UNION BUDGET 2015-16 My Take

Hi,

Its been a long time that i have actually visited my own blog and tried to type.

on 28th February we had an amazing session at our college. We had organized a budget viewing session on the large screen at our college auditorium, this was followed by a few remarks by experts on finance, economy, agri-horticulture and taxation.

The highlight of the programme was the presence of Shri. Athani Veeranna, the Chairman of our Institute, who is a leading chartered accountant and an acknowledged expert in taxation matters. He was his usual self in being highly meticulous in pointing out the pertinent facts in the budget and then giving his views on the budget proposals.

Prof B Veerbhadrappa, an economist, Economics Professor and the finance officer of Davangere University who sat through the entire proceedings. He gave a fabulous overview on management of the economy and spoke about the balancing act of the finance minister.

Mr. Basavanagouda, the coordinator of the Tarala Balu Krishi Kendra also did a great job of providing insights into the budget proposals for the agriculture sector. He analysed the proposals with respect to the wish list of the progressive agriculturists.

Then it was my turn to voice my opinion on the budget proposals. A lot has been said about the budget in the last three days but my opinion is my opinion and as always i beg to differ a little from the tread path. So here it goes....

JAM- the Jan Dhan - Aadhar - Mobile troika will necessarily plug the leakages in the subsidy system (a glimpse of the fallout of the troika was evident when the brother of the PM participated in demonstrations)

62% of the tax collections are to be devolved to the states and this is being projected as the spirit of true federalism. I see it in a different light. The center wants to put the onus of providing subsidies on the states so that there can be separate policies for separate states.

one of the visions of the government enunciated was of providing 100% housing by 2022. This is a laudable decision. Industries in cement, steel, housing finance, power and infrastructure can look forward to large opportunities. In fact, the next two decades will belong to the infrastructure industry.

An announcement of setting up an unified Agricultural market has been made, if this becomes a reality, then commission agents in APMCs will have to look for better business opportunities or remodel themselves to be a part of this new arrangement. Anyhow this will change the game for ever in the Agricultural produce markets.

MUDRA (Micro Units Development Refinance Agency) is being setup with a Rs 3000 cr. initial investment, this should pave way for credit availability to small, tiny and micro industries and free them from the clutches of private money lenders. The unorganised market of money lenders charges usurious interest rates and it has become the bane of the businesses at the proverbial bottom of the pyramid.

A bankruptcy code is envisaged to help faster start-ups and faster winding-up of companies. Along with ease of doing business, ease of closing business is also of vital importance so that resources are not wasted on trying to make unprofitable business to survive. This is a welcome move.

A vital point is that NBFC with more than 500cr capital will be treated as financial institutions under the SARFAESI Act. this would prevent the goonda raj prevailing in the private financing of commercial vehicles and tractors.

The Finance minister has promised a universal social security system, I am now feeling that we are truly moving forward to become a developed country. The Atal pension scheme is the right step in this direction.

"Sabka Saath and Sabka Vikas" has also brought in "Nayee Manzil" to appease the minorities with less formal education to start micro enterprises. (if the same was done for all communities then it would have been real sabka saath and sabka vikas). Here the government seems to be wooing the minority just the same way as the earlier governments.

A Rs. 25000 cr Rural infrastructure Development Fund has been announced, good days are here for gram panchayats and taluk panchayats. Hope the money finds its way to real infrastructure.

Apart from the RIDF another Rs. 70000 cr has been announced as investment in infrastructure, supporting my take that this is going to be a decade of infrastructure.

Much needed boost has been provided to the power sector by announcing a policy of plug and play power projects, Ports to be converted to companies (did somebody say Adani?) a start-up fund of Rs. 1000 cr for IT start-ups.

Financial Markets have found a new measures by the merger of SEBI and FMC. A welcome move, for that matter too many regulators spoil the broth, so minimum government is essential for maximum governance. Measures to develop and deepen the bond markets, introduction of Indian Gold coins and authority to FEMA to control equity investments will pave way for better administration, development of markets, freedom from gold imports and a sovereign gold bond to take care of the craze for gold investments.

The central theme of the budgetary proposals seems to be a road map for establishing a cashless society. Ease of doing business has been addressed again in bringing about a public contracts resolution bill ans a regulatory law for infrastructure.

Education seems to be loaded with skill development and not with mind development. A Student Financial Aid Authority to take care of financing the students of higher education is a welcome move but what is needed is "NATIONALIZATION OF EDUCATION" if Modi is being hailed as a Thatcher of India then it is imperative that the BJP with its majority pushes for Nationalization of education. only such a move will be able to provide education to all the classes of people. Germany is a very good example of what nationalized education can do to the country.

A Bank board to be setup and then this is expected to grow in to a bank holdings company. A Sovereign holding company to hold all governments investments, to be managed professionally is the right direction to take. Hope this too happens in the near future.

Finally a commercial division in the courts has been announced, this will pave way faster resolution of business conflicts and lead to better environment for conducting ones business.

I would not like to dwell on the tax proposals, As it is said that Taxes and Death are a certainty and they are not avoidable. Both cannot be moderate, thus less spoken of them the better.

All in all a budget that creates hopes, promises more than it delivers and seeks to flush out black money by making life difficult for offenders. this budget can be called high on hopes and low on real, ground level issues. let's hope that whatever is promised is delivered, as that is all that we can do for the next four years.

ANNA forces a compromise

The entire episode of Anna and his struggle to bring about the issue of corruption center stage has brought about some key take-aways.

1. The youth and the middle class population of India have become politically aware and they should shed their cynicism and VOTE in the next election.

2. We should not be carried away by tokenism of the politicians: like spending a night at a villager's house (after installing generator, western toilet and filling his house with mineral water)

3. We should stop electing people who are known land grabbers and are in cahoots with builders, contractors and other people who deal with businessmen who sell their wares mostly without receipts and thus steal on sales tax, income tax and other taxes.

most black money results from evasion of taxes. if taxes are paid truthfully and correctly then the question of generating black money does not arise at all.

4. We should stop talking about CASTE in this country.

WE ARE ALL INDIANS FIRST AND INDIANS LAST. ELECT A GENUINE REPRESENTATIVE NOT FROM YOUR CASTE AND THEN SEE THE DIFFERENCE.

ELECT A REPRESENTATIVE WHO SPEND LEAST MONEY ON CAMPAIGNING.

STOP ELECTING PEOPLE BECAUSE THEY BELONG TO A FAMILY

ELECT PEOPLE FOR THEIR WORTH NOT BECAUSE THEY BELONG TO A FAMILY

That's all for today

I know this post is going to elicit a lot of comments. all comments are welcome.

Stray Thoughts on Financial Ratios

Whenever we talk of financial ratios, some students of finance who read only text books come up with weird rules and standards. On Monday I was conducting a viva-voce exam for some students. Most of the summer projects were ratio analysis of the company that they had worked in as interns. First of all ratio analysis is not a two month activity, at best it can be a three hour activity or an overnight assignment on finance, nevertheless these students spent an entire 60 days in companies and then came out with a report on financial ratios. That was the first thing that pout me off. the other thing that put me off was that one of the students confidently came up and said that the current ratio of the company he had worked in was at 1.8 and that it was not ideal. when asked about the ideal ratio he said it should have been 2. I asked him where he has read this, he mentioned the book of one of the finest gurus of finance in India (Dr. I M Pandey). I asked him to bring the book and read the paragraph where Dr. Pandey has categorically written that one should not follow this convention blindly. in fact he has not used the words "rule" or "standard" that goes to show how the students reads and understands according to his convenience.

I asked all these students about their perception of a great blue chip company. They cried ITC and Hindustan Unilever in unison. then i asked them to find out the current ratios of these two companies. being FMCG companies they invariably work on negative net current assets and therefore a negative working capital. That in fact is the reason for their high efficiency. the students went about finding out the current ratios of these companies and came out with the obvious: less than 1. Then the students were convinced that there is no hard and fast rule about the current ratio.

Current ratio (Current assets / Current Liabilities) is calculated to find out the liquidity position of a company or firm when the company or firm is an unknown one. If one is analysing a known brand and a company which is in business for a long time then this becomes redundant. If the company is able to dictate terms to its suppliers and its customers then it will always be in a position to use all the suppliers monies for financing its current assets making use of its own funds redundant. That shows why big companies with bigger brand names are in a position to sell for cash and buy at long credits, skewing their current ratios below unity and therefore operating with negative working capital.

A petty businessman with a lot of commonsense would find this article talking about the obvious. he always know that running a business with others money the right way of running a business.

Now for the opinion on the markets: I reiterate that the markets are poised for a fall. they may pick up some steam and even reach the earlier high of Jan 2008. The distance between today's indices and January 2008 highs is only 10-12%. This distance will be traversed in no time at all and all those investors who realise that the markets have gone up will be the ones who will buy between 5800 and 6250 of the nifty. I pray that more people read this part of the piece and refrain from any buying at these levels. and please do not feel left behind if the nifty actually goes above the 5800, because even if the nifty really touches the previous high it will fall to minimum of 3500 in the coming year 2011. So please reign in your horses. If you still plan to be in the markets then just trade, be nimble, get out at the faintest profit margin. The markets can start falling anytime from now to December and the fall will be substantial.

Economy is fine says the Economic Advisor.. As usual I beg to disagree..

The Economic advisor to the prime minister says the economy is doing fine and we can expect a growth rate of 8.5% this year. Good News.

As always I am a naysayer and my only grouse is that we have inflation running at an average of 10% for the last four quarters and with nominal interest rates lower than the inflation rates we have already run into negative real interest rate territory for the last three quarters. This does not bode well for the foreign exchange rate front. As long as the real interest rate remains negative, Rupee will keep being under stress, new symbol not withstanding. May be, this is good for the software companies and other export led businesses, but since we are an oil importing economy with a trade deficit of close to a billion dollars and heavy reliance on "invisibles" to Balance our BOP, we need more to be done on the trade deficit side.

All through the blog you will find mention of this inflation in India being more due to non availability of supply than the over supply of money. Managing this inflation by using monetary policy is like managing hypertension by asking the heart to pump less blood rather than by exercising more. Ask any doctor for a remedy he will certainly say that your body needs exercise to counter high BP and not drugs to slow your heart down. But our regulators are not "doctors" they have their monetary policy blinkers on all the time.

what next? INR (sorry I still do not have the font to write the symbol of the Rupee) will weaken to offset for the negative real interest rate for another six months and then if we see some inflation management (monetary or otherwise) we may see a stop to the rupee losing value.

This, along with the money due to be pulled out from emerging markets, thanks to the new act signed by Obama will lead to depressed markets for the next six months. a recovery for the markets is seen only later.

A review of the economy is expected on the 26th evening. The shape of things to come will be decided later. But, since it is an RBI event and therefore a monetary event, it may not give any medicine for the disease of low investment and low supply kind of situation we are in.

Till then short a few August futures and make money.

"If it isn't broken dont fix it" says RBI

That seems to be the mantra from our venerable Governor of the RBI. this credit policy is just a tweak with respect to raising the SLR to 25%. All the other rates have been maintained at the same level. RBI's review has pared down the GDP growth outlook of 6%.
The stimulation of the economy on the back of the financial crisis in the form of eased liquidity remains nearly constant. The powers that be, have been crying hoarse that it is still not time to repeal the stimulus given during the crisis. One fails to understand, why should the government not stimulate the economy constructively on a continuous basis? Why should the government only think of monetary measures when fundamental shift in stimulating the economies are needed?
The best form of stimulus would be to encourage individual savings and collective investments.
Now, what does one make of this credit policy? The policy may have said many things in words but as far as deeds are concerned, it is very clear. The Governor does not think anything is wrong and he does not want to rock the boat when everything is to the Government's satisfaction.
What do we expect in the market? The markets are more concerned with the slow growth expectations. We have already witnessed sluggish growth in corporate sales, this may start affecting the margins and profits in the next quarter. That is the fear in the minds of the players in the market now. The markets have also gone up on one way street for most part of the last year and the time for profit booking is ripe now.
So BOOK PROFITS AND DON'T WAIT TILL THE MARKETS TOP OUT.

India Budget 2009

If there can be a perfect example for a damp squib, this is it! my earlier post I had opened a discussion on the role of media in creating a hype about the union budget and had also mentioned what can be realistic expectation of the new regime.

I was spot-on, in saying that no fireworks could be expected.

Now let see some of the important budget provisions and find out what they mean for you, me and the financial markets.

1. India Infrastructure Finance Corporation Limited (IIFCL) has been granted flexibility in raising finances and lending to infrastructure projects, meaning that it has been left to fend for itself.

2. The allocation for NHAI has been increased by 23%. Good move this would help in the development of national highways.

3. Farmers, the darlings of the politicians (that's not because they are voters but because most of the parliamentarians and politicians are farmers themselves!) have been offered an interest subvention @ 7% and a 1% subsidy for prompt payment (this means the effective borrowing rate fr farmers is 6% and they are not required to pay income tax too). It pays to be a farmer in India.

4. The Market development assistance for exporters in the form of interest subvention on pre-shipment credit extended up to 31st March 2010. Our finance ministry expects the global crisis to blow over by then and then we will be charging the same interest rate for our exporters as other manufacturers.

5. SARAL-2 will be introduced this year. Have you ever heard of a simplified simple tax form. here it is!

6. NREGA the wonder child of Congress (How come the name does not start with Nehru-Gandhi name?) has been allocated Rs.39100 crores (Rs. 391,000,000,000) this year. Lets do a small analysis. NREGA guarantees 100 days of gainful employment for one individual in every household in rural areas and pays Rs. 100 per day per head. This amounts to wages of Rs. 10000 per household for a year. So if Rs.391 billion have to be spent then this money is expected to cater to 39.1 million households, out of approx 197 million households as per the official census of 2001. The corollary of this is that 20% of our population is in abject poverty and is not capable of raising Rs.10000 per household in rural areas. If this is true then Shame on us. If this is not true then, there seems to be a problem with the way our government works.

7. A national mission on women's literacy is being set up and it will help in reducing illiteracy amongst women in the next three years. WOW a commendable job.

8. Students who take loans for education will enjoy a moratorium on interest payments till they finish their course. That is a great thing and it will go a long way in helping poor students to educate themselves.

9. A public Private Partnership is being envisaged in managing the good old employment exchange. That is a great idea, all you private placement consultants and naukri.com better watch out big brother has just entered the fray and he will gobble you up.

10. The Unique Identity Number project has been allotted Rs. 1.2 billion to start its operations. That will kick start the operations but we need more money to count the number of people in this country and provide smart cards for each of them.

11. GROSS FISCAL DEFICIT is expected to be 6.8% of GDP and the Gross State Domestic Product limit has been raised to 4%. Mr. Finance Minister Sir, your targeted Fiscal deficit was 3% and you went on to stretch it to 6.8%. How can you expect your counterparts in the State Governments who take pride in profligacy to contain themselves to 4%?

12. Direct Taxes: Individual Income tax slab at the lowest level has been raised by Rs.10000 for male individuals and women. The lowest slab for senior citizens has been raised to Rs. 240,000, a raise of Rs. 15,000. For the HNIs the surcharge of 10% is abolished. Here the people in the middle tax bracket seem to have got the wrong end of the stick.

13. Fringe Benefit Tax has been abolished. Now your company will allow you to go on tour and spend money and not worry about paying FBT on part of the amount you spent on that junket.

14. Commodities Transaction Tax is abolished. I don't know what to say. the government keeps banning commodities trading whenever it sees a flare-up in commodities prices. So the right question would be which commodity is being allowed to trade right now to understand the impact of abolishing CTT. Any way removing CTT will help commodity exchanges and help stock brokers to start commodity terminals as a hedge against the failing fortunes in the stock broking industry.

15. Minimum Alternative Tax: the MAT under which corporate growth has been swept under by the previous finance minister has just got bigger. MAT has been increased to 15%. There is no incentive for tax management using the growth=depreciation route now. THE SINGLE LARGEST REASON FOR THE STOCK MARKETS TO REACT THE WAY THEY DID IN RESPONSE TO THE BUDGET.

16. Thankfully there have been no major changes in indirect taxes.

17. GST to be operational from 1st April 2010. Good move. GST to be bifurcated to central GST and State GST. BAD MOVE. This means we are going back to the good old days when we had central sales tax and state sales tax. so in Karnataka instead of CST and KST we will have CGST and KGST. (How to share the spoils of the tax revenue amongst the centre and the state could have been kept in wraps and a common GST would have been better)


That's about it. As far as disinvestment is concerned, no specific announcement was made.

Moral of the story: More the things change, more they remain the same. The 1991 wave of reforms was not of Congress manufacturing, but out of compulsion of the IMF. Now that the economy is strong enough to withstand the perils of global financial meltdown we can do it our way, the NEHRUVIAN WAY. In fact, at one time the Finance Minister was singing paeans to Mrs. Indira Gandhi, for having the grand vision of financial crisis 40 years back and resorting to nationalisation of banks.

WOW I am very happy that we had such visionary leaders who could predict turmoils four decades ahead. Our FM needs to read a little of modern economics and find out that this financial crisis happened to US because the Glass Steagall Act was repealed in 1999. There was no way how our Prime Minister could envision that this would happen in 1979.

Now for the markets, the immediate support for the markets is 3800 on the NIFTY. Nifty has to fill the gap it created on that euphoric morning after the budget first. Then lets see if a plunge protection team is formed and whether it works else we will see the October 2008 bottoms again.

Will the FM deliver?

If you happen to watch the business channels these days, all of them want to sensationalise and make news of something there is no news about. these news channels survive on sensationalising the banal. That's exactly the thing they are doing with the upcoming budget. they have already labeled it as the "Big B" (The original Big B must be squirming at the thought of this unlikely and banal competition).

What can be reasonably expected by the budget?

1. Income tax slabs will be raised to make way for the 6th pay commission. may be the lowest slab will be up from Rs.150000 to 200000.

2. A broad and vague statement about GST to be introduced will be spoken of with a deadline of three to four years so that the listeners will feel good about some progress in the administration and the practitioners will also feel good that it is not coming soon yet.

3. A proposal for disinvestment to bridge the gap in the fiscal deficit will also be talked of and an arrangement of selling equity in PSUs to other PSUs will be taken up to satiate the views of people hankering for fiscal prudence. Whether it is fiscal prudence to disinvest by transferring the money from one pocket of the government to the other pocket is a debatable point.

4. The recent success of farm loan waiver in the electoral hustings is bound to cast its shadow (or should I call it lustre) on the budget and there will be a constituency which would hanker for more of the same. This constituency will surely be catered to, and an announcement in some form or the other can be expected out of this budget too.

5. NREGS will also become a mainstream project of the government, given the keen interest of the family in the project. An announcement of extension and raised "deficit funded" programme can be expected on this subject.

6. Securities Transaction Tax, the slow poison affecting the stock markets and the Commodities Transaction Tax the poor cousin of the STT will remain the same and no reprieve on these items can be expected.

7. Some superficial and cosmetic changes can be expected in the indirect taxes system to make it look market friendly. Here the phrase "look market friendly" is important.

8. Education seems to be the new frontier where the government will show its keen interest. especially Higher education, rightly so when we have a former UGC chairman as the Head of the cabinet. More central universities, IITs, NITs, can be expected to be announced in this budget. We can also expect at least 5 universities to get a substantial largess to augment their resources.

9. Defence expenditure would go up by 20%, this has become an annual feature now with the prevailing Geo-political situation.

10. Setting up of a new force of the type of NSG/RAF may be announced to combat internal insurgents.

11. Some politicians are vying for a special status for the Hyderabad-Karnataka region, Bihar, etc., these may see the light of the day and some package can be expected for Hyderabad-Karnataka region and Bihar in an attempt to woo non-congress voters there.

On the topic of special status, one thought crosses the mind, Article 370 gives a special status to J&K and politicians from congress have been talking about a similar status to Telangana, Goa north-east, etc. Does this mean that we are heading towards a decentralised system of governance? Are we heading towards a federal system with a weak centre and strong regional states? only time will tell.

So, if this is reasonably expected of the budget in general, one has to stop and think whether it is really the "BIG B " as our media wants us to believe. I remember economic times portraying a caricature of honourable Shri. P Chidambaram as the superman during the 1997 budget. Ten years ago it was for the print media to raise the hype, now its the turn of the electronic media to do the same. The reach and impact of electronic media is deeper and broader. If the media starts encouraging false hopes and sensationalising no news as BIG NEWS then the nation will be in for a big surprise. It seems that the present electronic media has taken upon itself the mantle of changing the opinions in the country. This type of sensationalism in the electronic media and instant justice meted out to people via the media will not get them anywhere. People are bound to realise sooner or later that the "BIG B" is also same as the case of "prince stuck in the bore well" or "A man who prophesied his death" or "leopard in somebody's house" or "injured tigress on the road". All these media stories took up nearly 48 hours of national TV space at one time or the other leaving aside grave issues like hoisting of the Pakistan flag at Srinagar.

Any way This budget as I see it is going to be a non-event and I pray that I will be proved wrong. Over to Honourable Shri Pranab Mukherjee to to the Honours.

New Government Old Politics

I am writing this after a long time. In the meanwhile as the powers that be changed and exchanged their jobs, me too changed the job (you can find out about it on my profile). The last month has proved it again that as more things change, they remain the same. The Loksabha saw the first skirmish of what was to come in the next five years. DMK and UPA do not seem to see eye to eye on the disinvestment issue. That caused the stock markets to lose 500 point on the sensex and gain 450 points in a matter of two days. Now, was this a predetermined trading strategy is any body's guess.

The Nifty has relentlessly gone up from 2550 pre-elections to 4500 post elections and has made a lot of investors richer. What should one make of this near doubling of the nifty? May I remind you of the October lows (i.e. 2008 October). In the last eight months majority of the front line stocks have posted phenomenal returns, Reliance, SBI, RCOM, Reliance Capital, Reliance Infra, Reliance Industrial Infra, Suzlon, the list goes on...

Has the economic outlook changed so drastically that the despair of the markets has gone and the economic boom is right round the corner? Has the global financial crisis blown over? Does a change in the leadership in Government (in this case no change) make such a difference that people will throng to the stock markets and buy whatever comes their way at whatever the price? We have heard that markets are irrational but are they so irrational that they DOUBLE IN EIGHT MONTHS?

Given these circumstances, we can reach to two conclusions.
1. The markets were artificially brought down and a panic situation was artificially created so that gullible people sold out at lower prices. The economic situation had not worsened at all and everybody was crying WOLF.
2. The economic situation has really worsened and there seems to be hope that things will turn around. This hope has made the markets rebound and get ready for scaling new heights. The worst is over and out and things will be great once again. Our PM also corroborates this statement that India has the capacity to grow at 9% p.a. despite the slowing growth world over.

I would like to leave these question open for discussion...

Please feel free to leave your comments at the end of the blog.

TWO CIRCUITS AND A SCAM

The Indian stock markets hit two circuits and were closed for the day. It was an unprecedented thing that happened.

A decisive win for the UPA has brought back the bulls in the market with a long list of wishes.

1. Easing of FDI norms for Insurance sector.
2. Reform in the banking sector (especially on the labour laws side)
3. Disinvestment from public sector undertakings to make up for the deficit brought about from last year's doles.
4. Dismantling of the Administered Pricing mechanism for petroleum products.
5. Easing of interest rates and making credit available to the industry.
6. Boosting exports by implementing a new export promotion policy.
7. Spending more money on health, infrastructure and education.
8. FDI in the aviation sector.

I HAVE ONLY ONE COMMENT TO MAKE FOR ALL THIS WISH LIST. THIS LIST WILL REMAIN A LIST AND YOU WILL PROBABLY BE ABLE TO SEE ONLY 40% OF THIS LIST COMING TRUE IN THE NEXT FIVE YEARS.

AS FAR AS THE MARKETS ARE CONCERNED THE REGULATORS ARE NOT IN SYNCH WITH THE MARKETS AND THEY NEED TO REFORM THE MARKET FIRST. A TRADING OF 300 ODD CRORES CAN STOP THE MARKETS FROM TRADING AND CAUSE A UPPER CIRCUIT. THIS IS THE BIGGEST SCAM OF ALL TIMES AND NEEDS TO BE PROBED.

Additional reading http://www.moneycontrol.com/india/news/market-outlook/nothing-to-be-proud-of-vk-sharma/398047/1

If the market can be easily manipulated with 300 crores then it is a very shallow market. We first need stock market reforms and we need a regulator not an opinion maker in the regulators seat.

All the best.

Waiting to Exhale

The Great Indian Election Drama of opposing postures is coming to an end tomorrow. All those who thought that the third front and the UPA are different will be in for a rude shock when they will muster all their might to come to power and bury their so called differences under the carpet of secularism.

If you notice the election campaign this year, there were four formations.

1. The United Progressive Alliance: which was not united at all and a splinter went up to forming a fourth front. The alliance was characteristic of unabashed sycophancy and unbridled faith in the first family of India. This alliance also made last ditch efforts to salvage its well wishers by using the CBI to give clean chit to all the well wishing offenders. You must notice one fact that majority of parties forming a part of this front have a common last name i.e. Congress and they root for a common last name too. i.e. Gandhi.

2. The National Democratic Alliance: which was non democratic to say the least. This alliance brought up non-issues when the real issues were not received well by the public. They understood late in the campaign that short and direct television campaigns without the "creative" was the order of the day. They have still not understood that they have to become an inclusive party and not an exclusive party to come to power. Here inclusive means more members and keeping the doors open for new members. Now that the contentions of Article 370, Ram Mandir and Uniform civil code have been kept in the deep freezer there is actually no ideological difference between the two national parties.

3. The Third Front: Means a bunch of regional satraps broken away from the congress of yore. these parties are really drifters with the only aim to get into power. They prefer to call themselves more secular than the Congress or the UPA and they also profess to speak for regional aspirations. Their slogan is to oppose congress in the states and truck with the congress in the centre.

4. Fourth Front: This is a group of parties broken away from all the three fronts with the USP of being away from the congress, the NDA and the Third Front. they would like to jump to the highest bidder post results.

I had not blogged for a long time because of the "Aachar Sanhita" which i had imposed on myself, so that my clouded political views should not add to the political confusion in the minds of the readers.

Now that the elections are over and the ban on exit polls has been removed, Amateurs like me can hazard a guess as to what will happen to the results. I am Hazarding this guess just for the heck of it and my guess is going to influence my strategies in the market.

Now for predictions: I think the house will be evenly divided between three fronts. if you combine the third and the fourth fronts. Left parties will gain enough seats so that they cannot be ignored in the formation of a government. I think all "secular" parties will come together to form the new government and probably this formation will also be given a new name as UPA will not be acceptable to come constituents (probably because of the word PROGRESSIVE in it!). This formation will lobby hard for the leadership of the government and a new face will emerge as the contender for the PM's post. It will be either Pranab Mukherjee or P Chidambaram. Congress would not give away the PM's post at all. If congress is forced to give away the PM's post then they will not participate in the government and will lend support from the outside only to pull the rug in the next Eighteen months. So, it is certain that it will be a congress led government without Dr. Singh as the PM and Left parties participating in the government.

Now for the markets. As I had written in my previous post the Nifty lingered around the 3600 mark until the election results and now it will take a decisive turn. If the Left parties form a part of the government then brace yourself for Nifty touching 1760 and if they do not participate in the government then it would be 4250 and beyond.

So all eyes on KARAT / BARDHAN/ YECHURY.