2010s India -The emerging market Economic Power – Master Moves

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History does not repeat , but it does rhyme

– Mark Twain

Everything looks good in hindsight , but life has to move forward. There has been some radical changes that altered our perceptions and thinking in this decade. Reminiscing about the past decade shows some few key events that has taken shape.

You think life is the same , but slowly over a decade there are so many changes that you realise only by looking back and in emerging economy like india there is a flow of events happening frequenting the domestic and global markets that affects our standing. So let’s take a look at a few important events.

I don’t take into account the Macros and Micros into a investment decision we need to see the events and the chaos it created and most of them presents an opportunity to the objective investor.


At the start of 2010 although we were far below that of China ( 9.5%) in 2011 , we managed to grow equally with China in the next 5 years. Its estimated that China will grow by 5.5 % in 2023.

Our government has set an ambitious target of 5 trillion $ economy by 2025. That’s a very audacious goal. We are one of the fastest growing economies in the emerging markets currently with multiple factors firing the engines of growth.

Interest rate cycles:

The one important parameter to investing would be Interest rates, a very important variable which would tell us about the opportunity cost of investing and also about the discounting factor in investing.

Aftermath of the financial crisis in 2008-2009 the markets were in a recovery phase and we could see the trends in interest rates after 2008 (9%) to near 4.7% in 2010 where the economy was propelling with growth. That was the phase where equity markets were at a peak after the crash.

17th April – RBI cuts repo rate by 50 basis point first in 3 years.

2010-2014 a phase where the markets were in a cautious move after raise in interest rates from 4.5% to near 7% until the now BJP led Narendra modi government took over. From there the growth in economy and sensex touched peaks and as of this writing the sensex is at its all time high near 41500.

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Birth of a bull market :

After the financial crisis slowly changes started to reflect in emerging economies like India, our interest rates from a peak of 9% started to reverse with inflation cooling down from ( 10.53% )and supported by manufacturing and other core sectors coming back to a investment cycle.

Let’s look at the chart of Sensex and compare it to the interest rates, we see until 2014 there was no big moves in the sensex, and interest rates at the time being 7-7.5% when the RF rate is so high and slowdown in economy the liquidity would be low as people prefer rf rate in fixed deposits.

Once the new government took over there was a flush of FII funds that came into India which provoked the growth in the country, the new government bought in policies that supported the economy. Once the capital started to flow into the Indian markets we saw a unprecedented bull market.

What supported the lower interest rates ?

The oil bill which was a big burden on Indian trade bill started to decrease and in 2015 crude decreased to 61.43$ which was a big relief to the Indian trade bill. Which eased the inflation and thus provided room for interest rate cuts after 2015 was a massive move that led to flush of liquidity in the Indian markets and the rally that led further until now.

Major government policies, events and reforms :

Make in India – launched by the PM on Sept 25 2014 with the objective of job creation and skill enhancement in 25 sectors of the economy.


Demonetization – on November 8 2016 the government announced the demonetization of denominations of 500 and 1000 denominated INR notes. Which led to a widespread criticism from opposition,business operators and market participants on the slowdown of the economy. The chief motive being to put a shutdown to a parallel black economy.

There were 2 instances of demonetization previously in India in the following periods

1964 – The 1st demonetization

1978 – Janata party coalition government demonetized denominations of 1000,5000 and 10000.


GST – July 1 2017 midnight Indian president and government of India launched the GST , which drew harsh criticism on the government by various channels and the opposition.

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As per the latest GST collection in Nov 2019 crossed the l lakh Cr mark.

The government had struggled to meet its targets of revenue collections of above 1 lakh Cr.


NBFC Crisis – ILFS Crisis , defaults on its debt led to a parabolic fall in NBFC’s. This crisis again led to a chain of events in the NBFC’s . Panic stricken led to a huge massive sell off in the sector due to issues of

lack of liquidity from banks to NBFC’s for lending.

Rating downgrades of several companies in NBFC due to ASSET LIABILITY MISMATCH .

The chain of events triggered massive sell offs in Midcaps and Small caps driving the valuations to multi years lows for certain companies.

Recapitalization of bonds – In October 2017 the government announced PSB recapitalization of 2.11 lakh chores. The PSB’s then were having a huge NPA’s due to various factors from defaults of big borrowers to slowdown and non repayment of corporate borrowings which led to default of payments driving the NPA’s.

Government was the rescuer again with its recapitalization measure and also proposing to merge PSB banks which led to chain of mergers among the PSB’s .


Auto Slowdown – Although we still can’t figure out if it’s a cyclical slowdown or structural , a few of the plausible reasons can be sighted to the reasons for its slowdown.

Low demand

BS 6 transition

Governments change in axle norms and GST

EV vehicles

Tax reforms – The finance minister on September 2019 proposed a tax cut for corporates. This unprecedented move led to a temporary relief for the equity markets.


I have broadly classified these events in accordance to its impact it created in the markets there were many other changes in the economy like the

GDP slowdown


Money laundering in PSB’s

despite all these events which occurred overall seeing the BIG PICTURE from 2010 until now markets have rewarded handsomely to investors who held their positions and did little to disturb the compounding process.

Overall a lesson which we can takeaway is when an opportunity presents itself in form of a panic driven economic event its time to take full advantage of it.

” Be fearful when others are greedy and greedy when others are fearful “

– Warren Buffett

To be continued ,

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Sensex continues its upward trajectory Inspite of the broader markets not participating in this growth rally. With that we see many pockets of opportunities in certain spaces that are left untouched by a class of investors. Small caps and mid-caps where some companies are available at a reasonable valuation are still not participating in the rally.

I expect this to revers soon and companies with good cash flows, earnings which are economy facing companies will soon be identified and rewarded with investors with a term mindset.

I’m sitting with the right amount of Hope and unlimited optimism for our country!

Sources :

1.Wikipedia – Most events are taken from Wikipedia , to get a detailed news on events of a particular year search India 2012 for events in 2012


2.The economic times


4.Yahoo finance

5. Business line articles and newspapers.

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Ragavendhra Perumall

Ragavendhra Perumall

Ragav is an ardent follower of Warren Buffet, a political enthusiast and a business person. He writes more on real-life instances combined with the mental models. Reading widely and interacting with people in various fields have helped him become an astute investor.
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