krsna Khandelwal – A Stock Market Vedic Theory proponent
The government and not Reserve Bank of
India will now own State Bank of
India. The holdings of RBI are going to be transferred to the govt. at current prices and the proceeds would flow back to govt. as dividend in August 2007 neutralising the burden of financing the deal. With passage of the amendment to RBI Act, the PSU Banks will be equally owned by the govt. to the extent of 51%. RBI has 59.73 % stake, limit of 51% will make room for the fresh issue of capital by SBI, and it may eventually merge all the subsidiary banks under SBI family.
The possibilities for the SBI scrip on bourses are immense. SBI’s insurance arm has already achieved break even and it is the first amongst new players to have done so. With listing of the insurance arm as per IRDA guidelines few years down the line, a lot of value would get unlocked for SBI. Further SBI has very many properties at strategic point in many cities all over
India. The boom in real estate, lesser requirement of space due to computerized operations and rebuilding of multi-storey structures will be generating a stream of income for SBI. With capital adequacy requirements fulfilled by the global standards, SBI would be able to operate at world scale by joining the consortiums for financing the mega-sized projects/deals around the world. The increase in
India centric international trade and capital flows will be growing by the day for the SBI to take care of as the biggest bank in
India.
Besides all above SBI has tremendous scope in marketing and selling of financial and insurance products and services all over the country. This is a unique strength and may not be matched by any one here or abroad. Therefore, in simple terms I would not be surprised to see the SBI scrip doubling in value in next two/three year’s time. It will also be a safer investment to hold compared to other lines of businesses, which are now more vulnerable.
Hari Om
krsnaKhandelwal
Thursday, August 24, 2006
Market Matrix – Steel Scenario of India and China – 24 Aug 2006
By krsna Khandelwal – A Stock Market Vedic Theory proponent
China is supposed to clock a production figure of 400 million tonnes of steel this year. China is a net importer of iron ore and still chose to establish so much capacity domestically is something not understandable even if it required so much steel for its own consumption. Its consumption is driven by some ultra mega projects and urbanization at super fast pace and the Olympics related demand. On all three counts the level of consumption seems not maintainable, the urbanization at breakneck speed may actually break its neck .The fast urbanization brings with it social problems and problems of forced settlement of population not actually desirable due to the natural economic currents in long run .Haven’t we seen the planned cities still not competing with the naturally grown cities around the world. The hinterland provides the sustaining strength to the cities and too much of planned shifts of population are therefore recipes for disaster. I have discussed this not because I am to discuss the steel scenario with respect to China, actually I intend to appreciate the future steel scenario in India.
In India we have a growth rate of about 8% per year , our GDP would be doubling every 8th or 9th year at this rate and the demand of steel like wise would be going up by three times every 8th or 9th year . By this simple equation, we would require 100 million tones of steel by 2015 and 300 million steel by 2025.This would be very much close to what China is consuming in per capita terms, which is about 220 kg. The world average is about 180 kg consumption per capita. The developed nations have an average consumption of 300kg of steel per capita. Against this backdrop, I think the level of consumption in India should not go beyond the figure of 200 kg per capita in near future because of the topography and the living patterns and aspirations of the Indians. In this light, I think any attempt to produce more than 200 million tones of steel by 2025 would be wrong and this target seems quite possible to be achieved in view of the committed capacity creation plans from the producers of steel in India and rest of the world.
What is in store for the investors in steel scrips at present may be assessed like this. The price of steel in open market at present is enough to sustain the profitability of the steel companies but any dent in price would make the profits fall substantially. Whether the prices may be dented is to be seen in light of China turning in to an exporter of steel. Here I think if it does not export steel at below the cost of production; it may not actually export steel to India. Our government has to be careful from the beginning itself and it should see to it that the dumping is not be done by any body as this would upset the expansion plans of companies and would delay the coming up of green field projects. We have on our shores the lowest cost producers of steel and we should actually strive to become suppliers of value added steel to the world at large. I would invite every investor to increase his exposure in steel sector. Here lies the scope of making large gains as any surge in steel prices would make the profits jump (rather high jump). The surge in steel prices is well nigh possible if the imported steel is not bringing pressure and because the green field project have been delayed due to the land procurement problems and due to delays in mining lease agreements etc. The consumption of steel is about to take a high jump as the economy has been growing at a speed never seen in land where the growth used to be just 3% year after year in times of Mrs. Indira Gandhi. This sustained growth is going to make steel prices jump or else the rate of growth would itself come down. Since the possibility of later happing is remote, the steel firms are on good wicket. So make hay while SAIL is ruling around 75/- and TATASTEEL is ruling around 500/-. These two should be out-performing Nifty, which rules at 3330.
HariOm,
krsnaKhandelwal
Thursday, August 17, 2006
Market Matrix – Cola controversy and public health – 17 Aug 2006
By krsna Khandelwal
Last year this controversy had raised head when an NGO found traces of pesticides in cola bottles of Coca Cola and Pepsi .I was surprised to see the response from the companies quite subdued and not an all out protest ,therefore there may have been some reason and some substance in the contention of NGO. At that time round some how the issue died down and it was business as usual for the cola companies. I was surprised as to why the govt. did not put in place a whole mechanism of periodically checking the quality of water used. In addition, what actually are the European standards and what standard we would like to be in vogue locally, should have been discussed and brought in to proper enactment. This did not happen and leaves room for the belief that the diluted governance was bought by the cola companies. The question that immediately comes to mind is why the international giants would be found wanting on the water quality front. The answer is not far to seek. Actually to keep the water quality standard some costly water treatment plants have to be put in place (at all the bottling plant sites) calling for big monetary outlays. Though the market in India is large for these drinks, it is also a fact that it is price sensitive. This made the companies to dilute the standard and to carry on to bottle and market the water based drink extensively.
The nation today is again at the cross road of this pesticide controversy and the NGO has again caught the companies on wrong foot. The response from companies again is not very loud as if the whole thing they want is the dying down of the noise. Our govt. is again not being forthright. Big money would again play with the health of the nation just because the market though large cannot be sold costlier cola, tasting the same. It is every citizen’s duty to rise up to the occasion and not let the matter be settled by the parties between themselves without educating the public about the whole affair and fixing the level of permissible pesticide residue. It is not just the pesticide, the water used has to be completely healthy and clean on all parameters. The attempt of the cola companies to scare the govt. and people that the FDI would be affected just because the quality concerns, which have a bearing on public health, have been talked about. Strange are ways of these giants and the people in high places who would do any thing to placate the raging controversy, which in my opinion is actually pointer towards a health hazard.
HariOm,
krsnaKhandelwal
Tuesday, August 15, 2006
Market Matrix – Jai Hind, Jai Hind, Jai Hind – 15 Aug 2006
By krsna Khandelwal – A Stock Market Vedic Theory proponent
Three scores and a year less our beloved Nehru gave a speech hailing the tryst with destiny of India, the appointed hour had come to be rejoiced and celebrated, the joyous moments were overwhelming for every body present at the site where the elders were pouring out their emotions laden with the responsibility ahead, with the grief of having to part with the bodies own fragment, with heartaches and with headaches. Some how our spirit never died but excelled in the heat of moment. The roadmap for the progress waiting to be made to bring not only the freedom in terms of political set up but also in terms of equality ,in terms of opportunity and in terms of responsibility , was not ready. Our people, our leaders of the ilk of Gandhi and Nehru did deliver much to these ends but did we prove to be worthy of that which was so painstakingly passed on to us ,the generation just born then and about to be born, now forming the generation of responsibility who are also the enjoyer of fruits of freedom.
If we really look in to our hearts, we can clearly see that we are not so deserving of the given freedom. Do we do things that behove of the independent race, society? We have started to take bribery as normal, spoilage of public property as no great sin and waste of time in offices as necessary evil. We should be relaxing as much as we want and do things comfortably but wasting the paid hours when we are not under watch or when there is no master present to take notice of it, is really that should be despised by us. Do we despise it? Cumulative thievery of this kind has put our nation on far lower rung then it deserves. The monetary well being that we see today is the result of the stoppage of plundering by foreign masters and due to efficient use of energy in equipment on account of technological advancement for which western nations are more responsible then our own effort. Our character requires general improvement; we do not have to go to bed only half fed any more. There are no justifications for short cuts as our survival at individual level is no more under pressure or under threat. Only a conscious thought given to what is proper and just will bring about change in our collective character and the individual effort will bring about the change, which will have a collective reflection. IT IS THE INDIVIDUAL VOTE, CARELESSLY CAST, THAT LETS THE WRONG SORT OF PEOPLE GET ELECTED.
I am thankful to those amongst our ancestors who through sheer strength of character gave us our freedom, I will be more thankful to those who will not let it be diluted. We hold our head high amongst the comity of nations for our economic advancement while this very yardstick has made us lesser when it is put against China’s achievement in economic field. The foresight of our founding fathers gave us a platform for judicious governance and prevalence of rule of law and only on this yardstick we are able to say today that what we have achieved will stay with us and grow while China has achieved may not remain so enjoyable. We have to maintain this advantage by proving to be less greedy and proving to be more inclined to give to our nation than to demand from it. We have to shed the petty selfish attitude and not make the needier to strive harder for making ends meet. We should make the ordinary policing redundant and concentrate on the need to ward off the menace of terrorism through the all out effort aimed at finishing it once for all. I call upon those sons of India who consider themselves lesser sons of India to overcome this misgiving as nobody is empowered to declare this and no body empowered to practice it, such people should come forward with confidence and be part of mainstream.
The India in the sixteenth century was the most endowed nation; the India in twenty-first century should regain that position. Let us work toward achieving this goal. Jai Jai Jai Hind.
Hari Om
krsnaKhandelwal
Monday, August 14, 2006
Market Matrix – Money supply and the effect on share market – 14 Aug 2006
By krsna Khandelwal
The money supply is at 12-year high growth rate of around 20% at present. This rate is quite high looking back in to history .Above 20% supply of money has been there in 1976 (23.6%), in 1994 (22.4%) and in 1978 (21.9%). Let us see what had happened after money supply touched high rate of growth in past. Here I am relying more on my memory as the concrete data is not in hand. After 1976, there was a change in leadership at centre. Mrs. Gandhi had called off the emergency and the fresh elections had thrown up the opposition in to forming the coalition govt. headed by Mr. Morarji Desai. The money supply in Mrs. Gandhi’s time had jumped up without a proper plan in place to control it as per the need of economy. In emergency years, the economic equilibrium had been completely broken and cosmetic treatment only was being given. It was a dark period. This period followed by a period of suddenly imposed discipline in govts’ economic measures and the inflation was particularly made to stay low. Mr. Morarji Desai’s strict discipline did no good to economy either and it gave way to yet another change of guard at the centre and the country saw a high monetary expansion for the second time without any thing calling for it. This govt. also was an interim govt. and fresh elections were called. These elections once again gave power back to Mrs. Gandhi and the chastised Mrs. Gandhi now gave the nation a better govt. for some years but she was made victim of hatred, germinated in some way by her self and fell prey to bullets fired by her own guard.
The economy however was now a bit more resilient as the decontrol was being brought about gradually under pressure of World Bank, which was ready to lend larger sums but only if the policies were more in line of free economy. Mr. Rajeev Gandhi stepped in shoes of Mrs. Gandhi and being not influenced by the political concerns of the day and having won the elections on the strength of his own lineage rather than on the strength of the political maneuverability of the party, he could usher in some far-reaching reforms in the economy. In the later years, he was entrapped by coterie around him and was out of power rather early and again a period of temporary govts descended on India. What we do observe is that the money supply goes out of hands when the governments are weak, as they have to make do with little taxation effort and rely on borrowings and deficit financing more. This situation when corrected by the serious govt. bring about a sudden pressure on markets, commodity markets as well as financial markets, this was the case post 1976 and post 1978. These markets however show improved rates while the spectre of money supply looms large. So now, we know that the money supply is a singular cause of rerating in equities and rather out of ordinary strong price behavior in other markets like property and commodity markets. The services sector in immune to this to some extent as the services cannot be stored.
Let us see what the case was in 1994 and after. We know that the equity market had been very bullish in 1994 after sliding for two years post Harshad era. This bullish ness was largely because of the expended money supply, as the companies were not actually performing too well. This very situation had seen the boom in property markets which has had to wait for almost a decade show the fireworks of the same kind. When Vajpayee came to power the country saw some basic development of far reaching effect. Post 1994 we also saw the same kind of pressure on different markets as was seen on earlier two occasions as the money supply was keeping pace with the requirement of economy and the businesses were being organised on sounder footings. Since money was finding way in to productive assets the financial and equity markets as well as property markets were not drawing greater share of the money supply and were cool on the price front. Then came the supply of money from overseas in late eighties and found way in to the stock markets we saw another period of booming share markets which was made to perch on very slippery ground by the activities of new avatar manipulator Ketan Parikh.This gave jolt to the smoothness of the market which was otherwise going to behave rationally in absence of extraordinary money supply. With a time lag, the basic strength that was being acquired by the industry and the economy at large gave birth to the most resilient stock exchange up moves, which were due, mostly, to the robust performance of economy. After Vajpayee, under leader ship of Man Mohan Singh no foolish measures have come to be adopted in spite of pressure from left. This has seen that there is no runway inflation and the markets that have moved up are not under tremendous pressure to move down or behave erratically. However, lately the things seem to be going out of control and there is suddenly this expansion in money supply which seems to largely responsible for the recent surges in indices in the market place. This phenomenon is best judged by the PE ratio presently in respect of SENSEX uneasily placed at 19 multiple against around 15 of a year before. The two factors namely the high money supply and high PE rationally give reason to believe that the correction is impending. The ill effect of money supply is not being felt so much due to the growth rate of economy also being at a high point. May be God has been kind and willy nilly the money supply is keeping the entrepreneurial class happy along with the public who have been less affected due to plentiful supply of goods and services. The pinch is being felt in the area of food grain prices and the prices of vegetables and fruits, which in any case form lesser part of the monthly budget of household.
I, on account of the observations made in forgoing paras, feel it prudent to advise my brethren to be cautious in keeping the money invested in stock markets. The Nifty has closed up by 38 pts at 3311 and is within striking distance of the all time high figure, only to trap than reward.
Hari Om
krsnaKhandelwal
Thursday, August 10, 2006
Market Matrix – Market Confusion Compounded – 10 Aug 2006
By krsna Khandelwal – A Stock Market Vedic Theory proponent
The US FED has not increased the rates of interest and has broken a long series of 25 basis point raise implemented for various previous occasions. What is interesting is that the scenario has been made very confusing. It is not clear as to what weighs more heavily – to take the rates higher or to take them lower – i.e. the concerns of inflation, the demand for capital in economy, to give boost to economic activity or to cool it down, to reward the saver or to punish the borrower, to help the govt. raise more at ease or to let it not borrow much and the list is end less. To my mind, it is some hidden agenda of the government and its masters that moves the rates for many a times. It has been seen that the reverse of what was proclaimed to be achieved, has happened and when such a thing is noticed nothing is done to rectify the situation, rather the reverse happening is allowed to be accentuated. The reaction of markets is also mostly not in line with the expectation. These are times of intrigue, these are times very skewed and what is more, the phenomenon is universal. We have to live dangerously but there are measures, which can take care of the impending dangers largely. A trained eye may see the underlying purposes and connections and at the same time the strained eye can hardly see any thing in right perspective, therefore, the need of the hour is to keep refreshing your self every passing day and not commit too heavily on any thing. We have seen the markets behaving strangely and we will keep seeing them behave strangely.
One may wonder as to what has been keeping the living standard high if the irrationality is so prevalent. The answer is very simple. The use of energy and the inventions in the electronic and other scientific fields are keeping the standards high otherwise the cost of defective governance and the cost of defective monetary system would have taken such a heavy toll on the living standards that everybody would have starved of most of the things required for living sake. I have a hunch that such a time would come, do what ever to check it. There are some deeper concerns that cannot be discussed on this platform but I have given an idea to keep various things in mind.
Our local markets are in a near perfect balance and any move without a discernible change in the economic environment would be uncalled for and would not hold fast for long. The nifty is ruling at 3227 at 1415 hrs on 10th Aug 06.
Hari Om
BIRDINFO Stock Rx – A Vedic Prescription for stock market
Wednesday, August 09, 2006
Market Matrix – The power of thought (Vichaar Shakti) – 8 Aug 2006
By krsna Khandelwal – A Stock Market Vedic Theory proponent
Have you ever thought that it is just a single thought which is capable of transforming the world, to let you achieve some thing very useful/important, to make you exorbitantly rich, to make you outstanding leader etc. It was the case with Gandhi, it was the case with Einstein, it was the case with Buddha and it was the case with Jamshedji Tata. The power of thinking is immense and it manifests only with action taken with two principles duly observed/adhered. These two principles are taking an action in an adequate measure and taking only the proper action. Without the action, thought is without any use and value and the action without thought is equally an exercise in futility. If the action is not proper the thought is not manifested or when the action is proper but not adequate, thought is again not going to achieve much in result. My philosophical sermonisation is to tell you that as an investor you may profit immensely if you thoughtfully make the investment plan and take a proper and adequate action in line with the plan, you may practically achieve very rewarding returns on your investment.
Please be very focused in selecting businesses and the companies in those businesses. You must try to know the nuances of these businesses and keep collecting company and business related information from journals and business newspapers, you need not be in a rush and you must keep digesting the information collected. Please be sure that over time an idea would strike you about making an investment in a certain company for sure shot returns. This is the time to value your idea and than prepare an investment plan and fix the profit-booking target by allocating a suitable amount to be invested. Next is to implement what you have decided without hiccup or change (the change if necessary would strike you in the same fashion as the original idea when you would take an appropriate action as was the case with the idea itself in the beginning). With some patience and with passage of enough nursing time I am sure you would have reaped a rich harvest.
The above gives you complete control on your investing practices and not be at the mercy of the self proclaimed investment advisors who are unavailable at just the right time, and who give the advice with a host of caveats which make a mockery of the advice giving exercise. Please understand that second hand investing has never borne satisfying investing experience for any body. You would now be surprised whether the Vedic Panch Tattva theory, so forcefully advocated by us, would fit in the whole scheme of things. You need not be surprised for that. What you have to do is simply to ask for what vedic points the company of your choice commands at the time you are ready for taking action , to just be sure please see that the point level is in BUY zone ( otherwise you may wait for some time for the price to adjust suitably). This exercise would make your timing right too.
Hari Om
BIRDINFO Stock Rx – A Vedic Prescription for stock market
Saturday, August 05, 2006
Market Matrix – Global interest rates scene and government’s hold on Banks – 5 Aug 2006
By krsna Khandelwal – A Stock Market Vedic Theory proponent
The European Central Bank has also now taken notice and has raised the interest rates. We have to see in historical perspective the changes in rates and the capital movements. You may recall that in early nineties the USA had gone to war on Kuwait issue and since then has been keeping the war cry on for over fifteen years particularly in reference to middle eastern powers.This, actually, in the initial years, had instilled the fear in oil rich countries and the rich oil barons there that in case of escalation in war like atmosphere the first casualty would be their deposits with the USA’s financial system and the properties owned in USA might also be under threat. This led them to draw out the invested capital from USA.The USA on its part did not mind it as the capital was in abundance in shape of the savings for future requirements by and for the public in USA and mostly parked with the money/asset management firms and the pension funds . These funds had started looking to emerging markets finding no room for investments in
USA itself on reasonable expected return basis. The flight of foreign money was taken advantage of by
USA by letting the inflationary pressures in
USA mount and thereby diluting the value of dollars. This in practical terms meant that the real value taken out by the investor from abroad was much less, than what he had sacrificed or say put in when investing in to USA.Finding no good option the fearful investors settled to draw whatever they could get back in real terms. Of late, they started to convert the saving in to bullion and resultant boom in bullion prices has, therefore, been noticeable. Seeing the monetary outflows from its shores the
USA became starved of the capital and its own capital was finding it lucrative to remain invested in emerging markets. In the mean time, the situation had turned up side down and
USA required having investments made in its own country for job creation etc… This mismatch needed to be adjusted .This adjustment was tried to be secured by Greenspan by increasing the interest rates bit by bit in a series. I am not fully competent to tell you whether Greenspan achieved the desired objective; there has however been a reaction all over. For some time while the money was still available to the emerging markets the interest rates there remained not much affected but gradually the dear money policy was adopted by most. The capital sufficient
Europe has fallen in line too lately. The Bank of Japan is also in a mood to change the nil interest rate regimes in to positive rate of interest after a long long gap. We now know one thing for sure that it is
USA that would be leading and causing the monetary flows and the trends in interest rates.
What it would portend for the lesser economies is something that has to be understood in not so simple manner. There might be some unexpected moves, there would be some expected moves, and the resultant impact cannot be easily fathomed. We in India should not have to worry too much on account of the fact that in spite of much integration with the world we have still not gone past the crucial point to have an immediate and pronounced impact of the shifting trends in world at large. We are also becoming an ocean like economy gradually where in falling rivers of money and the evaporation would have only a limited impact however the floating ships in our ocean would, no doubt, get wet when it rains and get dry when it stops.
There has been some unwarranted communication from the government to PSU banks that the interest rates should not be raised for the lending purposes and should not be raised too much on deposits. This takes away much needed option from the banks and the private and public division of banks would see one advantaged at the cost of the other, not a very likeable scene. Here the Neta-Babu combine has played the trick again, may be with some hidden agenda. The oil sector is witness to the foul play in pricing and subsidy game. These are the things for which the FIIs would have to reconsider the investment options. The Congress coupled with left is very not in sync with the moot requirement of the today’s policy initiatives .Being not fully in control/power they have not been able to look beyond their perceived safe haven. If anything, politics would bring down the markets and not the dear money environment solely. Our FM may cry hoarse that money is abundant; the money pools are fast drying up. The welcome effect would be that consumption orientation of masses would at least revert to savings, even if only to get more returns. Slightly better domestic saving rate would be responsible for saving the day for us; otherwise, we know that the foreigners own most of our profitable companies in greater proportion than the Indian Public. This is really a pain in neck for the nationalist and has to be applied balm to. Let us pray for the good of nation in spite of these (Neta-Babu) people and sing ‘sab ko sanmati de bhagwan’.If the game would be tried to be played on unnatural wicket , the problems would surmount as was the case when we had Governments’ finger every pie and the shortage of every thing. Have you noticed the discomfiture of the power centers of the day in regard to the right to information act which is being sought to be made absolutely useless and Baba Amte has had to declare going on to fast unto death on this issue.
Hari Om
krsnaKhandelwal
Wednesday, August 02, 2006
Market Matrix – The Laxman Rekha for Nifty is now identifiable – 2 Aug 2006
By krsna Khandelwal – A Stock Market Vedic Theory proponent
The India Inc has been able to show robust performance for the umpteenth quarter now and still nothing is visible to give reason for the performance in the next three quarters getting affected adversely except due to the interest rates having firmed up and to some extent when the oil prices suddenly go up (this does not seem very likely for there would be enough time to get the warning signals). The alternatives and strategy in a scenario like this will stop the rot, we and the rest of the world would not be caught unawares if the oil advances any furhter, the bio fuel option is now ready to take care of the fuel needs as the economic cost of the same is now at par with oil and its availability will be ample in the large consuming nations including India. The solar power and the wind power alternatives are also becoming cost effective every passing day due to mass production of equipment etc and due to the removal of the application bottleneck. Thus, we are left with the concern of the interest rates to take care of. In this regard also, the havens are not going to fall as the disposable/investible surplus in India itself is enough to take care of the requirement of capital and need not look outside for the same. The times have changed during the last decade, as the economy has grown in size almost double over the period. We have seen the issues of GMR and Tech Mahindra getting full subscription in the first day itself of the opening.
We may now look forward to the times when the Nifty would at least attempt to cross the previous peak in the course of the year. Should it cross that peak is the moot point. I have a word of caution here and that is that if the indices come near the past high level the investor should wash their hands off the investment in hand for once and wait for a while, as the PE ratio would not be still be right to keep holding the investments. The further improvement will come after elapse of some more time as the ones who entered at the earlier high level and suffered would want to get out and regain their capital and secondly the breather would give time for the companies to show some further improvement in their respective performance. You are now have to work out your own strategies for the rest of the year in light of above.Sectorial and company specific study would give you the best of the possible returns should you be able to identify them rightly.
So positive frame of mind should now be maintained for the emotional weakness plays havoc with the investors’ interests. The two demons of greed and fear are the worst enemies of the investing masses. Please come forward for seeking specific advice.
Hari Om
krsnaKhandelwal
The government and not Reserve Bank of
India will now own State Bank of
India. The holdings of RBI are going to be transferred to the govt. at current prices and the proceeds would flow back to govt. as dividend in August 2007 neutralising the burden of financing the deal. With passage of the amendment to RBI Act, the PSU Banks will be equally owned by the govt. to the extent of 51%. RBI has 59.73 % stake, limit of 51% will make room for the fresh issue of capital by SBI, and it may eventually merge all the subsidiary banks under SBI family.
The possibilities for the SBI scrip on bourses are immense. SBI’s insurance arm has already achieved break even and it is the first amongst new players to have done so. With listing of the insurance arm as per IRDA guidelines few years down the line, a lot of value would get unlocked for SBI. Further SBI has very many properties at strategic point in many cities all over
India. The boom in real estate, lesser requirement of space due to computerized operations and rebuilding of multi-storey structures will be generating a stream of income for SBI. With capital adequacy requirements fulfilled by the global standards, SBI would be able to operate at world scale by joining the consortiums for financing the mega-sized projects/deals around the world. The increase in
India centric international trade and capital flows will be growing by the day for the SBI to take care of as the biggest bank in
India.
Besides all above SBI has tremendous scope in marketing and selling of financial and insurance products and services all over the country. This is a unique strength and may not be matched by any one here or abroad. Therefore, in simple terms I would not be surprised to see the SBI scrip doubling in value in next two/three year’s time. It will also be a safer investment to hold compared to other lines of businesses, which are now more vulnerable.
Hari Om
krsnaKhandelwal
Thursday, August 24, 2006
Market Matrix – Steel Scenario of India and China – 24 Aug 2006
By krsna Khandelwal – A Stock Market Vedic Theory proponent
China is supposed to clock a production figure of 400 million tonnes of steel this year. China is a net importer of iron ore and still chose to establish so much capacity domestically is something not understandable even if it required so much steel for its own consumption. Its consumption is driven by some ultra mega projects and urbanization at super fast pace and the Olympics related demand. On all three counts the level of consumption seems not maintainable, the urbanization at breakneck speed may actually break its neck .The fast urbanization brings with it social problems and problems of forced settlement of population not actually desirable due to the natural economic currents in long run .Haven’t we seen the planned cities still not competing with the naturally grown cities around the world. The hinterland provides the sustaining strength to the cities and too much of planned shifts of population are therefore recipes for disaster. I have discussed this not because I am to discuss the steel scenario with respect to China, actually I intend to appreciate the future steel scenario in India.
In India we have a growth rate of about 8% per year , our GDP would be doubling every 8th or 9th year at this rate and the demand of steel like wise would be going up by three times every 8th or 9th year . By this simple equation, we would require 100 million tones of steel by 2015 and 300 million steel by 2025.This would be very much close to what China is consuming in per capita terms, which is about 220 kg. The world average is about 180 kg consumption per capita. The developed nations have an average consumption of 300kg of steel per capita. Against this backdrop, I think the level of consumption in India should not go beyond the figure of 200 kg per capita in near future because of the topography and the living patterns and aspirations of the Indians. In this light, I think any attempt to produce more than 200 million tones of steel by 2025 would be wrong and this target seems quite possible to be achieved in view of the committed capacity creation plans from the producers of steel in India and rest of the world.
What is in store for the investors in steel scrips at present may be assessed like this. The price of steel in open market at present is enough to sustain the profitability of the steel companies but any dent in price would make the profits fall substantially. Whether the prices may be dented is to be seen in light of China turning in to an exporter of steel. Here I think if it does not export steel at below the cost of production; it may not actually export steel to India. Our government has to be careful from the beginning itself and it should see to it that the dumping is not be done by any body as this would upset the expansion plans of companies and would delay the coming up of green field projects. We have on our shores the lowest cost producers of steel and we should actually strive to become suppliers of value added steel to the world at large. I would invite every investor to increase his exposure in steel sector. Here lies the scope of making large gains as any surge in steel prices would make the profits jump (rather high jump). The surge in steel prices is well nigh possible if the imported steel is not bringing pressure and because the green field project have been delayed due to the land procurement problems and due to delays in mining lease agreements etc. The consumption of steel is about to take a high jump as the economy has been growing at a speed never seen in land where the growth used to be just 3% year after year in times of Mrs. Indira Gandhi. This sustained growth is going to make steel prices jump or else the rate of growth would itself come down. Since the possibility of later happing is remote, the steel firms are on good wicket. So make hay while SAIL is ruling around 75/- and TATASTEEL is ruling around 500/-. These two should be out-performing Nifty, which rules at 3330.
Hari Om
krsnaKhandelwal
Thursday, August 17, 2006
Market Matrix – Cola controversy and public health – 17 Aug 2006
By krsna Khandelwal – A Stock Market Vedic Theory proponent
Last year this controversy had raised head when an NGO found traces of pesticides in cola bottles of Coca Cola and Pepsi .I was surprised to see the response from the companies quite subdued and not an all out protest ,therefore there may have been some reason and some substance in the contention of NGO. At that time round some how the issue died down and it was business as usual for the cola companies. I was surprised as to why the govt. did not put in place a whole mechanism of periodically checking the quality of water used. In addition, what actually are the European standards and what standard we would like to be in vogue locally, should have been discussed and brought in to proper enactment. This did not happen and leaves room for the belief that the diluted governance was bought by the cola companies. The question that immediately comes to mind is why the international giants would be found wanting on the water quality front. The answer is not far to seek. Actually to keep the water quality standard some costly water treatment plants have to be put in place (at all the bottling plant sites) calling for big monetary outlays. Though the market in India is large for these drinks, it is also a fact that it is price sensitive. This made the companies to dilute the standard and to carry on to bottle and market the water based drink extensively.
The nation today is again at the cross road of this pesticide controversy and the NGO has again caught the companies on wrong foot. The response from companies again is not very loud as if the whole thing they want is the dying down of the noise. Our govt. is again not being forthright. Big money would again play with the health of the nation just because the market though large cannot be sold costlier cola, tasting the same. It is every citizen’s duty to rise up to the occasion and not let the matter be settled by the parties between themselves without educating the public about the whole affair and fixing the level of permissible pesticide residue. It is not just the pesticide, the water used has to be completely healthy and clean on all parameters. The attempt of the cola companies to scare the govt. and people that the FDI would be affected just because the quality concerns, which have a bearing on public health, have been talked about. Strange are ways of these giants and the people in high places who would do any thing to placate the raging controversy, which in my opinion is actually pointer towards a health hazard of larger proportions.
Hari Om
krsnaKhandelwal
Tuesday, August 15, 2006
Market Matrix – Jai Hind, Jai Hind, Jai Hind – 15 Aug 2006
By krsna Khandelwal
Three scores and a year less our beloved Nehru gave a speech hailing the tryst with destiny of India, the appointed hour had come to be rejoiced and celebrated, the joyous moments were overwhelming for every body present at the site where the elders were pouring out their emotions laden with the responsibility ahead, with the grief of having to part with the bodies own fragment, with heartaches and with headaches. Some how our spirit never died but excelled in the heat of moment. The roadmap for the progress waiting to be made to bring not only the freedom in terms of political set up but also in terms of equality ,in terms of opportunity and in terms of responsibility , was not ready. Our people, our leaders of the ilk of Gandhi and Nehru did deliver much to these ends but did we prove to be worthy of that which was so painstakingly passed on to us ,the generation just born then and about to be born, now forming the generation of responsibility who are also the enjoyer of fruits of freedom.
If we really look in to our hearts, we can clearly see that we are not so deserving of the given freedom. Do we do things that behove of the independent race, society? We have started to take bribery as normal, spoilage of public property as no great sin and waste of time in offices as necessary evil. We should be relaxing as much as we want and do things comfortably but wasting the paid hours when we are not under watch or when there is no master present to take notice of it, is really that should be despised by us. Do we despise it? Cumulative thievery of this kind has put our nation on far lower rung then it deserves. The monetary well being that we see today is the result of the stoppage of plundering by foreign masters and due to efficient use of energy in equipment on account of technological advancement for which western nations are more responsible then our own effort. Our character requires general improvement; we do not have to go to bed only half fed any more. There are no justifications for short cuts as our survival at individual level is no more under pressure or under threat. Only a conscious thought given to what is proper and just will bring about change in our collective character and the individual effort will bring about the change, which will have a collective reflection. IT IS THE INDIVIDUAL VOTE, CARELESSLY CAST, THAT LETS THE WRONG SORT OF PEOPLE GET ELECTED.
I am thankful to those amongst our ancestors who through sheer strength of character gave us our freedom, I will be more thankful to those who will not let it be diluted. We hold our head high amongst the comity of nations for our economic advancement while this very yardstick has made us lesser when it is put against China’s achievement in economic field. The foresight of our founding fathers gave us a platform for judicious governance and prevalence of rule of law and only on this yardstick we are able to say today that what we have achieved will stay with us and grow while China has achieved may not remain so enjoyable. We have to maintain this advantage by proving to be less greedy and proving to be more inclined to give to our nation than to demand from it. We have to shed the petty selfish attitude and not make the needier to strive harder for making ends meet. We should make the ordinary policing redundant and concentrate on the need to ward off the menace of terrorism through the all out effort aimed at finishing it once for all. I call upon those sons of India who consider themselves lesser sons of India to overcome this misgiving as nobody is empowered to declare this and no body empowered to practice it, such people should come forward with confidence and be part of mainstream.
The India in the sixteenth century was the most endowed nation; the India in twenty-first century should regain that position. Let us work toward achieving this goal. Jai Jai Jai Hind.
Hari Om
krsnaKhandelwal
Monday, August 14, 2006
Market Matrix – Money supply and the effect on share market – 14 Aug 2006
By krsna Khandelwal – A Stock Market Vedic Theory proponent
The money supply is at 12-year high growth rate of around 20% at present. This rate is quite high looking back in to history .Above 20% supply of money has been there in 1976 (23.6%), in 1994 (22.4%) and in 1978 (21.9%). Let us see what had happened after money supply touched high rate of growth in past. Here I am relying more on my memory as the concrete data is not in hand. After 1976, there was a change in leadership at centre. Mrs. Gandhi had called off the emergency and the fresh elections had thrown up the opposition in to forming the coalition govt. headed by Mr. Morarji Desai. The money supply in Mrs. Gandhi’s time had jumped up without a proper plan in place to control it as per the need of economy. In emergency years, the economic equilibrium had been completely broken and cosmetic treatment only was being given. It was a dark period. This period followed by a period of suddenly imposed discipline in govts’ economic measures and the inflation was particularly made to stay low. Mr. Morarji Desai’s strict discipline did no good to economy either and it gave way to yet another change of guard at the centre and the country saw a high monetary expansion for the second time without any thing calling for it. This govt. also was an interim govt. and fresh elections were called. These elections once again gave power back to Mrs. Gandhi and the chastised Mrs. Gandhi now gave the nation a better govt. for some years but she was made victim of hatred, germinated in some way by her self and fell prey to bullets fired by her own guard.
The economy however was now a bit more resilient as the decontrol was being brought about gradually under pressure of World Bank, which was ready to lend larger sums but only if the policies were more in line of free economy. Mr. Rajeev Gandhi stepped in shoes of Mrs. Gandhi and being not influenced by the political concerns of the day and having won the elections on the strength of his own lineage rather than on the strength of the political maneuverability of the party, he could usher in some far-reaching reforms in the economy. In the later years, he was entrapped by coterie around him and was out of power rather early and again a period of temporary govts descended on India. What we do observe is that the money supply goes out of hands when the governments are weak, as they have to make do with little taxation effort and rely on borrowings and deficit financing more. This situation when corrected by the serious govt. bring about a sudden pressure on markets, commodity markets as well as financial markets, this was the case post 1976 and post 1978. These markets however show improved rates while the spectre of money supply looms large. So now, we know that the money supply is a singular cause of rerating in equities and rather out of ordinary strong price behavior in other markets like property and commodity markets. The services sector in immune to this to some extent as the services cannot be stored.
Let us see what the case was in 1994 and after. We know that the equity market had been very bullish in 1994 after sliding for two years post Harshad era. This bullish ness was largely because of the expended money supply, as the companies were not actually performing too well. This very situation had seen the boom in property markets which has had to wait for almost a decade show the fireworks of the same kind. When Vajpayee came to power the country saw some basic development of far reaching effect. Post 1994 we also saw the same kind of pressure on different markets as was seen on earlier two occasions as the money supply was keeping pace with the requirement of economy and the businesses were being organised on sounder footings. Since money was finding way in to productive assets the financial and equity markets as well as property markets were not drawing greater share of the money supply and were cool on the price front. Then came the supply of money from overseas in late eighties and found way in to the stock markets we saw another period of booming share markets which was made to perch on very slippery ground by the activities of new avatar manipulator Ketan Parikh.This gave jolt to the smoothness of the market which was otherwise going to behave rationally in absence of extraordinary money supply. With a time lag, the basic strength that was being acquired by the industry and the economy at large gave birth to the most resilient stock exchange up moves, which were due, mostly, to the robust performance of economy. After Vajpayee, under leader ship of Man Mohan Singh no foolish measures have come to be adopted in spite of pressure from left. This has seen that there is no runway inflation and the markets that have moved up are not under tremendous pressure to move down or behave erratically. However, lately the things seem to be going out of control and there is suddenly this expansion in money supply which seems to largely responsible for the recent surges in indices in the market place. This phenomenon is best judged by the PE ratio presently in respect of SENSEX uneasily placed at 19 multiple against around 15 of a year before. The two factors namely the high money supply and high PE rationally give reason to believe that the correction is impending. The ill effect of money supply is not being felt so much due to the growth rate of economy also being at a high point. May be God has been kind and willy nilly the money supply is keeping the entrepreneurial class happy along with the public who have been less affected due to plentiful supply of goods and services. The pinch is being felt in the area of food grain prices and the prices of vegetables and fruits, which in any case form lesser part of the monthly budget of household.
I, on account of the observations made in forgoing paras, feel it prudent to advise my brethren to be cautious in keeping the money invested in stock markets. The Nifty has closed up by 38 pts at 3311 and is within striking distance of the all time high figure, only to trap than reward.
Hari Om
Thursday, August 10, 2006
Market Matrix – Market Confusion Compounded – 10 Aug 2006
By krsna Khandelwal – A Stock Market Vedic Theory proponent
The US FED has not increased the rates of interest and has broken a long series of 25 basis point raise implemented for various previous occasions. What is interesting is that the scenario has been made very confusing. It is not clear as to what weighs more heavily – to take the rates higher or to take them lower – i.e. the concerns of inflation, the demand for capital in economy, to give boost to economic activity or to cool it down, to reward the saver or to punish the borrower, to help the govt. raise more at ease or to let it not borrow much and the list is end less. To my mind, it is some hidden agenda of the government and its masters that moves the rates for many a times. It has been seen that the reverse of what was proclaimed to be achieved, has happened and when such a thing is noticed nothing is done to rectify the situation, rather the reverse happening is allowed to be accentuated. The reaction of markets is also mostly not in line with the expectation. These are times of intrigue, these are times very skewed and what is more, the phenomenon is universal. We have to live dangerously but there are measures, which can take care of the impending dangers largely. A trained eye may see the underlying purposes and connections and at the same time the strained eye can hardly see any thing in right perspective, therefore, the need of the hour is to keep refreshing your self every passing day and not commit too heavily on any thing. We have seen the markets behaving strangely and we will keep seeing them behave strangely.
One may wonder as to what has been keeping the living standard high if the irrationality is so prevalent. The answer is very simple. The use of energy and the inventions in the electronic and other scientific fields are keeping the standards high otherwise the cost of defective governance and the cost of defective monetary system would have taken such a heavy toll on the living standards that everybody would have starved of most of the things required for living sake. I have a hunch that such a time would come, do what ever to check it. There are some deeper concerns that cannot be discussed on this platform but I have given an idea to keep various things in mind.
Our local markets are in a near perfect balance and any move without a discernible change in the economic environment would be uncalled for and would not hold fast for long. The nifty is ruling at 3227 at 1415 hrs on 10th Aug 06.
Hari Om
BIRDINFO Stock Rx – A Vedic Prescription for stock market
Wednesday, August 09, 2006
Market Matrix – The power of thought (Vichaar Shakti) – 8 Aug 2006
By krsna Khandelwal – A Stock Market Vedic Theory proponent
Have you ever thought that it is just a single thought which is capable of transforming the world, to let you achieve some thing very useful/important, to make you exorbitantly rich, to make you outstanding leader etc. It was the case with Gandhi, it was the case with Einstein, it was the case with Buddha and it was the case with Jamshedji Tata. The power of thinking is immense and it manifests only with action taken with two principles duly observed/adhered. These two principles are taking an action in an adequate measure and taking only the proper action. Without the action, thought is without any use and value and the action without thought is equally an exercise in futility. If the action is not proper the thought is not manifested or when the action is proper but not adequate, thought is again not going to achieve much in result. My philosophical sermonisation is to tell you that as an investor you may profit immensely if you thoughtfully make the investment plan and take a proper and adequate action in line with the plan, you may practically achieve very rewarding returns on your investment.
Please be very focused in selecting businesses and the companies in those businesses. You must try to know the nuances of these businesses and keep collecting company and business related information from journals and business newspapers, you need not be in a rush and you must keep digesting the information collected. Please be sure that over time an idea would strike you about making an investment in a certain company for sure shot returns. This is the time to value your idea and than prepare an investment plan and fix the profit-booking target by allocating a suitable amount to be invested. Next is to implement what you have decided without hiccup or change (the change if necessary would strike you in the same fashion as the original idea when you would take an appropriate action as was the case with the idea itself in the beginning). With some patience and with passage of enough nursing time I am sure you would have reaped a rich harvest.
The above gives you complete control on your investing practices and not be at the mercy of the self proclaimed investment advisors who are unavailable at just the right time, and who give the advice with a host of caveats which make a mockery of the advice giving exercise. Please understand that second hand investing has never borne satisfying investing experience for any body. You would now be surprised whether the Vedic Panch Tattva theory, so forcefully advocated by us, would fit in the whole scheme of things. You need not be surprised for that. What you have to do is simply to ask for what vedic points the company of your choice commands at the time you are ready for taking action , to just be sure please see that the point level is in BUY zone ( otherwise you may wait for some time for the price to adjust suitably). This exercise would make your timing right too.
Hari Om
krsnaKhandelwal
Saturday, August 05, 2006
Market Matrix – Global interest rates scene and government’s hold on Banks – 5 Aug 2006
By krsna Khandelwal – A Stock Market Vedic Theory proponent
The European Central Bank has also now taken notice and has raised the interest rates. We have to see in historical perspective the changes in rates and the capital movements. You may recall that in early nineties the USA had gone to war on Kuwait issue and since then has been keeping the war cry on for over fifteen years particularly in reference to middle eastern powers.This, actually, in the initial years, had instilled the fear in oil rich countries and the rich oil barons there that in case of escalation in war like atmosphere the first casualty would be their deposits with the USA’s financial system and the properties owned in USA might also be under threat. This led them to draw out the invested capital from USA.The USA on its part did not mind it as the capital was in abundance in shape of the savings for future requirements by and for the public in USA and mostly parked with the money/asset management firms and the pension funds . These funds had started looking to emerging markets finding no room for investments in
USA itself on reasonable expected return basis. The flight of foreign money was taken advantage of by
USA by letting the inflationary pressures in
USA mount and thereby diluting the value of dollars. This in practical terms meant that the real value taken out by the investor from abroad was much less, than what he had sacrificed or say put in when investing in to USA.Finding no good option the fearful investors settled to draw whatever they could get back in real terms. Of late, they started to convert the saving in to bullion and resultant boom in bullion prices has, therefore, been noticeable. Seeing the monetary outflows from its shores the
USA became starved of the capital and its own capital was finding it lucrative to remain invested in emerging markets. In the mean time, the situation had turned up side down and
USA required having investments made in its own country for job creation etc… This mismatch needed to be adjusted .This adjustment was tried to be secured by Greenspan by increasing the interest rates bit by bit in a series. I am not fully competent to tell you whether Greenspan achieved the desired objective; there has however been a reaction all over. For some time while the money was still available to the emerging markets the interest rates there remained not much affected but gradually the dear money policy was adopted by most. The capital sufficient
Europe has fallen in line too lately. The Bank of Japan is also in a mood to change the nil interest rate regimes in to positive rate of interest after a long long gap. We now know one thing for sure that it is
USA that would be leading and causing the monetary flows and the trends in interest rates.
What it would portend for the lesser economies is something that has to be understood in not so simple manner. There might be some unexpected moves, there would be some expected moves, and the resultant impact cannot be easily fathomed. We in India should not have to worry too much on account of the fact that in spite of much integration with the world we have still not gone past the crucial point to have an immediate and pronounced impact of the shifting trends in world at large. We are also becoming an ocean like economy gradually where in falling rivers of money and the evaporation would have only a limited impact however the floating ships in our ocean would, no doubt, get wet when it rains and get dry when it stops.
There has been some unwarranted communication from the government to PSU banks that the interest rates should not be raised for the lending purposes and should not be raised too much on deposits. This takes away much needed option from the banks and the private and public division of banks would see one advantaged at the cost of the other, not a very likeable scene. Here the Neta-Babu combine has played the trick again, may be with some hidden agenda. The oil sector is witness to the foul play in pricing and subsidy game. These are the things for which the FIIs would have to reconsider the investment options. The Congress coupled with left is very not in sync with the moot requirement of the today’s policy initiatives .Being not fully in control/power they have not been able to look beyond their perceived safe haven. If anything, politics would bring down the markets and not the dear money environment solely. Our FM may cry hoarse that money is abundant; the money pools are fast drying up. The welcome effect would be that consumption orientation of masses would at least revert to savings, even if only to get more returns. Slightly better domestic saving rate would be responsible for saving the day for us; otherwise, we know that the foreigners own most of our profitable companies in greater proportion than the Indian Public. This is really a pain in neck for the nationalist and has to be applied balm to. Let us pray for the good of nation in spite of these (Neta-Babu) people and sing ‘sab ko sanmati de bhagwan’.If the game would be tried to be played on unnatural wicket , the problems would surmount as was the case when we had Governments’ finger every pie and the shortage of every thing. Have you noticed the discomfiture of the power centers of the day in regard to the right to information act which is being sought to be made absolutely useless and Baba Amte has had to declare going on to fast unto death on this issue.
Hari Om
Wednesday, August 02, 2006
Market Matrix – The Laxman Rekha for Nifty is now identifiable – 2 Aug 2006
By krsna Khandelwal – A Stock Market Vedic Theory proponent
The India Inc has been able to show robust performance for the umpteenth quarter now and still nothing is visible to give reason for the performance in the next three quarters getting affected adversely except due to the interest rates having firmed up and to some extent when the oil prices suddenly go up (this does not seem very likely for there would be enough time to get the warning signals). The alternatives and strategy in a scenario like this will stop the rot, we and the rest of the world would not be caught unawares if the oil advances any furhter, the bio fuel option is now ready to take care of the fuel needs as the economic cost of the same is now at par with oil and its availability will be ample in the large consuming nations including India. The solar power and the wind power alternatives are also becoming cost effective every passing day due to mass production of equipment etc and due to the removal of the application bottleneck. Thus, we are left with the concern of the interest rates to take care of. In this regard also, the havens are not going to fall as the disposable/investible surplus in India itself is enough to take care of the requirement of capital and need not look outside for the same. The times have changed during the last decade, as the economy has grown in size almost double over the period. We have seen the issues of GMR and Tech Mahindra getting full subscription in the first day itself of the opening.
We may now look forward to the times when the Nifty would at least attempt to cross the previous peak in the course of the year. Should it cross that peak is the moot point. I have a word of caution here and that is that if the indices come near the past high level the investor should wash their hands off the investment in hand for once and wait for a while, as the PE ratio would not be still be right to keep holding the investments. The further improvement will come after elapse of some more time as the ones who entered at the earlier high level and suffered would want to get out and regain their capital and secondly the breather would give time for the companies to show some further improvement in their respective performance. You are now have to work out your own strategies for the rest of the year in light of above.Sectorial and company specific study would give you the best of the possible returns should you be able to identify them rightly.
So positive frame of mind should now be maintained for the emotional weakness plays havoc with the investors’ interests. The two demons of greed and fear are the worst enemies of the investing masses. Please come forward for seeking specific advice.
Hari Om
krsnaKhandelwal
Panch Tattva Wisdom 