TATAMOTORS @290 (300609) gets 967 panch-tattva points and it will be OK to buy it in range of 250-270 for long term.
SUZLON @103 (300609) gets 854 panch-tattva points and it should be sold on surges if in stock, for buying wait till next result.
INFOSYSTCH @1776 (300609) gets 1036 panch-tattva points andthis may be bought for medium term and particularly on days of decline.
Friends,
This is a crucial juncture for the markets and surprisingly the open interest in Futures and Options is very low. It is just 2.26 crs in Nifty Futures and 4.75 crs in Nifty Options, in case of stocks it is 105.91 crs/9.52crs for futures/options. This indicates that the option writers are wary of writing options. Therefore while public is OK with making further investments, the organised playerd do not want to expose themselves. Public’s investment flows are taking place in two ways ie directly and through ULIPs and MFs. I have seen that a large number of commoners consists of people who are willing to take risk for big gains. This is particularly true of people with reliable income stream.
The QIP route is being increasingly resorted to by the corporates. This is good in a way that it increases the gross market cap and eventually deepen the markets but this makes it difficult to judge the impact of QIP on the prices of scrips which are raising money through QIP. Like for example ‘bajajhind’ is going to raise about Rs700 crs at around Rs204/- per share through QIP. Now some would consider it a bullish factor as the equity money is coming to company with considerable premium on it. But I would consider it a bearish factor because of expansion of equity base and the new money has not been taken for any concrete expansion plan. So, it is case of management trying to have comfort of some liquid money in hand. This money will have to be serviced out of post tax gains rather than pre-tax gains (in case of loans). Now, the moot point is to find an answer to the question ‘as to why management opted for equity fund expansion while the sugar scenario is optimistic and increased earnings will be available to retire debt’. Clearly, what we know, management knows better. It definitely knew best when it rewarded itself with preferential allotment (read earlier posts about ‘bajajhind’). After this QIP issue, if successful, the sharholder will have comfort of share prices maintaining in a range of 176/- to 215/- but the rise will be very strenuous.
HariOm,
krsnaKhandelwal
Friends,
Inspite of all the trappings in favour, it will not be cake-walk for the bulls. There is big fight to be fought for each scrip in Nifty/Sensex before any big upmove takes place. The budget in fact is keeping the market in balance and people have reduced positions rather increasing them. So, for every body the ’safety’ is the watchword. Rest of the Asia is also subdued today.
Tatamotors consolidated result have shown big loss. On top of it the servicing of debt on books will remain a major concern. Tatamotors have announced entry of JLR vehicles for which a seperate division will be put in place to take care of all aspects of JLR marketing here. This and sourcing for compnents from cheaper market and lay-off of excess staff in Europe may eventually put them on even keel but shareholders will still have a question why this big risk was taken on slender shoulders of ‘tatamotors’ in the first place. I hope Tatas would be much more careful with their expansion plans where it is not through organic growth.
HariOm,
krsnaKhandelwal
Friends,
Nifty would go free float from today as was announced previously by NSE.
US markets have gained by about 2pc yesterday and Asia is positive today. It may therefore be assumed that in India the opening will at least be at healthy level, also, the results from ‘tatasteel’ and ‘unitech’ which were announced yesterday, have been OK and put behind the nagative expectations about future. Both have negotiated out of woods by raising fresh money and have met most of the liability of repayments that fell due.
There is one thing remarkable about India’s large cap companies and it is that the commodity companies will be maintaining profit due to fresh capacities coming into production and most of the rest have very little debt on books and ever growing demand/orderbook. A few in any kind of disadvantage, have very little market caps. So, in my openion the down side gets limited and upside without limit. The long term averages are also showing the same thing as any chartist would tell you.
The inflation for the w.e. 13 June 09 has been (-)1.14pc. This is largely due to fall in petro goods prices, for the rest of the items its not negative. In this light as soon as the petro goods prices are opened or revised upwards, the inflation will again be, should I say, at healthy 4-5pc.
Indian car market is showing signs of a fully grown car market. The rush for buying of high hatchback cars like Honda Jazz (Rs 7 lacs) Fiat Grade Punto and more.
Tatasteels consolidated results were announced. Tatas have been able to remain in green by resorting to cost cutting and they would be slashing more of Corus jobs (roughly 2045). The demand for different products of Corus is at different level and the cut in production on overall basis has been about 59pc. I hope that a leaner and more profitable Corus will emerge out of this crisis. The crisis is for every player and some would withstand like Corus because it has might of Tatas behind it who have not been facing the kind of problem the world steel industry is facing. Mittal of Arcelor-Mittal says that his expectation is that demand for steel would revive shortly in global arena.
The investors are advised to not stick with their sugar scrips and to off load. The centre has raised sugarcane SMP to Rs 107.76 from Rs 81.18 per qtl. This will make ‘mayawatis’ go overboard and damage the cause of sugar industry because this kind of raises in sugarcane prices will convert more acreages to sugarcane and excess supply may again push sugar price down and raise costs. The good fortune of industry which had just come about will again be a thing of past. World sugar supple may improve too because Brazil is already finding biofuel option for sugarcane as non-remunerative. Also that some of the sugar scrips have had more than the fair share of appreciation leaving little or no room for further improvement, they have also ensured to inflate the paid up capital without company getting the equivalent of market cap increase in its hands ( like ‘bajajhind’ where promoter got for themselves big chunk at almost one fourth of ruling price by way of preferenctial allotment, the notional loss to rest of the shareholders is over Rs 200 crs which amount can only be generated by company over many years, so, the fruits of many years have been lost to sleeping partners.You should, who can, bring this and such matters to SEBI’s knowledge).
India will be flooded with capital, Japan has dediced to back bonds issue by India (of upto 250 billion Yen) with soverign guaratee. The two oceans of lowest and highest rates of interest are ready to flow over to each other under huge pressure of differential. If only the govt can assure the investors abroad that scams like ’satyam’ will be prevented at any cost, there would be no derth of money here. There should be insurance protection available to investors agaist suffering from loss of such happenings.
There is now the need for preparing the Indian population to behave in a way that is required of a society going on faster growth trajectory.
HariOm,
krsnaKhandelwal
TATASTEEL @399 (250609) gets 1031 panch-tattva points and this is worth buying regularly on days of declines and be accumulated for medium term which means that partial profits may be booked on surges. A time will come when it will go to new highs and panch-tattva will reveal when that time approaches.
UNITECH @82 (250609) gets 1056 panch-tattva points and this should be accumulated on days of declines for medium term.
Friends,
Nifty closed June series at 4242 and it has lost about 2pc in this series. This has broken a three series winning streak. But it does not matter as much as it matters that consolidation has taken place without any extraordinery and anxious moments during this period.
Mr Nandan Nilekani of Infosys has been given charge by the PM, to implement the Unique Identity Number to each Indian. This is mega project and once implemented it will give birth to some very interesting projects which will give Indian IT companies a lot of work to do. It may eventually be responsible to generate a business volume of Rs one lac crs in five years, as per my estimate.
While I think that tommorow’s opening of Nifty will be gap up but I would say that it is important to hold 4000 or 4100 puts, by all keeping huge investment in equities and who have built long positions in F and O. The budget should be passed while you are perfectly hedged. The premiums on puts is not very high two. Those who do not wish to buy puts may at least remain half way into cash before the budget day.
There is some expectation that the budget will open the oil sector and allow free pricing of the petro goods. May be Pranab has this ace up his sleev which will allow him to have liberty from providing for oil related losses and thereby take care of deficit on one hand and be known for taking the bold reformist step. Of course petrol may be somewhat dearer but it will be digestible as the Indian crude basket is not that much costly as it has been at other times.
HariOm,
krsnaKhandelwal
ONGC @1050 (240609) gets 1221 panch-tattva points and its selling cheap, buy it for medium/long term (those who buy for long term need not take any action till the panch-tattva points after the next result are obtained because in good companies you will have advice for retention and adding more to draw full benefit out the stock as well as save tax, this way you do not miss the oppoprtunity to get out if the stock sells at fancy prices, you may always come back at normal prices. So, in a way you keep your cake and eat it too.).
BEL @1336 (240609) gets 1061 panch-tattva points and may be bought for medium term (medium term buy allows you to book partial profits on surges, even before you check panch-tattva points upon next result).
Friends,
The monsoon may be deficient this year and particularly in the north-west region. They say that the country’s GDP will be down by 1pc on this account.
However, there will be some welcome fall outs of this. There will be lesser demand on funds for the grain storage, the stocks lying for a long time will be sold. The inflation will be back to at least 4-5pc and even more. Availability of funds will keep interest rates down and inflation would make RR of interest moderated.The imports of edible items will increase and would weaken rupee and some sectors of industry would benefit. Water related infrastructure would get precedence. Also, the project completion will be urgent on basis because the chances with another year of monsoon failiure can not be taken. This will see cement and steel demand go up.
In fact, I have noticed in past that the poor monsoon is a friend of industry in some ways which makes stock markets go up in such a year. You are alreadyu seeing this happen, as much there is talk of monsoon failings that much surge in markets is noticeable.
HariOm,
krsnaKhandelwal
LUPIN @ 847 (230609) gets 983 panch-tattva points and this amy be sold on surges and wait for entry till next result.
Friends,
The P/E of Sensex companies has increased to 20.10 from 18.65 last year. The market cap of Sensex companies stands increased by under 1pc to about Rs 22.50 lac crores.
LIC of India invested Rs 40 K crs in equities last year and would be investing close to same amount in current year. This is huge investment by any standards and is for long term. LIC is very conservative in picking stocks and nurses them for good period which gives stability to markets. The last years upheaval would not have been there, had there been a more institutions of such type.
I have even earlier mentioned it and say again that there should be dedicated fund (under RBI’s control)which should pick up exchange traded funds representing broader indices as per a predetermined criteria and sell as per a predetermined criteria. This criteria should not be published and should keep varying as per advice of a team of people and RBI Governor empowered to decide the target amount of investment and dis-investment on any given day whenever the criteria becomes excercisable.
This will be putting some breaks on the uncontrolled movements and the public will have more courage in putting their savings in to markets. Which will give the required boost to issue of risk capital which will enable fast industrialisation of the country. Most of all the FIIs too will have some comfort while entering Indian markets. As for the funding, after some time this fund will itself grow and would be able to take care of growing fund needs.
The Nifty closed in vicinity of 4300 and behaved exactly as I expected and conveyed to you in my previous posts. Tommorrow it will be under clutches of operators who would either keep it very tightly range bound to not let any body encash profits on puts and calls or would give a sudden jerk to bring it to the ideal point where they have maximum to gain by way of digesting premium earned on call/put writing.
HariOm,
krsnaKhandelwal
