panch-tattva tallk

Friends,

The following was posted on the 12th Feb 08 and the market has closed way up at over 5200 Nifty today. I have reproduced this for your attention to be focussed on some important point covered:

“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