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SECTOR UPDATE - BFSI ( Thanks to research departments of various analytical firms) Strong government – positive catalyst; but there is a price for everything A couple of thoughts on BFSI sector post the “Congress rally” Strong UPA led government can have following positive impacts for BFSI sector: Fundamental impact – earnings upgrade, RoE expansion 􀂄 Investment and credit activities to pick up – enhanced liquidity and improved industrial activity will bring confidence among corporates to borrow and invest; thrust on infrastructure will continue etc - Positive for the whole sector, as it would enforce revision of consensus credit growth estimates - SBI is key beneficiary as it has huge balance sheet liquidity to fund credit growth 􀂄 Recovery in economy and comfortable liquidity to further assuage concerns on asset quality 􀂄 Capital market activities to go up further from here – brokerage volumes, investment banking deals, inflows into mutual funds/PE funds etc - FII/FDI inflows like...

There was a time, not long back, when the ‘American Dream' was shared not only by Americans but just as fervently by many ambitious students back here in India too. Getting an MBA from a good university abroad and using that as a starting point to get a job in that country was the norm. Well, that dream seems to have been shattered. And the sorry state of the US is now forcing many into realising the potential back here in India. An Economic Times report gives some perspective on the situation. According to a University of California study that surveyed 1,224 foreign nationals from India, China and Western Europe, almost 86% Indian students and 74% of Chinese students believed their home countries' economies will grow faster in the future than they have in the past decade. And with that, many students are either looking homewards, or have already come back to India. Looks like India may not have to contend with a brain drain problem again for a long time to come.

We will take the reforms agenda forward, but not at the cost of development and not at the cost of state firms." This statement by one of the leaders of the Congress party and published in a leading daily highlights the importance of tempering one's optimism over the re-election of the UPA government. Let us not forget that this is the same party that came out with social schemes like the farm loan waiver and the rural employment schemes. Hence, to expect a reforms overdrive from the new government will be akin to asking for a little too much. Of course, the scenario is a lot better this time around as there are no left parties to take two steps backwards for every one step that the UPA government will take forward, but the fact remains that a move towards more reforms is likely to progress at a slow pace at best. Furthermore, unlike 1990-91, where problems were India specific, a synchronized slowdown has engulfed the world and this will give the government more leeway to impl...

With the UPA regaining power, this time without the Left’s support, what does it mean for India? No more political instability risk for India; the new government poised to complete its 5-year term successfully. Near-term positive because of smooth transition – this is more like an extension of UPA’s term. In the event of any other party/alliance coming to power, it would have taken some time for the new government to formulate its policies. UPA to continue with its policies with more power in hand now; no fear of strange coalitions or drag of the communist parties anymore. Near-term positive for the markets Equity markets are likely to open with a big gap up on Monday, as desperation to deploy excess cash (both by DIIs and FIIs) will be high. While FIIs may show interest in large caps, DIIs may hunt for beta (chasing mid caps). India has underperformed other emerging markets (EM) YTD because of election concerns. However, stable government at home and strong global liquidity are likely...

India may soon be the proud owner of a national gas highway network, one that will ensure supply of natural gas across the country. As per an Economic Times report, the oil ministry is contemplating developing this national gas highway as infrastructure firms are refraining from venturing into non-profitable segments. That is the reason why even though there is a nationwide demand for natural gas, gas pipelines are concentrated mainly in the eastern and western regions while the southern, central and north eastern regions lack infrastructure. As such, a balanced distribution of gas will help India achieve a more distributed growth as industries have been known to develop along natural gas pipelines. Besides, with such a massive investment, companies catering to this industry will be direct beneficiaries.

This week will be a cherished one for Indian telecom major, Bharti Airtel as its subscriber base crossed the 100 m mark. In fact, with this milestone, it has now become the world's third-largest single-country mobile operator and sixth-largest integrated telecom operator. As for the top spot, China Mobile and China Unicom are the world's largest and second-largest in-country mobile operators with 414 m and 170 mm subscribers respectively. Expecting India's teledensity to double within the next three years from the current level of 37%, Mr. Sunil Mittal, the company's chairman has given very optimistic views about the future. He believes that the company will be able to double its subscriber base within that period. Given the fact that the telecom players in India are adding mobile subscribers at a very robust pace and also that Bharti Airtel is the market leader (marketshare of about 25%), the task does not look very daunting. However, keeping in mind the intense compet...

The verdict is out and India has decided! Going a step better than most media projections, the Congress led UPA alliance looks all set to return to power and form the next government at the center. Although still some seats short of the magical 272 figure mark, it now appears certain that the Left parties will have no role to play in the government formation this time around. Dr. Manmohan Singh, the reformer par excellence has given enough proof of what he and his team can achieve if given a free hand. And the people of India seemed to have done exactly just that. Now it is up to him to deliver. The road ahead though is anything but smooth. The country's finances are staring down the barrel and economic growth has taken a big hit. However, looked differently, this could just be the time to unleash another wave of reforms and push the economy onto an even higher growth trajectory. Perhaps,it's time for ‘The Great Indian Reforms II'. If at all they happen, the Indian people w...