Decisive outcome required for further upside in Indian economy

According to Morgan Stanley, Indian market's move relative to emerging markets will continue to occur before the elections rather than after it unless there is a material positive surprise in the outcome

The world is about to witness the biggest election in history, which could herald a sea change for India’s economy that has struggled with stagflationary-type conditions over the past few years. "We believe that the outcome of the general elections will be key in determining the pace of reforms. A strong and stable government could accelerate this process, leading to a sustainable improvement in gross domestic product (GDP) growth," says Morgan Stanley in a research note.

According to the report, Indian equity market is pricing in a decisive election outcome and the beginning of a new growth cycle in its aftermath. It said, "India’s current market rally is in line with emerging market (EM) countries’ historical trend of pre-election performance, based on our study of 25 major EM elections since 2000. This has caused the market to be overbought within EM on our key technical measures. Yet, MSCI India’s 1-year forward P/E relative to MSCI EM is currently at a 42% premium, slightly above its 10-year historical average".

The pre-poll surveys are suggesting that India's next government will likely be a narrow Bharatiya Janata Party (BJP) coalition, with the National Democratic Alliance (NDA) winning 230-240 seats headed by the party's Prime Ministerial candidate Narendra Modi.

According to Morgan Stanley, external funding and bank reforms are key for the Indian credit view. "If the election produced a strong political majority, we think credit spreads would likely tighten on the potential for improving BoP, SOE bank recapitalization and a more stable sovereign ratings outlook. From the currency market’s standpoint, the post-election reaction in Indian rupee would come from the impact on the capital account, where foreigners’ flows in equities would be the dominant driver for the currency," it added.

If the election result is decisive, utilities, SOE banks, energy, industrials and materials could gain the most.



Ramco Systems’ Rs123.35 crore rights issue to open on 5th May

Ramco Systems’ rights issue is priced at Rs155 per share, with a premium of Rs145 a piece. The issue would open on 5th May

Ramco Systems Ltd (Ramco), an IT consulting and software company announced that it would raise Rs123.35 crore through rights issue to meet its capital requirements. The rights issue will open for subscription on 5
th May to 19th May.

Ramco said, existing shareholders holding 2 shares will get 1 share through the rights issue (rights entitlement ratio of 1:2 shares).

Ramco will issue total 79.58 lakh shares at Rs155 per rights share including a premium of Rs145 per share to its existing shareholders.

Ramco also mentioned that the issue closing date may be extended by the committee without exceeding 30 days from issue opening date.

A year ago on 30the May, the board of directors of Ramco has approved the raising of further equity capital by issue of equity shares on a rights basis for an amount not exceeding Rs125 crore. The board has also constituted a rights issue 2013 committee and delegated necessary powers to this committee to decide about the terms and conditions and other modalities of the rights issue.

During December 2013 quarter, Ramco Systems’ sales fell 19% to Rs39.80 crore from Rs49.21 crore and recorded net loss of Rs8.49 crore from Rs3.87 crore compared with same period a year ago.

Ramco on Tuesday announced its strategic partnership with France-based Schneider Electric to offer advanced process control optimization solution for cement customers.

At 3.46pm Thursday, Ramco System was trading 3% down at Rs190 on BSE, while the S&P BSE Sensex was marginally up at 22,759.


Twist Your Nano

You can make quite a few changes to get more out of your Nano. Try them.

I now have two neighbours who own Tata Nano cars, one the older version and the other the newer ‘Twist’. Both appear to be satisfied with their choice; and so am I, when I get to drive their cars. They are great value for money. However, neither of them is young and upwardly mobile. Both of them are more than middle-aged couples who also have other vehicles but use the Nano as their daily-use car.

On that, the main issue that is still unresolved, according to both of them, is the matter of differently- sized front and rear tyres, and the other niggling reality of thickness of the front seat. Agreed, the car is built as a four-door four-seater, but the reality is that it is seldom used by either of them, or many other people, with more than two people inside.
As such, it is no doubt difficult to change the design of the panels, but it should not be difficult to provide an option of more comfortable front seats as an optional extra.

And, once that is done, remove the rear seat completely, or make it smaller and good for children only. Better still, re-configure the rear seat so that the space freed can be used for luggage. The new Nano Twist, especially, appeared to pelt like a dream even on the hills and slopes of Goa, where I drove it.

GM’s Problems

The woes of General Motors don’t seem to end in India, as can be seen by the latest recall on ignition switches worldwide. This is in addition to their Chevrolet Tavera, as sold in India, for which owners of older versions are entitled to substantial compensation as well as substitutions, too. If you own a Tavera, manufactured between 2005 and 2013, then, at the very least, you are entitled to major modifications and, in some case, a totally new engine or even more.

Please don’t wait for somebody from General Motors to contact you; write to them directly, if you own, or owned, a Tavera bought in those years. And, in the first case, request a response on what you are entitled to get. Even if you don’t have that Tavera, especially if you had to scrap it, and can show that you did so because of engine-related issues, you can get compensation.

It is likely that General Motors India will not reply, in which case, after a suitable gap of time, please make a direct complaint to the department of heavy industries via the public grievances website. Their web address is:

Toyota’s Pain, Your Gain

The lockout at the Toyota facility near Bengaluru brings to a grinding halt the ambitious plans that Toyota had to try and reach double figures in terms of market share. Its smaller sedan, the Etios, is doing increasingly well as a taxi, while the larger sedan (Corolla) and utility vehicle (Innova) are setting the standards. Toyota was constrained only by how much it could manufacture and deliver.

The upside for existing owners is that the street value of used Toyota vehicles appears to have gone up dramatically. Especially that of the Innova. In an election scenario, Innova is the vehicle of choice for lugging people and their personal effects around with reliability and safety. Prices have also gone up for other non-luxury used cars from the Toyota marquee.

If you have a used Toyota to sell, there is no better time than the present!

Veeresh Malik started and sold a couple of companies, is now back to his first love—writing. He is also involved in helping small and midsize family-run businesses re-invent themselves.


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