Why cherry picking is no longer seasonal in India

Much of what I am reading in headlines these days – on India and, indeed, the global economy –  reminds me of the opening lines of ‘A Tale of Two Cities’ – “It was the best of times, it was the worst of times…”. Why do I say this?

1)  The Indian Stock Market – Often considered a bellwether of the economy, I came across two different articles (thankfully, in different publications) on the same day this week.  One referred to a leading fund manager’s prognosis that the benchmark Bombay Stock Exchange Sensex will cross the 30,000-point level (currently hovering around 18,000) in the next 3-5 years.  The other publication informed me that one out of every six Sensex stocks is at its lifetime high.   Furthermore, the Sensex is about 3,000 points, or close to 14%, shy of its historical peak.  It went on to predict that a correction in Indian stock markets is imminent.

2) Telecom – Gartner, the technology research agency, says that mobile connections in India will grow by 27.3 percent in 2010.  Yet, India’s largest private telecom companies – Bharti Airtel and Reliance Communications – have gone on record to aver that ‘virtual’ consolidation is underway in the country’s crowded telecoms market. According to them, new entrants are scaling down their rollout plans and shying away from reducing tariffs further. 

3)  Automotive – The Wall Street Journal tells me that the Indian automotive boom is getting ‘bubbly’ with approximately 33% of respondents in a recent KPMG survey of auto executives predicting that India would be struggling with overcapacity in the auto sector within the next five years.  At the same time, auto executives and analysts agree that if the prices and products are right, India will have no trouble boosting passenger car and commercial vehicle sales. The KPMG survey also revealed that 40% of respondents expect sales to climb to more than four million by 2014, compared to 2.5 million at the end of March 2010.

4)  Retail – For the 4th time in five years, India has been ranked as the most attractive nation for retail investment among 30 emerging markets by the US-based global management consulting firm, A T Kearney in its 8th annual Global Retail Development Index (GRDI) 2009.  India's retail market is expected to be worth about US$410 billion in 2010, with 5 per cent of sales through organised retail. Retail should continue to grow rapidly—up to US$ 535 billion in 2013, with 10 per cent coming from organised retail. Yet, according to another study earlier this year, over 6.57 million sq ft of mall space is lying vacant across eight major cities in India.

Is one analysis right and the other wrong?  Not necessarily. 

While headlines are clearly becoming heady, what is obvious is that growth is no longer ubiquitous in India.  According to the wisdom of the crowds embodied in IBM’s 2010 Global CEO study, corporate leaders believe that a rapid escalation of complexity is the biggest challenge confronting them.   They expect it to continue and, in fact, accelerate in the coming years.  As Goethe, the German thinker, eloquently expounded 200 years ago: ’Everything is simpler than you think and yet more complex  than you imagine’.