Sunday, March 23, 2014

What will happen if Modi comes to Power


I want to start by saying that am an AAP supporter – and I believe that we need a "change in the system"  - and the existing system is represented by BJP and Congress.

However I see a wave coming – a wave that will get Modi to power

Chetan Bhagat put it well in his column in TOI yesterday . I am quoting a part of this blog verbatim below

he represents practicality. Most Indians know that while it is good to remove corruption, nepotism, dynasty, oppression of women and a million other wrongs, it isn't easy. Things change, but slowly and over time. The leader many Indians seek is not idealistic, but someone who can do a fairly good job despite the muck in our society

As an investor, I have to remove my personal bias (for AAP in this case) and see the writing on the wall.  If I can forecast correctly, my investing decisions will be better.

The markets are already betting on a stable govt  - that means Modi, as AAP and Congress cannot provide stable govt in these elections. Most brokerages have upped their Nifty targets to 7000 to 8000. FII’s are starting to pour in money and the Rupee is starting to get stronger – it has strengthened  from Rs. 62.02 to Rs. 60.9 in the past one month.

If Modi comes to power, I expect the FII’s to pour in more money  and the  Rupee will get stronger (in the range of Rs. 58 by year end),

If that happens, it will impact our export sector. Our export industries - IT and Pharma, that are currently doing very well, will slow down a bit.  

If Rupee gets stronger, Gold will not do well -it was anyway not in favour this year.

If Modi comes to power - what will happen to Public sector banks? They are in bad shape now – but with economy picking up will they get back? SBI has gone up from 1490 to 1707 in the past one month (a 14.5% increase).

If Modi comes to power  - will Infrastructure sector do well?  L&T has gone up from Rs 1051 to 1219 in the past one month (a 15.9% increase)

What about Modi’s favourite sector – Tourism? Should we invest in Cox and Kings and Thomas Cook?

I do not have the answers – But I am searching. I Will surely share as I make up my mind and invest ahead of the curve in the coming 3-4 weeks.

I would love to hear from you in the comments section below – please do not make this a political forum of BJP vs Congress Vs AAP. Please comment on where to invest if Modi comes to power.