Friends,
The last days trading for the week has given respite to people but it would be meaningful only when the follow up buying continues for some time albeit at a low key. The corporate and income tax collections in the first quarter of the current FY have been up by more than 30 p.c. and more than 40 p.c.respectively . This some thing concrete unlike the talk of inflation eating in to corporate profits and high petroleum prices causing slow down. The capacity of high petroleum prices will affect but only the ‘air travel’ and luxury car sectors and not any other sector for there always is room for taking suitable steps to mitigate the adverse impact of oil prices. I may add here that such steps when taken have a lasting long term good impact for economising energy consumption and moving towards non-conventional engergy sources is the real need of the humanity. The industry , therefore, is not going to suffer on account of threat of scarce oil supplies , rather it would have new vistas of industrial activity opened up. The relative cost advantage in favour of other energy sources is panacea for ills of oil’s costly supply scene.
So closing of Nifty at 4016 at the end of tubulent week is quite comforting.
The inflation has slightly gone up during the week and rests at 11.63 p.c. This is , in a way , going to cause a flutter in bond market for the negative rate of interest has increased and the natural expectation would be that interest would go up to , particularly when the RBI has embarked on high interest rate regime. I have question to ask of you and it is ‘would you sell your stocks after three years of inflation at an average of 12 p.c. per annum when the ruppe value will be down by 50 p.c.at the present day prices or would like to atleast cover the carrying cost for these three years since the assets of companies will have gone up in value by 50 p.c. atleast in value’. I think your answer will be to get even more than that as you have carried a risk asset.This explains that the price erosion in value stockss is no more possible after correction of two-thirds in prices. In case of momentum stocks nothing can be said and you may have observed that have not recommemded you to go for such stocks for more than last 12 months.
Please do not loose rationality, whatever is given out in papars and on channels. You should understand that the reporter are young in age hence have less experience and second they have to fill the columns and hardly have time to reserch and ponder.
HariOm,
KrsnaKhandelwal
