EMERGING INDIA

An Enlightening Short Story

By CA Rajiv D Khatlawala

A Short Story by CA Rajiv D Khatlawala

Emerging India !
The banquet hall of the Five Star Hotel was packed. The fact that the one-day conference was being held in this tier II city had excited the investor and financial intermediaries alike. And the theme of the conference was even more exciting and sexy as one of the financial intermediaries put it Emerging India Asias best investment destination . This seemed to have caught the fancy of the hundred and twenty participants who had gathered in the luxurious banquet hall. This is despite the steep conference fee of Ten thousand five hundred rupees which failed to deter the registrations. Outside the banquet hall, about six to seven leading financial intermediaries including stock brokers and a couple of banks had paid through their noses to get stall space admeasuring about 120 square feet. And they were using each inch of this space to display their financial products with banners, posters and even LCD TVs. And to top it, these stalls were manned by no less than the managerial level personnel, suggesting that they meant serious business! The scene immediately reminded one of stalls which children put up in the school fun-fairs! Inside of the hall, arrangement was modern, with scores of circular tables, around which chairs placed in a semi circle, so that each participant would face the speaker and the podium and the small stage. And the financial intermediaries had made it a point not to leave the inside of the hall empty. They had littered banners and standees across the hall. Each of these banners and standees attempted to grab the attention of the participants and build up what their advertising agencies would have called brand recall. But to a novice observer as most participants seemed to be, these did no more than help in Brand confusion and probably by the end of the seminar, most participants would forget these brands and the sponsors money would go down the drain- or so it seemed. In one of such semi-circled chair surrounding a circular table placed diagonal to the podium , I took up a middle seat. I was a little early hoping to meet a friend whose company was one of the six sponsors -but my effort seemed wasted as he was too busy handling the stall and interacting to seemingly interested early participants. So I concluded that taking my place inside the hall would be a better idea. Seated to my right was a man who seemed to be in his early sixties. The one to my left was yet empty and presently a student-like youngster rushed to occupy it. As I watched around me, in a matter of a few minutes most of the hall was packed. It seemed like everyone was talking to everyone and I too found myself talking to the not-so-young person next to me. Hello I am Aditya Shah from Creative Investing Educators I introduced myself, handing over, with both hands, my latest visiting card. Investing education is the offshoot of our investment consultancy, and I thought it appropriate to hand out the investing education visiting card rather than that of our consultancy.

Oh! Hello. I am Rameshbhai from Gandhi Marg, you know the street opposite to the railway station. You see, I was looking forward to this type of a seminar and it is great that the organisers have chosen our small city this time. Let me tell you frankly I have come here only or mainly to listen to Mr Nirmish Seth of The Alliance Bank. I watch him regularly on TV and he is quite knowledgeable. My fellow participant seemed to say this almost in a single breath! I nodded, while I observed that the young man on my left too was impressed by our fellow participant. Impromptu, he too added Yes Sir. Even I recently heard him talk on a TV show and he is an encyclopaedia - really filled with data. By the way, I am Kunal and I have just recently completed my MBA in Finance from Delhi. He shook his firm hands with me and then with Rameshbhai truly the etiquette worthy of an MBA. The youngster, turning towards me, enquired Sorry, but what did you say your company name was? Creative Investing Educators I replied. I see. Well, I did not know there were firms in the investing education business Yes I explained There are many part time trainers , but not many full time trainers like us, even across India It seemed that Rameshbhai was not too convinced of my line of business as he interjected What is it to learn in Investing? We can attend a few such seminars and learn a lot out of them. And in fact many of them are even free. And yes, I am sure you are aware about the Pathshala programs running on various TV channels he exclaimed Nodding to him I replied Yes Rameshbhai. You are right to some extent. These seminars and TV programs can surely give you macro guidance if you are a beginner. But frankly most of them just tell you what to do or even what not to; without suggesting anything about how to. It was Kunals turn to provide inputs to our deliberations. But, you see, in our MBA curriculum, we are also taught how to. And we are quite equipped with all the case studies and simulations I smiled. My mind raced across the times when I was a youngster myself and the times when my first brush with the stock markets while we were in the middle of a great bull market in the early nineties. When you are in a bull market, how uncanny it is to assume that you have an inborn talent in the art of investing, only to be proved drastically wrong in the next bear market. Coming back to the present discussion, my mind seemed more enlightened to the huge misconception about investing that the aged as well as the young carry with themselves. In fact the basic premise for my starting an investing education company was to eradicate these very misconceptions! But with the strong views of my fellow participants in the seminar, it seemed that it may take me a longer than anticipated time to get satisfied in this context. It was already 10.06am as I glanced at my watch and there was a hustle on the stage. The dignitaries had seated themselves on the chairs put up on the stage for this purpose and I could observe that one chair was still unoccupied. Most probably it was meant for Mr Nirmish.

At exactly 10.10 am the session started and there was pin drop silence. The organisers urged, or almost threatened, the audience to put their mobiles on silent mode and inadvertently one of the mobiles in the hall went abuzz and all heads turned towards the person holding it. The organisers announced the first speaker of the morning who was a representative of the sponsoring bank and he gave a rather detailed introduction of himself and his employer. At one moment I thought that we had gathered in the annual function of the bank! At last, after almost quarter of an hour, he stopped, to everyones relief. The second time slot was reserved for another sponsor, this time a broking firm. The organiser announced the name of the head of equities of the brokerage in question and it seemed we may have a better one hour. The Head of equities did not prove me wrong. He did talk quite vehemently about the India growth story. He even gave an eye catching PowerPoint presentation full with anecdotes and some data. He was strongly trying to tell the audience why they should start investing today even when the Sensex has been rising from sub-8000 points since the Lehman crises to the current 19000 levels. He almost suggested that FIIs do not have any other destination other than the Indian markets and with their continuous inflows, they (his firm) are anticipating at least a 20-25% return in the coming six months. I was observing that Rameshbhai was busy writing down notes and points and he already filled up three pages out of the Ten-page thin note pad provided by the organisers. I presume he may not have taken such detailed notes with such interest, even while in college! Kunal too was writing down something but he was much behind Rameshbhai as he filled up only three-fourth of the first page. The Head of Equities of the broking firm now seemed at the end of his gospel and he seemed quite satisfied with the audience as they were listening to him with high interest. Taking this as an opportunity, he even injected his firms name more than a couple of times in the presentation after all, his firm has invested a big sum for co-sponsoring the event. It was lunch time now and we were given the necessary lunch coupons. During lunch, we had a couple of more participants in discussion and the discussion directed towards the present investing scenario. Kunal was providing some good fundamental data, some of it out of the last presentation and the listeners seemed quite pleased with words like GDP growth, de-coupling , infrastructure spending , the telecom revolution etc. At this point I pointed out Kunal , I think along with the fundamentals, you need to also see the technical picture of the market. Prices movements are important advance indicators and my experience tells me that prices usually go ahead of fundamentals The other two new friends as also Rameshbhai were not convinced at all. Rameshbhai said Oh you mean the technical analysts? Oh they use such technical jargons that we dont understand. I dont think price analysis can help in any way But Rameshbhai , price is one of the most important indicators. As an investor you cannot ignore it Oh but I am an investor , not a trader. So for me looking at price movements is unnecessary

I realised that the discussion was not going to find a common ground and hence I let go the topic. I observed that Kunal seemed to think that I was right to some extent. The post lunch the most awaited session started. Inspite of a tasty five-star hotel lunch , the participants seemed as fresh as in the morning- the magic effect of the coming speaker. As Nirmish Seth stood up for his presentation, the participants clapped aloud. The celebrity speaker seemed like a religious guru having a hundred and twenty disciples. Suddenly there was pin-drop silence as the speaker adjusted the mike. Good afternoon ladies and gentlemen. It seems that I have a tough task ahead of me as most of what I wanted to say has been covered by earlier speakers. But what I want to tell you one thing very strongly- all of us are lucky to be in the middle of a structural bull market. The India growth story has never been so strong. The government of India it seems is being conservative in estimating that the Indian economy will grow by 7-8% a year. Let me tell you friends, we are set to grow much more than that for the next decade. I have been talking to a lot of Institutional investors recently and they have only added to my confidence in the Indian economy. Yes we have our set of problems , but then which country does not have problems? Yes the world economy is in trouble with the US and the European economies faltering. But then for us Indians this will turn out to be a great time because investments flow where there is growth and India as a destination has too less a competition. Yes our inflation figures are not encouraging but then let me remind you the simple economic theory , that inflation to some extent is good as it induces producers to produce. Yes, we have various scams popping up every other week but then these are necessary evils in the path of growth. The data which you see on the screen tells you that we have a demographic advantage. Earlier India was criticized for having a large population and today that very fact has made it attractive. The next few weeks, months and years are some of the best times to be in equities. So dont you miss out of this opportunity. . . . As someone had pointed out in the morning , Nirmish seth seemed to be an encyclopedia of data as he rolled out one after the other data on the screen taking a few moments to explain each in brief. The mesmerising lecture went on for almost one and half hour and it seemed everyone in the hall will rush to their brokers on Monday morning to get their share of emerging India. Rameshbhai, in the mean time, was on his last page of his note pad and I even offered mine; which ,to Rameshbhais ashtonishment or disappointment, was blank! By the time Nirmish Seth concluded, it was almost tea time. He received a standing ovation and many participants rushed to meet him and shake hands with him. I could see Rameshbhai too. I guessed that Nirmish Seth had a fan following which even Film Actors and politicians could be jealous of. May be someday he may think of joining politics, I pondered. During Tea break, with exotic cups in our hands, we again assembled for discussions. It was Rameshbhai who started the conversation. You see, My daughter is due to get married in six to eight months time and I have kept aside about five seven lacs for her marriage. After listening to what Nirmish Seth has said, I think I will invest this in the Stock Market for six months and out of the returns, may be gift my daughter a foreign holiday. Which stocks do you think should I buy ? Nirmish Seth was quite bullish on Infrastructure. His question was being addressed to all of us.

I attempted a reply Rameshbhai, I think you should not invest money kept for your daughters marriage in the stock market. Better keep it in an Bank FD Oh , did you not hear Nirmish Seth? This is an opportunity not to be missed ! It seemed the others around me too seemed to agree with Rameshbhai. It reminded me of a dialogue from the movie 2012 where the protagonist tells his wife When they say everythings fine, thats when run . But in the current circumstances, the best I could do was pray for Rameshbhai and hope that something changes his mind. The day-long seminar concluded and it seemed all the stakeholders were happy and satisfied at the outcome. I anticipated that the sponsors and the co-sponsors will surely get their ROI (return on investment) in the coming months with more clients getting added. And I expect that Rameshbhai and other participants too will now watch and read about Nirmish more than ever. The Organisers too were already thinking of another such blockbuster seminar in the next month. As they say Alls well that ends well. Five months slipped by since the event. Meanwhile, the Sensex did rise from 19000 to 21000 before falling about 20% to the current 15000 points. We were now stuck in the range of 14000 and 16000. My price analysis in fact told me since the day of the event, that the peak was nearby and it was time to exit. But who, other than lesser mortals like me, cared? The investors of a seemingly vibrant economy were scrambling for shares then. Today morning, while glancing through one of the sections of the financial newspaper, I read a small article titled Due to bearish markets Top executives of financial firms on holiday. Most preferred destination is Europe I wondered whether Nirmish Seth too was on Holiday in Europe- most likely he was. And he may have easily spent more than Rs Ten lacs for the trip, and most of that could have also been a perquisite. While in Bullish markets, they get extra fame and money, in bearish markets they make it point to disappear from the scene, while still getting huge salaries and bonuses , irrespective of whether investors earn or lose money. And then again, I wondered about the fate of Rameshbhais Seven lac rupees . What would have become of them? I reckoned that if he had invested in Infrastructure, which he (and Nirmish Seth) were so bullish on, his portfolio would be down by about 50%. If that was the situation he may well have to finance his daughters marriage out of personal loans from friends and relatives and it may take him a couple of years, or may be more, to repay them. The gift of a foreign holiday will have to wait another few years. I was deeply saddened by the two extreme likely outcomes. And I still wonder in what time and age , will investors comprehend the need to educate and upgrade themselves? When, if at all, will they learn that what they read in newspapers and listen on TV is yesterdays news and is just information. When will they try to develop skills and learn to decide on their own?. And when will they really know that Price is King? God Bless emerging India!