panch-tattva talk…remain unfazed

Friends,

The markets at this time last year were dithering but were at almost the same level as today. The news flow with all the gory details of what had happened in USA were were yet to form a steady flow. The markets tumbled in October 08 with a ferocity unheard of in earlier times ever. Then there were the rescueing acts, put together by almost all the world’s economy masters.

We are now at a juncture that while the wounds of past year still pain but the atmosphere has changed perceptibly for the better. In India it has come in the form of benign interest rates and easier availability of consumer finance. It is for this main reason that the auto-sector has seen alround expansion in sale volumes at higher per unit value. This spurred the demand for flat steel which has emboldened the steel maker to hike steel prices. The auto component maker have had a sigh of relief too.

Now we see that the big chunks of shares change hands at handsome premium to prevailing prices. This suggests that there is demand for shares even at a premium. Any company that has such transactions in respect of its equity shares, also forces the markets to rerate the peer companies. I see that this will keep happenning due to the fact that the very may Indian companies are selling for part of their real values. Also there is going to be attempts at mergers and aquisitions which will make the different segments of market more organised and will reduce marketing and distribution costs.

The dividend yields have gone up. There is no capacity creation rush which secured the near term future of companies. In fact the advantage India lies in the fact that there is no excess capacities here while in China there will be tough fight for survival. We therefore, remain a more preferred destination for the world’s money flows. Even China itself may want buy a part of Indian cake, after capital seeks safety and return, first and foremost.

In this light would it be wrong for me to declare that Nifty will march past its previous peak at some time in not so distant future.

HariOm,
krsnaKhandelwal

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