Dear Mr Cut & Paste, Why you harrasing readers by your nonsense mails? please contribute something worthwhile and dont attack with lot of junk articles thanks Rahul
--- On Sat, 4/4/09, Haresh Soneji <[email protected]> wrote: From: Haresh Soneji <[email protected]> Subject: {GS} CNBC TV18 Column -- Market-o-logy -- Playing With The Consumer To: Date: Saturday, 4 April, 2009, 12:58 AM http://www.moneycontrol.com/india/news/cnbc-tv18-analyst-markets/playing-with-the-consumer/391847 Column: Market-O-Logy Playing With The Consumer "Many people want the government to protect the consumer. A much more urgent problem is to protect the consumer from the government." - Milton Friedman By Haresh Soneji, CNBC-TV18 The Indian consumer has spoken, once again. She/he lacks confidence. But, nobody seems to be listening. The equity market seems to be giving thumbs up to global developments, India Inc. seems to have increased output anticipating a revival in demand and the government is busy with its own political agenda. The result is simple – no one is listening to the Indian consumer. What does the consumer have to say? Nothing great actually. The March survey reveals a strong undercurrent of fear in the minds of the Indian consumer. Weakening optimism about economic and personal finance conditions and deepening pessimism about employment conditions seem to be the key reasons for the massive decline in sentiments. This is reflected from the CNBC TV18 Boston Analytics Consumer Confidence Index for March, which fell another 5.6% over Feb. At 73.5 levels, it’s the lowest number since the index was constituted in Jan ’08. But, who cares? This monthly index is the world’s largest consumer confidence index based on nearly 10,000 face-to-face interviews from respondents across 15 cities. Across the world, consumer confidence is a lead indicator on economic conditions. It should be true for India too. In India, the consumer is worried about the employment conditions and job security. Confidence levels on employment conditions dipped 10% month-on-month, while job security confidence in March dropped 16% odd over Feb. So, if the consumer is not sure about his future income, She/he would rather save than spend. It’s simple. Isn’t it? Yet, no one seems to be listening. India Inc. is focused on increasing supply rather than keeping a tab on demand. This is evident with the rise in manufacturing days and also the output. Business confidence survey conducted by National Council of Applied Economic Research (NCAER) is on its way up, in contrast with consumer confidence. A sharp contradiction here means that if the consumer is not buying, inventories may pile up again. And India Inc. is aware of the consumer trend. At a private equity event in Goa during the weekend, Roopa Purushothaman, MD, Future Capital Research said, “Consumer confidence is down and could be affected by any fresh news on unemployment and deflation.” This is in line with the results of CNBC TV18 Boston Analytics Consumer Confidence Index. Having said that, the consumer spending confidence component in the CNBC TV18 Boston Analytics Consumer Confidence Index rose 10% in March as compared to Feb. But, that doesn’t read much. The only way to read the positive number in the consumer spending confidence is a decline in pessimism levels and not a trend reversal. This could be attributed to the government efforts to prop up demand. Also, the positive sentiment is largely evident in Tier III towns and continues to remain negative in metros and most Tier I cities. Titan’s MD Bhaskar Bhatt confirmed this on CNBC TV18. He said, “The Top 8 cities underperformed rest of India. There is a general reluctance to spend on discretionary items.” So the big question is when India Inc. is aware of likely consumer decision, why is it building up manufacturing? India Inc. appears to be skeptical yet optimistic. Roopa explained to the audience that the Jan-Mar quarter saw sequential growth reviving. But unless, year on year growth stabilizes, the extent of outright declines could be over. This could be seen stabilizing towards the beginning of the third quarter. This skeptical confidence from India Inc. seems to be another source of fuel to the ongoing equity rally. The successful G20 summit is the other reason. Before the G20 meet, legendary investor George Soros wrote that the world may fall into depression, if the G20 summit failed. The G20 submit last week pledged another $1.1tn to save the world from the financial mess. Both, capital availability and cross border trade are now eased to help the consumer spend. Bulls around the globe are shouting at the top of their voice – the worst is over. This is the beginning of the new rally. But, that may just be an illusion. The current rally in the markets – commodity and equity – is all but reflation trade. And traders betting on the world reviving soon due to the stimulus spending by governments could fall flat on their feet and lose a lot of money. The measures taken at ‘saving the world G20 summit’ will definitely be inflationary without actually solving the crises. That could be the root cause of another crises. Timothy Geithner’s plan is flawed and is another financial bubble say veteran experts and economists. We are living in uncertain times. Is the world saved from The Great Depression 2? Only time will tell. But the wise still are uncertain. At the CNBC TV18 CFO awards a few weeks back V Balakrishnan, CFO, Infosys revealed a gem when he said, “People says Cash is King. I would say Cash is God.” If you have cash you are God and for God’s sake, save your cash and invest wisely. When I messaged Ramesh Damani last week asking him about the ongoing rally he replied, “Bear market rallies are like thundering herds of elephants. They will trample anyone in its way and so, is this rally – strong, powerful, and global. The good news is that it still has legs and may surprise on the upside.” I rest my case. Disclosure: The author is not permitted to trade and/or invest into the equity market directly or indirectly, apart from investing (long only) in mutual fund products. His equity exposure is only to the extent of ESOPs granted by the employer. -- Best Regards, Haresh Soneji +++++++++++++++++++++ END PIECE - CRY PLEDGE "Before anything else, I'm an Indian. And so is this little child. The rights I enjoy as a citizen of this free country are hers too. She has a right to be free. She has a right to be happy. But I'm going to fight for her because she has the right to be a child. I'm going to fight for her every single day, every single moment. With my skills. With my resources. With my heart. I'm going to fight for her because I can. And she can't." +++++++++++++++++++++ Check out the all-new Messenger 9.0! 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