Jamal Mecklai: The world in a country

MARKET MANIAC

Regular readers of this column know that I suffer from a very serious, if common, medical condition, which requires me to visit Goa every few months to prevent terrible outcomes, both personally and professionally. As a result of this, I was in Goa last week, just before the Budget, and it reminded me of other pre-Budget visits to the State of Visions.

I remember once, so many years ago that Manmohan Singh was finance minister, I was dozing on the beach, when I was woken up by some shouting, and saw a handsome sardar running down the beach with a phalanx of what-looked-like Marwari businessmen chasing him shouting Stop, Stop. It was 1991. And then more recently, I was at a wonderful restaurant, and, at the next table there was this charming South Indian man in a veshti trying to sweet talk a lovely but strict-looking Bengali woman, who was enjoying his attention, but nothing more. That was last year.

This year, the sea at Baga was so rough that I could barely go in for a few minutes "" and it wasn't quite the end of February yet. Clearly, the monsoon is going to be early, but whether that is good or bad is hard to tell. And, of course, there were dozens of bikini-clad women from Germany, the UK, Russia, even some from Italy "" quite a lovely sight.

And while I was trying to figure out the political meaning of this, I ran into my old friend, Auduth, who, thank God, wasn't wearing a bikini.

We were talking about business, as we often do, and he was beaming, as he always does. He has a range of businesses from mining to hospitality, and, like most every business in India, they were doing very well. "But don't you think some sort of correction is due..." he mused.

"Well, you know, I've been expecting a correction in the rupee for about a month or so. I've noticed over the years that "" other than in March last year "" each time the RBI has maintained the rupee in a tight range for several months, the break-out is always in the direction of a weaker rupee. Then again, I've been expecting the dollar to strengthen overseas, but like the few rapidly feebling dollar bulls left, I'm beginning to get a bit embarrassed."

"And, you know, of course, that the market will continue to embarrass you till you throw in the towel "" only then will the dollar rise. Doesn't matter, why don't you have another feni?"

We were sitting on the beautiful terrace of the Cidade, the sun had set, and the day at the beach was rippling through my body. It was wonderful, as I reached for the bottle.

But Auduth wasn't done. "But isn't it possible for the rupee to weaken against the dollar, even if the dollar is weak overseas?"

"Babu," I took a long sip. "Anything is possible. Indeed, everything is possible. And, over a long enough horizon, everything possible "" which means everything "" will happen."

An indulgent smile "" he has known me nearly 50 years.

"But, the truth is that that's just what's been happening. The dollar index hit an all-time low last week, and the rupee didn't even threaten 39.60. And, after the Budget it actually slipped back below 40, despite the dollar remaining on the ropes."

"So, what did you think about the Budget?"

"Well, it wasn't much. But it didn't do any real harm, notwithstanding the moral hazard of the loan maaf. Net net, a non-event.

"But, don't you think the focus on currency futures and other derivatives was good?"

"Well, I'll believe it when I see it. There's so much turf protection going on between the regulators, that ... But, I've done my bit. I've sent bright printed shirts to most of the candidates for RBI governor and I had even sent one to Mr Damodaran. I guess I'll send one to Mr Bhave as well. I mean, if they're wearing bright shirts, it's more likely they'll be less nervous about life. And, of course, the markets."

"Another feni?"

"Of course. And, while I'm at it, I must also tell you that my chairman, who has seen more of markets than anyone I know, came in on Saturday and told me he thinks the rupee is going to 41 fast."

"You think so?" He involuntarily reached for his mobile.

"Hey, calm down. It's just a view. As we were saying, anything can happen. Why don't you have another feni?"

"So, you're saying you think there will be a correction?"

"Babu, there are always corrections going on. This is India. Today, the stock market may correct, tomorrow it may be real estate prices in Gurgaon, the next day the rupee. But overall, nothing's correcting "" the economy is still hot and everything's going up."

"You mean the economy is so diverse that even if something dips somewhere it doesn't really impact the larger picture"

"Exactly. I guess you could say, India is like the world in a country. Rather like your tag line here "" Goa in a resort."

"Cheers to that."