The markets are at an all-time high and have not only crossed the intraday high made on the day the election results were announced, but even closed at higher levels. Clearly the sentiment has changed and once can see the difference in body language across various segments of society. The PM has assured the Indian Bureaucracy that they have to perform, take decisions, be disciplined and above all have nothing to fear. These are strong words and will make a brilliant force which has become inefficient back to its heydays.
Things don’t end at just the civil services but extend much more to even the ministers who have been told that they need to work and put their best foot forward. Inter-ministerial groups known as “IMG” and “EGOM” have already been established and as you read this, the Chinese Foreign Minister is in India. The PM travels to Bhutan, Japan and USA in the next few months and has a busy schedule.
What’s driving the markets? Two things are driving it with the first clearly being the money being poured by FII’s. The second is the hop and optimism that this new government will start doing things. Ten years of misrule and more important three years or thereabouts of doing nothing will start moving. It is this expectation and new found spring in the step of the people of this nation that will change things. Everyone knows that data such as IIP and GDP always come with a lag effect and for the numbers to speak it will take some time.
I am very bullish on the PSU pack and believe that these will become big gainers and many of them will turn out to be multibaggers. Speaking at a CII conference on Capital Markets, SEBI Chief mentioned that all listed companies will have to follow the minimum public shareholding norm of 125%. This he said was irrespective of who the owner of the company was. I am sure these comments cannot be with the tacit approval of the new government and speak volumes of what will happen in the near future as far as markets are concerned. The markets need transparency and thus divestment in the proper form will happen.
This is a significant statement as the cross holding methodology would dilute the promoter holding but not increase the public shareholding. For e.g. shares of ONGC held by IOC are deemed to be non-public as IOC is a company owned by the Government. If this transparency starts coming into the public enterprises and their holdings reduce over time, greater accountability and better performance will follow.
I urge investors to look at PSU companies there is plenty of money just waiting to be made.