Re “Flight rationalization...”, Mint, 27 June, if 22 July is the date of the Air India-Indian merger, things seem too rushed. You point to the importance of organizational structure for quick decision-making. Not enough thought seems to have been given to this—as in case of the strategic business unit to be located in Delhi, and not the corporate headquarters at Mumbai. It is shocking that there’s no clarity on issues such as appointing business heads and grievance redressal for HR problems. The future of some 30,000 employees is involved. The exercise seems to be ministry-centred. It should have been left to those who are to manage the new entity. As two of our oldest public sector institutions are involved, the PMO or a GoM should examine these public concerns.
I do not claim to be a stock market expert but,as a layman, I believe that at a basic level, it is linked to the economy very closely. Yes, we are doing well as an economy, and we were doing so in the month of March this year too, when the big crash came. However, seeing the mid-cap or small-cap rallies today, it seems we have collectively taken our eyes off the speedometer! Shares which were unheard of some time back are rising 15-20% intra-day. I remember that in earlier days, even without proper market regulators such as Sebi, category “B” shares were not allowed to rise beyond 5% intra-day, and category “A”, not beyond 10%. A market freeze was imposed upon reaching these levels. Now, there seems to be a free for all. No sooner than we reached the 15K mark, the “pundits” began forecasting 16K, within the next three months.
We have gone through at least three stock market bursts in the course of markets maturing to current levels, and I thought that Sebi had put down norms to ensure that such crashes do not take place again.
I, however, believe that history is going to repeat itself time and again, since we have a tendency to swing between great optimism and equally great pessimism—translated as bullish or bearish tendencies.
I sincerely feel that taking cues from the Europe and US markets, we have to take the oil factor into account, apart from the likelihood of rising interest rates in India and the US. I cannot understand how an economy in which more than 30% of GDP is dependent on oil imports is totally ignoring the fact that oil price may go over $73 a barrel yet again. Even this year, one website forecast the oil price line touching the $93 mark. We don’t know whether it would touch that high mark, but the possibility cannot be ruled out.
Even at the present levels, if the average price of oil this year is higher by 15-20% over last year, then the impact on GDP could well be a negative 4-6%.
I was surprised to see individual remarks lately on a financial website about the shares of a 60-70-year-old company being “low” this year at Rs40 that did not rule out the possibility of their touching Rs120 or even Rs300.
Another share, which was priced at Rs7.7only over the last 52 weeks, has already shot past Rs64, and no one gets surprised to hear that it may even touch Rs100 this year. I am not against the markets, but I want to know if the present trend can be checked? Such an act (of checking) will not be undemocratic—on the contrary, if this is allowed to go on, it would tantamount to manipulative practices for sure.
Last, but not the least, we cannot compare ourselves with markets such as China and Pakistan, which have risen unduly in the last months, as these stock markets are still young and are yet to see big crashes of the kind we have already weathered.
I feel the players in the market should recognize these facts and act in a more mature manner.
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