Friends,
I request you all to please visit my new site www.niftywisdom.com from now on. You will find all that was being made available to you here and more. You may , however, keep coming here for referring the material available in archive of this site.
HariOm,
krsnaKhandelwal
Friends,
The rupee (at 47.89/dollar) has become stronger and the capital inflows are high. The RBI chief has started making the expected noise about having to take measures for curbing money supply. I am surprised what makes RBI shiver when the flows are high and there is more money here to work with. What is so scary for them that want to upset the apple cart. If rupee gets stronger and hurts the exporters it may just buy some dollar and help. Afterall China must have doing the smae to keep the Rembini down. Has it not achieved the unthinkable of India type growth rate. We have to shed our still sticking remains of the Hindu Rate of Growth era. It will not yet harm India to cover more ground in short term for we still haven’t taken care of the nutrition and health needs for all, leave apart shelter and education.
The telecom scrips were badly mauled yesterday for no known fault of theirs besides having the courage to compete on strength of market getting larger and being successful at cutting costs. This is a natural outcome of many players in the field that has room for two or three that the fierce competition get underway and eventual consolidation (through mergers of weaker with stronger takes place). Did I not tell you that Bharti is uselessly trying to go global while home turf has to secured. I must appreciate RCOM for boldly initiating price war, India is going to get more integrated as a result and the movement of labour more free because the people away from home may remain more in touch.What a wonderful development is new age telecom, the lowliest have more power to communicate than Akbar had. The wise would buy into both the leaders, RCOM and BHARTI.
You have seen that the rebound here has been dramatic, the Nifty closed higher yesterday at 5027. Europe and US economies have yet not been out of nursing ward but the stocks there have no intention to reflect that situation and scaling up ( Obama is on side of more spending and tax cuts as the jobs are still disappearing).
SAIL has half the slice of Chiria mines and the other half will go to private palyers.This ensures future supply of ore to SAIL (Chiria reserves are about 2 billion tonnes).
Sugar scrips are on wicket at the moment and should form part of your portfolio for the time being.
Steel scrips were up but out of turn, the steel prices are subdued since some time back.
The Hindustan Unilever did a rope trick yesterday which is unlike its character. This was due to the fact unloading of soem part of portfolio generated cash and since the players are in no mood to withdraw cash HINDUNILVR was lapped up. Surely times have changed for the FMCG and Pharma which will have a larger population with more spending power and better awareness about their products to cater to. So this is also a sector to be viewed with some degree of greed.
HariOm,
krsnaKhandelwal
Friends.
The shares with differential voting rights (DVR) are yet not popular in India. Tata Motors had issued them some time back and the issue was not welcomed by public in general which was more on account of the conditions then prevailing rather then due to the aversion for DVR shares. The promoters and arrangers/managers ect had to pick them up. Now the same are selling at some discount (about 30pc) and would be a good pick for the fortunes of Tata Motors have become attractive on back of CV sales picking up and expected to gather momentum and on back of successful launch of ‘nano’ which will be supplied in bulk in future. It commands premium at the moment ie those who have booking may get some premium for trasferring to the interested buyer. I think the DVR shares should be issued by promoters as a routine for this will keep them safe from the requirement of proportion contribution to maintain holding level. Secondly the discount on such shares and higher dividend entitlement makes it attractive for the common investor. He happens to to be safer then otherwise because the manipulative power of promoters goes down. The SEBI has not been permitting issues of DVR shares after the first such issue but I think they will come round after the markets here become more mature.
There is no question about India spending ever larger amounts on infrastructure. Rakesh Kumar Chaudhary says in an article in FE (5/10/09) that ‘for every 1pc less spending on infrastructure, there is 1pc loss in GDP. Now point is how to generate resources of high order and not destablise the fiscal and financial balances otherwise aimed at. I gave the solution only a fews back and that was to somehow bring the capital in Indian hand out in the open which is stashed away in form of precious metals. The govt should give some incentives in form of saving on taxes and in form of returning the equal quantity of gold/silver at some time in future. The resource so generated will be without burden of interest but the spending of so raised money has to be 100pc for the purpose of creating infrastructure of the type which may pay back enough returns to take care of the liability created. Thus the need would be fulfilled, the worth will be back in publics hands and the nation will be left with useful infrastructure for a long long time in future.
We had Nifty advancing by more than 2.5pc over the three trading sessions in last week. The cues form Asia this morning are not positive and the mood may rub off on traders in India when the market opens. Some correction was even otherwise due and does not mean end of world, the resumption of upside moves will again be noticed after some time.
HariOm,
krsnaKhandelwal
Friends,
State Bank of India has for the umpteenth time reduced the interest rates on retail deposit. This is simple extension in line with the lower credit off take and risks in doling out retail credit to all and sundry. I have been at pain explaining all the while that the high interest (real rate) phenomenon is afflicting Indian businesses most. Since there is higher return on investment in India, it was being absorbed. Every passing day we are heading in the direction of a freer movement of capital but the govt has still not formally opened the doors by keeping useless but detrimetal curbs. The portfoio investments are rising and making rupee strong. Our businessmen are still not being allowed to think big and conceive mega projects. The result has been that the high profitabilty of operations is giving lot of cash back in hand and the enterpreneures are trying just to put the same back in business by expansion etc. The whole scenario has therefore kept us at a level of growth which is far lower than the potential. The west is not fully competent to take advantage of the invitation extended for entering Indian business arena for lack of managerial personell of their own. The groups in China and Japan have problem of trust and language and the later also has the aging population of its people as a deterent.
There is another angle which does not let India grow at break-neck speed. We have been an agrarian society and have been seeing effort bear fruit over time at natural pace and aided by nature itself. We plant seeds and let it convert in to a tree, so do we do in case of our business enterprises. We find it foolhardy to bring growth through aggression. We are aggressive only when we have to defend livelihood, we have never been aggressive to aquire means of livelihood. Our patience and the practice of saving todays output in form of seeds for tommorrow is reflection of the same. It is therefore not our grain to borrow too heavily and conceive mega projects. We would never order the building of underground rail networks simultaneously although it is the requirement in at least a dozen cities ( the capital is waiting to come from all over). We can develop railway network by adding another track, connecting a few remote regions, introducing more trains, adding a few platforms on busy stations etc but when it comes to creating dedicated freight corridor or a special track for superfast trains between two stations, we begin to faulter or downrightly demur. We keep amending our archaic laws but an entirely new set of law is found to be difficult to put in place. We have never ever tried to solve the problem viz a viz Pakistan in a decisive manner inspite of having such might and support. The Chinese and the Americans and the Japanese have no such restraint. They would go all out when moment is opportune for them. We are loved for being so and laughed at too.
I would not say that we should lose our inviduality because losing indiviality is like losing all. I would however stress that raising pace of our progress in accordance with the times is by no means bad. Its time we ask our people to bring out in the open the shy capital (resting in our vaults as gold and silver) and with some additional borrowing from outside, do take care of water-resource mangement, power availability etc and pull out of the recess of poverty the entire population that is living in subhuman conditions in one single sweep.
Today is a special day for us Indians. The father of our nation was born today. He did what was difficult for an army to do ( by army I mean army of social servents, army of political activists, army of relious preachers and the army of soldiers as well). Gandhi, the Mahatma does belong to catagory of ‘Buddha’,'Mahavir’,'Nanak’ and ‘Adi Shankara’.
HariOm,
krsnaKhandelwal
Friends,
How remarkably the Sensex has crossed the 17000 mark. It took just 15 session for it to acheive this feat. However, last time when it performed the coverage of 1000 pts between 16000 and 17000, the time taken was just 5 sessions of trade. Why does the pace advance between 16000 and 17000, the answer lies in the fact that 1000 devided by 17000 is a figure under 0.6 (or say under 6pc). This can be taken to be as nearly five percentage and this much percentage movement does not make one sit up and gasp. A movement at over 6pc is rounded to 10pc in popular perception and is taken to be some thing extraordinery. You will notice that movements hereafters on the upside will be rather fast in terms of time taken to cross the next 1000 points. An other pointis that upto the level of previous highs, the groove exists and it does not need to excavate to move ahead. Beyond the previous high level it would have to be trying hard or let us say it would take a spate of high potential news at that point in time to enable it to move further ahead.
Bharti-MTN deal has been aborted. They say it was the insistance of SA about duel listing, may be so but I haven’t heard any body say that the statute there does not bar it and what SA is insisting is extraneous. If the later is the case then why should an Indian company expose itself to risks in an irrational and unhealthy place. As I told you earlier, I do not find much of substance in the deal for the stake holders other than the comfort to Mittal himself as promoter to be able to withstand the local political pressures by posing to represent international interests. India’s potetial is still not exploited to the hilt then why spread thin the effort and resource. It was themistake committed by Tatas, the Birlas and few others and they had to face tough times. Also I say that the business rules in India should be firmer and less prone to changes every now and then. The businessmen here should be taken to task for breaking rules but should not be subjected to either please the establishment or face (harsh) music. Again, if the deal failed because India has still not graduated to having full/free convertibility of rupee, it is an occassion to do it and just not have fearful attitude. You can’t have a grim face and smile too.
The IPO by Oil India commands 9.3pc premium over issue price. Can’t just yet whether its good for investment. I have to have a track record of some quarters to be able to do so. That’s why you do find coverage of newor small companies in the ‘panch-tattva/post result’ catagory. I am pleased to say that my system has gained credence and a few of my readers have informed about having made money, relying on the advice.
The Nifty PE (at 20.59) is still not in danger zone because the profitability has kept pace with the market. If the second quarter does the same than rosier times are ensured in future too. The only hick up is that those who bought equities between Oct 08 and Mar 09 would like to encash chips without subjecting themselves to capital gains. Even other old holding would find way in to market for similar concern. The new tax code is a bad omen for the market.
There is some weakness in the Asian markets today and so was the case in USA and Europe yesterday. We may be impacted to some extent today but not much. The result season holds the key in our case.
The China is celebrating its foundation day. What an irony, the foundations of that time have no trace now and still the foundation day is being celebrated. China turn into a market economy from a economy under shackles has been dramatic. What is more surprising that it has still heard the noises about democracy even though the stomachs there have been more than full for quite some time now.
HariOm,
krsnaKhandelwal
Friends,
The Indian stocks have performed best during last twelve months. The Indian stocks will be the leaders as far as returns go, for the next 12 months at least. Now, after some confirmation you would be able to take my suggestion that the previous all time high is not difficult to be breached by leading Indices here.
There has been an explosive sort of reaction in world’s leading markets during last twenty four hour when we were closed. This may be on account of the positive vibes coming out of the G-20 meet at Pittsburg where the dissenting voice is quite feable. I had occassion to tell you that China may not see the stock price movement in line with rest and particularly India. Today that happens to be the sole market in the red. The Nifty is trading past 5000 mark in Singapore this morning, gaining more than 40pts. I would still say that the investors here should be maintaining their equity investment at between 50 to 70pc of investible whole. This is necessary to keep the fear element out and the to remain ready for buying just in case there is some extra-ordinery movement on down side by way of knee-jerk reaction. The fundamentals of Indian economy will not be dented in a short time because of its unique positioning.
As for the sectors, I would say that ‘auto sector’ has entered risky waters in terms of pricing of stocks. The cement sector remains a good bet for investment and so is banking sector. About capital sector I would say that those who have nerves of steel and would not be disturbed for any small loses, may surely invest in leading infrastructure companies like L n T, BHEL,ABB and a few other construction companies. The IT sector is now fit for moving out on rises and entry on declines. Realty should be shunned unless you have specific knowledge about some company expected to do better in near future, these stocks should not be looked at for investment of long term nature. The Pharma sector in OK and should form part of portfolio without over-weightage. The telecome sector has big promise but entails some risk due to ongoing price war. I feel rather uncapable of speaking surely for refineries and petroleum but stocks like ONGC have potential of going up, may be substatially too. Steel remains my favourite sector for some more time till the full price potential is achieved. The present day P/E ratios are around 26 for Auto,around 10 for Banking,around 10 for Cement, around 30 for Cap-Goods, around 20 for IT, around 25 for Pharma, around 10 for Steel and around 15 for Telecom.
So, please be ready to take part in action.
HariOm,
krsnaKhandelwal
Friends,
The Swiss Banks have offered to collect ‘universal withholding tax’ on earnings from the deposits of foreigners. They would still not like to disclose identities of depositors which is core to their business. This, atleast, may be preferred by those in power for it will be seen as an excercise helping the exchequer . It would , however, still suit the possessors of not disclosable income. The ‘mighty rich’ will always find their way. The proceeds of tax collected will be trasferred by Swiss Banks to client’s country of domicile. This first step should adopted by India by putting in place the necessary laws and treaty. The Swiss banks hold about Rs hundred lac crores worth of such deposits from all over the world.
The govt is trying while the LIC is resisting ; the matter is about the percentage of profits to be distributed to the policy holders by LIC. It distributes 95pc of profits at present and the govt is trying to fix it at 90pc. The LIC’s policy holders may suffer a lot if this is done by changing the statute.
Only three days from now, the gifts received by you will be taxed as income, without any exception. The exception on the gifts received from relatives on the 0ccassion of marriage will still qualify for tax relief. This is good and bad too for it will do away with cumbersome tax calculating excercise and also will stop fictitious gifting but it will subject the same income to tax in two hands where the gifts are genuin.
ONGC was required to deposit its surplus cash ( Rs 18000 crs ) in only the nationalised banks. The fall out is that the nationalised banks are offering it not even an interest rate equal to retail deposits. The govt’s fingure is never ready to take rest and the ONGC will suffer interest loss of Rs 200-300crs and is naturally cribbing about it.
G-20 have commonly felt the need to curb Banks’ pay-packages. The matter of pay-packages is in fact due for some curbs and ceilings in all areas of organised business. I think there should be ceiling on the times(multiple) of the lowest salary a company can pay the top salary earner in the company. A further ceiling should be placed in terms of the same executive not drawing salaries/perks from more than one company as an whole time executive or even as a part time executive in one company and whole time in another. This in fact involves share holders interests and also disallows the management to skimming the company beforehand, if there are danger clouds on the horizon.
The gold bottomed out at $250/oz some nine years ago. It is now knocking at the ceiling of $1000 which may eventually turn floor for it. The golden staircase, however, has one point of discomfort ie its last two steps in ladder have been very high (the last one even higher than the earlier). To understnd it better please note that gold prices took took more than six years to decisively cross $500/OZ in 2006 and took about two years more to cross $700/OZ decisively and it is trying to scale past $1000/Oz decisively in a matter of just one year. Now should you be with gold or without gold, I think it is time to shun it and prefer equity investment , at least in case of India.
HariOm,
krsnaKhandelwal
Friends,
The World Bank has offered loan of $ 4.3 bn to cover support to Indian banks and other infrastructure fields. There would possibly be another loan tranch of $ one bn by June 2010. This reassures us atleast tow things that the World Bank’s funding taps are open and that India merits to have large doses out of it. By the way this happens to be the largest block release to India. I may add here that this is not so much out of love for India as it is to fulfil the need for keeping surpluses safely somewhere. Any way, we should be pleased to get such loans which have lesser degree of strings attached and are at moderate interest rates.
Air India is cutting down payments to its executives.
ONGC has capex plan of over Rs 50 k crs.
Pranab has spoken sensibly again. He told Reserve Bank on Wednesday that its not right to tighten the monetary policy just now. He observed that the fiscal and monetary policies have started to show recovery. He further said that the food grain production will fall by 15 M/T but the problem of food scarcity will be manageable.
Infosys is set to roll back freez and hike pay. This gives an idea that IT sector is now out of woods.
The credit offtake has dropped to 13.24pc as on Sept 11, from 14.1pc as on Aug 28,2009. This tells us that there is not going to be big supply of goods in the coming festival season and secondly the owned funds are enough to take care of working capital. The delayed expansion projects also may have been responcible for lesser need of funds for the India Inc. The retail credit has grown by 25pc and deposit growth is flat at about 20pc. This is OK for the stock market.
As was the expectation (my personal), the Nifty went down to 4970 (-50 pts) in yesterday’s trading. This is not a great fall and if there a few down days in small way, the fear of big fall will have been eliminated and future would be more secure for the investors. It is interesting to note that the DJIA has seen 312 declines of more than 5pc since 1900, that about 3 in a year on average. If DOW has had such a frequency of declines of big order, we should not be panicking if any such blip occurs here.
The week has not seen any big movement in commodity prices on either side, however, the steel prices give reason to go long in steel stocks ( primary producers).
Foreign capital flows towards India remain strong for both ie portfolio investment and direct investment. FIIs have pumped in close to Rs 50 K crs worth in to the markets since biginning of the calender year. This is not small by any standards.
As many as five of the Nifty stocks recorded 52W high, three of these made it to 2yr high. Do’nt you agree that crossing the all time peak is only a matter of time, in case of Nifty.
HariOm,
krsnaKhandelwal
Friends,
World leaders will meet in Pittsburgh, President Obama will be playing host to the Group of 20. There may be apperant bonhomie but there are very many issues that have implication of grave nature for one or the other of the participents. There will be China wary of US stance as the later is raising tariffs on imports. US has worries about the continuing clout of China as an exporting nation. It is believed that the depression of 1930 had deepened due to trade restrictions which were resorted as remedy by the world’s nations.
Then there is concern over the monetary matters. The UK and France have an idea that the banks should be taxed on the basis of the volume of transactions ( I think that this would not be a bad idea).
The Advance Tax payments by India Inc have been up by 15pc in Q2. Bharti Airtel has an increased outgo by 220pc. This is enough of a reason to buy ‘bhartartl’. It has not yet participated in rally and has to cover ground sooner or later, pre or post deal or whenthe deal flops.
Nifty closed at no less than 5020. I think you remember my mentioning that the Nifty will carry on upmove after there is 52W high level achieved by at least five of the Nifty stocks in a single day. This feat has been accomplished by nine on Tuesday, the 22nd Sept 09. Namely they are ‘hdfc’,'infosystch’,'maruti’,'pnb’,'ranbaxy’,’sbin’,'tcs’,'tatamotors’ and ‘wipro’. Can any body resist the scaling of new high for Nifty by the end of this financial year. If nine can do this in a day, the rest would attempt to do it one after the other and the result naturally would be as I just told you. Will it be right or wrong, is the question that comes to mine. I amy assure you that it would be just in line of the development that have taken place since Jan 08. The ywo years time span expects the growth of monetary assets by at least 20pc and this will still not be the case when Nifty crosses 6200 mark. So worry less and concentrate more on your investing excercise. What I was telling by way of caution to only be raedy to enrich and be more safe when there is any sudden occassional drop. Afterall the Nifty has been going up continuously for weeks togather.
HariOm,
krsnaKhandelwal
Friends,
The deficit in rain fall is going make some people eat less as the ‘tur daal’ is up by 78pc and sugar is up by 45pc. Rice and Wheat also are costlier by 5pc and 7pc. This is causing inflation but of domestic variety.
The further dose of inflation would come due to. Higher metal prices which are up 35pc for Aluminium, 67pc for Copper, 81pc for Lead and 85pc for Nickel. The steel is trying to catch up and not before long will show similar price rise.
India’s stock markets would keep doing well till the inflation does not result in higher interest in equal proportion. The govt borrowing requirement of Rs 450000 crs is huge but the savings rate in system would easily absorb it. The earilier kind of dread on this account will be wrong as then the pressure of demand for funds was from all sides and supply from foreign sources was either restricted or was not liking to come to India. The scenario is quite changed. As for the control of global financial environment at macro level, the govt of India is too ill-equipped. The movement in foreign currency rates in future may or may not be helpful for India. When re-balancing of. World’s leading currencies will take place ( after the tinkering with the money supply by everyone), it will be sudden and without allowing time for taking a defencive stance by us. So, our policy planner should remain on the side of allowing growth and have lesser fears on other counts.
I may give you tip as to when be making investment with positivity in markets next time. This occassion will be there when you see at least five of the fifty stock make post 52 W highs on a single day. Many have posted 52 W highs in recent past but have slid back to make room for others.
HariOm,
krsnaKhandelwal
