panch-tattva talk…macro environment and nifty IV

Friends,

 

The corporate capex has been running at healthy 14% of the GDP towards end 0f 2007. This single piece of statistic is enough to make the investor looking at India , quite comfortable. Can the such ratio of GDP being absorbed by way of corporate capital expenditure be brushed off likely. This will ensure jobs in future, expansion in GDP and will spur alround activity. Why should one be shy of investing in markets at such reasonable level of prices of equity stocks of good companies belonging to respectable corporate houses.

 

The glimpse of I have said above was visible only today when the Indian stock market opened at 400 pts down in Sensex and closed the day with a gain of 67 pts. The market tanked after the overnight weak advice from USA and the still weaker advice fro the Asian peers. With this about turn in mood while the RBI had raised the repo rate by 25 bps to 8% only yesterday speaks clearly that India is poised to gain relatively better share in the world market cap .

 

HariOm,

krsnaKhandelwal

panch-tattva talk…ranbaxy bagged by japanese

Friends,

A very important development has taken place yesterday.I has remifications beyond the apperant aquisition. Daiichi of Japan has been too pleased to offer 30 percent premium to the promoter group headed by Malvindr Singh over the June 10 2008  closing price of Rs561/- for a share of RANBAXY and this was gracefully accepted.The deal was sealed without much pre-aquisition dust being raised, is also a point speaking of the mature status of Indian markets and rules and regulations.

Now,people will see this in very many different ways as per their personal leanings and conceptual make up. Let us look at it for what it has to convey about the underlying cross-currents in the economic and business arena. Firstly, it conveys that the Indian stocks are underpriced to the extent of 10 to 15 p.c. Because the aquisitioners, generally, are happy to pay between 10 to 20 p.c. premium but in the instant case the premium paid has gone beyond 30 p.c. over the price closed and further more on the six month average price.

Secondly,it has established the fact that the money has to flow towards the high interest rate regimes, India still has positive real rate of interest while all over other Asian eonomies it is negative.

Thirdly, it confirms the fact the Indians are good at creating companies with capability and organisation of world order which are now coveted by the developed world.

Fourthly, the past owners have shown wisdom in accepting the premium which offered a good chance to get out rather crib about the pestige related matters.The cash offers them many other opportunities to be looked at.

Fifthly,it also endorses the fact that Indian managers are good because the promoters will still be running the company for the new owners.

Lastly,this paves way for many more such deals that may place because this precedence is a path breaker one.

Whether this deals proves profitable for the new owner may be in question and only time will answer it, it has proved immensely profitable for the Indian sharholders as it triggered a rally yesterday making Nifty go up by over 1.5 p.c. And settle at 4523.I would not be surprised if the likes of Microsoft offer to take control of likes of ‘infosystch’(NSE code).

HariOm,
KrsnaKhandelwal