panch-tattva talk…big losses today

Friends,

Today was a day whic people were fearing all through the recent rally. Asian markets lost, our Nifty lost 130 point , European markets have been down and DOW is trading at 7500 (-275) just now. People have again are questioning whether it was a bear market rally. The chartist may say so but those who believe in fundamentals would not think so because the P/E and P/BV ratio are still OK. There has been a gap of 14 month since the markets started tumbling in Jan 08. During this period the book value has added an amount equal to 10pc of present Nifty value of 2978. It will keep adding almost 0.8pc every month to the book values. So there is seemingly no possibility of its losing any substantial further ground other than move in sympathy of the world markets. Some leading analysts believe that the right level of S and P is 900 against today’s 785. This tells us that even US markets may not move lower on an ongoing basis.

GM and Crysler may better opt for bankrupcy route rather than look for aid, is what Obama thinks. If this happens , it will be death of companies that have not come up with cars using alternative fuel and economy of consumption of fuel. This is not a development that should be something special. This is how the efficient players have an edge. GM shares are already selling way cheaper and hence its demise would not be too much of importance.

The crude is selling cheap at $49.59/bbl. Rupee dollar parity is at 51.18.

The bond yield has gone over 7pc while RBI has bought over Rs 1000 crs worth of securities. Banks may have lost ground today due to yield concerns.

The stock limit on wheat has been removed as the there has been record wheat production this year.

Cabinat has appoved restructuring of United Bank of India and would infuse Rs 800 crs into its kitty by way of Tier I
Capital. O P Bhatt , Chairman SBI, thinks that the rates on deposits as well as on advances are
headed lower.

The combined market capitalisation of all listed companies went up to Rs 31.46 lac crs and that is under Rs 30000 per capita. Considering the real value of rupee today, this is pittance and needs to improve through fresh capital raising and share prices going up.

The ball is very much in RBI’s court. It should be taking one final call on rate reduction before there is any further strain on the industry and the consumers. The inflation is already at under one percent.

Russell Napier , a Global Macro Strategist with CLSA Asia Pacific Markets , says that he is positive on Indian Stock Markets.

HariOm,
krsnaKhandelwal

panch-tattva talk…big losses today

Friends,

Today was a day whic people were fearing all through the recent rally. Asian markets lost, our Nifty lost 130 point , European markets have been down and DOW is trading at 7500 (-275) just now. People have again are questioning whether it was a bear market rally. The chartist may say so but those who believe in fundamentals would not think so because the P/E and P/BV ratio are still OK. There has been a gap of 14 month since the markets started tumbling in Jan 08. During this period the book value has added an amount equal to 10pc of present Nifty value of 2978. It will keep adding almost 0.8pc every month to the book values. So there is seemingly no possibility of its losing any substantial further ground other than move in sympathy of the world markets. Some leading analysts believe that the right level of S and P is 900 against today’s 785. This tells us that even US markets may not move lower on an ongoing basis.

GM and Crysler may better opt for bankrupcy route rather than look for aid, is what Obama thinks. If this happens , it will be death of companies that have not come up with cars using alternative fuel and economy of consumption of fuel. This is not a development that should be something special. This is how the efficient players have an edge. GM shares are already selling way cheaper and hence its demise would not be too much of importance.

The crude is selling cheap at $49.59/bbl. Rupee dollar parity is at 51.18.

The bond yield has gone over 7pc while RBI has bought over Rs 1000 crs worth of securities. Banks may have lost ground today due to yield concerns.

The stock limit on wheat has been removed as the there has been record wheat production this year.

Cabinat has appoved restructuring of United Bank of India and would infuse Rs 800 crs into its kitty by way of Tier I
Capital. O P Bhatt , Chairman SBI, thinks that the rates on deposits as well as on advances are
headed lower.

The combined market capitalisation of all listed companies went up to Rs 31.46 lac crs and that is under Rs 30000 per capita. Considering the real value of rupee today, this is pittance and needs to improve through fresh capital raising and share prices going up.

The ball is very much in RBI’s court. It should be taking one final call on rate reduction before there is any further strain on the industry and the consumers. The inflation is already at under one percent.

Russell Napier , a Global Macro Strategist with CLSA Asia Pacific Markets , says that he is positive on Indian Stock Markets.

HariOm,
krsnaKhandelwal

panch-tattva talk…G-20 meet

Friends,

G-20 nations will be represented by their leaders when they meet in London on thursday this. The meet will resolving some differences of openion between USA and European nation about the need , impact and scope of various stimulus packages announced by various govts.

In fact, the financial crisis and the stimuluous packages and lowering of interest rates to remedy it, are having a compound effect on currencies. The stress is noticeable but movements have been not all that large so far. The dollar appreciated since Sept 08 than lost ground. Similar is the fate of other currencies. China is affected due to its dollar reserves. India is less affected as its dollar reserves are not that large. Everybody is looking towards a solution and return to normalcy that would not have an adverse impact on them individually. But I think some thing will give way and some kind of turmoil will take place before the calm returns in international financial affairs. By the way , I see India getting least affected because its economy has far lesser proportion of international exchanges than others. The protectionist policies are not bad thing in the back-drop of current world economic situation. If there are islands of stability , the world will have better chance of coming out of the present mess.

Asian markets have opened lower and so should be the case in India at least today.

HariOm,
krsnaKhandelwal

panch-tattva talk…govt borrowing

Friends,

The centre would be borrowing Rs 3.62 lac crs in 09-10 which is 56pc higher than the budget estimates for 08-09. The govt will borrow Rs2.41lac crs in first half of next FY. RBI has however announced to buy from banks securities worth Rs 80 K crs. I think over all this should be making any difficult demand on the money supply overall which is going to be there on account of FIIs inflows and remittances by NRIs.Subbarao is sure that Indian economy would be an outperformer in the world ,however, it may have to go through some painful period till the world sees improvement in economic situation.

Life Insurance sector has just grown by .06 pc between April-Feb.

US markets have closed with decent gains and Asian markets are moderately up. Indian markets may see a volatile session as this will be a day after continuous surge for over 12 sessions. From now onwards three days of continuous rise should be used for partial profit booking and three days of continuous drop should be taken as an opportunity to buy.

HariOm,
krsnaKhandelwal

panch-tattva talk…a red letter day

Friends,

The sensex performed India rope trick and closed up at 10003 points. I am pleased for the guidance provided to you through out the bleak period and painstakingly . Nifty closing at 3082 shows a gain of 12 pc in march series. This has calmed many nerves. The story is still on in the sense that while DOW moved up,down and then up on wednesday , its future is further up by 50 points today.

SAIL says its march sales will be better by 9pc.

The European markets are marginally up at the moment.

Total t/o on BSE and NSE was a whoppin Rs 97 K crs. None of the sector is performing poorly.

The emerging markets have sounder economies compared to developed world and the returns over last year for the emerging markets have been better than invetments in developed markets. This has to continue in future too.

HariOm,
krsnaKhandelwal

panch-tattva talk…nifty at 3000

Friends,

In a brave move the Nifty has come very very close to 3000. The question doing rounds is whether or not this is bear market rally. I would look at it this way that the bear market definition does not remain the same. The start of the bear market or let us say the bearish moves in markets emanated not under ordinery circumstances but under some extra-ordinery circustances. This being the case , the bearish moves will be of a different kind this time as also the recovery. At no time in the past the govts have had so much concerned about the markets or the economy as much as this time.

Besides , the level of market today was nearly the same as was on the day when Mr Raju of ’satyam’ spilled the beans and the moods were spoilt as a result. Since then however there have been a spate of measures and monetary initiatives that have taken place and which have been mostly positive. Also the US markets were the source of accentuated bearish moves here. The US markets have displayed strenth after the Giethner’s new plan.So, the conditions have improved a lot since the day of break out of ’satyam’ saga. If all this is interpreted and we have not missed any important point , there should be a further upmove in India whether or not the rest of the world similarly behaves.

There is yet more to consider ie emerging markets have stronger economies than the developed economies of the world and there have been more gains for invetsors in emerging markets over the last eight years than in the developed markets. It was because the growth was more in emerging markets and still remains. The drop from peak may have been similar in both parts of the world but this happened because of financial troubles originating in developed world which had the knock out effect in emerging markets too.

As for the fundamental valueations, there is a concensus that the valueations are historically the best every where. It is because of the fear and shock of the worst kind that was faced by the investing community. The rationality takes a back seat when the fear grips (‘aarat ke chit rahahi na chetu’).

Tommorrow is the last day of trading for march series and in light of what I have said earlier here , there may be moves which are more accentuated than on other ordinery days and also if the Nifty closing is to be controlled as is usually done on the last day then at that particular level it remain static in the closing hours and will much more in any direction on the first day of April series.

HariOm,
krsnaKhandelwal

panch-tattva talk…high turnover

Friends,

The turnover has more than doubled in cash section over the fortnight from about Rs5800 crs to Rs 13291 crs on NSE on 24th Msrch 08. The Nifty has been able to close at par after scaling high during the day. This is some thing that imparts confidence in present rally. US markets have also been down a bit after 20pc gain in last two weeks and over 7pc gain day before. The character of the markets has shifted and bad news scare is less to be felt while the good news is honoured by markets more.

In Indian contaxt , the MFs were sitting on lot of cash and could not have been able to deploy it while market went up. They owe an explanation for deciding to keep cash while stocks were going way cheap.

It is learnt that the India Inc has been steadily investing its savings in equities directly and through MF route over last three years. The investment to asset ratio has increased to 21.03pc in 07-08 against 17.85pc in 05-06. The share of equities stands at 46.58pc in 07-08 out of the total investments made by corporates.

The 207 miilion tonne cement industry has seen consumption growing by 8pc in current year which is very handsome growth considering the times.The dispatches for first 11 months till Feb have been 163 M/T (152 M/T). Eastern region demand has been better than the rest and is a sign that the weaker states are catching up.

Nifty will be made to have weights as per the free float (this is after adjusting for promoter stake). This conversion will be effective on 26 June 08. It is being done to enable easier maitenance of investment in accordance with the Nifty weightages. The Sensex is already on free-float basis.

There will be balanced day of trading as Asian markets have opned range bound and around the yesterday’s levels.

HDFC has reduced PLR by 50bps, it says cost of funds have come down. The builders have reduced prices by 30oc and further drop is unlikely. Even this 30pc price correction should not be putting builders to loss as it is trimming of the excessive price level which was scaled in a rush. I expect the realty sector companies diing very well over the next year and they are good picks at the moment.

HariOm,
krsnaKhandelwal

panch-tattva talk…unstoppable

Friends,

The DoW seems to be unstoppable and why would it stop in light of the fact of biggest ever doses of monetary injection in economy and over-fat packages aimed at stimulating economies scatterred all over the world. The US markets have added close to 7pc to stock values on average last day.It may have been surprising you in past few weeks (even months) what I have been writing and in strong words (not liked by readers generally) but the message had to be passed on to you. The theme has been that the debt paper will be of no comfort and equities have to be relied more. The developments warranted this. But the gloom was prevelent all over and much of it spread by the organised people in an effort to put people off from buying equity. A game plan was being enacted upon. It was for this reason that I said many a times that those who will wait will miss the bus. The 12pc jump so far in the month and more to happen , the bus is missed. It has placed the investor in dilemma , if he enters now he is taking a slight risk, if he does not he is going to lose the value of his monetary savings. Any way its never late to mend but advisable only to the patient.

The Asian markets have positive openings but not so stark. Let us wait for the Indian market opening with fingers crossed.

Marks Mobius now has an openion that the markets have turned bullish.He sees emerging markets better placed than develped ones. He is looking for companies with cash surpluses, low debt and high dividend yields. There are still some people calling the recent rallies as bear market rallies. I beg to say if the returns can be as much as five year’s interest on bonds, those who do not plan to grab it are only foolish. What’s the wisdom in not investing for 25-30pc gains in shorter period and stay away calling it bear market rally. Take your decision when the occassion to encash profits comes as to whether it is bear market rally or is a beginning of a bull market. Only this way you will be in the thick of money making game.

The equity surge is also keeping the interest rate tight for a short while because money is flowing into equity markets. Eventually the interest on govt paper will ease which is over 6.dpc for long term paper.

panch-tattva talk…book a nano

Friends,

The ‘nano’ has been formally launched in Mumbai’s Zimkakhana Club. Its base model will be priced at Rs one lac and for the rest will scale up to Rs 1.72 lacs. The booking of as many as 5 lac cars is anticipated. Per Booking Form cost of Rs 300 will fatch Tata Motors a sum of Rs 15 crs. TM will be collecting between Rs 2500 to 3500 crs by way of booking amount.I estimate ‘nano’ contributing Rs 20 K crs addition to top-line by the year 2011-12 per year and profits of Rs 3000 to 4000 crs since it will be seeling at over Rs 2 lac per piece on average by then. Besides , its exports will be stabilising demand and supply situation. The ‘outside the box’ thinking has been responcible for the cars birth. Ratan Tata is to be remembered along with Henry Ford in automobile history of the world. One is respocible for the ‘assembly-line’ concept of car manufacture , Ratan Tata will be remembered for cost cutting and material saving in car manufacture. Its not every day that such achievements are seen. The success of ‘nano’ road will more feathers to cap Ratan dons.

HariOm,

panch-tattva talk…oh my god

Friends,

Nifty gained 133 points and closed at 2940. The DOW is trading plus 314 points just now and S and P plus 4.5pc up. This on top of tow week gains. The floating money is doing the trick. It is also improving metal prices. The aluminium has gained more than 15pc in as many days. The steel prices are still down but steel scrips have been star performers. The oil has rallied to 53.67 dollar/bbl. When the march series gets to trade for the last day on the coming tuesday, possibly some history will be made. My warning that ‘the bus will be missed for those wait’ has not been useless. Did you make some money, please inform.

HariOm,
krsnaKhandelwal