Tuesday, July 21, 2009

Water Babies

India is essentially an agricultural economy. Now why say that?! Agricultural and related activities accounts for nearly 17% of our GDP and employs nearly 60% of our labour force. Any growth in our economy happens from grass root level. It is this 60% of the work force that drives our economy. Past five to six years have been very good for our economy. Our GDP grew by average 8 - 9%. Agricultural growth may just have been in range of 2 - 4 % but the multiplier effect it created has resulted in this superb economic growth. Stable livelihood that agriculture has given to our 60% of population has resulted in money in their pockets. This they have spent on consuming goods and services other sectors have produced thereby giving India its much to talk about GDP growth.
Some may lobby for placing greater importance to IT in our economy or some may lobby for more and more SEZ. Others may talk about liberal financial markets for FDI and FII to pour money into our economy and few on disinvestment and all sorts of infrastructure building. However the bottom line is, all we need to ensure is that this 60% of population's pockets are never empty!
People point at our young crowd of IT and finance people in malls and say this is where our future growth lies in terms of consumption and spending by them. Yes we are a consumerist society and a consumption driven economy but the real consumption is not driven by this tiny mass of people we see flocking in newly built malls, its driven by this very 60% of agriculture labours spread across the rural hinterlands of our country (places which we hardly visit).

Speaking about importance of agriculture in our economy, on what is the output of this sector largely depended upon? Sadly, its still the monsoons. Our irrigation facilities are not so developed across the states and these farmers largely depend on blessings of rain god for their good livelihood. Building great agricultural infrastructure is another topic all together and may focus on this some other day, right now focus is on monsoons vs stock markets.
There are many charts which show correlation between GDP numbers and monsoons. Stock markets are said to be voting machines for a short term and weighing machine for a long term. What do they weigh? They in general weigh the health of our economy or in a long term conform to the GDP numbers. So if GDP numbers are good, our economy is growing, stock markets would also tend to have an upward bias. So as monsoons are co-related with GDP and GDP with stock markets, isn't monsoon co-related with stock markets.
This is the last thought that can come to someone's mind. Stock markets and monsoon, ha!

Let me try to analyze this issue a bit. Here I am presenting a chart of rainfall as % to LTA (long term average) and returns of sensex (a barometer for stock market), for the next year. So like in 1998 rainfall was 106% of LTA, and sensex returns in 1999 were -4% relative to 1998. Both the charts are scaled so as to overlap one another so as to see a co-relation.


One can clearly see a strong co-relation between rainfall in a particular year vs performance of stock markets in the following year. So we look at all possible numbers IIP, FII inflows, broker community's sentiments and what not, but a simple analysis of an event which has greatest impact on the lives of people which in turn have greatest impact on our economy can provide us with almost all the answers. Can it?!!

So with the current performance of monsoons, what would be the direction of stock markets next year can be anybody's guess. The point here is that many times something simple is more effective than something complex and just because something is so simple, don't overlook or ignore or replace it with something complex and hard to understand.

A public-opinion poll is no substitute for thought!

Sachin

Tuesday, July 7, 2009

Is Bob Arum playing safe with Manny Pacquiao's next fight

With Floyd Mayweather Jr Vs. Juan Manuel Márquez fight postponed to September later this year due to Mayweather's rib injury, any chance of either of the two facing Manny Pacquiao may not happen till mid of next year. So who should Pacquiao fight next is a multi-million dollar decision. He is a prized fighter and there is a line of challengers waiting to face him. Who is the lucky one is what Paquiao's camp is working on these day.
As per reports, Miguel Cotto is coming out to be the chosen one. Question here is that is he the right choice for Paquiao.

Let us examine the possible alternatives. Firstly the big question is on what weight the fight should happen. I feel that the Super lightweight (140 lb) is the ideal weight Pacquiao should take the fight. As we saw in Ricky Hatton's fight, he is best at this weight. So who all can be his opponents at or around this weight (+- 4 lbs)

One boxer that readily comes to our mind is
Shane Mosley. He is a world class boxer with huge fan following and a formidable opponent for Pacquio. This no doubt can be the best fight we all would witness in present times. However he is little too bigger for Pacquiao. At 5'9'' and fighting at 147lb he can no way make it near 140 lb. I think this was perhaps main reason for talks between these two camps to breakdown and another may be split of fight purse as Mosley's camp would want a close 50-50 split.

Next can be Andre Berto. Undefeated welter weight (147 lb) champion. He may not have that a big fan following right now which may deter Pacquiao's camp to take a fight. Another reason can again be his reluctance or inability to make it to 144 - 140 lb range.

As we move down the weight category to 140 lb we have an option of Andreas Kotelnik or Timothy Bradley or say Nate Campbell. Kotelnik is busy fighting Amir Khan, Bradley may be less experienced and Campbell may be too old to take on Pacquiao. Also none of these fighters have a big fan following to make a great PPV fight.

Lets move further down to 135 lb category. One name that comes to my mind is of Edwin Valero. He is is a great fighter, a south paw, has tremendous punching power and speed. Just like Pacquiao! Further he is available and has shown interest in fighting Pacquiao. What more adds to the fame of this guy! He is currently Lightweight WBC champion. He holds a perfect record of 25 victories and all these coming by a way of knockouts. Infact first 18 of his fights were won with a KO in first round itself. He may not have fought many quality fighters till date, but he surely deserves a chance to take on one, and who could be a better opponent than Pacquiao. I think this fight is the best fight which Manny Paquiao camp should consider as next one.
Here are few reasons for same:

  1. Both boxers have same size and the contracted weight to fight would be ideal for both. They both would be in best shape making it a great fight to watch.
  2. They both have similar energy levels, speed and punching power.
  3. Purse negotiation won't be any problem for Pacquiao's camp and even a 65-35 split can be arranged.
  4. There would be great air behind the fight. Valero has a good fan following now, has fought in USA and has a claim to fame that is always knocked his opponent down.
Coming back to the choice of Cotto. I just don't think it is a good choice. Cotto seems like a fighter on a decline and had struggled to win against Clottey in his last bout. Also there may not be much air behind the fight.

Where do we go now!

Sachin