Round And About

Round and about. I borrowed the title from an old Busybee column that used to appear in now-defunct Evening News. People of my generation will know what I am referring to by way of the writer and the paper! That column used to contain some news elements that occurred in recent times and which had some sort of relevance to our daily lives. Similarly, I read a few news items in recent times that I thought might throw out some interesting possibilities.

The first was on investment by domestic mutual funds into the markets. The report said that they had pumped in nearly a billion dollars’ worth into the markets in the last month.  In the last year they had pumped in slightly more than 10 billion dollars’ worth. Now, these are impressive numbers. It indicates a buying power that could create the much awaited bull market. We all keep thinking that market runs on FII money. But the big bucks that the domestic funds are now able to garner are certainly a game changer.

Reading a foreign website I was intrigued to find an article that dubbed India as the ‘new China’. Quoting from the article, “India is expected to have the fastest growing demand for crude between now and 2040, according to the International Energy Agency (IEA). India’s consumption stood at 4.5 million barrels a day in March, which is up considerably from an average of 4 million barrels a day in 2015. The Asian country represented a whopping 30 per cent of total global consumption growth in the first quarter. This makes it the world’s “star performer” growth market, a role occupied until recently by China. India is now poised to overtake Japan as the second largest oil consumer in Asia, if this hasn’t already happened.” Oil consumption going up is one of the surest signs of improvement in our overall economy. People may keep complaining that nothing is happening on the ground but these numbers say different. It is something to feel cheery about prospects for the market ahead.

Cars are one of the most aspirational items of the Indian working class. But I was quite appalled to read that the car penetration in India is just 17 per 1000 people. To compare, the same number in the US is 850 for every 1000 people!  Here is another interesting ditty that may signal us of what may come. In 1979 there were only 60 privately-owned automobiles in China. Today, it’s the world’s largest auto market. I remember my brother saying that when he visited China in 1980, the Works Manager of the factory would come to work on a cycle. When he visited again in 1992, the same manager had already acquired a swanky car! More than 600 million Indians are under the age of 25, based on 2014 data, and many in this cohort aspire to have social mobility. The country is now on track to become the third largest auto market by 2020, behind China and the U.S., and obviously this has huge implications for oil consumption.  Maybe I should just switch to becoming a SIP investor in auto stocks for the next 5 years? Can’t lose!

One of my staff is from interior Maharashtra. He was lamenting last week and roundly cursing Nitin Gadkari. Apparently the govt had seized some land that belonged to their family for the purpose of building the new highway between Mumbai and Nagpur and he was blaming Gadkari for it!  He was talking about some 10-hour journey between the two places. I don’t know how true this is. But if it is, then it is something fantastic that is happening. Connecting important cities thru national highways is one of the biggest leaps forward that the country can witness.

There are several other such ditties around us all, if we bother to look. If we wallow in the ‘nothing is happening’ syndrome, then we are probably singing the song that opposition politicians want us to sing. The outlook ahead looks considerably rosier now that news like this is making it seem like good times are really going to roll soon. Bull market, ahoy?