panch-tattva talk…panchtattva and market frenzy

Friends,

Friday, the 18th Jan 08, saw a precipitous fall of round 3.5% and Nifty closed 5705 pts and Sensex at 19013 pts. They say it is IPO related fund needs of investors that has been responsible for the sell off. In fact , this is true in part, the other part was that the values were stretched and there is yet another contributor in the form of poorer advices from around the world .You may add another dimention of possibility of some more downward movement back here under pressure of rising rupee and pressure on metal prices on LME. The political situation in India may worsen. The olympic year may make markets in China go down due to lesser spending on infrastructure projects and some diversion of interest from business. Chinese effort will be directed towards showcasig China for the tourists.

Coming back to IPOs, I would remind you here that industrialists tend to raise capital when thy see difficult times ahead , why would they make you partner in a business which is going to flouish in short run. Haen’t Tatas sold TCS equity to pulbic when the IT sector had been exploited to the hilt. Is SBI not ready with a demand of Rs1590/- for a share which by the way is for five-six times of its price in 2002-03. Has SBI’s business seen such expansion in business or such rise in profits. You, the investor, will be lured in many ways to part with your money. When you suffer a fall you will be left licking your wounds. This has happened many times in the past with a certain regularity. The secondery market goes up with support of unabsorbed liquidity and there come the people who grab the benefit out of the conditions ideal for fund raising due to higher preference to equity stock investments and the free funds in hand. It is estimated that some Rs75000 crs worth of paper would be introduced in Indian markets over the year. Only during the recent years the public holding in the Indian companies had been reduced to a figure of less than 10% , now the same public would go for the new equity purchase. Its only good at least that they can’t be lured in to buying the same stuff for higher prices that the price they sold it out for to the smart FIIs and smart operators and promoters. This only has always been the bane of Indian bull operators. These operators have been successful for a limited period and could not cash out their benfits . It , therefore , can be said that profit taking in the necessary part of investment excercise. My ‘panch-tattva’ takes care of this in a beautiful manner without any temptation offered by rising markets hindering the process.

Have you ever surprised at the wrong sort of noises on TV and papers by experts trying to convince about India Growth Story at this late stage. Are they guided by some invisible authority to speak in such unison manner while the reverse happens. Why suddenly the concrete numbers are not talked about . Why is it that a rosier picture is being drawn up for sectors like realty,power,infrastructure,finance,media and retail . Why these sectors command fancy discounting and have no reltion to possible ROCE, to possible CARG and to possible room for growth at macro level. These are some of the inexplicable things but I may assure you ‘panch-tattva’ would keep you in good stead.

HariOm,
krsnaKhandelwal