panch-tattva talk…wall st rallies

Friends,

The wall st seems to have got in to a different mood. The gains there have been so much in three days that have not been seen since Nov 08. The European markets have kept pace albeit in slightly cooler way. The Asian markets have been reluctant to do the same including ours but today has made even sleepy Nikkei get woken up and post more than 3pc gain. Japan may also announce an stimulus package. As I have been telling you through out that measures taken by govts all over have to work. These measures have a basic tenet ie reducing the interest rates and expanding money supply even monetising deficit. These are the sure fire things. The enlarged money pool is bound to reflect in high equity prices whether there is some basic economic turn round or not. The lower interest rates enable the investor wait longer to see the rebound on economic front actually happen. So, my point is that the markets and economy do not have to be improving at the same pace , the easy money conditions will take immediate care of the markets.

Now, coming back to India, I am my wits end , finding out markets not doing better than else where inspite of the fact that we were minimally affected in the first place and we have now simptons showing regaining the health. There is therefore an unvisible hand of organised bear cartel keeping market pressed. As there activity is against natural forces , it is bound to boomrang on them. May be today itself the catching up act is done by Indian investors and Nifty improves by a far wider marging than 47 points it gained yester day ( this was roughly the loss of points here on manday before the two day long holiday).

You also may have recalled that I told you about forgetting gold and be with equities. The gold has hardly improved since than and equities have become darlings of investor. In fact what I had noticed was that the recent liquidity in money supply has taken the gold prices up and which will soon start weighing benefits in other arena of investment.

The ‘satyam’ invitation for bidding for its offer for 31pc stake in company has seen B K Modi, TechM and L and T come forward. Out of three TechM and L and T have better chances to get ‘satyam’ and have better ability to see it come back to narmal times. I am , however, unhappy about the manner in which the company’s affairs have been dealt with. If an exception was to be made it should have been made by allowing the purchase of shares in open market without restrictions and then the body of shareholders should have been allowed to vote for the party they deem fit for take over of management. Why was it necessary to bypass the corporate democratic process. If this case will be the way similar cases will be dealt than it is diluting the shareholder power of all company shareholders. A similar game was initiated in case of ‘maytas’ but CLB thought it otherwise and clamped. My further grievance is that the reality about fund movement from out of ‘satyam’ has still not been revealed. Leave apart a whole govt busy doing it, I as an individual , if given power, can find more than they have given out. They have no business to keep it secret, the shareholders have right to know every development in full detail on day to day basis. A govt which finds it necessary that the promoters give details about pledged shares immediately, does not find it necessary to inform the progress and findings of investigation where the shareholders ( the only people directly losing money) have every right to know it. As I have been telling you that the whole idea behind the way ‘satyam’ has been dealt is to conceal information more than to reveal the information. First it was scam , now its a fraud on shareholders of a different kind.

IIP numbers for Jan 09 have been negative growth of 0.5pc. This is an encouraging thing for it comes against high base. Inflation is further down to 2.43pc for the latest week. RBI should now complete its unfinished task.

The time has come when companies with high esteem come out to raise capital for their needs directly from market through partially convertible debentures at coupon rate of 9pc. The banks have to be given a bypass as an intermediatory. It is necessary because they are reluctant to give big ticket loans and if they do the cost of intermediation is too high. Let both, the borrower and saver, share the saved cost and be happy.

The crude has gained 11pc (at 47 dollar/bbl) and here also the liquidity improvement is the cause.

Aluminium prices are firming up and will see fortunes of Hindalco turning for better. At current prices ‘hindalco’ is good buy (CMP 39.60).

The sugar sector companies have lost heavily lately without a reason and only in simpathy of market in general. The rebouding will be fast in these scrips as their business has basically become sounder. They also reflect low P/BV ratios and replacement costs are more than two to four times against their present market cap. This makes them safe bet whatever happens in future because bottoms with such strong fundamentals can not be breached further down. The management of the leader in the pack ie ‘bajajhind’ is to be asked a few questions about how its costs of operation are going up much more than of peers and why the per unit realisation is not as much as in case of their peers. Both eay its either gross ineficiency or something of other kind ( like leakages or wrong reporting). It may be also a case where the promoters want to grab stocks at low prices and hence it is attemted to keep prices down. Some thing is amiss, this much I can tell you and whatever the case the equity is a good investment at present.

HariOm,
krsnaKhandelwal

One thought on “panch-tattva talk…wall st rallies

  1. Hello!
    Very Interesting post! Thank you for such interesting resource!
    PS: Sorry for my bad english, I’v just started to learn this language 😉
    See you!
    Your, Raiul Baztepo

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