panch-tattva/update…jubilant

JUBILANT @326(310308) gets 967 panch-tattva points and deserves to be bought on declines for medium term.

panch-tattva talk…US economy

friends,

The corporate profits in US were down by 3.3% in Q IV and the US growth slowed to just .6%. I think with Fed’s initiative , time has come for USA to have far higher grwoth rate . The only imperative is for US to have a very very libral immigration policy. They have natural resources , they have financial resources. They just have to have more of human resources, capable to produce the items of use in USA itself that USA presently imports. This will make their markets grow in volume. Would it be politically digestible is some thing else.

HariOm,

krsnaKhandelwal

panch-tattva talk…misplaced bearish mood

Friends,

Every body seems to have joined to say that India’s growth rate will come down to 8% . I say, it may but the Indian markets are in for good times ahead. This is due to the reason that it now has just about 2% of world’s market cap while it has not lost on economic front ( it was close to 2.8% only a few months back). Since this is relative number it has a great value and can not move way off in any direction unless there is economic change in the scene to justify it and of a defined character.

There is one further reason to give thought to. The inflation numbers have gone past 6.5 % while the long term yield on govt. paper remains under 8% . This clearly shows that the real rate of interest is down to under 1.5%. For an economy that is crying for the investible rupee and is in expansion mode , the real rate of interest at under 3% is a big positive. When such is the situation why would the markets not rebound. The inflation numbers also ensure that the top line will grow as also the bottom line without increasing the entity’s worth in real terms. But we ascribe value to stocks only in terms of the diluting currency hence will give higher monetary numbers in any case.

Thirdly, the Indian saving pool is growing fast and this supply of capital will result in ower interest rates and part of it will get in to stock markets . The ULIP have become very very popular and act as a conduit in the process of transferring savings in to stock markets in a painless way. I call upon the fund managers of the insurance companies to invest very prudently because the funds of policy holders are long term funds and are for the families future needs.

 When the savings rate is high the users of capital bargain for lower interest rates. It was mainly the reason that subprime crisis took place. When the lenders did not settle for the lower rates they opted to lend to sub-prime borrowers and interest rates maintained in USA. This arrangement boomranged and the US Fed had to come for rescue like never before . This very course is being treaded in India too and its finance managers , I mean those seated in governmental chairs , have not noticed the parallel or are guided by some agenda to serve the political masters of the day.

panch-tattva talk…an economist’s view

Friends,

Percy mistry , an economist and corporate finance expert, has , in an article in Financial express of 28th march 08, made out a case for for further financial deregulation and freedom. He says that this will add a good a good percent or two to GDP growth rate.He also says that crying foul over the corporates loosing due to complex and tailored foreign currency derivatives by the banks is also wrong. He say it would have been open to deal in markets directly, had the markets in India were allowed the trading in currency derivatives. I can only agree with him. Also, there is need for the currency derivatives to be introduced now in India without further delay as the Indian companies have revenue streams connected to foreign trades.

HariOm,

krsnaKhandelwal

panch-tattva talk…bonus by sail

Friends,

The markets have rebounded and with conviction while FM was reported to have said during his Singapore visit that the growth rate would plummet in coming time and may bot be any better than 8%. The markets towars end of session did the reverse by postin handsome nifty gain of 111 pts which closed the day at 4986. Earlier , about a few moths back the FM had been optimistic about the growth rate did not find reasons that may damage growth rates but the markets did the opposite and went in to a tail spin.

The scrip of SAIL is not reponding to the bullish mood in market and ruling under 200. The govt. may do away with import duty , this has been reported in papers but the steel prices domestically have gone up further. This may in fact translate iin to hefty profits for SAIL. It is infact in the process of enhancing capacities and putting up new plants. It has very substantial reserves in the balance sheet and has never ever issued bonus shares. Since substantial investments have been made out of generated funds and fixed asset have grown and the working capital needs wold be met through fresh borrowin , I think the lenders would expect rather demand that the part of the reserves are converted in to capital. In light of these factors I expect SAIL management to announce bonus in the ratio of one to one or two for one. If it turn out to be one to one then the ex-bomus price may settle between range of Rs 130/- per share to 170/- per share. With two for one bonus it may be Rs 90/- or so. It has also been noticed that the premium on calls in its case have gone up to almost 8% which says that some quarters are picking this scrip with grand designs.

Would you not like to pick such a promising scrip at current prices. The cash and laggards may be converted in to SAIL for big gains. I may declare here that I have interest in this scrip. I am not competent to discuss technical part. Book value and PE is quite OK, however.

HariOm,

krsnaKhandelwal

panch-tattva/update…ntpc

NTPC @196(260308) gets 987 panch-tattva points and may be bought for long term but ask for panch-tattva points after every quarterly result for guidance.

panch-tattva/update…gail

GAIL @426(260308) gets 992 panch-tattva points and may be bought for medium term but book profits partly on surges to reduce cost.

panch-tattva talk…tatas grab ‘jlr’

Friends,

Tatas have clinched the Jaguar Land-Rover deal and it is going to be consumated in about three-four months. The price paid seems to be alright and is modest $2.3 bn but payable in all cash. The Tata grp as well as its advisers must have seen the pros and cons and there are some benefits there for Tata Motors which fit in to their grand design of being a world class auto manufacturer.

 It all adds a feather to the Indian cap but the share holders of Tata Motors would have to suffer for this glorious venture rather adventure of Tatas. Earlier the Corus deal costed heavily to the Tata Steel shareholders and it is now a confirmed reality. Long term may turn out in whatever way but the near term loss of this magnitude should not be downed the throats of powerless shareholders. As conveyed to you on many occasions earlier, the Tata group under leadership of the great Ratan wants to be as much out of India as here in terms of business presence . This is a clear dis-advantage for India as it is crying for investment to harness the true potential of the teeming millions who have capacity to give back incremental return on each of the further invested unit of capital. This is not possible else where in the world , at least in the present scenario. I would have preferred if Tatas had floated a new company here for the aquisitions abroad and asked for subscription from the willing people as well as chipping their own funds . It would have been fair and justifiable. I think the robust cash flows in the Tata group companies and the taxability of the profits may have forced them into the arrangements presently made. As the Tatas have been conscentious business group for over a century , I can not accuse them of blatant disregard of shareholders interests.

HariOm,

krsnaKhandelwal

panch-tattva talk…next 365 days for nifty

Friends,

Yesterday , during mid-session I suggested to you that the markets have bottomed out and are inviting for investment. The next twenty four hours have proved beyond doubt that there is good chance of making money on the stock market. Posting a substantial gain of nearly 6% the nifty closed at 4877 pts. Those who aced have reason to celebrate.

Though I am not very good at expressing complex ideas yet I would tell you the following.  In my opinion there would be, at no point in time, a return of less than between 5% and 10% on point to basis for the full year in respect of leading indices in India over the nex twelve months. This means that nifty would be crossing 6600 mark some time during the period between December ‘08 to January ‘09. This may seem to be a far fetched idea but has certain basis. I invite you to keep track of this and point out to me if this proves wrong .

Please excuse me for making such a statement but I have my reasons. Since there is not enough time to discuss these reasons just now , I am leaving the matter and if possible, will recount them later. This is of course subject get altered if any thing of extra-ordinary nature happens on the economic or political front.

HariOm,

krsnaKhandelwal

panch-tattva talk…what to make of the markets

Friends,

I can well understand the extent of the confusion and fear about the markets. I also understand that nobody prefers to invest in dated securities of the govt. any more and particularly the young. There is another matter of importance and it is that there a huge section of population who have limited household requirements and have robust cash flows. These people are too busy to enjoy their cash surpluses and are pursuing careers with all their might. There are very many businessmen who have more cash than their business can absorb.They are looking for the investment opportunity in the markets which actually has arrived but keeps them jittery on account of the day to day wild fluctuations. The MFs have not yet invested their full corpus and hold substantial cash. The banks have poor off take of credit.The inflation has inched up 0 5.90% and this makes mockery of RBIs keeping interest rates high which have got trimmed in terms of ‘real rate of interest’ due inflation. This is markets mechanism ensuring right rates. The govt. employees are going to get a sort of a bonanza in their salary hikes. The tax burden on tax payer would be lower a great deal. There would therefore be a good spending power in hands of middle class and would keep demand high.The list is endless in fact.

I have tried to find feet for you in these fluid times.

There have been five occasions since January 08 which have pushed down the sensex by a wide margin. Total of the points dropped comes to 4967 points. The first and the biggest fall occurred on 21st Jan 08 when the sensex slid by 1408 and settled at 17605 pts at the end of day.

Now I invite you to look at this way that if we deduct the full 4967 pts slide from the level it was on the 20th Jan 08 ie 19013 we get a figure of 14046 pts (presuming that all other days were neutral). The factual level of sensex is close to 15000 mark at the last closing. This gives us an information that the normal days have had an upward bias on average hence we should have comfort in buying on days of steep falls and build up our portfolio.

A natural question comes to mind that why such big fall occurs without a plausible reason. It may be due to following two things. First, the FIIs who are sitting on huge unbooked profits are trying to get out since the US markets have become inviting due to interest rates fall. If they transfer their investment to USA they will be invested in a market which is more liquid and which will see support from the Fed itself. FIIs have a tendency to achieve the targeted liquidation without caring for the prices on the decided day of trade. Secondly, there may be lobby wanting to get in Indian stocks and pushes down the prices on the days of big fall and mops up on the days which are quieter from the weak hands. The time just before the result season is fit for deliberate big moves ie manipulative trades. It was the case in December 08 when the stock prices were pushed up in this very fashion that are now being pushed down. I may assure you that the level was wrong in early late Dec 07 and early Jan 08 and it will prove to be wrong again. You may recall that on umpteen occasions I warned you to get out of the market in the months of Nov 07, Dec 07 and Jan 08. Now I am advising just the reverse and that is to gets into market selectively for long term without fear. If you will base your decision on ‘panch-tattva’ for stock selection , you will have no problems ahead. You may contact me at my mobile no. ‘09376168780′.

HariOm,

krsnaKhandelwal