Shavasana — the sleeping pose. That was the mood of the market last week, with the Russian-Ukrainian conflict creating uncertainty around valuations. With Putin becoming aggressive and Volodymyr Zelensky bravely holding on Virabhadrasana, warrior pose, the Sensex was losing points wildly every day. It’s interesting that it took a ‘ soy‘wake it up’ soy hua‘market and create’ Ruchi‘ in the ratings.
Ruchi Soya’s follow-on public offering (FPO) opened on March 24 and the markets took a collective sigh of Pranayam. The company was looking to raise ₹4,300 crore through the FPO and had been underwritten 3.6 times by the time the issue closed on March 28.
In December 2017, the National Company Law Tribunal (NCLT) opened insolvency proceedings against Ruchi Soya. Patanjali acquired Ruchi Soya for ₹4,350 crore under the insolvency and bankruptcy code in 2019. For the Patanjali brand, which was already well into the healthcare segment, the acquisition seemed perfect and would give them the exact protein needed for growth.
Going forward, while Patanjali will operate in the non-food medicine and wellness segments, the food business would be transferred to Ruchi. Ruchi Soya will work across four major verticals, namely Edible Oil, Food and FMCG, Nutraceuticals and Palm Oil Plantations. Even as product line consolidation occurs, the company must also adhere to SEBI guidelines for acquisitions.
Under these regulations, Patanjali must reduce its stake in the acquired company to less than 90% within 18 months of acquisition and less than 75% within three years of acquisition. Baba Ramdev appears to be busy balancing product lines with company finances as well as the legality of acquisitions. Quite the trikona.
Babaji adopted EBITDA and PAT as if they were Anulom Vilom. It’s really interesting to hear pro-fit Yogi talk about profits. It’s almost reminiscent of Jackie Chan in The Karate Kid. ‘Kung Fu lives in everything we do, Xiao Dre. He lives in the way we put on the jacket, the way we take it off, the way we treat others. It’s all Kung Fu!’ You almost expect Babaji to tell you that everything is Yoga. Companies can certainly be classified as yoga – is that why they are called Ud-Yoga?
As the world of yoga enters the financial markets, the markets on their side have suddenly become yogic. The bulls looked rather pale and confused by the development. “Until now, all the bull pose needed was a phone in one hand and frantic squeals in the mouthpiece followed by a choppy jump when the markets went up. But now we’re expected to know Vrishabhasana, the pose of the bull. It apparently makes the breathing regular, the body energized and the mind peaceful. After all these years of keeping the mind energized and the body peaceful, we’re not entirely sure if this will work for us! opined a rather dubious bull.
The bears aren’t exactly too thrilled either. They were instructed by SEBI to practice the Merudandasana, or the balancing bear pose. Given their strong propensity to create a major state of imbalance within the markets, the balanced bearish is more than most can imagine.
Technical indicators and chart patterns are given new yogic identities. Bollinger Bands and Fibonacci Lines are replaced by Iyengar Bands and Straps. The MACD line (Moving Average Convergence Divergence) is one of the most popular technical indicators that indicates the momentum of the stock. The 12-day moving average of stock prices is compared to the 26-day moving average. If the short-term line crosses the long-term line, it indicates the possibility of the stock trading higher in the near future. This is best captured in the Supta– Matsyendrasana.
The MACD will henceforth be called the Supta Matsya (SUMA) indicator. The head-and-shoulders map pattern, captured through the regular Vajrasana position, indicates a danger of a selling episode on your stock in the near future. Technical analysts are suddenly talking about the vajra effect on Indian stock markets. A rounded top pattern is an indicator often used in technology analysis and is similar to an inverted U-shaped curve. It indicates a potential decline in stock prices. ‘But it’s a simple chakrasana!’ the yoga instructors said happily when shown the model on Indian stocks. ‘How fitting,’ muttered the technical analyst darkly, ‘to call it chakrasana when all it induces is a Chakkar in the mind of the investor.
India’s anti-SUMA and Vajra patterns upend RBI’s exchange rate calculations. When all the calculations are in Shirshasanahow to maintain Kapotasana, the position of the dove, is the essential question.
The writer is a brave economist who tries to laugh against the odds
March 30, 2022