Showing posts with label portfolio investments. Show all posts
Showing posts with label portfolio investments. Show all posts

Friday 3 May 2013

Long term prognosis for the Indian Rupee is abysmal - time to increase exposure to US dollar denominated assets


The Reserve Bank of India (RBI) clearly fears inflationary pressures in India to the extent that it cut the repo rate only by 25 basis points today disappointing markets. RBI governor is quoted in the Economic Times as saying that "Conditional upon a normal monsoon, agricultural growth could return to trend levels. The outlook for industrial activity remains subdued, with the pipeline of new investment drying up and existing projects stalled by bottlenecks and implementation gaps." Persistently high current account deficit, credit growth falling to the lowest growth rate in over a decade, and now the RBI's own admittedly hawkish stance on inflation only add to an abysmal prognosis for the fate of the Indian rupee. Expectations that the Rupee will hit 60 to the US dollar are steadily rising. Government Pollyannas still try to come up with creative explanations to invent a growth story (see video).



As long as the RBI's Liberalised Remittance Scheme is still available to Indian residents, Indian or NRI investors are strongly urged to increase their portfolio exposure to US dollar denominated investments. You only have yourself to blame if your net worth significantly falls due to a sliding Indian rupee.

Saturday 20 April 2013

Goldman Sachs gets it wrong on their predictions for India growth


Last year Goldman Sachs predicted a 6.5% growth for India in 2013. This seems a bit far fetched considering that India's GDP growth in Q3 of 2012-13, at 4.5 per cent, was the weakest in the last 15 quarters (see graphic). Goldman Sachs was it at the prediction game again citing 5 reasons for gradual pickup in India's GDP growth including the upcoming general elections and expected fiscal stimulus; expected lower interest rates to stimulate economic activity; Policy, reform push to fast-track projects; Global economy acting as a tailwind; supposed green shoots emerging in activity data. Clearly the analysts at Goldman Sachs while certainly highly educated are naively out of touch with ground reality of the Indian political scene.



More recently, ratings agency Crisil on Monday April 15th cut its 2013-14 GDP growth forecast for India to 6% from 6.4% citing weak consumption demand, stubborn lending rates and the impact of policy delays on growth which is much closer to ground reality.

Thursday 18 April 2013

Irrational exuberance continues to send Indian markets climbing



The Economic times reported today that the Indian stock market market has risen higher for the week by 770 points. As I have blogged before there really is no basis for this continued irrational exuberance. The finger of blame for this steadily inflating bubble can be pointed to portfolio investments flowing in though Mauritius which is simply money laundered overseas by tax dodging citizens through hawala channels and returned back as legitimate portfolio investments through Mauritius.



The other channel for laundering this money is right in India in real estate in the major cities of Mumbai & New Delhi where the bubbly property market has reached stratospheric levels long time ago. When these multiple bubbles burst...and burst they will...look for shelter outside India...