[extreme_torque]

Originally Posted by V.Narayan

FDI inflows for FY2019-20 topped US$49.97bn, the highest ever in our history. They used to be around the US$28bn for FY2012-13. Each of us can draw our own conclusions. Having said all this real improvement is nominal.

I suppose you can account approximately $15bn of those investments to just one favoured conglomerate. There are only two companies in India right now who are making hay while the veritable sun shines on them.

[vrprabhu]

Reliance - Jio deal - is one that immediately rings a bell. The other?

[V.Narayan]

Originally Posted by extreme_torque

I suppose you can account approximately $15bn of those investments to just one favoured conglomerate. There are only two companies in India right now who are making hay while the veritable sun shines on them.

Might be or might not be. I do not have a month by month company by company list. I'd rather discuss with facts. And in any case what is wrong with that. FDI does not come due to political wrangling. First it must make stiff commercial and long term business sense for that external investor. No one invests billions of $ just like that. And it is FDI not FII and it will create jobs, commerce and GDP. I have dealt for long with both the groups you are hinting at. Personally I do not like them. But I will not mix up economics with personal likes or dislikes.

[extreme_torque]

Originally Posted by V.Narayan

Might be or might not be. I do not have a month by month company by company list. I'd rather discuss with facts. And in any case what is wrong with that. FDI does not come due to political wrangling. First it must make stiff commercial and long term business sense for that external investor. No one invests billions of $ just like that. And it is FDI not FII and it will create jobs, commerce and GDP. I have dealt for long with both the groups you are hinting at. Personally I do not like them. But I will not mix up economics with personal likes or dislikes.

My response was purely to your figures for FDI inflows this year compared to 2012-2103. If you take the $15bn out and dollar appreciation in, the FDI inflows are at best either stagnant or slightly down irrespective of our ease to do business rankings.

The external investor is a capitalist company and the shareholders dont care as long as they make money on the investment. The confidence they have shown is not on the market per se but with the company they chose to invest to play the market and give them returns. Who is to say this is a bad strategy but the question is, is it good for the public interest in the long run?

As for jobs, a well run economy with strong consumer laws, strong anti trust laws and anti monopoly laws will create a much stronger ecosystem of jobs and innovation in the long run because it will promotes healthy competition, increases overall efficiency and fosters innovation to build products/services that we would be able to sell to the rest of the world.

[kiku007]

A quick check reveals that the following factors have been trending in the wrong/unfavourable direction for a considerable amount of time even before COVID. Please correct me if I’m wrong.

Originally Posted by V.Narayan

For the bottom 65% of our population economic health means unemployment index, consumer inflation, stability of food prices, and GDP growth in that order. For the MSME it is growth in demand (GDP again) & availability of liquidity.


That being the case, how come these 50 – 500 stocks/companies that represent a vast majority of the trading/cash flows buck the above trend? I mean, how come one part of the economic index have a trend that’s opposite to the factors mentioned above?

Should the pragmatic approach be to join the bandwagon (By investing in the stock market after due diligence) rather than complain about loosing out?

Originally Posted by V.Narayan


-- The stock market indices may represent only say 50 to 500 stocks (varies with index) but those stocks represent a vast majority of the trading, and cash flows and hence are representative of the sentiment of the investor. As I have mentioned earlier the stock index is not an index of the economy but of a part of it. 


We often read about equality but I’m tempted to think that the gap in financial knowledge is so wide that even people with 20 years of formal education are lacking the expertise that the richest 10% seem to be applying.

Why is economics so difficult to understand or is it designed this way to make it seem like an enigma?

[AMG Power]

Originally Posted by V.Narayan

FDI does not come due to political wrangling. First it must make stiff commercial and long term business sense for that external investor.

The only exception to this rule was FB's recent investment. The actual reason was to gain access to political clout of the promoters of the investee company. An earlier attempt by FB to gain such access didn't materialise. (Please come through proper channel as earlier folks would say.)

Of course the external world is made to believe that FB's investment intention is to tap into Jio's customer base. FB doesn't need to invest to tap into Jio's customer base to gain access to its customers. Almost 100% of Jio customers would take a Whatsapp connection anyway as its free. And the couple of them that don't are certainly not worth Rs.43574 crores that FB paid to Jio.

[Turbohead]

Originally Posted by AMG Power

The only exception to this rule was FB's recent investment. The actual reason was to gain access to political clout of the promoters of the investee company. An earlier attempt by FB to gain such access didn't materialise. (Please come through proper channel as earlier folks would say.)

If this is for real, wouldn't net neutrality be back in the news yet again?
Or is there more to it?

[AMG Power]

Originally Posted by Turbohead

If this is for real, wouldn't net neutrality be back in the news yet again?
Or is there more to it?

I don't think net neutrality would be back but there's certainly a lot more. Watch this space.

[Rahul Bhalgat]

Originally Posted by AMG Power

The only exception to this rule was FB's recent investment. The actual reason was to gain access to political clout of the promoters of the investee company.

FB doesn't need to invest to tap into Jio's customer base to gain access to its customers. Almost 100% of Jio customers would take a Whatsapp connection anyway as its free.

Interesting hypothesis.

On similar lines, we can also ask why FB needs political clout. Almost 100% of it's customers would anyway join FB irrespective of it's political clout.

Is it other way round? Is it that the powerful people need the support of FB?

[AMG Power]

Originally Posted by Rahul Bhalgat

On similar lines, we can also ask why FB needs political clout. Almost 100% of it's customers would anyway join FB irrespective of it's political clout.

When you do global business in the league of FB, the need for political clout comes with the territory. That political clout is not to get more customers. It's more to ensure that you don't run into serious issues with the establishment.

There is a choice here - One could be a Vijay Mallya and run away or one could be fortunate and write off 20,000 crores.

[Sutripta]

Originally Posted by V.Narayan

. One measure of a destination country's attractiveness is FDI inflows. I prefer to believe when money is put where the mouth is, than believe a journalist. FDI inflows for FY2019-20 topped US$49.97bn, the highest ever in our history. They used to be around the US$28bn for FY2012-13.

https://www.business-standard.com/ar...1602223_1.html

Sutripta

[V.Narayan]

Originally Posted by Sutripta

https://www.business-standard.com/ar...1602223_1.html

Sutripta

Can't read the full article as it is behind a paywall. The author refers to foreign investment of US$ 20bn in the current FY. The figure might be directionally correct as about Rs 84,000 crores (roughly US$ 11.5bn) or so is the net FII inflow in May to August period or roughly US$ 12bn. I do wish journalists would quote exact figures instead of one round all encompassing one which doesn't tell much - FII vs FDI, net vs gross. Maybe they think the audience is too ignorant to grasp the subtleties! Depending on what geo-politics and domestic politics plays out in USA and China not to mention suicide by Brexit we may witness in India a strange situation of buoyant stock markets buoyed by FII net inflows juxtaposed with a sinking economy and high unemployment. This phenomena has been thrashed on this forum often with overtones of the cruel uncaring stock market. The stock market does not reflect the economy alone but also foreign investment sentiment towards India compared to other opportunities that foreign money has. It reflects domestic economic sentiment & expectations in the traded corporate sector and the demand and supply of liquidity a lot of which is foreign.

For the JAS quarter my expectation is of a GDP shrinkage of about -3% to - 5% over the same quarter last year. Eagerly waiting to hear what the numbers say.

[Simhi]

Interesting article - Is Indian economy facing situation of stagflation?

https://economictimes.indiatimes.com...w/78214140.cms

Seems double whammy for RBI - whether to keep interest rate low to spur demand or increase interest rate to control inflation?

[Samurai]

Originally Posted by V.Narayan

a strange situation of buoyant stock markets buoyed by FII net inflows juxtaposed with a sinking economy and high unemployment. This phenomena has been thrashed on this forum often with overtones of the cruel uncaring stock market. The stock market does not reflect the economy alone but also foreign investment sentiment towards India compared to other opportunities that foreign money has.

No. What is trashed in this thread is not the disconnect, but the tendency of stock market to continuously transfer the wealth to F1 drivers, to you use own analogy. I personally don't care if stock market is disconnected from the economy. Financialization of economy has created a reverse effect, where economy is now held hostage by the stock market. Even if stock market acts independent of economy, economy is now severely impacted by stock market's rise and fall. This is one of the clearest cases of tail wagging the dog.

Economy is as old as the mankind, while stock market is just few centuries old. In India, stock markets appeared only 150 years ago. Let's not confuse one with the other.

[vrprabhu]

Originally Posted by Samurai

Financialization of economy has created a reverse effect, where economy is now held hostage by the stock market. Even if stock market acts independent of economy, economy is now severely impacted by stock market's rise and fall

I used to believe that deriving the health of the economy based on stock indices wasn't the correct method. But you have a given a totally new perception. It would be helpful if you could give a brief as to the above. Thanks in advance.