panch-tattva talk…bull market has run its course

Friends,

The sensex/nifty tumbled by 385/85 pts yesterday. This is no big deal but the concern emanates from the developments that are indicating that the future course of market will be like ‘up one step down two step’ in a sober fashion which may fool some gullible investors in to investing or it may be sudden falls and gradual gains for a few days followed by sudden falls. The weakness now can not be wished away.

The cap.goods (particularly in power ) sector has to suffer for the diminishing margins. The power ministry is contemplating to remove the 15% price preference clause for the domestic sippliers as they have to also see that the power is supplied at cheaper rates. Secondly there is derth of trained man-power to the extent of even making DLF go out to woo the expartiate construction labour who have developed skill in modern building construction.

The India Inc is going to raise salaries by about 14% this year, the biggest amoungst the growing economies. This is not out of love for the employee but due to dire need of retaining him for what ever the cost.

Rupee has made imports cheaper. Chinese cororations have been noticed to come for bidding for projects. The factors forcing slow down in other sectors are well known and need no repetition.

Since it was the cap.goods , infrastructure, banking and oil and gas sectors which were being shown in a different light that I have tried to bring before you the reality concerning the cap.goods and infrastructure structure. As for banking I may say that the coming times will see the competition hotting up and it will be industry itself that would damage the profitability in this sector. Lastly , about oil and gas I am not having enough material to decide this way or that, particularly when the govt. has the strangle hold on all its aspects . It is also not supposed to do the right things at the right time and would distort matters illogically to make any assessment of the future of the sector a very difficult excercise. Here you have to speculate now or later and not rest your judgement on facts or projections.

In what way can you justify the rise of split Reliance share being sold  for five times the value within two years. It is a clear case of keeping thing under wraps and then over playing them. The Ambani Brothers are capable of seeing the share prices of their companies behave as per their designs as was the case with the patriarch.

Wish you all happy diwali times,

HariOm,

krsnaKhandelwal