panch-tattva talk

Friends,

Raj Thakerey who raised a hornet’s nest by asking the non-marathi to leave Mumbai has a case registered against him for inciting mob fury against Indian citizens hailing from other states. Govt. would however arrest him only after taking into account the possible repurcussion after the move. It is a pity that people get away with such blatantly wrong acts and get support from a certain class of people.

I have earlier on expressed the need for having the financial and political capital headquarters
over two or more centres across the country. Further there is a case for having all cities with population over 80 lacs to be converted in to autonomous regions as they have requirement of different set of laws and plans than the rest of the states where they belong just now. This has to be on the priority agenda of the centre. The revenue losses and shifting of capital related losses for the states have to be compensated to the satisfaction of the states concerned. I think if not this then the next popular govt. at the centre will have to take this matter up. It will be in the interest of the states too, who can have a more governing style as per the needs of the rest of the state.

HariOm,
krsnaKhandelwal

panch-tattva talk

Friends,

I came across , through an article of A V Rajwade , this information about the ratio of credit expansion and GDP growth in US after 1950 : the ratio of credit generated per dollar of GDP growth was fairly stable at 1.5 for severed decades after 1950. It started growing rapidly in 1990s and was as high as 4.5 last year! In case of India it keeps below the GDP’s absolute growth ie in 2006-07 while GDP of India grew by Rs 493 000 crs , the credit growth clocked Rs 416 000 crs . This has been the case for most of recent years.

India has capacity to grow far more rapidly if only the credit is made available at around the international rate. With such untapped potential why not the rupee will see better value viz a viz other currencies. Our bottlenecks are getting removed fast and remain more in the mind than in fact.

HariOm,
krsnaKhandelwal

panch-tattva talk

Friends,

BOI has  successfully  raised Rs 1260 crs by placing shares with the qualified institutional investors @ 360/- per share . This will bring down govt. holding to 64.47% from 69.47 % .  This has saved the bank a lot of issue related expenses .

Commonwealth games in 2010 , to be held in Delhi, will at least require govt. to do some urgent infrasyructureal spending . This will put an additional demand on items like cement, steel, glass and aluminium. These sectors may be invested in , also these shares have come down to very attractive levels.

Call Rtaes are at moderate level of 6.8% while the 10 yr gilt yeild has come down to 7.44%.

The world market capitalisation is now down to $54134 bn , India holds just 2.67% now. You may recall that India’s share had gone up to over 3% only about a month back. I think it has to catch up again.

Banks have reduced lending rates for various purposes by 25 bps to 100 bps under the lead from SBI. There room for further reduction.

IT firms have taken foreigners on board to have diversified representation. TCS has three Non-Indians on board in a tweve member board.

IT exports will touch $40 bn and constitute 64% of overall revenue.

FM has expressed view that insurance companies should be having simpler products . He has point here and as an insurance adviser I endorse this view. The public at large is not qualified enough to judge the value of complex products and land up buying wrong sort of products.

New Hyderabad Airport is ready for landing. It has asia’s longest runway (4260 meters) and has cpacity to handle 12 million passengers. The cost of the project worked out to be Rs 2500 crs.

TCS would be raising salaries by 15% this year. This is healthier considering that the IT majors have cost reduction also as an ojective to fulfill.

EM finds withdrawal of  $ 15 bn in redemption in Jan 08 after an year long investing spree in 2007 of the order of $54 bn , has unnerved Indian markets. India remains high quality growth story is also true. US banks could loose close to $ 400 bn in the sub-prime exposure. This is reason enough to hurt the investor psychology which over time will itself.

Most indices have fallen below the 200 DMA.

HariOm,

krsnaKhandelwal

panch-tattva talk

Friends,

Market has fallen by a wide margin in two days after the listing of Reliance Power and Nifty hs closed at 4835 points and discounts the earnings at just 20 PE. Reliance Power itself has lost 20% over its issue price and clearly speaks of the weakness of the merchant bankers while dealing with the issues of big groups which have over powering influnce on all concerned. The public has had to suffer for the for its gullibility while Indian financial press kept feeding the wrong sort of information. My feeble attempt at asking to keep away from the Reliance Power issue was not supposed to have any effect over masses as the viewership is still small. Any way what has happened has happened and let us look at the possibilities ahead in the market.

The Nifty PE ratio will get well under 20 by the end of current quarter and this level should supposed to be quite comfortable considering India has still a good rate of expected growth ie over 8% , to which even the pessimists agree.

This fall has further closed doors for the FIIs to be able to get out of the market. Market plunged badly when they just sold equities worth Rs 1200 crs. Any further attemt will make them loose value of the portfolio without even selling a part of it hence they would stick with the investments for a longer period and get out only slowly . The Indian saving will keep pouring in regularly through direct investment, through MFs and further through the insurance companies which have proved to be most resilient source of equity investment. This is time to get invested too. Each of the well managed companies has a potential to double , even treble capcities. As for the bottom line , it may flactuate but it is immetirial so long as the cash is not being lost.

I have a doubt that Indian ‘babu’ is creating  plateform for the bulls to ride and get off when the interest rates will be eventually be brought down.

In the end I may , based on my personal openion , suggest that its time to pick equities and more safely as per the recommendation under ‘panh-tattva’.

HariOm,

krsnaKhandelwal