Mauritius treaty trauma sends brokers, Monkeys tumbling
It's not been a good week for the markets - or our monkeys.
Down, down, down. The trading week ended on a glum note for investors as news spread that the government is planning to review its double-taxation avoidance treaty with Mauritius. Upset investors bid stocks lower, causing the Sensex to fall by 1.8 percent for the week ended 4 May, while the Nifty slipped 2 percent.
How did our portfolios fare? Predictably, not too well. Monkey portfolio 1, consisting of 10 randomly picked stocks from the BSE 100, at least managed to match the Nifty's performance; Monkey portfolio 2 and the brokers' portfolio fared much worse.
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Monkey portfolio 2, comprising 10 randomly selected stocks from the BSE 500, dropped 3.1 percent, while the brokers' portfolio, made up of 10 stocks picked by stock whiz kids, fell by an even sharper 4.7 percent.
More from InvestingIt was a similar story for the period since all three portfolios were created (19 August, 2011): the Sensex and Nifty topped the winners list, gaining 4.3 percent and 5 percent, respectively. Monkey portfolio 1 came next, pocketing a 2 percent gain ( see table ). The biggest winner here was Tata Global, advancing 30 percent.
Next up was the brokers' portfolio, which added a marginal 0.4 percent (see table). MRF remained the top performer but its gains were pared to 65 percent from about 80 percent earlier. Monkey portfolio 2, as usual, ended the eight and a half month period as the worst performer, slumping a steep 11.8 percent (see table). Eight out of 10 stocks posted losses.
Somehow though, no one is celebrating or feeling particularly relaxed this weekend. The government's plan to review its tax treaty with Mauritius, the favourite route used by foreign investors to invest in India, has cast a pall of gloom over financial markets.
The news has abruptly brought to a halt the devious machinations by both the brokers and Monkeys to pump up the value of their respective portfolios. After all, everyone's portfolios will be headed down if foreign investors, the biggest driving force in Indian markets, stop investing.
Last we heard, Monkey 1 has sought the refuge of a tree in Borivili National Park to meditate and soothe his jangled nerves (we recommend keeping one eye open to spot any lurking panthers), while Monkey 2 is planning a rigorous boxing workout to work off his stress. Juicy tidbit: he's stuck a picture of finance minister Pranab Mukherjee on his boxing bag, so he can pretend he's punching the FM, whom he blames for the confused state of stock markets. Ah well, can we blame him?
The brokers, meanwhile, are huddled behind closed doors to decide on whether they should clamber aboard the next flight to Delhi to dissuade government officials from taking any harmful action on the tax treaty. Here's a Firstpost tip: Don't take Kingfisher.
Until next time!
