May 2006


Merit is the latest taboo. And a forgotten word in Indian politics. Caste is more important. The promise of 49.5% reservation by Mr Arjun Singh was a dangerous political stunt timed just ahead of elections in five states. And to top it, what could be more pitiable state for the country other than that the Govt instead of looking into rationally, has conceeded to it hurriedly just to diffuse the agitation.

The latest statement from PM, stating that the 'Issue is settled' reminds me of the medivial age kingdoms. No debate, no data, no thinking. You wake up one morning, the King says, "Whoosh! The decision is final."

Reservation. Something that started with a good intention behind it, but used as a political tool to garner votes. VP Singh changed it all in 1989. Till 1989 reservation was the solution to a social problem, after that it has itself become a social problem.

I find the present system of reservation to be severely flawed. One, it is caste based rather than need based. And two, it is a reservation of results rather than facilitation of efforts.

Its common logic, but I wonder wether Mr Singh knows it; you don't launch a substandard missile and then hope it to succeed. You try to first _make_ the best missile you can, and then launch it. Children are born more or less equal even though the families they are born into might be very unequal. And the time to help is right then. Ensure nutrition and education in their formative years. Help them develop their skills right from the initial stages of their education. And when they are ready, let their individual efforts bring the results. Substituting substandard candidates at the final stages of career just on the basis of caste is a cruel injustice to the more deserving candidates who have toiled all their life. Providing free books to study is one thing, providing free marks at the final exams is quite another. (I don't think the "lower cut-off percentage" is anything other than disguised form of free marks). Worst, caste based reservation is detrimental to India's talent pool and more importantly social harmony.

10 years. Then 20 years. 30, 40 and now 50 years have gone by. We're closing in 60. How many more to go before we stop penalising the deserving candidates for Govt's failure to provide education to the deprived classes at primary and secondary level? How many more years to go before we stop dividing the country on basis of caste? How many more years before we realise that reservation is NOT the goal. The goal is the entire process itself; a system where facilities are available right from start. A system where people are helped not on the basis of caste or religion, but on the basis of needs. A child born in a family that cannot afford food and education has every right to be helped. And he must be helped irrespective of his caste or religion. Let the government be his family and provide him food and education. But the end result still HAS to come from him.

Fifty years of cosmetics. Fifty years of social injustice in a free country. I think Arjun Singh needs to refresh his political history. Nehru was opposed to reservation and Rajiv vehemently opposed it during Mandal, saying it was a threat to national unity and integrity. Heck! Arjun himself opposed reservation during Mandal era. How much more selfish can one get?

Already people have started to think in terms of 'us' and 'them'. Today its caste based, tomorrow it will be religion based. Congress is pushing strongly for that.

Mr Singh, I have a question for you. Where will this political madness end? Are you so blinded by the lure of votes that you can't see the grave dangers lying down this path? Can't you see that you are taking India into an era of Apartheid? Only in our case, the parameters are different. Its not Black or White; its religion and caste.

When will it dawn upon your infinite intelligence that you are eating right through the social fabric of my country?

What to do now? Markets crashing like anything! Seems to be the question everyone is searching an answer for.

My advice, breathe easy. Nothing; really nothing has changed with the world.

People will still wake up every morning, brush and shave, and shower. They will still read newspapers printed on paper, sipping tea with sugar in it. People will still drive bikes and cars and suvs to work. They will still need electricity, and oil and roads and bridges. And companies which build them will still need steel and cement. People will still goto banks for deposits and loans. And those banks will still need software to run. People will still buy TV and Refrigerators and Music systems and other consumer goods. And they will still need medicines when they are not well.

It takes thirty years to build rock solid companies like Seimens, Reliance, M&M, SBI, ITC, Hero Honda etc. Can the fundamentals really change in just a weeks time?

Do what you have been doing before. Play with your kids. Spend time with family. Talk to your friends. Give your best to your workplace. Enjoy life. If you have made your buying decisions right, you can sleep sound.

Unless the dollar crashes or unless you are leveraged beyond your limits, you have nothing to worry. And if any of that happens to be true, then also you don't have to worry. Because then you are royally screwed up, and worrying won't change that.

Personally I find Investing to be very much like Rock Climbing. You need intelligence + risk apetite. If you are not intelligent, you won't find the way to the top of the mountain. If you are intelligent, but don't have the risk apetite, then that is more dangerous. You will climb up the cliff, but at the slightest movement of a stone beneath your feet you will look down, and fall off to death.

Unrelated: Incidentally both investing and rock climbing are my overriding passions. Though I haven't got time to do much of the latter recently. 😦

Update: Someone pointed out that if I have made my biggest call on derivatives, am I not over-leveraging? Answer is, No. Coz that biggest call is still just a single-digit percentage of my stock portfolio. That means I am way under the point you can term over. I can pay off my obligations any day, which is what every leveraged player must keep in mind.

Butchery. Savage Massacre. And today, raw Blood on the Streets.

Charles Dickens starts A Tale of Two Cities with. 'It was the Best of times. It was the Worst of times.' He was certainly not referring to India 2006.

Sensex crashed a mind-numbing nerve-rattling stomach-wrenching 887 pts in preclose trade to create the biggest fall in the 130 years history of Indian stock markets.

Nothing expresses it better than this Live Mkt Data, I captured on my laptop. ALL Nifty in Red!
Biggest Fall

Rediff lists the 10 biggest falls in the history of Sensex. I have some interesting observations,

  1. Todays fall eclipsed the previous record fall of 507 pts by a big margin. Then it was a huge Eleven Thousand Crore Harshad-Mehta scam, the biggest till then. This time its a host of international factors – the commodities bubble, the pressure on Fed rates, rising crude, and currency manipulations.
  2. Of the 10 biggest falls, three (yes, that's right, THREE) have taken place in last one month! The biggest today, and the 4th biggest just 3 days back. We are surely living in the most turbulent era of Indian mkts. Read Charles Dickens quoted in the start of this post. You know what I mean. If we have seen the pink of Hedge Funds flocking to India like never before, we must suffer the blue as well.
  3. And now, the most startling observation. April and May are omnious. Nine of the ten falls occurred in these months. Actually all 10, if you notice that Mar 31st, 1997 was just a day before April. What's with Indian May and April?

I was listening to Fanaa all day long, as I witnessed history unfold before my eyes. And I think I can hear the Market singing to us,

Ye jo iraadey bata doon tumko,.. sharmaa hi jaaogi tum.
Dhadkaney jo suna doon tumko,.. ghabra hi jaaogi tum.


Btw, does that last line means its NOT over, yet.

My Personal Call –

What did I do today? Over the last few days I've particularily been very active in Derivatives. And it led me to building my biggest position till date on Tuesday. So, did I pare it today? No, I have further increased it. Its a big call. I'm generally a very confident, clear-thinking level-headed investor.

Now, if things move in favor, I'll shoot through the roof. No, make that 'I will go through the stratosphere'. If not, you can fish me out alongside Titanic or somewhere near Maraina's Trench.

Btw, Do Do Do positively grab a print edition of Indian Express and TOI tomorrow morning. Even if you have no interest in stock markets at all, you can save them as a collectible or even gift it to me later. 🙂

NSE alone has Thirty One Lakh Crore of public money at stake with it. I wonder how much of it went 'fanaa' today? Waiting for the EOD stats to come out. Till yesterday, Fanaa was about Aamir and Kajol. Today, its about my romance with the markets.

Subhaan Alaa.. subhaan allaah..
Sharmo haya key pardey gira key.. karni hain humko khata..
Jid hain ab to khud ko mitaana,.. hona hain tummein fanaa..

Humming along..

Update: If you haven't yet tuned into Chand Sifarish from Fanaa, its time to do so. The post makes more sense after you have listened to the song 🙂 Plus, its an absolutely wonderful song.

mktbear2.jpg 11:30 ish AM – Sensex dives another 460 pts! Nifty down 140 pts!

A commodities meltdown on LME causes another Black Monday in India – can the world be more networked!?

Wonder how many traders got margin calls today, and were forced to pare down their positions further adding to the slide.

But when the sanity returns, the markets will have only one direction to go – North! 🙂

markets_crash4.gif markets_crash.gifToday was the biggest intraday fall for both Sensex and Nifty since,… since May 17, 2004. Coincidence?

Sensex nosedived 463 pts at close. Nifty145 pts.
All stocks in Sensex and Nifty closed in red. (Very rare indeed!)

All indices in red. Midcap and Smallcap down 3%, IT down 2.5%, Bankex down 2.7%, Metal down 11%, FMCG, Oil & Gas, CapGoods and Pharma down 4%.

All emerging markets in red. Indonesia -6%, Russia -3.5%, Dubai -7%, Poland -3%, Thailand -2%, Philippines -3%

All major World markets in red. DOW down 120, Nasdaq down 29, Nikkei down 114 pts, HANGSENG down 407 pts, Kospi down 100 pts. FTSE down 129 pts.

Little wonder then, that Nifty and Sensex also crashed. The wonder really is the huge amount by which they have fallen. Are we in a bear mkt now?

International cues are all negative. Rising crude, falling commodities, Fed hikes, USD gaining Vs Euro etc.. Local cues are also all negative. Left getting a stronger foothold, cement under pressure, under-recoveries in oil, metals under pressure and most importantly a real-estate bubble etc..

But still I think, no. We're in a short-term bear phase, with long term story still intact. And based on that I have taken my biggest exposure till date on the Futures. I am Long on it.

Now, let's see now what happens.

Checked out Ruby on Rails today. Looks good at the first sight. I wonder when we already had Java/J2EE, and LAMP then why we needed RoR? Ok, I think its a trade-off between development time and scalability. 

LAMP – utterly easy, quick hacks, good for most sites. (Including Sourceforge 🙂

RoR – bit complex, requires you to tie your database tables to class names, shallow copying is difficult etc.. Lacks the extensive libraries that PHP has. But its still evolving, and looks like the most productive RAD tool for web development. With time, the framework will mature, with more developer community joining in we will have more libraries as well. The best thing is the surprisingly low amount of code you need to write. For MVC, this is the easiest framework to code on.

J2EE – full blown heavy weight bull. Good for Walmart, Amazon, Yahoo etc. Unless you are one of them, or need scalability comparable to them, you can manage quite well with either LAMP or RoR.