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Saturday, February 07, 2015

The Kejri Correction

The Delhi Vidhan Sabha (State Govt.) elections are being seen as a big event by the media. Maybe it is significant because it might be the one last hurrah of anti-BJP parties to stop the Modi-BJP juggernaut.  A defeat here will certainly deflate them for the more crucial and larger state elections due later.

Since Delhi sends only 7 MPs (or 1.3% of total MPs) to the Parliament, even a NIL tally hardly makes any significant impact for the ruling party or indication of its popularity. A neck to neck contest, will mean even less so for the NDA. 

Nonetheless, it is being built up as the first (possible) setback for BJP. Some reports indicate that AAP may actually take the lead in a photo finish or with Congress support.

Scenarion of Possible AAP win: the positives for India
However, an AAP win may be in some way beneficial for the country.

Talks over, show the work now: So far, AAP has only been in the talking mode. Talk is easy.  In my view, their ability to run even a small city-state like Delhi is arguable.

Kejriwal & Co.'s ability of organization & direction, crucial for good administration are un proven. Also, their disregard of basic economics sense & their penchant for biased populism runs a danger of anarchy and their actions may soon be stymied by litigations & PILs. Their last time, some of their decisions regarding power bills reprives etc. was biased & questionable, in my opinion. Even 1-2 years of government will expose their skills (or lack of it) to everybody.

In other words, they will be forced to walk their talk. Sure AAP can for some time manage, by running huge deficits and by creating a smorgasbord of policies succeed in fooling the people for some time. But eventually, the citizen will see through and assess whether she is happy or otherwise.

  • IF AAP Govt. succeeds & Delhi is better off: BJP will have competition, and India will have a viable alternative to the regional parties. Since long India, has been looted by Islamic invaders, the British and of late, the Congress (Ghandy-Nehru family) party. We terribly need good alternatives to achieve optimal growth & eradicate poverty.
  • IF AAP Govt. fails & Delhi is a mess:  If they fail and Delhi state machinery comes to a chaos, then at least the nation will have a model to compare BJP/Modi’s Governance with.

Bihar elections more crucial - Rajya Sabha superiority crucial

Already, due to their numerical superiority in the Rajya Sabha, the opposition is able to stonewall progressive bills like the Coal bill etc. that the NDA introduces. This is expected to continue for some more time.

Hence, it is imperative for the NDA to grab control of the Upper House to get any meaningful work done. This is because, the more time is wasted, the more frustrated the electorate may get. Bihar has 16 members in the Rajya Sabha (6.5% of total), Delhi none.

In this stalemate situation, the anti incumbency feeling against NDA may increase and impact them in the Bihar elections, due later. An anarchist AAP Govt. in the not Delhi, even for a few months, will be a good contrast to the Central Govt. and may actually help NDA avoid the anti-incumbency factor in Bihar elections.

Video: Cheesy...but says it.He he :) 

For markets: Discounts time
The Delhi Legislative Assembly election results will come out on Tuesday, 10th Feb 2015. If some media reports are right and the AAP/Congress are able to cobble together a majority, the markets may take a correction that many experts have been waiting for some time now.

In that scenario, I don’t expect blue chips to be impacted much, but midcaps and especially lesser known/covered stocks may see significant correction. I feel, this may be a good opportunity to accumulate quality stocks at discounts.