Saturday , 19 October 2019
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Looking through untinted glasses

By Tensing Rodrigues

When I typed untinted it got underlined in red. I know the word is not found in the dictionary. But that is exactly what I mean: looking at the small pictures as they are not as they fit in a bigger collage. And at such a time when the euphoria runs high it is natural to look through tinted glasses.

What I am about to say may also sound tinted by the euphoria. But that does not mean it has no substance. So just keep that big picture out. Keep out all those clichés like India Shining, Achche Din, New India, etc, and see the small pictures that you may see in your view finder. These obviously are likely to be more authentic. And do not go by my judgment but judge it yourself.

Well, what I am going to say is not entirely mine. It is what made sense to me as I watched the video of an interview with Ashish Somaiyaa, chief executive officer of Motilal Oswal AMC. As you might have immediately guessed the slant of the view is the stock market; so I thought it may interest you. It interested me, because that is what I have always believed in: the small pictures. If it sounds like Warren Buffet’s legendary interest in Coca-Cola and Gillette, it only means that such an approach to the stock market has some respectable followers.

Somayya lists a few simple things that don’t show on the macroeconomic radar but matter for the way in which an aam aurat  ends up allocating her limited budget. They do not show on the macroeconomic radar because these get pushed out of the screen by better sounding indicators like jobless growth, GDP at 5-yr low, unemployment at a 45-yr high, etc.

Somayya speaks of the availability of the tap water, for instance; Mumbai municipality has recently announced that the municipal water is now drinkable. This needs to be seen in the context of the situation where one has to trudge for miles to fetch water or has to drink water that is unfit for human consumption.

He is in no way suggesting that water problem is solved; but some small islands of relief are emerging. Or take the case of the LPG. The waiting period for a cylinder has gone down and the hassles of getting it are reduced. He cites the example of one of his employee who spent just about Rs. 1,800 on the electricity for wedding festivities in his village as against about Rs. 18,000 he would have to spend if he was to use a DG set. These may seem irrelevant to the stock market. But if we realize that the stock market is ultimately about the kirana market it begins to make sense.

Once people are relieved from existential worries lots of time and energy will get released for deployment in the productive activities. At the end of the chain, that is bound to show in the bottom line of the companies translating into higher productivity, higher profitability. There is nothing novel in this; we have always believed that the money that goes in the hands of our village folk, returns to the investors as better returns – effective demand, higher profits, and all that economic stuff. Therefore the importance of the ‘rain giver’ – be it Indra or St. Anthony !

The moral of this story is simple look for small pictures around you, for small things that make the life of the small people easy. Things that give  relief and release a little of productive energy. Then you know what lies ahead in the stock market. Big bulls can swing the market in a big way; but long term gain in the market can come only from a steady rise in profitability. We have seen big gains in the market in the last few weeks. But do not get carried away by that. The stock prices are driven by expected profits, not past profits, not even present profits. And higher levels can be sustained only if those expectations come true. So look at the depth of the ocean; not the waves.

*The author is an investment consultant. Readers can send their comments and queries to

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