Goodbye Raghuram Rajan, Markets Will Take A Cue From Here

Finally ending all the speculations, incumbent governor of Reserve Bank of India, Raghuram Rajan on June 18^th conveyed his wishes not to continue his association with the country’s apex bank come this September. In a letter written to his colleagues, Rajan expressed his desire to go back to the classrooms of University of Chicago Booth School of Business in his capacity of a teacher, mentor. Moments later, certain section of media predicted a doom’s day on June 20 as far as stock markets are concerned in India. Contrary to their views, the markets behaved sensible and closed in deep green. While the governor did his task efficiently and we believe certain steps taken by the central bank under his leadership helped the country to experience a stable rupee and economy, few things perhaps he could have done better and also few things he could have avoided. I somehow feel, the RBI actions on NPA mess was much delayed even though Rajan had taken charge three years back on September 5, 2013 after he was elevated to the coveted post from the chair of Chief Economic Advisor engaged with Ministry of Finance. His guidance to the public sector banks once the cleansing mission picked up helped investors to regain confidence on these NPA-tainted banks. A spiralling effect was thus witnessed on the movement of these stocks during first quarter of the current financial year. All said and done, Rajan’s ability to work towards handling rate of inflation and not bowing down to political pressure seeking rate cuts, also needs a special mention here. Some believe as he pressurised the banks to take stern actions against the defaulting top industrialists causing much annoyance among a section of Indian politics, his option was limited during first half of the current calendar year.

It has been a critical phase of Indian economy during 2013-2016 and things started changing for good since 2014 when the new government under leadership of Narendra Modi took over the reign from the UPA government. While it is goodbye time for Rajan, perhaps we all need to gear up to welcome GST regime finally. The meeting convened by union finance minister Arun Jaitley in Kolkata recently which was also attended by finance ministers from most of the states ended with the resolution for the GST regime. A matter well-handled by Jaitley, the trusted lieutenant of Modi. If the arithmetic goes right, GST soon will be a reality and a uniform tax structure across the nation will excite the industries, markets and business initiatives further.

In this edition of your favourite investment magazine, we are talking about NBFCs, their performances in the markets and role in investment world. In these days of critical analysis of public sector banks and their stocks, NBFCs are found a safer bet and some of them even have given a return of over 100 per cent during last one year while other key players gave returns over 50 per cent on a year to year basis. Where do the NBFCs and their stocks go from here—we have come up with a critical analysis with much number-game. I am sure, you will find it a good read.

Our research team members also have brought an exhaustive piece on penny stocks. We have tried to guide you through your journey in the world of penny stocks in this edition.

Meanwhile in an interesting development on June 20, Centre relaxed FDI norms in defence, aviation and pharmaceutical sectors. The move has obviously positioned India as the most open economy in the world in terms of FDI. The government also cleared the Apple proposal to open its chain of retail stories in the country. Furniture giant IKEA is also set to benefit from the resolutions of June 20.

Though delayed by few days, finally monsoon is around the corner. While the southern and eastern states have already started experiencing good amount of rain, till the time of writing this piece of editorial on June 20, certain pockets of Maharashtra have remained deprived of rain. But certainly, the sowing season has come. Not only for the farming communities but also for the investing communities. We can bank on the predictions of good monsoon and start investing wisely now. Optimism is around and things can’t go backwards from here.