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India – A false dawn or bright future?

Aug 04, 2014

Some newspapers have already written Mr. Modi off from observing what they describe as a ‘lacklustre start’ or misplaced euphoria after the Indian market registering a gain of 20% so far this year in local currency terms. Last week India blocked a global trade deal and the first budget was not as exciting as everyone wanted it to be. The problem are real. India is corrupt through and through. There are no or only a handful of industrialists in India with clean hands. The government has made sure of that, because nothing moves in India without some form of bribery. India is on the surface a socialist leaning country. Everyone talks idealistically.

There is a fair amount of protectionism and it works to feed the few who are left in charge of regulations and implementation of imports and exports. In action India is an example of extreme Darwinism. Everyone is for him or herself. Very few have a social conscious. In such a country the tycoon linked equity markets will do well. The tycoon in India have the levers of government in their hands. As long as there is decent regulation of the public markets, these tycoons act as monopolies, repressing bold reform. It works remarkably well for them in a country that is hungry for growth. The rich in India, and I have met many of them, much rather maintain a minimum ownership and market share, instead of adding yet another billion to their fortunes by allowing competition and participating in a much bigger market.

India is definitely on the rise. It is only the pace of reform and actual growth rates that are uncertain. This will make the ride quite bumpy. Under such conditions one can either buy and hold the Indian market for a very long time or like going up a mountain path with many small peaks and valleys one can observe the immediate horizons and invest accordingly. This journey is the one we recommend. Covering the extra distance with greater visibility should achieve much better results.

Have a look at Algoam’s NIFTY strategies across different frequencies. Algoam models simply observe change and are designed to react to it. The objective is to generate risk adjusted returns that are superior to simple passive investing.