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One feels bad for the cement industry. The government just won't let it be. Since the latest salvo from the government, a customs duty cut, analysts have commented on how negative this is, or not, for cement companies. It is probably true that the impact is more by way of sentiment than material. But the point is not simply whether Gujarat Ambuja will fall another 10 rupees. The bigger issue is the risk that the market now faces from desperate policy action.

The signs have been all over the place since the start of this year. The first tinkering with cement prices, the ban on sugar exports, cut in oil prices, a  lacklustre and regressive budget, further action on cement prices, rollback in steel prices and the RBI's recent aggression on monetary tightening. Who knows what's to come next? A desperate man's actions are difficult to predict. As we wade through a number of important state elections and approach the next general election, politics presents a real threat to this market. The slant of policy making is progressively veering away from being reformist, to populism and sometimes plain madness.

Investors need to factor this risk in. While it's fine to rave and rant about government and RBI policy, it's hardly likely to make a difference. Since it's not clever to cut your nose to spite your face, you need to steer clear of sectors which could possibly come under the government scanner, in its bid to curry favour with the populace. The commodity sectors and banks are obvious choices but as you have seen, the government can be quite imaginative and expansive in its assertion of bullying rights. When the dust settles finally on all this, a sad realisation will also dawn : that there are no reformers, only politicians.

Email author: marketwatch@hindustantimes.com