Lot of roller coaster rides on lot of fronts, in my professional world where I was easily putting in 18 hour days, emotional/nationalistic front due to 11/26 event in Mumbai and then the shake-up in the Indian IT industry due to the Satyam fiasco
But first 11/26: I am happy to find that both, Indian Hotels and Oberoi opened withing 1 month of the event. Of course , the heritage wing of Indian Hotels is yet to open, but at this time I will take anything. It is heartening to note that 1 month after the event, Indian Hotels scrip has not lost much, its clawed back.
Now coming to the fall out of 11/26. These days, war cries seem to be the order of the day. Most of the noises are coming from Pakistan while India is maintaining the holier-than-thou approach. But with each passing day, situation does seem to be get more serious. Are we looking towards the next conflagration that is going to consume lot of lives? Are we eventually looking to World War III?
With things so tense, any small event can trigger an escalation. I really don't think Pakistan's civilian government has any kind of control over its military, nor does it have any control over its territory.
I think the time for so called 'surgical strikes' has passed. Any assets vulnerable to these 'surgical strikes' would long have been protected. Its pretty clear any kind of strikes would be met with a response and that's not good for either country. I think India has much more to lose (more because India does have something to lose, Pakistan is anyway going down the tube).
If that really happens, all bets on future direction of the stock markets are off. Most vulnerable to strikes would be the industry-rich Gujarat including Reliance who has most of its assets concentrated in that region (ouch!), Mundra Port, possibly deep sea oil assets of ONGC....
Not much can be predicted at this stage. We do need to teach Pakistan a severe lesson though. Congress cannot afford another terror attack before the elections (and if that indeed happens, we will definitely have an all out war on our hands)
Another interesting development was the Satyam fiasco (ADR: SAY) . How the mighty are falling. Satyam never was the epitome of ethics and corporate governance, but in an industry where companies like Infosys were setting such high standards of corporate governance, it was kind of rubbing of lot of other players too.
Now that the tide is ebbing away, its showing the true colors of some of the players in the industry. What was Raju planning to do with buying up Maytas (note Maytas is Satyam spelt backward) for 1.6 USD Billion? In these days where everyone is protecting their cash, Satyam is throwing money on a questionable deal on a company which belongs to the cash-sucking infrastructure industry? Go figure. It of course helps that Maytas' promoters are from Raju clan. Very sad. I read in the media that this is going to paint the entire Indian IT industry in bad light. I don't agree. I think that's stretching it too much. I think Indian IT industry is fast reaching maturity (in terms of global acceptance). Such events are actually going to help industry to consolidate. I remember around a year back, when discussing with friends, I said that eventually one or two players will make the break through an acquisition or something and others will fall behind. HCL Tech did do a big acquisition, beating Infosys (ouch!), and TCS and Wipro lapped up a few Citi assets, however what I never considered was one of the players shooting itself in the foot.
61% of Satyam is owned by 3-4 institutional players, and word on the street is that they are out there looking to sell this stake. Satyam is strong in few areas e.g. SAP. If one of the Indian players to pick it up, it would catapult them high in the industry stakes.
Whatever happens, heads are definitely going to roll in the Satyam world. To add to it, Satyam has been barred for 8 years for unethical practices by World Bank. If that is indeed the reason, I think Infosys would like to stay away from any kind of buyout deals.
With this kind of negative press, Satyam would be reduced to a fringe player for some time to come, which would help the other Indian players.
On another note, with oil touching sub-40$ levels, it does look extremely enticing to go long on energy stocks. I am seriously considering this move, currently investigating a few ETFs which would give me the exposure I am looking for.
Till then,
Peace and take care
Sid
P.S
I saw 'Rab ne...' this Tuesday after driving 40 min each way through treacherous snowy roads. This was one of the rare SRK movies I liked, no overacting, and the characters have been painted well
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