Brokers thrash Monkeys, offer their tips for Budget 2012

Last week, the Monkeys got their chance to present their wishlist for the Budget. That annoyed brokers, who decided that this week, they would elbow their way ahead to claim their 15-minutes of fame.

And they did it in style: for the 25-week period since inception (19 August), the brokers’ portfolio, consisting of 10 stocks from 10 investment experts, leapt by 10 percent ( see table ), which was only marginally lower than the Sensex’s and Nifty’s gains of 11-12 percent and ahead of the Monkeys. MRF and Infosys were the standout winners in the portfolio, surging by 50 percent and 32 percent, respectively.

While Monkey portfolio 1, consisting of 10 randomly-selected stocks from the BSE 100, posted a 9.3 percent increase ( see table ), Monkey portfolio 2, comprising 10 randomly-picked stocks from the BSE 500, slipped into the red again, losing 2.2 percent ( see table ). Monkey portfolio 1’s best performer was Tata Global, up 37 percent, while Monkey portfolio 2’s biggest drag was VIP Industries, down a steep 35 percent.

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Even for the week ending 24 February, it was a similar story: the Sensex was the best performer, slipping just 2 percent, closely followed by the brokers’ portfolio, which lost 2.2 percent. The Nifty shed 2.4 percent.

In comparison, Monkey 1 was down 4.3 percent for the week, while Monkey portfolio 2 dropped a steep 6.5 percent.

Sources told Firstpost that while Monkey 1 has decided to rethink strategy by hanging upside down from a tree, the more aggressive Monkey 2 is letting off some steam by attending an additional class of high-impact boxing this weekend. There is also a unconfirmed rumour that Monkey 2, in a fit of pique, placed some banana peels in front of the offices of some of the brokers in the hope that they would ‘slip up’. We’ll let you know if that’s true next week.

For now, we have no reports of any broker requiring medical attention.

In fact, on late Friday, everything proceeded as scheduled as some long-time supporters of the brokers granted Firstpost an exclusive look at their wish-list for the Union Budget.

Here are their top three demands**:**

One, like everyone else, they want to see some fiscal consolidation by the government. A soaring fiscal deficit (the gap between government revenues and expenditure) puts pressure on interest rates and inflation. To break that cycle, the government must, first and foremost, make a credible attempt at cutting the deficit, the supporters said.

Two, Finance Minister Pranab Mukherjee needs to announce a growth-oriented budget, not just pack in more taxes. Simply raising tax rates won’t help generate tax revenues; you need growth to do that. The supporters want the FM to include some growth sops, such as additional investment allowances, in the Budget. Such measures will also boost the stock markets.

Three, they want the government to move aggressively on infrastructure. Right now, production of everything from coal to power is stuck because of a toxic mix of policy inertia, high interest rates and regulatory hurdles. Without adequate infrastructure, India’s future growth will come under threat. The government needs to act now to jump-start infrastructural development again.

This week, no doubt, was a victory for the brokers. Will the Monkeys regain the spotlight again or will they be relegated forever to the position of has-beens? Come back next week to find out!