panch-tattva talk…the perspecitive


The earlier bear market in 2000-01 had taken 16 months to pave way for the next bull run which run for almost 5 years.It rose but peaked out after six times rise and settles at four time rise since the low point.

Taking nifty universe as the reference index , I may say that in 00-01 the IT scrips had made it lose a bigger part of decline. The IT has achieved the earlier level or has only slightly improved over the peak prices in 2000 while it has kept growing profits year after year and has retained large part of profits for business.

Other than IT scrips , LT had lost 65 pc , ICICI Bank had lost 55 pc Ambuja Cement and ACC had lost about 50 pc , TM had lost 57 pc, Glaxo and Indian Hotels also lost more than 50 pc in the aftermath then.

All those that lost heavily have had a course of improving profitability over the last six years and if they trade at about four to five times their low point at end of last bear phase , it’s OK. By this yard stick it may be said that the values below 3800 will only become far more solid than they ever have been.

The giants like ITC and HLL have added a lot of points to Nifty after the peak of 2007. All in all , the rest of the Nifty also represents well managed companies only which have taken strides in capacity creation, have improved accounting standards , have raised capital , have gone global through aquisitions abroad (eg Tata Steel, SAIL, HINDALCO,STERLITE,Pharma cos.,ONGC and Reliance Ind and the like which deserve to be valued far more than four times of low values on 2001).

Now there is Hero Honda’s ‘ Mahindra’s and Maruti’s cases which have become global leaders over the last seven years and deseve to be valued far more than four times since 2000 lows.

Further more there is inclusion of telecom companies in the Nifty and dropping of some laggards. Telecom is sunrise sector and is growing at fast speed and is returning dream returns on the capital employed and is immune to recession.

Also consider the inflation over the last seven years which makes replacement costs far more than the book values represent.

The positives do not end here , the nifty corporate universe has raised funds through public offers and right issues at market values .

The inclusion of construction giants gave it some jolt but these have already so moderated in value that no further damage is possible from them.

I forgot to tell you about HDFC group which has shown the best resilience and the public sector banks which have had so much of addition to book values and have become technology oriented , saving operating costs in the process that they have become immensely value rich.

The crux of the matter is that if and when the nifty drops with a thud any time in future you may grab represented equities of your choice with conviction but please broad base your portfolio albeit in Nifty scrips. This way you will be well prepared for the jolt that may come or not come but if any thing positive happens you will have had your first laugh lasting for a long long time.

What I have written requires to be understood with a receptive mind and while you are at piece. I am always there to offer detailed clerification about any point that you don’t fully understand but please at least tell me about it through the comment space or by eimailing. During last half decade

we have been one of the best performers and are not the worst performer. Our practices and regulation are world class and sets an example for emulation , the real thing is that we have to grow our size of market capitalisation and participation.

Authorities should also consider listing of global companies here and the trading hours extended upto five in the evening with a recess time for lunch. This way, we will be a preferred country of Stocks,Commodities and FOREX trading . Alas, our leaders do not see the ooportunity.


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