Ask yourself this ~ Did it really matter to me here in India who won the USA Presidency ? ~ am I better or worse off !? ~does it affect my health,my family,my job or business,my wealth….my stocks ! ? ~ am I really going to advice to get out of Indian IT Space !?

On US Foreign Political or Economic Policy Issues,neither Obama nor Mitt Romney would dare to effect any changes that will affect US Interests

Happy for Obama that he won as incumbent…..and his anti India IT outsourcing stance ,am told by Indian IT Insiders is only a local  appeasement tactic to protect American Jobs,as they really have little choice in the matter as of date ~ call it Catch 22 ~ they want to protect American Jobs but in a leveraged economy and a recessionary environment the economics simply don’t work out  not to outsource ~ having said this the cap on H-1B Visa for highly skilled foreign workers has been dropped by USA from 195000 in 2001 to just 85000 this year ~ Indian IT Companies get round this hurdle by rationalising the team numbers on a project,local US Hiring and doing more work on the Project out of India…of course they have been accused of other ways too !

David Bier,an US immigration policy analyst,wrote in Forbes earlier this Year that Foreign Highly Skilled workers on H -1B Visas create jobs not take them ~ in support,he quoted a 2009 finding by the National Foundation for  American Policy that for every H-1B Visa request it co-related with five new jobs at major firms and more than seven new jobs at firms with less than 5000 employees   !

Though  Indian IT may not be a great Investment Theme that it was in the 1990s and earlier part of the 21st Century when all IT majors,except for  Satyam, were simply great multi bagger pickings !, the IT Story is far from ebbing and I’m not going to advice Clients to move out of this space totally ~or even switch from TCS to Infosys like CLSA thinks should be done !

Make no Mistake,Obama will continue to bully India on both fronts and,I daresay, we shall continue to acquiesce quickly without serious debate justifying US entry on grounds of aiding GDP Growth and creating millions of jobs  and upgrading our Infrastructure with latest technology !  ~ We need to be cautious that while USA promotes their Interests aggressively,they will as they need to survive and recover from a faltering and highly leveraged economy,we need to safeguard our interests ~ I genuinely fear this is not happening  ~ we are opening out more US exposure in Insurance,Retail,Defence,Aviation,Agriculture,Banking,Higher Education,Automobiles and allied sectors without the rigors of  an intelligent debate without premediated bias or prejudice on the long term implications of this

1. Opening out FDI and allowing US MNCs to flood and penetrate India overwhelmingly
2. Enter into Billions of US $ Contracts with US Engineering and Technology Companies to manufacture Equipment and transfer technology to set up India’s Nuclear Power for Peaceful Purposes Infrastructure and for other Major Infra Projects

Have a look at my several Obama Posts when he visited India in November 2010 in the middle of his first Presidency

The first one on November 6,2010 lists many issues where USA and India are not on the same page

The last one on November 17,2010 laments how highly US educated Indians are used as pawns by US Corporates

Performance of the BSE Sector Indices in 2011/12  and to date is quite Interesting ….What provoked this post is Sameer’s counter argument in my earlier post…he is bullish in the short term,citing the favourable upmoves in the Pharma,Cement and Auto Sectors…I’m looking at the Bigger Picture and I’m not so excited really as Macros are clearly playing up and this Government is unlikely to push big ticket reforms…we need to await 2014 General Elections,which I fear may yet again through up a fractured verdict…but I hope with a more reform friendly and decisive coalition !

Have a Look at the Performance of the BSE Sector Indices in 2011/12 and to date…Quite Interesting…The Reds & Greens signal fall or rise/holding up from over a year ago  

The Alltime High & Low Columns are quite revealing

• FMCG,Healthcare and Auto Indices  have registered All time Highs this Month…with consistent Wealth Creation in the 21st century in FMCG and Healthcare while a huge surge in the last four years in the Auto Sector
• Quick and huge  wealth destruction in the IT sector in 2000/2001,the Metals and Power Sector inside Ten months in 2008 between January and October and in the Realty Sector between Jan 2008 and March 2009  

PERFORMANCE OF BSE SECTOR INDICES AS ON APRIL 26,2012

• IT  shows a Drop,but TCS has outperformed Infosys ,which has slumped and the latter holds 48% weightage in the Index ! against just 29% by TCS !…this needs to be rectified by BSE rightaway…more so as the Market Cap of TCS is Rs 233301 crs against just Rs 135415 crs of Infosys !….The Index tracks the share price of  10 Companies with 88% weightage of just three …Infosys,TCS and Wipro …Other interesting constituents are Oracle Finance and Financial Technologies 
•   Techk comprises of 30 IT,Telecom,Media and Communication Companies and has mirrored IT fall
• FMCG has been the years Darling with ITC (55% weightage) and HUL (18% weightage) outperforming to allow the Index to hit Alltime Highs…11 Companies constitute this Index…Interesting ones are the two Kingfisher Group Companies,United Spirits and United Breweries…. and Tata Global (spotted this at Rs 80 late in 2011) and the huge 2010/2011 winner Jubilant Foods (Dominoes Pizza)
•  Consumer Durables has heavyweight Titan with 51% weightage in the Index…It’s been a flat year
• Metals has seen a bad year…In fact this Index has slumped the highest @ 35% over last year…75% Index weightage is in Five scrips led by Tata Steel with 22% followed by Coal India,Jindal Steel,Sterlite and Hindalco
• Oil & Gas too has seen a bad year…Reliance with a 54% weightage and ONGC with a 22% weightage aggregate a skewed weightage of 76% in the Index
• Capital Good Giants,India Proxy Larsen and Toubro and BHEL have a weightage of  54% and 16% respectively in the Index that monitors the share price of  17 companies,that also include Siemens,Suzlon,Havells,Thermax,ABB and Punj Lloyd…it’s been a shocking year for both,Larsen and BHEL on the bourses and the steep fall has unnerved even the aggressive Investors
• Healthcare has held up well in 2011/12…19 Healthcare and Pharma Companies comprise the Index with Sun Pharma (18%),Dr Reddys (17%) and Cipla (12%) leading the weightages
• 14 Banks comprise the Bankex with the top three weightages given to HDFC Bank (26%),ICICI Bank (25%) and State Bank of India (16%)…it’s been a very challenging year for the Banks given the slowdown in the Economy and high interest rates affecting credit offtake…the rising level of NPAs remains a threat
•  PSU ~ The Index has 60 PSU Companies in it ! with Coal India and ONGC leading at 14% each in weightages followed by State Bank of India with 9% and NTPC with 8%…Interestingly these 60 Comnpanies have an aggregate  Market Cap of Rs 1561821 crs currently….and this smartly and significantly  constitute nearly 26%,that’s over one fourth of the Total Current Market Cap of BSE of Rs 6108734 crs 
• The Auto Index covers 10 Companies across the sector spectrum of leading four HMV and LMV wheelers & Two Wheelers,Battery (Exide) & Engine (Cummins) Manufacturers and Tyres (Apollo)…Aggregate 86% weightage is given to top Five Vehicle Players led by Tata Motors with a 31% weightage .Interestingly and encouragingly too,this Index has held up well,largely due to outperformance by Tata Motors…However Index aggregate Market Cap is below 5% of total market cap 
• Realty Index tracks the share price of 12 realty companies…DLF lead weightages with 33% followed by Unitech (17%),Oberoi (10%) and HDIL (10%)…Shobha,Godrej Properties,Phoenix,D B Realty are some others in this Index…it’s continued to be a sliding year for this sector that’s been saddled with huge crippling debt,huge inventories and delayed projects….but how much more lower can it go !…search for contrarion winners in this sector over the long term…had spotted Orbit at Rs 20 + late last year and early this year…Price has doubled to @ Rs 48 currently…and even Indiabulls Real Estate at Rs 45 + levels after demerger of Indiabulls Power….it surged to Rs 80 levels before reacting now to Rs 62 …But Both do not form part of this Index 
• Power Sector is battling  Source Feed Supplies of Coal and Gas that’s crippling Operations and resulting in lower output and capacity underutilisation….Implementation of both,Public and Private Mega Projects too has been delayed for a host of reasons …This Index tracks 19 companies in the Sector that cover Generators,Transmitters and Distributors as also others that supply Equipment like BHEL which has the second largest weightage of 15% …NTPC with a 20%  leads the weightages….Incidentally Private Power Players like Reliance Power  and Adani Power have a weightage of 4% and 3%  respectively….Given the Challenges faced,the Year has been quite unkind to this Sector…the Index has slumped @ 27% in the past year…anyone for a Contrarion Bull Play here !? 

To Protest against the Congress led UPA Government’s recent decision to Hike Prices of Petroleum Products, the Opposition parties led by BJP and even joined by some UPA parties ! had announced a Bharat Bandh today….Political leaders are courting arrest…there is disruption in Road,Rail and Air Transport across the Nation….In Mumbai,Autos and Taxis are off the road….schools are closed…banks have closed shutters as have many establishments….many offices have declared an off day

There is a demand for rollback of this price rise….yesterday,our FM,Pranab Mukherjee asserted that there would be no rollback   

So India is officially Open but practically ‘Bandh’ today but Stock Markets are ‘Chalu’ !…Pun fully intended !….though they were less ‘Chalu’ today as Sensex and the Nifty closed down just 20 points and 1 point respectively at 17441 and 5246 

Cheers !  

As of December 2008,the Central Electricity Authority (CEA) reports that India’s Power Generation Capacity is 147402.81 MW,up 8651 MW from 2007…India continues to reman a power deficit country…Current Deficit is 20000 MW

NTPC,a leading PSU, is the biggest  generator with 28333.99 MW from the Eleven Central Sector PSUs…It may be recalled that Reliance Power,in the Private Sector, has plans to generate 28000 MW by 2016…By Then NTPC capacity would have surged pass 65000 MW

The Eleventh Five Year Plan 2007-2012 has a revised planned creation of 92000 MW…But with India targeting high single digit GDP Growth Rate over the next several years,the demand for power too will surge…It will be only in the Twelth Five Year Plan 2012-2017 that the power demand and supply curve will cross

Mckinsey in their report ‘Powering India-Road to 2017′ estimates that the Power Demand  will be 335000 MW in 2017 …Interestingly last year,amidst great controversy and opposition .both in India and in USA,both countries signed a Nuclear Treaty to facilitate purchase of Uranium by India and setting up of Nuclear Reactors for Civil Purposes  

The Breakup on various parameters of India’s Installed Power Generating Capacity of 147402.81 MW makes interesting reading

 Some Observations

• Thermal Power Generation is 2/3 rds of the Capacity
• Hydro Power Generation is 1/4 th of the Capacity 
• Coal Based Plants at 52% are over half the Capacity
• Much Hyped Mode…Nuclear Power plants currently contribute less than 3% of Capacity…even with the implementation of the controversial Indo -USA Nuclear Treaty,this percentage will only marginally go up to @ 5% in the next Ten years
• Renewal Sources contribute under 10% of Capacity currently…There is great potential to increase this percentage to reduce dependency on Coal,Oil and Gas Sources 
• 85% of Capacity is from the Public Sector
• The role of the Private Sector may assume more focus and it may contribute more in the future than the current 15% to Capacity 
• Of 28 States and 7 Union Territories,Maharashtra leads with over 7% of Capacity

An additional capacity of only 8651 MW was created in 2008…To achieve Five Year Plan Targets,the incremental annual capacities should be close to 18500 MW…otherwise it may take much longer than 2017 for the demand/supply curve to cross

Major Constraints in Developing the Power Generation Capacities have been

• Government Equipment Procurement Procedures 
• Project Implementation Delays
• Saturation in Capacities of Engineering Companies in Setting up of Power Plant Infrastructure and delays in their increasing their Capacities
• Delay in Allotment and Development of Coal Mines…largely on account of delays in land acquisitions and in obtaining government clearances and  multiple mine allottees for the same mine
• States Dominating the Distribution of Power…State Electricity Board ( SEB) Losses are legendary…it impedes the State’s capability to invest further to augment existing capacities and also discourages Private Investors from providing Capital to do so….Distribution Losses are reportedly a criminal 40% of generated and transmitted Power

If India has to Grow to be one of the top Three World Economies in the next Two decades,as is expected, Power Capacities have to scale up significantly and fast…Government is well aware of this and has been introducing Power Reforms…The Electricity Act of 2003,CERC,Exchanges for Power Trading,Privatisation to highlight a few

Despite constraints,some  due to  coalition politics,the Power Sector has the Power to  create  Multifold Gains for those who invest in this sector as a Business or even  just as an Investor…but these will play out over the Long Term…Ten Years and Beyond

Consider three Listed PSU Power Plays for your Long Term Portfolio…BHEL,NTPC and PTC…You’ll get an opportunity to buy these at Distress Prices when the Sensex follows further DOW Declines and seeks even lower levels  from 8900 levels today        

Stark Reality this !…..The US Senate passed the Indo Nuclear Deal by a resounding 86 to 13 Vote on October 1,2008 …..Next Day was Gandhi Jayanti and the USA President,George Bush ratified the Deal….Mahatma Gandhi stood for Ahimsa and Non Violence…was it just a stark coincidence or was it what James Redfield,a modern day thinker, termed as “Synchronicity” in his book “Celestine Prophecy” or was it ” Secrets of Shambala” ?

The contrast of “Nuclear” and “Non Violence” was meant to be juxtaposed like this!

Hey Guys ! How can you blame Ekta’s Serial Plots which are brainwashed on us through various TV Channels…..there is enough inspiration available…look at what transpired just now in the Lok Sabha !….Three BJP Members opened up a bag and exhibited for the whole world to see the Currency Bundles that were given to them to buy their Vote or abstain from giving one at this evening’s Trust Vote to save the UPA Government

This is what I say….last evening the Media showed us how our PM,Mr Manmohan Singh,walked towards the Cameras and to a question posed ,said emphatically that if there is any proof of Cash having been paid to buy Opposition MPs then let the Opposition provide proof !…He should have realised that this would Invite Big Trouble….This is exactly what happened…as if on cue you had the three BJP MPs,two from Madhya Pradesh and one from Rajasthan literally producing the Proof in the Lok Sabha !….stating that they were given an advance of Rs One Crore which they flashed and were promised Rs Three Crores each by the Samajwadi Party !…..now you will have even more charges and uncouth language exchanged between our elected representatives and leaders

The UPA Alliance says this is a big gameplan premeditated and preplanned by the NDA Alliance as they had realised they would have lost the Vote….they should have informed the Speaker in advance about this and not flashed it like they did…Mulayam Singh says it’s a BJP “Shadyantra” and the BJP MP Ashok Argal who flashed the bundles should be immediately arrested and the Small Bag and Bundles tested for fingerprints…also how could such a small bag hold Rs One Crore!……reminds me of when the Late Harshad Mehta held a press conference to disclose that he had given a bribe of Rs One Crore to the then PM Mr Narsimha Rao …at that time too there was doubt as to how the money could have been fit into a suitcase!

The NDA Alliance wants the PM to resign .They say this is JMM 2

What more can I say !? The PM asked them to show proof of Corruption and BJP had done so…I’m not even shocked by the way it was done…it was inevitable in this slugfight of a trust vote….now the ball is back in PM’s Court to prove that this proof is merely planted proof…as Lalu Prasad screamed that these BJP MPs must have gone back home and got this money from their own homes

PM,if you wanted to win here…then you should have stayed true to your nature and kept silent instead of taunting the BJP to provide Proof of corruption.

Interestingly the Tapes and CDs referred to by the BJP Leader,Rajnath Singh which will expose the UPA Alliance’s under the table means to buy votes,  are with CNN IBN and they are disclosing on their channel that they do have such tapes and CDs,but in their wisdom will not air them but will give them to the Speaker of the Lok Sabha……These have not been edited or doctored………This is a serious issue

The Trust Vote is in Jeopardy as is the N-Deal…will the PM get to deliver his speech after which the Trust Vote is scheduled.The House convenes at 6 pm,just half and hour away from now 

Watch the Entertainment on News Channels….especially CNN IBN who has these tapes

There is a trust vote in the Lok Sabha today as the ruling UPA Government will attempt to prove it’s majority with new support from the Samajwadi Party and after the withdrawal of support from the Left

And there is a reason why I’ve sang in chorus thrice the current hot favorite song ”Singh is Kinng !” in the blog’s title….and yes “Kinng” is spelt with two “n”s and the movie of the same name has yet to be released….because there are three leading “Singhs” in the UPA Alliance now….Manmohan Singh,Mulayam Singh and Amar Singh…The “?” is because the vote is scheduled for this evening and we’ll know the fate of the trust vote only after the actual Vote on it concludes.

Looks like UPA will sail through by a slender margin…less said the better about the cross voting and abstentions expected,ministerships promised,the horsetrading going on,accusations of crores changing hands to buy MPs and whimsical alliances where foes becoming friends to fight other foes who were friends earlier ! ….while I write this blog ,the speaker of the Lok Sabha,Somnath Chatterjee, has just commented live in Parliament Session “I think the Parliament has reached it’s Lowest !”…this is when Rahul Gandhi is speaking on the Debate and opposition members are cursing loudly….speaker has directed that nothing should be recorded

However even if the UPA sails through the victory will be pyrrhic…won at too high a cost to be worthwhile

Stock Markets have been buoyant for three days in a row now and as I write this the Sensex is up  304 point today at 14154 at 12.43 pm…it’s gained smartly nearly 1500 points inside three days as it is expected that the UPA will speed up financial banking ,pension and insurance reforms after winning the trust vote today with the support of their new allies,the Samajwadi Party….the reforms were opposed strongly by the Left.

Methinks whatever the outcome of this Trust Vote,there will be General Elections later this Year….earlier than normally scheduled in mid 2009 which would have been at the end of the full five years of government

Why is India pushing for the Nuclear Agreement with USA ?

&

Why is USA pushing for the Nuclear Agreement with India ?

despite there being sizeable opposition in both countries to this Deal

Let’s address the first question.

India,clearly needs significant additional Power Generation to sustain it’s GDP growth for the next few decades.In fact from the current US $ I Trillion economy ,if India grows at 7% to 8% CAGR it will cross US $ 4 Trillion in the next 20 years.Any higher rate of growth will see it becoming a US $ 6 Trillion economy in this period !

‘Powering India—the road to 2017’, a report by global consultancy firm McKinsey states that India will need $600 billion to meet electricity demand that may triple to 3,35,000 mw by 2017 and it will face a huge shortage of power if it does not act now. 

India’s Hydel and Thermal Power Generation Capacities and those generated by Altrenative Sources like Wind and Solar would just not be enough to cope with an expected Power Demand

So what’s the opposition about ? ! Well for One it’s the way the UPA Government has gone about this whole process.Full Transperancy and Communication from Day One would have been a better idea.

A more compelling argument is that many believe that India will surrender some part of it’s sovereignty in that it will not be able to conduct further nuclear tests or it will risk facing stoppage of the supply of uranium which is the feed to the reactors.Australia,who holds 25% of the world’s uranium reserves, has already taken a  U turn as the Labour Party has come into power and stated that it will not supply any uranium to India as India had not signed the 1970 Nuclear Non Proliferation Treaty.The risk is that if supplies do stop there is very little “corrective measures” (Draft IAEA Agreement) that India can take to keep the reactors in operation….The Reactors would at best serve as gigantic storage Bins…like the silos that store Wheat!…and they would have cost India over US $ 40 billion to build

The arguments on higher creation costs (Nuclear :Rs 6 crores/MW against Thermal :Rs 4 crores/MW) and safety issues (Chernobyl Disaster in 1986 in Ukraine was more due to lack of safegaurds prescribed by IAEA and the Three Mile Island Leakage was controlled by conventional means) are less compelling.

Now let’s tackle the second question as to why USA is pushing for this deal.

Clearly USA benefits two fold with this deal.

It hopes to immediately capture orders worth US $40 billion to supply equipment and even build the reactors.General Electric will be a clear beneficiary here.It’s CEO, Jeffrey Immelt,who till a few years ago treated India with disdain and had no time for It,has already flown into Delhi several times to lobby at the highest level for potential contracts.These would probably bail out GE.There a real “fear factor”on GE in USA and Immelt is under hell of a lot of pressure.In fact Immelt’s famous predecessor , Jack Welch even went on CNBC on Apr. 16, saying Immelt had a “credibility issue” and was “getting his ass kicked.” This was because Immelt oozed confidence but GE was unable to match it’s earnings guidance last quarter. Welch later said his comments were incorrectly interpreted, but that did little to change the fact of Immelt’s bruised credibility on the Street.

The second reason is that with growth and demand saturation levels in USA and Europe,USA can ill afford not to participate in India’s growth story in the next few decades.It clearly envisages significant incremental business with India

That India is on it’s way to becoming an Economic Superpower is arguable but that it weilds enormous Political Clout in the Sub Continent is not 

Opposition in USA to the Deal is also centred around the fact that India has not signed the 1970 Non Proliferation Treaty and USA could have extracted much more…On the other hand Opposers in India feel that USA has extracted too much

So what’s the bottomline ….. should the deal go through ? Both India and USA clearly will benefit…..however with volatile,uncertain and fearful geo political situations across the globe,especially in pockets like Iran and Iraq and the Middle East,North Korea and even our subcontinent there is a very real nuclear threat and India would have to protect it’s defence interests and while doing so a situation may clearly arise where the Congress would have to explain why it spend US $ 40 billion to build reactors but now has no fuel to run them!…Corrective Measures would have an insignificant impact in such a situation and that is precisely the reason they have not been spelled out clearly in the draft IAEA agreement 

Andrew Kramer’s vituperative column in the New York Times is explicit on the real reason why USA Invaded Iraq ….it was to control it’s Oil Reserves (Iraq has the second largest reserves after Saudi Arabia) and bring back US Oil Companies like Exxon,BP,Shell and Total to Iraq …it was not to search for Weapons of Mass Destruction and Terrorists as USA had claimed.The Invasion is nothing short of a War Crime.Despite tenders being floated for Oil Concessions in Iraq and bids received from over 40 companies including those from India,China and Russia the shortlisted are the American Companies who submitted no-bid contracts

In November 2007,bypassing the US Congress and the Iraqi Parliament and the people of both countries,President Bush and the Iraqi Prime Minister,Nouri al-Maiki signed a ” Declaration of Principles”.It contained a brazen statement about exploiting the resources of Iraq especially by “American Investments”.In January this year,President Bush made it even more clear stating that he would reject any Congressional legislation to restrict funding to “exercise United States control of the Oil resources of Iraq”

This would give you some idea of US Ploys to action out the Hidden Agenda at a future date…They would clearly do so in India too when it suited their interests…Remember it stopped short of declaring Pakistan a terrorist state as it needed access to Afghanistan to flush out the Al-quaeda,despite India providing enough proof of Pakistan aiding terrorists.

Even in the 1992 Stock Market Scam in India,when Citicorp was seen to be a big ally in the Bear Cartel in the Bulls v/s Bears Battle on Indian Bourses,and had it’s Indian banking license in jeopardy,it’s CEO at the time,John Reed,flew into Delhi for a few hours in his plane and strong sources say,literally blackmailed India’s Prime Minister that he would withdraw Billions of dollar deposits…at the time India was facing a deep economic crisis and had Foreign Reserves of just a few billion dollars(Today it proudly sits on FX Reserves of over US $ 300 billion)…interested on some of Citigroup’s mishaps,especially it’s role in the Indian Stock Scam of 1992 then just Google search for it     

So is USA a friend or a Foe?…let’s just say both,India and USA, are the biggest icons of democracy in the world and they both need to protect their self interests…The question is when compromising on some interests when negotiating the deal you need to address” How Much is too Much ? !  

Our Prime Minister,Mr Manmohan Singh may have given his personal promise to President Bush in 2005 to get the N-Deal Cleared…he needs to carry 120 crore Indians with him this time…But the first critical test will be to muster 272 votes in the trust vote on July 22,2008 in the Lok Sabha….The Left parties have withdrawn support to the UPA on the N-Deal Issue leading to the need for this trust vote.Earlier arch rivals,the Samajwadi Party is now lending the UPA support and like Shylock is expected to extract it’s pound of flesh from the Congress Government…quite brazenly too

I dare say… Cheers !

Before we debate the controversial Indo-US Nuclear Agreement that may see the light of day it would be enlightening to get a little bit versed with India’s current Nuclear status…check out this link to gain some insight

www.world-nuclear.org/info/inf53.html