FY16 - VISTA'S AHEAD OF SOME TRECHEROUS ROADS
By Ruma Dubey
It is 1st April. Maybe a Fool’s day but for us ‘ Dalal Streeters’ it is the beginning of the new fiscal, FY16. It marks the start of a new accounting year though the first month would be mostly about taking stock of the old accounts of FY15.
One wonders as to how does one look at this new fiscal. It’s like looking at two sides of a different coin – the mood amongst analysts and India Inc remains upbeat and they are sure that this fiscal will bring in much better results and more action. But this confidence is nowhere seen on the ground. Here, the mood is somber and the glimmer of hope, that elusive light, seems to be getting dimmer.
So how comes these two different moods? Well, the market plays on the future and it is seeing a bright light ahead, maybe not in the first quarter but in the ensuing months, more towards the second half, things are expected to get much better. In fact FY17 holds a lot more potential.
On the other hand, those on the ground are looking at their immediate future and that, unfortunately does not look all that luminescent. The worry of rising costs of food and vegetables, the intolerable heat, power cuts, unemployment; the sheer day-to-day life for many has not changed a bit as promised. Though they knew that it would take time, their patience is fast getting eroded by the hardships of life.
Yet, life is about looking ahead, constantly keeping on moving like the fresh gurgling waters from the mountains, gushing down with sprite and zeal, despite knowing that there are huge rocks in their way.
The immediate “look forward” factor as such is only the credit policy. No interest rate cut is expected but maybe a CRR cut is anticipated as liquidity will need to be pumped in once again. And there is also hope that after the 7th, once RBI is done, banks will start passing on the 50 bps cut it received, at least part of it to us.
Earnings in Q4 will remain weak, banks will post higher NPAs and industrial recovery seems fragile. Farm output could be dicey and there is real risk of inflation raising its ugly head, threatening a fatal bite. Over the last few days, we are seeing capital goods companies reporting good order intake but implementation remains a question mark as nowhere are we seeing revival of investments. On the US currency front, the dollar vis-à-vis the rupee is appreciating and this is giving a lot of dollar-debt companies living nightmares. Yet, at the same time, thankfully the crude prices remains low and that is indeed some relief.
FY16, globally will remain challenging with US expected to hike interest rates during Q3, China remains sluggish and exports are showing no signs of a take-off. But all this can be borne with great aplomb and a smile on the face if domestic demand is up. And for that to happen, companies have to grab opportunities with both hands and get to working, kick-start the slumbering investment cycle.
For now, much to the disappointment of many and at a risk of being labeled a ‘party pooper’, it is imperative to know that immediate sightings on the horizon for the market do not look like a rainbow. It’s more like clouds but these could get blown away if winds of investment start blowing from India Inc.
The bottomline: H1FY16 could see a lot of hiccups and burps; we could see signs of improvement only in H2FY16. That seems like a long wait but look at it like this – at least there is light waiting to shine…..