.
  • We can see that TCS is a clear leader, including RoCE and Return of Equity, while Wipro lags on this comparison amongst 6 large cap firms. L&TI however appears as a growth and profit leader.

Mid-Cap Firms – Benchmarking and Sales Charts

  • In a similar manner, we compare mid cap IT services firms. In Mid-cap basket, Sonata is the leader on financial parameters, including RoCE and RoE, whereas Persistent lags among the 5 firms.

Fig. 4b – Mid-caps Benchmarking

  • Among mid-caps, Mphasis has the highest revenues or sales, followed by Mindtree.
  • Sonata Software has the highest domestic sales by value and proportions.
  • Fig 4b above captures the MidCap firms revenue by domestic and exports.

Future of the Indian IT Services Industry

  • The comparative advantages of the country are – young population, good college education and ample science and technical courses. These feed this sector with quality resources.
  • India is developing as a critical part of execution and delivery of global business and IT Services, across industries & locations. Firms like TCS are covering more countries & expanding the market.
  • The growth of Telecom networks like 2G-4G and now 5G are bringing the world closer.
  • Covid has actually accelerated the rise of digital, eCommerce, internet and the IT Services industry. As larger firms enforced WFH for their employees’ safety, the physical presence has become unnecessary for work, for large swathes of industry. 
  • TCS as the #1 firm globally in terms of market capitalization has been able to sustainably mix high margins, high growth and a global vision. The other firms in the industry are growing in its wake and developing their own niches and strengths.
  • The industry is looking at many years of global growth in early double digits, even as IT services take early baby steps of growth in its own backyard, India. With programs like Aadhar card, UPI payments, GST, digital tax filing and FASTag, technology is proving the best way to transact at scale with speed and transparency, and also reduce corruption.
  • The success of the Indian IT Services firms has spawned the second generation of services firms such as Syngene Intl. (pharma R&D) and Tata Elxsi & LTTS (Engineering R&D) which are niche services players by technology or industry.
  • The key new IT services trends are WFH, cloud services, AI, IoT, robotics, mobile apps and machine learning.

Conclusion:

  • IT Services firms are always going to be needed to stitch together solutions for large Enterprises, and to help them navigate, evaluate and deploy in complex IT landscapes with multiple technology options.
  • Indian IT services companies have time and again proven their mettle and have the skilled resources and project management skills to deliver successfully. It is a dynamic, globally focused sector.
  • The 11 firms had an excellent share price performance range of 42% to 179% gains over 2+ years.
  • The weak INR may help India to continue to be a good base for service delivery teams and exports.
  • Large Caps: A LC IT Services portfolio will be more stable and safer for investors. We conclude from Fig 2, Fig 3a, and Fig 4a that of the 6 LC firms, the best 3 are L&T Infotech, TCS and Infosys.
  • Mid-Caps: A MidCap IT Services portfolio will be more volatile, but possibly provide better returns. We can see from Fig 2, Fig 3b and Fig 4b that of the 5 LC firms, the best 2 are Mindtree and LTTS.  
  • We recommend investors to buy this 5 firm portfolio in an equi-weight mode.

Disclaimer

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. Punit Jain has positions in LTTS, Sonata Software, TCS and L&T Infotech, all <1%. Punit Jain worked at TCS from 1995 to 2002. Other than this, JM has no known financial interests in any of these firms. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an Investment Advisor. Punit Jain is a registered Research Analyst under SEBI (Research Analysts) Regulations, 2014. JM has been publishing equity research reports since Nov 2012. Any questions should be directed to the director of JM at punit.jain@jainmatrix.com.

JainMatrix Investments – Track Record

11th Feb 2021

Dear Investor,

JainMatrix Investments is a premium Investment Service for Indian equity. We build wealth through in-depth equity research and Model Portfolio appreciation over the long term. It is the best way to get great returns, lower costs and yet be in control of your own portfolio. We simplify investing for individuals. Investors trust our advisory services for stock picks, tracking and personalized support. JainMatrix is run by Punit Jain, a SEBI registered Research Analyst.

We created two Model Portfolios 8 years ago, with our best picks at that time. We have since been managing the 1) Large Cap (LC) and the 2) Mid and Small Cap (MSC) Model Portfolios. We remove under-performers and replace them with promising new picks, to give investors a solid core portfolio of equity assets to replicate in their personal holdings. Today we share with you the Track Record for these JainMatrix Model Portfolios.

PERFORMANCE TRACKER

Investors should be aware that performance depends on market conditions, and past performance is not necessarily a guide to future performance and value of investments can go down as well.

..

PERFORMANCE DESCRIPTION

The Indian Indices were doing well till Feb 2020, then they got impacted by the Covid uncertainty and subsequent lockdown, falling to a low in March. Thereafter, there has been a steady recovery, and the Sensex retouched its past high in Nov 2020, and has been above this level thereafter. 
The JainMatrix Investments Model Portfolios continue to do well against their stated objectives.
  • We have a portfolio universe of 70 tracked stocks, the finest firms found through our equity research over 8 years.
  • From this universe, we created 2 focused portfolios of 6-8 shares each – a Large Cap and a Mid & Small Cap portfolio.

Mid and Small Cap Model Portfolio – MSC

  • JainMatrix InvestmentsThe objective of MSC is to simply outperform over a 1 year plus period by investing in growth or turnaround firms with solid fundamentals and excellent managements.
  • The 6-8 MSC shares here represent growth or value leaders from 3-6 high potential sectors.

Large Cap Model Portfolio – LC

  • The objective of LC is to preserve capital and outperform the Nifty by 2-5% a year by investing for minimum 2 year periods in firms with solid fundamentals and excellent managements.
  • The 6-8 LC shares here represent leaders from 6-8 large and solid sectors.

Ours is a 100% equity approach, so investors should allocate to other asset classes with inputs from a good adviser/ financial planner. So if the investment climate turns sharply negative, we may exit equities and stay in cash.

Other Valuable Research – IPOs, Stock Ideas, Sector and Trend reports

  • In addition to the Model Portfolios, we also present new stock ideas from listed and IPO firms and reports that identify sectoral trends.
  • Our IPO reports have had a good success rate and help identify winners and avoid overpriced or under-rated IPO firms. Subscribers also receive valuable Listing Day – buying range advise on IPO picks, so that they can take large positions, as allotments in good offerings may be limited to 1-2 lots.
  • Our sectoral and economy notes help develop long term thinking after events like demonetization, budgets, etc.

Sign up for the JainMatrix Investment Service to take the right decisions, whatever the event, in your investing journey. ..

SUBSCRIBE NOW TO GET THE BEST INVESTMENT SERVICE at

PRICING AND PAYMENT OPTIONS

DISCLAIMERS

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an independent expert/advisor. Punit Jain is a registered Research Analyst and compliant with SEBI (Research Analysts) Regulations, 2014. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com.

Budget ’21 lays foundation for $5 T economy; India pivots to top ESG nation through Budget

4th Feb 2021

At JainMatrix Investments, we want to think positive, and get back on Track, so here are articles in this space:

  1. Budget 2021 lays foundation for $5 trillion economy – M’Control – 04th Feb
  2. India pivots to top ESG nation through Budget – ET – 04th Feb
  3. Towards $5 T: What is holding India back? – FinExpress – 07th Jan
  4. India should follow agri – led industrial growth model – BT – 07th Jan
  5. NBFC sector rebounded in six months of FY21, says RBI – LiveMint – 29th Dec
  6. Power sector limping back to normal – ET – 29th Dec
  7. Digital is the way forward in a post-Covid world – LiveMint – 16th Dec
  8. Disinvestment will now gain momentum – ET – 16th Dec
  9. India may grow at 11% in 2022, says N Chandra – M’Control – 13th Dec
  10. Six early trends in financial sector – M’control – 09th Dec
  11. View: How tech makes it possible to solve corruption – ET – 09th Dec
  12. Indian economy back on track in Q2 – FinExpress – 20th Nov
  13. India’s health spend low, needs to be made priority – BS – 20th Nov
  14. GST collections at 8-month high – IndianExpress – 05th Nov
  15. Economy to reach pre-Covid growth by fiscal-end – BS – 05th Nov
  16. COVID in India on recovery – BS – 05th Nov
  17. India reopens its doors, restores most visas – ToI – 22nd Oct 
  18. E-tailing to become USD 200-bn by 2025: Report – ETNow – 22nd Oct 
  19. FM’s consumption boost to turbocharge e-comm – BS – 13th Oct 
  20. Low finance rates leading to increased home sales – ET – 13th Oct 
  21. Gig economy to lead 80% of blue-collar jobs – BS – 13th Oct 
  22. How robust is India’s recovery? – IndianExpress – 5th Oct 
  23. Covid may have peaked in September – ToI – 5th Oct 
  24. Digital payments: Pandemic does what demon couldn’t – ET – 01st Oct
  25. Healthcare Reforms – National Med. Commission started – (ET) – 25th Sept 
  26. Export show signs of a revival – (LiveMint) – 25th Sept 
  27. Economic recovery sustains momentum through first week of Sept – (ET) – 10th Sept 
  28. Rice, sugar push up Q1 farm exports by 23% – (ET) – 10th Sept 
  29. IPL set to kick-start consumption cycle – (LiveMint) – 30th July 
  30. Unlock 4: Metros to start, no lockdowns outside containment zones – (LiveMint) 30July 
  31. Mfg. policies of govt to help firms shift base to India: ICEA – (BS) – 26th Aug 
  32. RBI at end of rate cut cycle, govt must play role for revival: Economists – (BS) – 26th Aug 
  33. Railway earnings, Power generation: weekly indicators about economy – (BS) 18th Aug 
  34. Import embargo plan for 101 defense items to boost indigenisation(FE) 18th Aug 
  35. Must improve ease of business to be a mfg. hub: Industry captains– (ET) – 07th Aug 
  36. Here’s what Indians have been spending on during the pandemic – (ET) – 07th Aug 
  37. Redesign, rethink whole economy for success in post-Covid world – (ToI) – 05th Aug 
  38. Joblessness at pre-covid level as India unlocks more – (LiveMint) – 05th Aug
  39. Expect V-shaped recovery over next few months: Ridham Desai – (ET) – 30th July    
  40. A major change is shift in format: Panel on education – (ET) – 30th July 
  41. Hiring optimism grows as demand gathers pace – (LiveMint) – 20th July 
  42. IT may see surge in offshoring biz – (LiveMint) – 20th July
  43. The current wave of rail reforms is actually “historic” – (ET) – 17th July 
  44. Mapping India’s Post-Covid Capex Recovery – (BQ) – 17th July 
  45. View: Never a better time than now to build for India – (ET) – 13th July 
  46. India at the cusp of a huge explosion of demand: Panasonic CEO – (ET) – 13th July
  47. Record surge in sales of vacuum cleaners, dishwashers, DIY products – (ET) – 07th July 
  48. Labour shortage, factories go the extra mile to woo migrant workers – (ET) – 07th July 
  49. PMI, GST mop-up point to a pickup in economic activity – (LiveMint) – 02nd July 
  50. India Inc’s big bet on Bharat saving the day – (LiveMint) – 02nd July
  51. Green shoots in Bharat lead country’s economic revival – (LiveMint) – 30th June 
  52. Opinion | The onus is on us to conquer fear – (LiveMint) – 30th June 
  53. Not two years, 200 projects finished during lockdown: Railways – (ToI) – 29th June 
  54. Bankers in India are more productive working from home – (LiveMint) – 29th June 
  55. Global equity markets are likely to continue their up move – (BizStd) – 27th June
  56. Migration is reversing: Trains from UP, Bihar run full – (ToI) – 27th June 
  57. Indicators of economic recovery in India – (EcoTimes) – 24th June
  58. Get India fully back to business, says India Inc – (EcoTimes) – 24th June
  59. Post-crisis, increase integration with global economy – (EcoTimes) – 20th June
  60. Kharif planting rises 40% on strong monsoon start – (EcoTimes) – 20th June 
  61. Maruti Suzuki’s model can make India a global mobile mfg hub – (EcoTimes) – 18th June 
  62. Indian economy to recover very fast: HDFC Bank CEO – (EcoTimes) – 18th June 
  63. A COVID-19 workplace readiness tool for organisations – (IISC) – 17th June 
  64. It is time to be a little positive on financial space – (EcoTimes) – 17th June 
  65. Exports bounce back to last year’s levels in June – (EcoTimes) – 16th June 
  66. Unemployment rate declines sharply as India exits lockdown – (Livemint) – 16th June 
  67. Local trains, Mumbai’s lifeline, resumes services – (Livemint) – 15th June 
  68. Construction work restarts at over 100 projects in NCR – (EcoTimes) – 15th June 
  69. Govt urges use of bicycles, EVs to mitigate risks – (EcoTimes) – 13th June 
  70. Digital is the Key to Unlock this Disruption’ – (EcoTimes) – 13th June 
  71. ‘Put the money in Indian stocks, forget till 2025’ – (EcoTimes) – 12th June 
  72. Loans are getting cheaper, HDFC cuts lending rate – (EcoTimes) – 12th June
  73. View: Replacing China imports possible, even in EVs – (EcoTimes) – 11th June 
  74. ‘Time for Bold Investments, not conservative decisions’ – (Livemint) – 11th June 
  75. After steep falls, June exports show signs of improvement (EcoTimes) – 10th June 
  76. Partial lockdown lift gives work to 21 million; not salaried class (EcoTimes) – 10th June 
  77. Covid-19 is no plague or cancer; fear psychosis unnecessary (EcoTimes) – 09th June
  78. Import-intensive spending likely to feel the pinch – (EcoTimes) – 09th June 
  79. Getting growth back on track is non-negotiable: Uday Kotak (EcoTimes) – 08th June 
  80. Post Covid Opportunities – Global Work Force (Nasdaily) – 8th June
  81. Impetus To Realty Demand, But More Needs To Be Done (NDTV) – 06th June
  82. Collections improving, demand picking up in rural India (EcoTimes) – 06th June
  83. View: How to get Make-in-India to work this time (EcoTimes) – 05th June 
  84. Effects of Unlock 1.0 as new guidelines come into play – (IndianExpress) – 05th June 
  85. Cabinet approves amendment of Essential Commodities Act (Livemint) – 04th June 
  86. Goods movement pickup in May signals economic revival (Livemint) – 04th June 
  87. PM’s First Major Address On Economy After Unlock 1.0 (ndtv.com) – 03rd June 
  88. Five Indian states are leading in the recovery from lockdown – (EcoTimes) – 03rd June
  89. India’s 3-phase ‘Unlock’ Plan starts at last (ToI) – 1st June 
  90. Supply to improve post-unlock 1.0; demand pickup may be slower (Livemint) – 1st June 
  91. Over 1.65 lakh people traveled in 2,198 flights since Monday: Puri (Livemint) – 30th May 
  92. The global supply chain is being reconfigured, India can gain (EcoTimes) – 30th May
  93. Nearly 65,000 cured from COVID-19 in India, 42% recovery rate (Livemint) – 29th May 
  94. An India lockdown survey: The good, bad and the ugly (Eco Times) – 29th May 
  95. How is India doing against COVID19 in 3 graphs – 28th May
  96. Covid-19 proves the importance of telecom in India (Eco Times) – 28th May
  97. India runs on Rails: MORE TRAINS BASED ON DEMAND (Fin Expr.) – 27 May
  98. MY TAXI HAS VEHICLES WITH PPE KITS, CURTAINS (Eco Times) – 27th May
  99. COVID-19 Is Fast-Tracking Digital Transformation – 26th May 
  100. HOW DHARAVI IS TACKLING THE COVID INFECTION RATE – 26th May 
  101. AFTER 2 MONTHS, FLIGHTS ARE BACK – 25th May
  102. HOW INDIA INC. GOES BACK TO WORK, LEADERSPEAK (Eco Times) – 25th May
  103. A THIRD OF NSE MFG FIRMS BACK AT WORK (Eco Times) : 23rd May
  104. MAHINDRA FACTORY – COVID CARE READY – 23rd May
  105. We actually wrote about the need for a lockdown in Mar 2020 – CALL IN THE INDIAN ARMY TO HANDLE THIS EMERGENCY – 20th March

We have been tracking this infection since March when it came to India and we had to declare the lockdown. Today, 6 months on, we are at a different phase in the economy. We have to understand that this virus will not go away, it is we who have to adjust to it. Even as we maintain social distancing, and wear masks, and wash hands regularly, the important thing now is to dive back into business and achieve some semblance of normalcy.

Regards,

Punit Jain

DISCLAIMER

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. Punit Jain and JM has no ownership or known financial interests in any company mentioned in this note. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an Investment Advisor. Punit Jain is a registered Research Analyst under SEBI (Research Analysts) Regulations, 2014. JM has been publishing equity research reports since Nov 2012. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com.

How robust is India’s recovery; Covid peak in Sept; Pandemic helps Digital payment

5th Oct 2020

At JainMatrix Investments, we want to think positive, and encourage India to get back on Track, so we share articles and track stories in this space:

  1. How robust is India’s recovery? – IndianExpress – 5th Oct 
  2. Covid may have peaked in September – ToI – 5th Oct 
  3. Digital payments: Pandemic does what demon couldn’t – ET – 01st Oct
  4. Healthcare Reforms – National Med. Commission started – (ET) – 25th Sept 
  5. Export show signs of a revival – (LiveMint) – 25th Sept 
  6. Economic recovery sustains momentum through first week of Sept – (ET) – 10th Sept 
  7. Rice, sugar push up Q1 farm exports by 23% – (ET) – 10th Sept 
  8. IPL set to kick-start consumption cycle – (LiveMint) – 30th July 
  9. Unlock 4: Metros to start, no lockdowns outside containment zones – (LiveMint) 30July 
  10. Mfg. policies of govt to help firms shift base to India: ICEA – (BS) – 26th Aug 
  11. RBI at end of rate cut cycle, govt must play role for revival: Economists – (BS) – 26th Aug 
  12. Railway earnings, Power generation: weekly indicators about economy – (BS) 18th Aug 
  13. Import embargo plan for 101 defense items to boost indigenisation(FE) 18th Aug 
  14. Must improve ease of business to be a mfg. hub: Industry captains– (ET) – 07th Aug 
  15. Here’s what Indians have been spending on during the pandemic – (ET) – 07th Aug 
  16. Redesign, rethink whole economy for success in post-Covid world – (ToI) – 05th Aug 
  17. Joblessness at pre-covid level as India unlocks more – (LiveMint) – 05th Aug
  18. Expect V-shaped recovery over next few months: Ridham Desai – (ET) – 30th July    
  19. A major change is shift in format: Panel on education – (ET) – 30th July 
  20. Hiring optimism grows as demand gathers pace – (LiveMint) – 20th July 
  21. IT may see surge in offshoring biz – (LiveMint) – 20th July
  22. The current wave of rail reforms is actually “historic” – (ET) – 17th July 
  23. Mapping India’s Post-Covid Capex Recovery – (BQ) – 17th July 
  24. View: Never a better time than now to build for India – (ET) – 13th July 
  25. India at the cusp of a huge explosion of demand: Panasonic CEO – (ET) – 13th July
  26. Record surge in sales of vacuum cleaners, dishwashers, DIY products – (ET) – 07th July 
  27. Labour shortage, factories go the extra mile to woo migrant workers – (ET) – 07th July 
  28. PMI, GST mop-up point to a pickup in economic activity – (LiveMint) – 02nd July 
  29. India Inc’s big bet on Bharat saving the day – (LiveMint) – 02nd July
  30. Green shoots in Bharat lead country’s economic revival – (LiveMint) – 30th June 
  31. Opinion | The onus is on us to conquer fear – (LiveMint) – 30th June 
  32. Not two years, 200 projects finished during lockdown: Railways – (ToI) – 29th June 
  33. Bankers in India are more productive working from home – (LiveMint) – 29th June 
  34. Global equity markets are likely to continue their up move – (BizStd) – 27th June
  35. Migration is reversing: Trains from UP, Bihar run full – (ToI) – 27th June 
  36. Indicators of economic recovery in India – (EcoTimes) – 24th June
  37. Get India fully back to business, says India Inc – (EcoTimes) – 24th June
  38. Post-crisis, increase integration with global economy – (EcoTimes) – 20th June
  39. Kharif planting rises 40% on strong monsoon start – (EcoTimes) – 20th June 
  40. Maruti Suzuki’s model can make India a global mobile mfg hub – (EcoTimes) – 18th June 
  41. Indian economy to recover very fast: HDFC Bank CEO – (EcoTimes) – 18th June 
  42. A COVID-19 workplace readiness tool for organisations – (IISC) – 17th June 
  43. It is time to be a little positive on financial space – (EcoTimes) – 17th June 
  44. Exports bounce back to last year’s levels in June – (EcoTimes) – 16th June 
  45. Unemployment rate declines sharply as India exits lockdown – (Livemint) – 16th June 
  46. Local trains, Mumbai’s lifeline, resumes services – (Livemint) – 15th June 
  47. Construction work restarts at over 100 projects in NCR – (EcoTimes) – 15th June 
  48. Govt urges use of bicycles, EVs to mitigate risks – (EcoTimes) – 13th June 
  49. Digital is the Key to Unlock this Disruption’ – (EcoTimes) – 13th June 
  50. ‘Put the money in Indian stocks, forget till 2025’ – (EcoTimes) – 12th June 
  51. Loans are getting cheaper, HDFC cuts lending rate – (EcoTimes) – 12th June
  52. View: Replacing China imports possible, even in EVs – (EcoTimes) – 11th June 
  53. ‘Time for Bold Investments, not conservative decisions’ – (Livemint) – 11th June 
  54. After steep falls, June exports show signs of improvement (EcoTimes) – 10th June 
  55. Partial lockdown lift gives work to 21 million; not salaried class (EcoTimes) – 10th June 
  56. Covid-19 is no plague or cancer; fear psychosis unnecessary (EcoTimes) – 09th June
  57. Import-intensive spending likely to feel the pinch – (EcoTimes) – 09th June 
  58. Getting growth back on track is non-negotiable: Uday Kotak (EcoTimes) – 08th June 
  59. Post Covid Opportunities – Global Work Force (Nasdaily) – 8th June
  60. Impetus To Realty Demand, But More Needs To Be Done (NDTV) – 06th June
  61. Collections improving, demand picking up in rural India (EcoTimes) – 06th June
  62. View: How to get Make-in-India to work this time (EcoTimes) – 05th June 
  63. Effects of Unlock 1.0 as new guidelines come into play – (IndianExpress) – 05th June 
  64. Cabinet approves amendment of Essential Commodities Act (Livemint) – 04th June 
  65. Goods movement pickup in May signals economic revival (Livemint) – 04th June 
  66. PM’s First Major Address On Economy After Unlock 1.0 (ndtv.com) – 03rd June 
  67. Five Indian states are leading in the recovery from lockdown – (EcoTimes) – 03rd June
  68. India’s 3-phase ‘Unlock’ Plan starts at last (ToI) – 1st June 
  69. Supply to improve post-unlock 1.0; demand pickup may be slower (Livemint) – 1st June 
  70. Over 1.65 lakh people traveled in 2,198 flights since Monday: Puri (Livemint) – 30th May 
  71. The global supply chain is being reconfigured, India can gain (EcoTimes) – 30th May
  72. Nearly 65,000 cured from COVID-19 in India, 42% recovery rate (Livemint) – 29th May 
  73. An India lockdown survey: The good, bad and the ugly (Eco Times) – 29th May 
  74. How is India doing against COVID19 in 3 graphs – 28th May
  75. Covid-19 proves the importance of telecom in India (Eco Times) – 28th May
  76. India runs on Rails: MORE TRAINS BASED ON DEMAND (Fin Expr.) – 27 May
  77. MY TAXI HAS VEHICLES WITH PPE KITS, CURTAINS (Eco Times) – 27th May
  78. COVID-19 Is Fast-Tracking Digital Transformation – 26th May 
  79. HOW DHARAVI IS TACKLING THE COVID INFECTION RATE – 26th May 
  80. AFTER 2 MONTHS, FLIGHTS ARE BACK – 25th May
  81. HOW INDIA INC. GOES BACK TO WORK, LEADERSPEAK (Eco Times) – 25th May
  82. A THIRD OF NSE MFG FIRMS BACK AT WORK (Eco Times) : 23rd May
  83. MAHINDRA FACTORY – COVID CARE READY – 23rd May
  84. We actually wrote about the need for a lockdown in Mar 2020 – CALL IN THE INDIAN ARMY TO HANDLE THIS EMERGENCY – 20th March

We have been tracking this infection since March when it came to India and we had to declare the lockdown.

Today, 2 months on, we are at a different phase in the economy. The first phase of lockdown and defense against this virus has been by and large successful in India. We did not have a massive early spike in cases. We did far better than Spain and Italy and USA  in the early phase. We have been able to set up Covid hospitals, track infection cases, close our borders and airports and more or less, slow initial infections. The statistics today is that we have 125,000 infections and 3,720 deaths from the infection. This is a very very small number for India’s population.

After the very strict lockdown 1.0, we have had lockdown 2.0, 3.0, 4.0 and now Unlock 1.0. The fact of the matter is that the economy has suffered immensely. Crores of people lost their jobs due to the lockdown. Many had to migrate back to their native places due to loss of wages. The economic losses are much more severe from the economic slowdown. Now that the infection is in control, we need to reverse our losses and regain the momentum. Even as we take sufficient precautions.

Both demand and supply were frozen, and it will take a massive effort from each of us for the economy to regain momentum. Its now time to open up our economy and as far as possible, get back to normal. We have to understand that this virus will not go away, it is we who have to adjust to it. Even as we maintain social distancing, and wear masks, and wash hands regularly, the important thing now is to dive back into business and some semblance of normalcy.

Regards,

Punit Jain

DISCLAIMER

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. Punit Jain and JM has no ownership or known financial interests in any company mentioned in this note. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an Investment Advisor. Punit Jain is a registered Research Analyst under SEBI (Research Analysts) Regulations, 2014. JM has been publishing equity research reports since Nov 2012. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com.

How is India doing against COVID19 in 3 graphs

Its been 3 months since Covid infection hit India. I believe India has done well so far. But lets check out the facts using just 3 graphs in Logarithmic Scale. (click to expand image)

  1. India’s COVID-19 Curve, compared to other countries. (Source visualcapitalist.com)
  2. Total Coronavirus Cases in India (Source: worldometers.info)
  3. Total Coronavirus Deaths in India (Source: worldometers.info)

jainmatrix investments, India on Covid

Thoughts? Comments? Please share below.

Regards, Punit Jain

Expectations and Thoughts on a New India – Post Elections Note

Date: 1st June 2019

Recent Events – Elections

  • Last week we had an election result day and the 2019 central election came to a dramatic end. We welcome the second term of BJP and the National Democratic Alliance at the center.
  • The 6 week long 7 phase election was an emotional, high decibel multimedia war among the parties and participants. I am so glad we fight this way. People argue, they criticize, they pull up history, they express themselves, and they get angry. They decide whom to vote for. Then they stand peacefully in a line to vote, and accept the outcome.
  • This is far better than a civil war or an agitation or a set of bandhs and protests. Thank you India. :-)

THE Economic Environment

  • Growth is slowing in the Indian economy to 7% and below. This is weak as we have a low per capita GDP. To absorb the population growth in jobs, we have to target 8% plus growth.
  • The slowdown is a culmination of multiple events – high interest rates relative to inflation; weakness in sectors like real estate, automobiles, consumption and low rural demand. BFSI sector has issues like a liquidity challenge affecting NBFCs, NPA issues in PSBs and the IL&FS crisis. Exports have slowed down as global demand is down due to weak growth and a tariff war between USA and China. The private sector is not investing.
  • Even though the above laundry list of issues is depressing, the economy also has a number of positives. Our IT and ITES sector continues to bloom. Sectors like pharma, automobiles, telecom and retail have achieved impressive scale. The large corporates have in general improved balance sheets and are low on debt. Private sector does have investment firepower in place if they see good opportunities. We are past several difficult structural reforms like GST, RERA, demonetization, shell company crackdown and Bank NPAs, and with this election result market uncertainties are much lower. We have rich human resources and need to tap this well.
  • Corporate India has to grip the large opportunities up for grabs – housing, infrastructure push from govt. including roads, railway, airlines and airports, gas distribution and water supply, mobile and telecom based opportunities, consumption by a large population, eCommerce, digital and Aadhar validation based business models.

A Wish List for Modi 2.0

As an investor, I have many hopes and expectations from this new government. Extending from governance to education to the corporate sector, this is my list:

  • How can justice be delivered faster? The numbers of pending cases in lower courts to SC are scary. The main issues are – slow resolution, and cases in lower court routinely reopened in higher courts. Our suggestion is to – have no vacancies for judges, courts open all year long, push for mediated solution rather than court battle, time bound cases (no tareek pe tareek) and low acceptance in higher courts. Digital solutions can speed access and enable common judgements for similar cases. The NCLT driven IBC code has also proven its usefulness. However this needs to be tightened based on the experience so far, to be faster and with higher success rates.
  • Do we have the right education systems today? The problems extend from low penetration and presence of schools, high dropout rates, poor learning and skill building outcomes, overlaps between state and central boards, many languages and high study load for students. Our suggestions are – more and better govt. schools, coordination between central and state boards on content and timetables, free and compulsory (penalty parents punishable) govt. education till 10th, digital tracking of schools, teachers and students, better curriculum of less rote and more experiential, discovery and project based learning, emphasis on sports with good facilities, and zero homework. Competition is always good, so all education should be freed from govt. license shackles. The best universities will naturally thrive.
  • Is the right way Garibi Hatao or Amiri Badhao? Both are important. On the former side, the excellent work on toilets, housing for all, LPG, ration card based subsidies, farmer schemes, cooperatives, good supply chain to agriculture needs to continue. Electricity for all, better quality electricity, lower leakages, pension for 60+ age, unemployment measurement and schemes (MGNREGA) needs to be bolstered. All subsidies and subsidized product distribution needs to go through Aadhar verification to plug leakages. On the latter side, corporates need to be encouraged as they generate employment, good salaries and taxable profits. Real Estate and Textiles need revival. Exports and a good startup environment is important.
  • Need for Infrastructure: This is obvious, and a crying need. While some progress has been made on Roads and Electricity, much more needs to be done here; and in Railways, Airways, Ports, Water supply, Healthcare and Education, Municipal reforms and Town planning, local transportation and Police reforms.
    1. Suggestions – funding is as important here as detailed planning. Pension and Insurance funds should be allowed and enabled to invest in Infra.
    2. Projects have to be reasonably profitable for private sector operators, with lower risks and permit challenges.
    3. Development of 1-2 new metros in every state. The current 6-7 metros are overcrowded and infra is stretched. The next 20-30 cities need to develop systematically to take pressure off these metros. The Smart Cities Mission needs to be accelerated.
  • Public Sector Enterprises: The Govt. should not be in any operational firm that has no national Interests. Firms like SAIL, NTPC, HPCL, BPCL, many parts of Indian Railways, BSNL, MTNL, Coal India, etc. should be freed from the chains of PSU restrictions, allowed to operate freely and generate reasonable returns. The PSUs and govt. ministries have assets worth lakhs of crores that are generating low single digit returns. GoI should monetize firms, assets and lands and sell to investors – foreign, Indian or even their own employees, through IPOs, auctions and management takeovers. And fund Infrastructure, Education and social needs.
  • The role of Regulators: The right way to encourage growth in a sector is to have a Regulatory authority that ensures a level playing field and meet national and business objectives to develop the sector. It has to include a think tank and sector experts. Regulators for every sector should be much more dynamic, open to discussion and forward looking, with minimum regulatory and legal overlaps. They must enable minimum ROI for new sector entrants. The success of SEBI, IRDAI, TRAI, etc. has to be extended to Hospitals, Education, Pharma, automobiles, chemicals, etc. to roll out required standards & compliance, and encourage growth and penetration.
  • Taxes, Interest Rates and more on Corporate Sector: The laundry list of urgent needs is
    1. Corporate taxes need to be lowered. This was a Modi 1.0 promise – lower taxes and fewer tax concessions.
    2. The current interest rates in India are very high in the global context, as well as given the low domestic inflation. Rates need to lowered – through RBI intervention and easing up of foreign borrowing.
    3. Simplification of GST to 2-3 levels. Inclusion of liquor, petro products and cigarettes
    4. SEZ model revival and encouragement of exports
    5. Labor reforms. Firms should be able to hire (and fire) more easily and with lower overheads.
    6. We need to officially and robustly measure & track Unemployment. This is a key economic measure.
    7. Auditors have an important role in prevention of financial crimes. Perhaps a regulator is needed for Statutory Auditors to keep up standards and prevent problems early.
  • Do we need to export more or import less? Both. Many high tech products like auto steels, specialty chemicals, commodities, oil, gold, machinery, chocolates and consumer products are imported for factories and consumers here. Local manufacturing needs to step up to fill these needs. Also exports is still not happening on a good scale. We are running a trade deficit. This has to be filled up by IT & ITES, pharma, automobiles, engineered products, steel, aluminum, petro products, gem & jewellery, tourism, airport /aviation and seaports /shipping.
  • Environmental protection: As the globe gets hotter, the oceans dirtier and forests thinner, it’s sad to see USA dropping environmental concerns and reneging on commitments. In the war on air, water and plastic pollution, India has a secret weapon – low cost of operations. It’s possible to recycle old ships (Alang), electronics /ewaste, newspaper and most dry waste, and generate a wage for workers and a profit for the business. However we need to protect our borders from waste dumping. And the Ministry of Environment, Forest and Climate Change needs to proactively reach out to industry, municipal corporations and volunteers to enable and scale these activities.
  • Thoughts on Ministerial Changes:
    1. In Singapore, the minister appointed for an Industry is often a very respected senior business executive from the sector, who transitions from a CEO role, to developing the sector for the nation. Knowledge of individuals gets institutionalized. This has allowed Singapore to progress very fast, it is now a Developed economy. India must adopt this model as in many ministries leadership requires a lot of industry knowledge.
    2. In India, we saw the Railways and Coal ministries work together innovatively due to a common Minister. Such strong coordination is needed to solve challenges such as Kashmir (Home and Defense), Transportation (Ports, Road, Rail, Air) and Energy (Electricity, Petroleum, Solar, Wind, Coal, Hydro,) etc.

Conclusion

  • Execution, administrative reform and good governance have been key observations in Modi 1.0. National pride, Industrial progress and social capital are coming together well.
  • We need to do even better in this new regime to take Indian GDP to 8-10% growth range and lift standards of 130 crore / 1.3 billion Indians.
  • Also see A Vision for the Indian Economy‘ 

Disclaimer

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an Investment Advisor. Punit Jain is a registered Research Analyst under SEBI (Research Analysts) Regulations, 2014. JM has been publishing equity research reports since Nov 2012. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com.

Market Outlook – Jan 2019

JainMatrix Investments takes a long hard look at 2018 and then builds the 2019 Outlook. 

What happened in 2018 – making sense of it 

  • CY2018 was a challenging year for investors. Many global equity indices gave negative returns, see Table 1.

jainmatrix investments, outlookTable 1 – Global Equity Indices (click to enlarge)

  • The Indian markets in 2018 were affected by various domestic and international factors.
    • The introduction of LTCG tax in Jan 2018 started the negativity after a very positive 2017.
    • Mutual Fund schemes were reclassified as mandated by SEBI, which led to MFs shifting the funds to LC stocks from Mid, Small and Micro caps and a sharp correction in MSM share prices. This was unexpected.
    • There were corporate scams (Punjab National Bank and Gitanjali Gems), auditor resignations and a new surveillance system (ASM framework) put in place by the exchanges to curb excessive trading.
    • The unfolding of the IL&FS crisis and the liquidity stress affected the NBFC sector.
    • Brent crude prices rose to $84/barrel creating worries over India’s deficit. The INR also weakened to Rs. 75/USD. Crude rose from May-Sept 2018 only to plunge sharply after that.
  • However it wasn’t all bad news in 2018. On the positive side,
    1. GDP rose sharply, as did govt. spending in Infra space. Inflation fell, giving debt investors better real returns. Domestic investors moved into equity even as FIIs withdrew from debt & equity markets.
    2. Broader corporate earnings improved after a weak 2017 due to Demon and GST. Exports sectors like IT and gems & jewellery did well due to USD strengthening against INR.
  • See Fig 2. It can be seen that Nifty fell after Sept then recovered to stay positive by year end. Mid-caps and Small caps did badly in 2018. This was a Risk-Off year after Risk-On years of 2016 and 2017.

jainmatrix investments, outlookFig 2 – Benchmark Indian Indices

  • In USA Trump reduced taxes, which gave a boost to the markets. However he soon imposed tariffs on China and broke international agreements. Interest rates were raised by the Fed. after 8-10 years of quantitative easing and low rates. The govt. has shutdown following Trump’s order for a demand to build a wall between USA and Mexico.
  • A look at Dow Jones Industrial Average (USA) and Sensex, see Fig 3, indicates that over the longer term there is a similar pattern. However in the shorter duration the movements could be more influenced by domestic factors playing out.
  • Fig 4 shows the year wise performance of these Indices.

jainmatrix investments, outlookFig 3 – Sensex and DJIA 5 year movement and Fig 4 – Year Wise Performance of Indices

the 2019 OUTLOOK

  • The 2019 outlook has key factors:
    1. On Interest rates there should be a reduction by RBI as inflation is in check and growth will be encouraged.
    2. Elections: The Rajasthan, MP and Telangana election results were BJP losses but the market was not affected. Our feeling is that coming elections will be hard fought. However the worst case scenario is not very bad for the markets and India is on a growth and reforms path that should continue.
    3. Currently the BFSI sector is recovering from the IL&FS and liquidity crisis. The central govt. and RBI have taken measures to resolve these. Interest rates have hardened. The NCLT lead NPA resolution process is bringing confidence back to markets and strengthening Banks.
    4. Auto sector is slowing in Q3, partly due to credit issues. Cement is seeing good volumes but weaker margins. Capital goods, construction and infra are positive. Power sector looks steady. Consumption sector remains strong.
    5. Real estate is weak due to RERA, GST and crackdown on black money. Demand for new housing will remain weak until prices correct, except in affordable segment. Rentals demand will be robust.
    6. We do have a situation where GoI will increase public spending. In the private sector, growth is pushing capacity utilizations, profitability is increasing and there is some reduction in overall corporate debt levels.
    7. Given weakness in USA, Europe, China and Japan, India may become a favorite again among Emerging Markets for FII flows into equity and debt.
  • The outlook on USA equities is bearish on fears of slowing growth, govt. uncertainty and rising interest rates. The tariff war is more harmful to American business, and the Trump brand is causing uncertainty.
  • In Fig 4 India on average has seen 12% growth in 4 years, lower than the long term Sensex average of 13-14%. We expect a mean reversion to higher levels.
  • This market needs patience 
  • Post elections, we project a return to Risk-On for Indian stock markets. Long term investors can expect markets to be weak in H1 CY2019 and a recovery post elections.

We wish our readers a happy and prosperous new year!

Disclaimers

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Punit Jain has no shareholding in any listed firm mentioned in this article. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an independent expert/advisor. Punit Jain is a registered Research Analyst and compliant with SEBI (Research Analysts) Regulations, 2014. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com.