Saturday, February 27, 2010

Hazoor Multi Projects Ltd.....cmp..Rs 5.01..FV 4..

I am giving you all a homework to do.Hazoor Multi Projects Ltd.I have seen some development taking place in this Co.It is a Dark Horse according to me.
Even I have to take a look more judiciouly.I just came through some annoucement at bse and hence has written it in past the promoters were having bad name.But seems the Co has come out from that and I am looking positively from hereon to Hazoor Media Projects Ltd.But utmost due diligence needs to be taken before going for this Co.But I am looking positively at this Co.....but if things settles as I see, then this can be a good earner in future.......
Let us see how many comes out with what!
I am able to diggin some very interesting things here......


The budget was good.I think market gave a thumbs up by going up by 175 points.The bears worry is global cues but I have already written on that.FM has raised the IT rate and raised the slab of income tax and thereby put money in Middle Class pocket which should come back in system....that is the biggest trigger I am seeing in our economy.
Readers keeps on asking me new picks and asking me stocks have run up so if there is new stock I have picked.
I think this is not the right way to look at my blog.I have written many times that read my replies to others and take the cue from it.I can't go on giving same and same answer to each and everyone.
From now onwards I will not entertain any question where I have to give same answer.Read my replies in commets section.Just a day back I referred Cronimet Alloy Ltd which is GMR Ferro Alloy Ltd.The name willbe changed to Cronimet Alloy Ltd in near future.If India is to grow through Infra and Railways then steel consumption is going to be there and hence Chrome Alloy which is used in making steel is going to have great days.Depends upon which co can bring in cheap Chrome Ore and boost its bottomline.....
That was my new pick.But readers has not read my replies properly and come out asking question of same type.Remember I have very limited time to give replies.Try to help me  not ending up asking me redundant questions.
I am here to give stocks which I find cheap in value.I write stocks which have story.These are calls which can come good or maynot come good.It may happen the stock can go down as much as 50% after I gave a call.When to sell and when to hold is absoluetly in hand of readers.
I am in no way responsible for any loss from my calls as the profit is also all yours.

Friday, February 26, 2010

UTV given at 337.....

I have recomeded this stock ealier here.I saw a report on Utv today in ET in Midcap Mania column.I have seen in past some 2-3 more stock that I covered here suhc as Mcnally Bharat etc in same space but I today decided to past that article here.....

Broadcasting, movies to drive UTV numbers

Stock Has Appreciated 130% In Past 12 Months

UTV Software Communications is one of the few players in the entertainment industry pushing to corporatise the movie-making business. However, for years, the company had nothing much to show in terms of superior financial performance. Now, it seems, UTV’s strategy to chuck formula films, in favour of films high on content, is finally paying off.
In the December ‘09 quarter this fiscal, the company’s net sales grew by more than 150% to Rs 159 crore on a year-on-year basis, while its net profit during the period jumped by five times to Rs 40 crore. The company’s performance was driven by the success of newage films such as Kaminey and Wake-up Sid. Earlier in the year, the company had tasted success with DevD. The company produces films under two banners. For first-time and not-soknown directors, the company produces movies under the banner of UTV SpotBoy. While for established directors, it uses its flagship brand — UTV Motion Pictures. Interestingly, UTV is now majority-owned by Walt Disney with around 60% stake, which it has acquired for $400 million around two years ago.
While movie-making remains UTV’s core business, the company has also diversified into broadcasting in the past few years and its bouquet of television channels now include Bloomberg UTV, UTV World Movies, Bindaas, UTV Action and UTV Movies. Thanks to the diversification, movies now account for 48% of its revenues, with the balance coming from television software, broadcasting and gaming. During the April-December ’09 period, broadcasting for a third of its consolidated revenues, while 14% and 16% coming from TV content and its gaming venture, respectively. This diversification protects the company from excessive dependence on revenues from movie-making, which is highly susceptible to the success or failure of a flick.

In the past 12-months, the stock has been an outperformer and has appreciated by around 130% against 70% appreciation in the Sensex during the period. In the coming quarter, the company has good movies lined up which will drive its revenues and profitability. Also, its broadcasting business has picked up well and the company now claims a 17% market share of the total general entertainment segment. These two businesses would continue to drive its performance in future.

Thursday, February 25, 2010

Lesha Energy Ltd.....cmp 112...

If someone remember I gave a call on Lesha Energy at 43.30 along with Telecanor Global at 35.85 on 31 Aug 09.
Means 6 months back.Telecanor has underperformed but Lesha has outperformed even the market in big way.
It touched a high of 121 and is now today at 112 after touching 80 in todays trade but today it make a new high of 128 as well .The reason it touched 80 was because Lesha Steel is getting demerged from Lesha Energy and the shareholder of Lesha Enery will get 1 share of Lesha Steel for every 2 share held.
So if someone is holding 200 shares of Lesha Energy then they will get 100 shares of Lesha Steel.Lesha Steel is going to be listed in near future and heard that it will be listed around 30-40 and hence today Lesha went down to 80 , means 32 down from previous close as it become XR today.But there is Oil story in Lesha Energy and hence  after touching 80 it bounced back to previous close of 112.Means as of now the price remains same and one get shares of Lesha steel in FREE ..........That also implies that even after the Lesha Steel is demerged market still looks Lesha Energy as a value play and its value still remains same after the demerge of Lesha Steel.
That is the beauty of Stock Market.Lesha is giving enormous return and I think it will keeps on giving such type of return in future as the story is still to unfold.If one looks at the results one will find nothing in Lesha Energy but still it is quoted at 112 and strategic investor are ready to buy stake at 100-110 as I always use to write , don't always look at earning or RONW or EPBDTA (whatever), Cash Flow,Mcap, Sales.........they needs to be looked but one don't need to follow it religiously.Just imagine when someone can see nothing in it, the topline or bottomline is almost NIL and still it is quoting at 112 then what can be the price when the real story materialize?
I have not written anything on Lesha Energy except when I gave the call that they have interest in Oil Fields.None also came out with due diligence and hence I kept the discussion as it is......and I will still not write anything more in Lesha Energy.
Well, coming to TeleCanor , the dispute betweeen that big investor and management seems to be over as I read in bse site that he has asked for conversion of warrents as he has taken back the complaint from SEBI about mismanagement of funds.......So TeleCanor should be back in reckon any time soon.....

A Road Map For India...........

Sramana Mitra,

India has a critical decade ahead. Managed well, it will catapult India into a developed country with superpower status. Managed poorly, the opportunity will be squandered. I would like to believe that this time, India will manage its destiny well. And in my new book, Vision India 2020, I have outlined what I wish to see. So far India has positioned itself as a software superpower on the shoulders of outsourcing. But is that all that we will ever achieve? With the right guidance, I resolutely believe that the Indian youth have the potential to build their nation's next phase of development--systematic development rather than the haphazard, helter-skelter development we have thus far seen.
Development for India, of course, will not be limited to the technology sector. Driving from Calcutta to Kharagpur last year, I experienced intimately the toll of one of India's many unforgiving bottlenecked roadways: a highway reduced to one lane because of a bridge that has stood derelict for three years. Outside Jaipur, where a thick mass of trucks constrict the flow of traffic, the scene is unchanged. And when I do finally persevere, make it home and find my bed, the noise pollution keeps sleep distant. I toss and turn in bed, listening through the walls to my family members' coughing due to the environmental disaster we have created.
These same trucks that clog my journey to Jaipur are caught up in similar jams up and down the length and breadth of India. They wheeze to a halt trying to deliver goods to train stations to be transported across the heartland of India, or to ports so ships can sail.

And the people? Dripping in sweat, hanging from fuming buses, packed like sardines in trains, they trudge on. Living in postage-stamp-sized slum rooms amid squalor, crime and health hazards, the majority of 21st-century India's citizens live a life far below "superpower" standards.
India needs clean water. India needs energy. India needs roads, ports and bridges. But India also needs to look back as it strides forward.
In the name of development, India has managed to destroy much of its architectural heritage. Real estate entrepreneurs have mercilessly destroyed British-era jewels along with much of the traditional Indian buildings. Such, I understand, is the destiny of developing nations. The same destruction runs from Kashmir to Kanyakumari. It runs in Mexico, in China, in Brazil and in Romania.
Darjeeling, the erstwhile Queen of the Himalayas, once enchanted visitors with pine-lined walks strung from house to house; today flashing neon signs welcome tourists. In the heart of the Himalayas, the picturesque villages are upgraded from utmost poverty and poetry to mediocrity. Their sun-bleached Buddhist prayer flags that flap in the mountain wind no longer whisper their blessings. This is the era of cement, of development for development's sake.
But what of beauty? Of preservation? Paris preserved itself, as did Kyoto and San Francisco. Will India fail to showcase the magic and the mystique of its past? Between consulting and writing over the last decade, I have interacted with thousands of entrepreneurs and innovators, encountering hundreds of business case studies, and from that rich crop I have harvested ideas to answer these issues.
George Will once said, "Not only do ideas have consequences, but only ideas have large and lasting consequences."
Vision India 2020 is my notebook of ideas on entrepreneurship in India. Set in 2020, this futuristic retrospective looks back on the building of a set of particular entrepreneurial ventures, gleaned from the many opportunities I see at the end of the first decade of the 21st century. Much in these ventures needs yet be fleshed out.
Whether in film or health care, education or rural development, I have dreamed freely, taking bold, ambitious measures to address impending crises such as water, energy and the environment. As you read this book, take with you that boldness. And afterward, as your own ideas gestate, use my process of envisioning--of imagining a manifestation, in as real of terms as possible, of the company that you will build, the change you will bring about.
It is a powerful experience to project far into the future--your future, based on your ideas, your dreams. But as you dream, be sure to work out the details requisite to your venture's success. I have envisioned details as granular as logos and colors, not to mention margins and pricing. It is within such details that billions of dollars of GDP await. In my model of development, it is the entrepreneurs who wield the most potent weapons of mass reconstruction. Reconstruction to build markets, to build nations, to build worlds.
Sramana Mitra is a technology entrepreneur and strategy consultant in Silicon Valley. She has founded three companies and writes a business blog, Sramana Mitra on Strategy. She has a master's degree in electrical engineering and computer science from the Massachusetts Institute of Technology. Her three books, Entrepreneur Journeys, Bootstrapping, Weapon Of Mass Reconstruction, and Positioning: How To Test, Validate, and Bring Your Idea To Market, are all available from Amazon. Her new book, Vision India 2020, has just been released.

Monday, February 22, 2010

World watch - Too much money chasing too little market cap ..........

WARNINGS that emerging markets are inching toward bubble territory are misplaced so far but the volume of securities on offer must rise fast to accommodate the new cash that is expected to join the sector in coming years.

Emerging assets have become very desirable as the financial crunch damaged western balance sheets and budgets and further enhanced the relative growth attractions of the emerging world.
With emerging markets roaring back from the slump of 2008, crises in the likes of euro zone mem- ber Greece -- and also two years ago in Iceland -- have challenged decades-old assumptions that sovereign risk was inherent only to developing economies.
In theory, that should be a positive for emerging markets, which are on the whole, hugely underrepre- sented in global portfolios, especially of more conser- vative but cash-rich investors such as pension funds.
But the reality is that relative to the developed world, emerging bond, stock and currency markets remain underdeveloped, small and illiquid. Which means a large-scale cash influx can quickly inflate asset prices to unsustainable levels, risking a repeat of the familiar boom-bust emerging market cycles.
"Too much money chasing too little market cap -- potentially it's a concern," said Michael Wang, emerging equities strategist at Morgan Stanley. "It was a concern in 2007-2008 when there was a lot of euphoria over emerging markets and this wall of money came in. We are starting to see that kind of euphoria again."
The 37-country MS- CI emerging markets index has market capi- talisation of $3 trillion -- just over a tenth of the MSCI World's $20.5 tril- lion and a third of the US S&P 500. And the $5.5 trillion in local currency bonds issued by every emerging nation in the world are worth less than the US treasuries outstanding.
Flows are tipped to grow, as the pull of emerging markets -- rising incomes, growth, relatively sound public finances -- coupled with "push" factors from the developed world -- anaemic growth, falling popu- lations and rising debt.
Emerging equity and bond funds got inflows of $75 billion in 2009, dwarfing all fund groups except US bond funds.
This year, private capital flows -- direct and portfo- lio investments -- to emerging markets will rise 66 per cent to $722 billion, the Institute for International Finance (IIF) says. That is over three times more than levels a decade ago, IIF data shows.
There are signs pension funds, pressured to boost returns, are increasing emerging market allocations -- a Barings study last November found a third of UK pension funds would consider investing in emerging markets, up from under 5 per cent in 2007.
The problem is that even a small re-allocation from a deep market to a relatively shallow one can cause substantial swings.
Take for instance pension funds. With $23 trillion in assets globally, just a 1 per cent extra allocation to emerging stocks would bring inflows of $230 billion -- almost a tenth of the existing market capitalisation of the MSCI EM.
Volumes of existing securities would have to rise by a comparable amount, possibly via stock listings, to avoid the wild swings such large-scale capital inflows would cause.
"With all this money flowing in, we are going to see an inflation of price-earnings ratios," said Robert Ruttman, emerging equities strategist at Credit Suisse.( the bottomline is grab stock having low p/e as they will have a long way to go...from low p/e to average p/e and then inflate p/e and I have not to mention which can be those!)
"It is important to watch earnings growth relative to volume of funds coming in."
So far he says valuations are looking fair around 11.5 times one-year forward earnings or a 13 per cent discount to developed stocks and a 10 per cent below their own historical average.
If earnings keep up, emerging markets could justi- fy a premium to developed markets on a P/E basis, ana- lysts say.
"A bubble implies there is not a fundamental under- pin to the price," Wang said. "At the moment this is not the case."

My Comments:
I think everything is there to read.I have already highlighted it......what one needs to do is just take the clue....for is written about Pension Fund....having $23 trillion asset globally and even 1% will bring in $230 bn!
So read this post properly and take clue.......

Saturday, February 20, 2010

Is rate hike that much bad?

I don't know why analyst and pundits are so wary of rate hike.
First we need to understand why there can be a rate hike?Rate hike takes place for different reason.I am no pundit in economics and hence my knowledge is limited on that front but in a simple laymen term if I think then I can say that rate hike takes places when government anywhere around the world wants to check the inflow of capital in system.
There are many reason why capital Inflow check is made.The reasons can be taming the Inflation,taming the easy money getting in the system and thereby checking the price rise in Realty sector etc.
Now there can be different kind of rate hike.Say like when we saw the economics crisis that took place, rate were decreased abysmally to infuse money in the system.
And there comes that catch.The rate hike we are hearing is of that rate that were decreased to bring back the economy world wide back on road.
Now if USA increase rate what does that mean?It says that Ben Bernanke is seeing positive in US economy and that is why he is thinking to increase the what this shows.....what is good and what is bad?Rate hike is bad or economy becoming good is bad?
There can be a reaction for ST when that happens but overall the rate hike says that economy is doing good.If China is increasing the rate it is doing to cool off the growth and trying to put check on any bubble that is created.Now what is good,that China is trying to keep measures on economy which is overshooting and let its economy turns into a bubble or keep it cool or letting it burst?Which situation investor would like to have?Why there is so much of talk on rate hike?Why there is only negative talk of rate hike?Why analyst are not seeing what is coming up?
The question that is important is how much rate hike takes place?The timing of rate hike is what matters the most.Whether it is gradual or it is one big hike?
Sooner or later the government has to hike it , because easy money cannot be there for asking which incase makes more distruction then good.
Now the case in study is India.And the topic is roll back of fiscal stimulous.Now if Fin Min wants to roll back some of the fiscal stimulous what is wrong.When analyst  were talking of 5% growth in 2008 for 2009  , India pushed some stimulous pacakage so that growth do not get hindered.The fiscal stimulous was neccsary step at that point of time because the money flow stopped coming from overseas and actually FII 's were taking out money and we saw the result of that.We came down from 21k to 8k.
As there was quizzing of supply of money , the money that corporate India was able to get easily through PE investment , QIP, Preferential Allotment,IPO's were left high and dry.So to curtail any such debacle GOI decided to go on with a fiscal stimulous measurement.And the result is in front of us.We didn't go to 5% GDP, instead we did well by going to over 7% GDP to 7.5% GDP.This has been averted due to the stimulous pacakage that GOI went with.Now if FIN MIN sees that it is time to roll back some of the stimulous back what is wrong ,why there is so much of a CRY for that.If GOI is thinking like that then that is a good news as our economy is coming back to normal.
If USA think of raising the int rate as  they feel that their economy is doing well, then why shouldn't we?When there was a danger of China's growth coming to 7 or 8 % and China did extremly well in 2009 and they are taking mearsure to curb down the hottingup of their economy then why should India not?
I don't know what analyst and pundits have in mind when they cry for the stimulous rolling back.What danger they see in it.If Corporate India is apprehensive then that is also not good.But I think Corporate knows it very well that the stimulous pacakage has to go one day.They have done good in 2009 with many IPOs coming, many QIP's being done.
I see not fault in such steps taken from GOI and do not believe in the theory that it will hinder the growth.Taking back stimulous pacakage step by step will put our economy back to normal and when I say normal it means the state where we were in 2007!I hope one understand my point.
That hass to happen one day.We have to be back to normal , days before 2007.
The thing to remember here is if Int rates is hiked or stimulous pacakage is rolled back slowly we are not doing it wrongly.We are just coming back to NORMAL.The days we were in 2007.The pre 2008 ERA.Now what if we are back to 2007 ERA? Is anything wrong in it.In the same era we went from 3000 to 21,000!
I am not an expert but I can understand certian things very easily and hence I have written it here for my readers not to get scared much after reading the Pundits,analyst and experts of market domestically and world over......
We have seen analyst saying Stayam is gone and will become ZERO and same analyst will come one day back and will say that he now sees that Satyam is a great play.Now the thing to be taken in account is what impact that creates in investors community is ignored.This happened just a year ago.The recomendation came in 2008 Mar that satyam will become ZERO.
I sometimes get mails and opnions that why we should bother about what analyst speaks and why we should discuss whether he is right or wrong but those who says so may be not bothered about it as they maybe over and above such emotions but lay investor do think and take decision on that.Freedom of speech is there in demiocratic country but then it should be such that it doesn't hurts someone.
I read a week back when the Shivsena and SRK debacle took place and one of the lawyer came out with a view that whether SRK violated any law of outspoking or being out of normal view.....and the stand was taken that he was not.
So everyone has the right to think whatever he feel but not the right to speak whatever he thinks.Democracy do  not give that right to do things where people get disturb and that leads to instigation of others and some atrocity evolves out from it.

Thursday, February 18, 2010

Shankar Sharma speaks at ET Now........

Sensex may swoon to 12K level: Shankar Sharma

17 Feb 2010, 1446 hrs IST, ET Now

ET Now caught up with Shankar Sharma, Vice Chairman & Joint MD, First Global to seek his views on where the markets were headed in 2010 and which stocks could be an attractive bet. Excerpts:
Where do you see the markets heading where in a surprising pullback, we have broken that resistance level that we were tracking. We are past 4900 on the Nifty. Do you actually see the markets witnessing a further correction in 2010 and what kind of returns do you expect from equities, especially in emerging markets?
The pullback was very much in order because we had sold off from 17,500 to 15,500. It can easily pull back another 200-500 points on the Sensex.( He puts just 500 point more means 170 points more on Nifty) This year is the down year for equities and within the context, emerging markets will do worse than the US markets. The markets that did really well in 2009, that is the BRIC pack, will actually underperform the markets. The markets that did not do that well, like Taiwan or South Korea, have relatively more stable markets than the volatile BRIC pack markets. Overall, this year is the down year for equities by and large.
When you say a down year, what kind of correction do you see both in the short-term and in the long-term?
In the short-term, we definitely do see the markets in the first half coming down 20-30% from the highs of the year, which was 17,500. The markets could easily go down to 12,000-12,500 in the first half and from there, I suspect there will be some measure of recovery. Markets could still ultimately end the year down 10-15% from the close of 2009 which may be around 16,000, but that is a long call or a long short to make just yet. For now, markets are headed lower. However, once they have reached a certain level, then we will see if things have changed enough for them to rally all the way back to close enough to the levels of 2009 December.
Do you think that's going to be a valuation call or is it going to be liquidity driven because we have also just had news that LIC would be pumping in another Rs 15,000 crores by the end of March and other insurance companies are waiting to put more money in. Also, FIIs are bringing in the money. Do you still see corrections coming in?
When the markets sold out 2000 points, the money was still there. These are facile arguments that liquidity ensures the markets will never fall. Throughout the history of the world, there has always been liquidity chasing markets and not markets chasing liquidity and that's the way it is. If the markets have to fall, they will fall. It does not matter whether LIC puts in $2 billion or everybody in the whole world puts in money. I do not waste my time looking at liquidity at all, it makes no difference to broad market trends at all. It might make a difference to thinly traded Z Group stock but other than that, I do not see that being a factor. The overall situation globally is probably headed to be a lot worse than what we saw in 2008. At that time, particularly the second half, we saw the collapse of one investment bank which was not a huge investment bank by any standards, compared to the top 3-4. It was a smallish bank but that itself was large enough to bring down markets substantially and shake the entire world financial system.
The southern rim of Eurozone and Ireland on the north end are looking in absolutely terrible shape and in reality, nothing really went away by way of the problems. We just applied band-aid on the problem and globally the central banks were focussed on only one thing that was to supply enough liquidity to engineer a stock market rally, which would somehow lull us into believing that everything that was bad had actually gone away. In reality nothing actually went away, they were pretty much there, they were hidden by a coat of band-aid and now the band-aid is coming off. ( Here I think Amit need to read this.SS says that liquidity has nothing to do with market going up....but his chartist friends one arguement is that due to liquidity market went up)

What about this classic domestic consumption story that India is very well cushioned? We have already seen very strong IIP numbers, the best in a decade. We are expecting GDP next year to be good, forward earnings multiple for the broader indices at anywhere near to ballpark figure of 15-16. Do you think that's not good enough for our markets to see a base being set around 15,000-16,000 on the Sensex?
If you go back to March 2009, people were predicting 20% earnings growth for 2010 March end. As it turns out, we have ended up far short of that. By our reckoning, we had an aggregate of may be just 2 or 3% growth for this year. That is terrible by any standards. You are coming off the low base of 2009 and on top of that, you are tagged on just a mere 2 or 3%. I do not see on what basis I can say that we will hit 20% earnings growth in 2011, which will suffer because of the relatively higher base of 2009-2010. A lot of the earnings growth starts out at the nice cosy figure of 20% and by the time the year kind of begins to come around to the end, the numbers keep getting adjusted downward to probably meet more realistic numbers. We started even the last year on a nice 20%, we ended with 3%.
We are starting again this year with 20%, we will see where we end but my sense is that there is room for disappointment on the large parts of the market, particularly in the areas wherein you had people raising a lot of capital and that's the one big area of the market and which actually is a large part of the market wherein you will see that multiples are still very high, they still have 20-25 times earnings. All infrastructure companies irrespective of the fundamentals are trading there. I can easily see them trading at 15 times earnings and also the metal stocks in light of China tightening and trying to rein back domestic credit growth. In light of all that, I cannot make the case that commodities are headed substantially higher. If you put all that together, I do not see from where 20 25% earnings growth can materialise. If it were to do that, that would be surprising. That can happen but I suspect the probabilities are quite low.
It is interesting that you see this year's earnings being at 2-3% growth. Most of the other brokerage targets that we are dealing with are clearly much higher. How do you peg it at such a low number?
That is a separate discussion and for that, we have to go sector by sector, company by company but lastly the point I was making was that you are ending up with a situation perennially that India is totally correlated with the world. If globally things turn bad or good, domestic markets follow. We have seen that for the last 10-13 years, right from the Asian crisis. India is completely tied and completely integrated with the global marketplace. Even if the domestic economies are not correlated, the markets are correlated. If globally situation turns bad and I think it will, I cannot make out the case that India will standout and go to 21000 while the rest of the world is selling off 25%.
There are some reports coming out where various international brokerages are saying that India, out of the emerging markets, will probably see a further correction than some of the other markets in the region. Would you agree with that view and why would that be?

I pay no attention to what other brokerages say. That is not a determinant of what our take is. Our take is that EMs in general are looking to correct substantially because EMs are the high beta end of the global markets and whenever you have a global market sell off or a rally, EMs perform better or worse by way of their being higher beta than what the global trend is. If global markets are rallying 25%, EM will typically do a 35-40% up. If global markets are selling off 25%, the entire EM pack will fall may be 35-40%. I do see the global situation being very precarious and in context of that, EMs are trading at an all-time high weight in the global indices and that's the biggest area where people can take off money if there are jitters on the global front and that is clearly something more than just jitters now.
For sometime now, we have been moving in a range and there was not even too much expectation of a pre-budget rally. Yesterday it is surprising that we saw somewhat of a pullback rally, we have broken resistance as you were just talking about. What are your expectations? Do you think we might actually see a pre-budget rally? Do you think markets are expecting too much from the budget and will there be a knee jerk reaction post the budget if perhaps those expectations are not met?
I do not know, I have no expectations. I have never had any expectations from the time I was born for this thing called the budget because it is just all guesswork unless the Finance Minister is my buddy and he keeps telling me what proposals he is going to come out with. I see no reason to waste time on speculating what will come in this budget, so I pay no attention to that. What I do know is that statistically markets do sell off post budget rather than rally post budget. There have been a few exceptions but more than 80% of the time that's the trend. I see this year as being no different.

How would you play these markets? They are looking set for a downward correction but sectorally, where would you be overweight still?
We have been overweight on pharma as well as the auto pack and IT pack. On IT, our concerns have emanated just now post Obama's talk on imposing some kind of an offshoring tax or whatever he calls it. If that were to come true, then that sector can really hurt. We would be a tad cautious there but we are not downward negative. It is just that there is room for caution there. Within the context of whatever else we see, these three sectors still look the more secure places and autos continue to do well. I have no reason to doubt, at least the macro numbers on autos will be good. Even though within that you might see little bit of margin compression or because of higher competition, some price cuts being taken by the leaders or because of higher steel prices, you might see some margins getting squeezed. But by and large, that is a sector we have reasonable comfort on by way of the numbers at least, the headline numbers still look very good.

What about pharma, how would you play that? Would you be looking at the generic space, would you be looking at the formulation space or the cram space? Where is it that good money can be made now?
Most of it is again going to move as a pack. Within this space, we have liked the large cap pharma, but of course, we did like some of the second tier ones like Orchid etc which had a reasonable run. This is a sector where you buy when you have nothing else to buy because most of these companies have reached a reasonable level of maturity and they may not have huge blow out growth numbers. In context of where the markets are going, this sector does offer comfort. Of that, we like the fallen angel which was Ranbaxy. Having doubled, I doubt if there is a great deal of upside left in this stock. Although, I do not think it can go back to Rs. 250 that easily but but this is a space that will not fall as much as the rest of the more volatile sectors or the high beta sectors. It is more of a defensive call rather than the desire to make actual absolute returns in a lot of these stocks because I doubt if that is really going to come through that easily. Unless you buy unloved ones like the Ranbaxy, Orchid and Sun Pharma of the world, I doubt if you will make a huge amount of absolute return but you will definitely make outperformance returns.

What do you feel is overvalued right now?
The entire infra realty and metal space definitely looks overvalued. A lot of metal stocks are trading at markets caps higher than their market caps at the peak of the cycle and I see no reason to make out that case just yet. Infra, metals, realty have plenty of room on the downside. To some degree, I would probably put even banks in that category because looking at the inflation situation and looking at the fact that credit growth may not be as good, some of the valuation on the banking space do not look that attractive now. These are the sectors that you would probably want to be more cautious on rather than the ITs and the pharmas and the autos.

What about the smaller sectors like aviation, textiles? We have also seen logistics perk up, some of those stocks that are exposed to the railways to a certain extent. Any of those look interesting right now? Also, what about the smaller metals space like pipe manufacturers because this is a space which has not moved up just as much as in terms of valuation as the rest of the market has?
I do not look at small caps, so I really cannot comment on a pipe manufacturer or anything of that sort. Aviation looks interesting. Aviation stocks have done well and the traffic on that front looks again like the auto story. It looks to have reached a certain level of momentum which will not be very volatile on the downside at least. That space looks good and our take is that oil prices are definitely going to go down over the next six months time. There will be no real upward risk on price of fuel going up for these carriers. Aviation looks definitely very interesting but I have no take on the other smaller sectors you mentioned.

What about oil and gas and this whole big thing about the Kirit Parikh Committee report, the subsidy burden? In today's Economic Times we have Mr. PMS Prasad's speech saying that price deregulation needs to be the order of the day. You think it would be a good play? You think if this is something that might happen in the next one year?
I pay no attention to all these committee reports. Again they have been coming from the time I have been born. They will keep coming till the time I depart from Mother Earth. So by and large, ultimately it is the Prime Minister's call and that will be a political call. Subsidies should not be removed in the entire sector. Subsidies in general should not be removed whether it is for fertiliser, whether it is for food or whether it is for oil. Subsidies should remain because that is a huge buffer that the government provides to citizens of the country that it will take the burden off price fluctuations onto itself at least to a very large extent and not burden us with those fluctuations. If subsidies were to go and consumers, whether it is industrial or individual, were to start paying market risk with everything, consumption in India would drop through the floor and I do not think that is a very very palatable thing at all. It is better if the big brother takes deficit on its books and leaves the consumer's balance sheet intact rather than shifting its deficits onto consumer books. I am a big believer in subsidies and that is my position on that.

In a falling market, do you feel anything is a value buy at this point of time in the heavyweights that you focus on?
The sectors look good because they have value. If you just take an example of Bajaj Auto. The stock has done very well and still continues to look very reasonably valued. I do not think you can find too many quality companies of that pedigree trading at the valuations it is and given the growths that it is delivering. Bajaj Auto is quite inexpensive, the stock has done well and despite doing well, the stock is still inexpensive, that is a surprising thing.

Talking about falling stocks, we have not discussed Bharti Airtel, trading at 275-280. Of course it has recovered from those lows but do you think it is a value pick now?
This is a sector we have been negative on from 2007 end, if I recollect correctly. The first round of shock from the sector came by way of the tariff cuts. Once the cosy monopoly went, new players came in, they had to grab market share from people. Market's growth while it is there, it is still coming at the low end of the spectrum by way of the ARPUs, so they really have to scramble to take high value customers or high paying customers away from the incumbents which is offering very very attractive rates.
That was the first round and now the acquisition led growth that companies want to go in for because they see their own growth slowing down, that is again the second fairly predictable outcome. This you could have predicted two years back. It is my belief in general that acquisitions do not typically add value. Maybe one out of ten do, but by and large, usually companies blow up a lot of good money on assets that in hindsight should not have been acquired. In India itself, we have seen many examples of those things happening starting right from Dr. Reddy's acquisition of Betapharm and down to the ones we saw in 2008.
Maybe the Bharti deal is an exception. We do not know enough about the deal just yet for us to take that call but the fact of the matter is that when companies start to do this, you need to start getting even more cautious than you would be otherwise. What Bharti did when the whole industry was in the shambles back in late-1990s was perfect acquisition because those were struggling companies, about to go out of business, so the JT Mobile deal was good. Now I suspect you are paying reasonable market price, if not higher than market valuation, for your targets and that in a telecom business, somehow does not make sense but maybe Sunil Mittal knows something that we do not.

While we are on the subject of acquisitions, in light of what you just said, you think perhaps Reliance should not be trying so hard for LyondellBasell?
Mukesh Ambani is a very smart businessman, so if he is looking at doing something, I am sure he has again better information than what all of us do. We can only make that call after he has done a transaction rather than before doing a transaction.

My Comments:
My only comments here is I don't think we can see 12k this year.........but reserve my right to be wrong....afterall this is stock market.........SS is repeatedly giving 12k ......

Tisco Shoots up on good numbers....

Short-covering fires up Tata Steel stock

A FRENETIC bout of short-covering fired up Tata Steel shares over 6% to Rs 584.90 on Wednesday. Many traders and a quite a few hedge funds are said to have gone ‘short’ on the stock, anticipating weak quarterly numbers. But with its performance turning out to be better than expected, these players had to cover up their positions. Among those caught on the wrong foot included a market operator who shares his first name with the Union agriculture minister.
My Comments:
This is what I read in ET "Heard on the street section"......
Now if we try to analyse what is going on our brouses then it can be understood that Hedge Funds shorted the market very heavily and under that news smart chartist started sending SMS etc all around saying that market will tank and will go below 3000 nifty giving all resistances and waves and legs and morning start or gap filling or head and shoulder(Shampoo...Lol)....then inverse Head and Shoulder....and then Doji, the evening star .....etc etc........
Well, what one need to understand here is how that was going to be possible?I donno, but they give examples of Greece and some Europeans coumtries default as reason for market to fall....and that we believe it and take decision on that view and that I find it the most atrocious thinking taking place in very well learned community of investors who are Chartered Accountants,MBA's, IIM's, IIT's, Doctors, Engineers,Economist pundits and likes.......
Is Greece or any European country is bigger then USA?That is a very simple question one need to ask himself?If it is not then try to compare how big can be the default amt?Can it be bigger then USA subprime Mortagage crisis?Can it be bigger then Lehman default or AIG .....
But the mian thing people have in mind is , better safe then sorry and they sells everything......that is good....but when they start thinking of something out of world like say hearing Nifty to again touch 3000 and then believing it.....that is the worst part coming from these well learned community....
If these people are going to act as herd mentality then I think there will only be One Warren Buffet, One Rakesh Jhunjhunwala or One Peter Lynch.....FOREVER....
The above news clearly states that Hedge Funds short sold Tisco in  big way thinking that Tisco will give bad results but they forget that Indian growth is due to domestic demand .Tisco gave good numbers and they started covering Tisco and Tisco Shoots now becomes very clear that the person at the helm of affiars at hedge funds do not know anything about Indian Market and Indian economy.....and as the text rightly pointed a name of a Bear Operator......Who is a well known figure among market community who comes or welcomed to speak everynow and then negative about market.....should be the expert of these hedge funds and seems that he is neither doing good for them nor for his clients......but the part that puzzles me is why these hedge funds still go on taking his advice ......I know he is an orator and speaks with such authority and confidence citing all reasons that anyone can get carried away...and when in  recent past 2008 he proved correct....he must be a much sought after personality by Hedge Funds and FII's.....
I have written in recent past that I do not see even 12k in  sensex and that too giving reasons for that.But who will believe me?I have no big office nor people working under me, nor a big acadamic qualification MBA or CA or IIM..nor I am a big name in stock market.....

And last but not the least, while going through the ET , I just read that ,Billionaire George Soros investment in gold more than doubled in Q4 as central banks around the world, including those in China and India, sought safety in the yellow metal .....
he is the same person who gave a call just few days back that Gold is now in an ultimate bubble territory....

and this is the link to read it......Imagine whom to believe and whom not to.....

Wednesday, February 17, 2010

Nifty Crosses 4860

One of the reader named "Amit" wrote me this which I have pasted here.
He said someone told him that Nifty will go below 3000 and hence sensex will be below 6k.....
He(that guy) cited all reasons for that which Amit wrote it here  and that guy who predicted this also saved Amit's voice to later prove himself how much he was correct and how big mistake Amit did by not following him.
I wrote to Amit at that time whether that guy will come out and accept if nifty breaks 4860 that he went wrong!.....and that has happened.Now what....
Now what will happen I will tell you.
If Amit will go to that guy he will still say , there is still one resistance of 4950 and that will never be crossed.But he was so sure of even not crossing 4860 why he is now after 4950 and if that is crossed then what?What will he say?
And I am SURE even 4950 is also going to be broken.....and nifty will cross again 5000 .......
The bottomline is , do not ever depend on charts.Charts never show you how market will move.Market charter it's own course.Charts do not decide market course and market also breaks charts levels and resistance and not the otherway.
Those who wants to believe charts and technicals may do that but please don't discuss with me about charts and technicals......I donot believe in it at all..........but I appreciate Amit's effort to put it down here so that I can atleast show here that it is not the charts that decide market course ..........

Hi Rajeev

Below written analysis given by that guy in defence for his call.
Sice the word limit is low i am putting it in parts.
Our market has turned weak! In all likelihood, a bear market is certainly a possibility. The weakness signs that lead to the onset of a bear market are also visible in major markets like the US as well.

While a pullback rally to 4860 is entirely possible, the probability of the downtrend resuming soon enough is quite high given the nature of the weakness in weekly charts...............
Once we put things in perspective this becomes quite clear as to why we should reassess the situation and shift our stance about the condition of the market. First, till date we have seen three intermediate upswings in this major uptrend that began last year on March 06 from the Nifty level of 2539.45; the first one got terminated at 4693 on June 12: a run of 2154 points in 14 weeks from the low of 2539; second upswing from July 13 till Oct 20 lasted for 14 weeks and had a price swing of 1263 points from 3918 till 5181; and the last one from November 03 last year till January 06 this year was much shorter—a little over just one-third in price terms of the first intermediate upswing mentioned above—it was a swing of 772 points that lasted for nine weeks. The upswings, thus, have become progressively smaller in terms of prices and in time terms first two had been equal and the third one lasted for a much shorter span of nine weeks. This phenomenon of time and price swings getting progressively smaller in intermediate uptrends is definitely a sign of the bull market weakening...........
.........Now, let us look at the corrective downswings in between: first one lasted for 31 calendar days from June 12 till July 13 last year, price swing was of 675 Nifty points; second one is much shorter in time duration—it was a sharp downswing—lasted for only 14 calendar days from October 20 till November 03 last year, and had a price swing of 643 points. The current downswing is already 31 calendar days old the bottom has not been established as yet. Its price amplitude so far has been 618 points. If it were to fall below 4635, by any chance, even on intraday basis it would be the largest downswing in terms of both price and time. This suggests a probable turning of the major trend from up to down.

However, calling the current market a bear market would be a bit too premature since the 200-day moving averages (MAs) are located at 4650 (both EMA and Simple MA). Since this would be the first test of the 200-day MAs--after they have been crossed from below by the Nifty on Apr 23, 2009--there is every possibility of a rebound after testing it or from a level close to it. Notwithstanding such a possibility, we can say that the Nifty would find it really difficult to cross 4950 levels now: as it is that has established itself as a strong resistance and two, the downward-sloping 89-day EMA is also located close by, which would now act as a strong supply point......
This bull market for all practical purposes has been driven by liquidity in domestic economy and FII inflows. Both are on reverse gear at the moment. FIIs are mostly sellers and the RBI has already started tightening. Internationally, Australia and China have also opted for monetary tightening and they did it much earlier than we did. The signs are pretty ominous for the US as well: during the last week of January, FED deputy chief Kohn had already hinted and warned banks in the US to prepare for higher interest rates. The very-important 70% mark has not been breached by the number of stocks in the S&P 500 that are above their 200-day moving averages; however, it is almost there and might just achieve it unless there is a sharp recovery right away.

Unless the governments and the central banks decide to inject massive quantity of money again to stem the rot in PIIGS (Portugal, Italy, Ireland, Greece and Spain) countries the situation would not become better for world markets. Japan’s debt level is also worrisome at 220% of the GDP. Bond markets are jittery and the commodity markets have also lost their gumption being dependent more on the fuel of liquidity: copper and lead have slid quite a bit again.

Smiles and Tear rarely meet with each other but when they meet they create the most gorgeous moment of LIFE..

Sunday, February 14, 2010

Avoid post-crisis mistakes, Spence cautions India ........

It’s absolutely essential... capital controls help manage domestic money supply Michael Spence Avoid post-crisis mistakes, Spence cautions India


Partha Sinha
Mumbai: Michael Spence, the 2001 Nobel prize winner for economics and a member of World Bank’s Growth Commission, has cautioned Indian policy makers against being overconfident about how the country was steered during the recent crisis and make policy mistakes. Spence says how Indian policy makers reacted during the crisis was “very good” and the subsequent turnaround has given them confidence, but he feels now is the time to drive growth and avoid post-crisis mistakes.

The Nobel laureate is in India to release the World Banksupported report titled ‘Post-Crisis Growth in Developing Countries’ and also to deliver the keynote address at RBI’s international conference for economic researchers.

“India’s resilience to the crisis was clearly very high... it was very impressive,” Spence told TOI. “For example, the services business has weathered the storm well and can go back to high rates,” he added. ( Now what does it mean by "Service Business"?)

The Stanford University professor believes that the direction for the policy makers at the Centre is right, with the focus on infrastructure, education, land and labour market reforms, and cutting down the time taken for legal recourse.

But “getting it done... implementation of these policies, is the main challenge”, he said.

On the debate on capital control, Spence takes the side of developing nations like India, which favour such measures. “It’s absolutely essential... capital controls help manage domestic money supply.”

Spence feels they insulate developing nations from the volatility that global capital markets bring in. Even some of the developed nations had resorted to capital controls during their growth phase, he said.

On economic stimulus, Spence says it should be withdrawn slowly. He calls the spike in the food inflation in Inida a distribution issue. But he is against total control of prices because he feels that some amount of higher prices acts as an incentive for those on the supply side.

On the tough language used in the report by the World Bank commission he chaired, Spence said the crisis was a “massive failure” for the Wall Street. It was thought to be self-regulated, requiring no outside regulation, but “it blew itself up”.

My Comments:

Now when we read this view of an economist who is a forienger, he clearly has appluaded the policy matters of India and RBI and the Capital Control that was done when Mr.Y V Reddy was at the helm of the affairs as an Governor of RBI.
But now as we have whethered the storm he also catiouns about not falling in mistake of post economics crisis.
He says that Indian Service sector has whethered the storm and has come back strongly.Now what is this service sector.What comes in that sector.
Sure,Logistic sector will come in.But the sector which I am betting on is IT service sector.There will be huge stake in this sector as whole lot of state will undergo through various changes and each state will have to change and keep updates for each and every form of datas.
So from doing data works in Jails, Municipalities ,Courts , Schools, Colleges, Universities, Railways , Telecommunication(BSNL,MTNL)Buses and many more such institution will have to take help of IT sector.And these orders will be in billions of rupees.
There is a very big stake in this sector and I don't think I have to elaborate which co fitsin this category......

Tuesday, February 9, 2010

Happy to see.......Stride Arcolab is making 52 week high...320....

that my stocks like Rasandik Eng, Spanco, Genesys Int,laffans Petro , Lesha Energy , Supreme Petro, Vishnu Chem, Simmond Marshall etc   are making new highs or moving up when market is down.......
This gives immense pleasure to  me that when other investors are losing in their stock my followers are atleast not losing much......even when some stock are losing ground due to recent meltdown.There is some respite for them.....


Stride Arcolab , I recomended at 235 went to 299 and came down to 275.I am seeing today a price of 320 which is 52 week high......
So all doubts are laid to rest with Stride making 52 weeks high......
I again write here, this is not the place for  ST calls.....or F& don't visit this place for ST or daily trade.......

Monday, February 8, 2010

Ril Ind on Buying Spree........

RIL submits EoI to buy Canada’s oil sands co
‘Co Ready To Pay Around $2 B For Acquisition; Plans To Expand Global Footprint’
Our Bureau MUMBAI

RELIANCE Industries (RIL), India’s largest private sector company, has submitted an expression of interest (EoI) to acquire Canadian oil sands company Value Creation (VCI), as it looks to expand its global footprint
in the oil exploration business. RIL may be willing to pay as much as $2 billion (Rs 9,250 crore), according to persons familiar with its plans.
The Calgary-headquartered company’s subsidiary Technoeconomics is the owner of a technology, which helps to produce oil from sand and upgrade bitumen — a major feedstock for petroleum — at a relatively lower cost, according to oil industry experts.
RIL’s oil and exploration business head PMS Prasad and group CFO Alok Agarwal are understood to have had initial discussions with VCI’s management, ahead of submitting the EoI, according to a person close to the development. VCI was founded by its CEO and chairman Columba Yeung in 1999 after a long career with Shell Canada and Royal Dutch Shell, where he held various executive positions in technology and project development.
“BA Energy, a subsidiary of VCI, has filed for bankruptcy, which could bring the valuation down,” said an oil industry official close to the transaction. The first commercial application of VCI’s technology was by BA Energy, the bankrupt subsidiary, which is currently constructing an upgrader that processes bitumen, in Strathcona County northeast of Edmonton, Alberta.
An RIL spokesperson said: “The company is reviewing a number of global opportunities for growth in its core business. The difficult operating environment of the past year has made available several interesting opportunities, where an investment by a strategic operator of industrial assets can add substantial value. The review is ongoing and there can be no assurance that any approach will be made with respect to the opportunities under review or that any such approach will result in a transaction.” RIL has raised Rs 9,300 crore so far through sale of treasury stocks, as it builds up a warchest for overseas acquisitions. It is also sitting on a cash balance of $4.65 billion or around Rs 18,000 crore.
India’s largest private sector company, which is looking to expand its global footprint, has targeted loss-making companies. According to media reports, BA energy filed for bankruptcy in early-2009 after it failed to repay a loan its parent, VCI. This default led to creditors recalling loans to VCI.
RIL is also in discussions to take over bankrupt petrochemical major Lyondell-Bassell. “RIL has been trying to expand its footprint across the global, as it has already consolidated its presence in India. The sharp fall in valuation of overseas assets, especially European ones, offers opportunity to the company,” said Deven Choksey, managing director, KR Choksey Securities.
RIL, has raised its bid for LyondellBasel by 13% to $13.5 billion, is facing resistance from the LyondellBasell board, which is controlled by Access Industries. The board has valued the company at about $15 billion. Analysts forecast the asking price to keep rising given the improving prospects for companies, as the developed world emerges out of the recession.
RIL is reviewing a number of global opportunities for growth in its core biz
RIL has raised Rs 9,300 crore so far via sale of treasury stocks, as it builds up a warchest for overseas buyouts
The first commercial application of VCI’s technology was by BA Energy ..

My Comments:
Extracting OIL from Sand? Difficult to understand....isn't it?But still int oil co use to do it and when Ril Ind see opportunity then it should be there and especially when he is ready to pay $2 bn , means Rs 9,800 cr....that is huge amt ......
There are lots of US and Canadian Co which are exploring possibilites for extracting Oils from sands and unless it is lucrative business no one would go for it.
It is said that Alberta , in Canada,is a very rich region of Sands where Oil can be extracted.There are lots of US and Canadian Co which are doing work at Alberta region in Canada......but one thing is very clear and that is if Ril Inf is interested in it then there should be something in this sector......

Saturday, February 6, 2010

Shankar Sharma speaks at DNA....

The big bear hates commodity bull runs because, unlike other asset classes, it impoverishes people. So they don’t last. And he continues to be bearish. The Sensex, he says, is just a two square mile phenomenon — Fort to Nariman Point. The market going up benefits 25 brokers, 200 promoters and 100 funds. Iske aage kisko fayeda ho raha hai, boss? he asks. Meet Shankar Sharma, director and chief global strategist, First Global Stock Broking. In this freewheeling interview, he spoke to DNA Money of how China is 200 years ahead of India, how India doesn’t deserve to be a Bric nation, on how the market is all about insider trading:

How do you see 2010 panning out?
Back in December 2008, my view was that in 2009 could not by any logical measure be a down-year considering that we had already lost 60% in 2008, which was unprecedented. That panned out but within that, my view always was that it was a bear-market rally and not the emergence of a new bull market and I’ll still pretty much maintain that view till I find evidence to the contrary.
But what about 2010?

My view has been that we will see a market in the first half which will be quite ugly. The first half would be a down-half and the second would be an up-half but by and large, for the year, we may not see much of a huge swing as opposed to 2007, 2008 and 2009, which have been very huge by way of volatility. I doubt if this year will be as violent as the years past because volatility cannot continue with the same intensity perennially.

What about the impact of FII flows?
I don’t believe that money flows have anything to do with the market. So I don’t subscribe to that theory that flows determine where the markets go. The rationalist in me, the mathematician in me, tells me only one thing — that dollar in is always equal to dollar out. There can never be new money coming into the market, it is arithmetically impossible.
So we chose to focus on the side of the equation that supports the market move. If the markets rally and the FIIs bought stocks worth a thousand crores, we kind of work in reverse and say that because they bought the market went up.
I say what about the guys who sold a thousand crores? For FIIs to have bought a thousand crores, somebody sold a thousand crores.

So how come we are not focusing on that side of the equation?
Because that’s not comfortable. We like to see easy patterns in things, that’s the way the human mind is. Sometimes patterns are easy and they sort of lull us into … Five days on which the FIIs bought, the markets went up so we kind of assume that that is the pattern. If you drill down, there is no pattern at all. The mind wants to seek a pattern in things that show no patterns at all. That’s the way the human mind works. We like easy theories, we like things we can tell our children. And I always say that if this was that simple, then my daughter, who is five, can be an analyst. If all that matters is that money came in, markets went up, and money went out, markets went down, then why do we need people who are educated. Then why do we need people who are educated for a pretty childish thing to analyse? Anybody can analyse it.No flows can determine where the market is going. It’s irrelevant. The market does not know the identity of the buyer or the seller. A dollar in is equal to a dollar out. And a dollar in, irrespective of where it comes from, has the same monetary effect on the market. I can’t say that just because a foreigner is buying stock, I have to attach $1.5 of value to a $1 investment. That’s all bullshit. That’s all nice talk that people begin to talk, you know, over three drinks…

Ultimately there is no rational basis for saying these things. But in life there are a lot of things which we kind of just believe, that’s the way it is. Rationalists always debunk these theories. I belong to that camp. I believe in a lot of nonsense also but I don’t believe this nonsense.

What is the rationalist’s view of the markets?
My views are determined by 60% technical analysis and 40% by fundamentals. Money flows don’t matter, because arithmetically money flows cannot matter. Dollar in is always equal to dollar out.
I’ll tell you where it matters. It matters in a thinly traded stock. That’s where it matters, because that guy is the market. That one guy, two guys, that cartel of people they can manipulate and take up the price of a single stock, a Z-group stock. And that happens. Even as we speak, there is some stock being manipulated, that’s possible. But I am not talking about a stock, I am talking aggregate, macro, a big market. A large, liquid well-traded market. And by category emerging markets, by category global equity markets, its not possible yaar.

When will you turn a bull?
It’s not to say that we have been bearish on all sectors. One sector which we have been very, very bullish on over the last twelve-eighteen months is auto, even during the 2008 crash. Most other sectors have favourable comparisons emanating out of a poor 2008, so 2009 makes them look good. Autos, on an absolute basis —- the numbers, profits —- take any parameter, have been good. Autos are in a secular bull market in India, without a doubt. I am not convinced about other sectors.

The top heavyweights of the Sensex are very large companies — Reliance Industries, NTPC, Bharti, RCom, SBI — and they would not be able to deliver the earnings growth needed to take the market to new highs. Broadly speaking, though not in the absolutely literal sense, we will become like the Nasdaq. That index has done nothing for ten yeas and I doubt if in my lifetime it will go to new highs. That’s because the top five stocks — Intel, Cisco, Microsoft, Dell, Oracle — are 50-60% of the weight of the index. They are not going to their highs, forget about it. They are not going up three-four times, they are large, mature companies which will grow earnings maybe 3-8%. The Nasdaq is being weighed down by the weight of these five-six biggies, but below that Apple has been terrific; Google, Amazon have been terrific. But none of them occupies a huge enough weight to influence the whole index. What you need for that to happen is the emergence of companies that become equal-weight or higher in weight than the stalwarts. Maybe it is possible in America because it is a tech-centric market and simply because of the innovation of the American people. In India there are no innovations, there are existing businesses that are growing. We don’t have a single technology company in India.

What about the telecom revolution?
Telecom was large across the world but not so here, so it had a lot to catching up to do. It was a pretty predictable road, we knew where we would end up. Maybe to 15-20% penetration from 2%. I remember when we had to make presentations to foreign institutional investors in 1994-95, India’s telecom penetration was only 2%. There were only landlines then. I couldn’t take the bet that it would become 50%, but I could definitely take the bet that we will go to 10-15% in 10 years. My belief was that every two-wheeler owner would have a mobile phone. That was the proxy on which we worked, which was actually totally wrong. That has been outstripped by a factor of 10 at least.

On Sensex, the phenomenon of a few becoming heavyweights - is there a similar example of it elsewhere, say in emerging markets?
In most emerging markets you will find that a few companies become an oversized part of the index. The reason for that is very simple. Most emerging markets have businesses that are born out of crony capitalism. A few promoters and entrepreneurs can fix the system, get large businesses and hence power gets concentrated in a few hands. So whether it is a land deal, a land contract or a gas find — whatever it is — if you and I try, even if we qualify, we will never get it. Intrinsically all these economies work on the basis of connections unlike America, which is still a highly merit-driven economy. Hence we have a very concentrated market cap in the hands of a few people who manage to get their licences and sweetheart deals.

Which sector do you think is now placed like telecom was in the mid-1990s?
Actually the strange thing is that we have been making the same presentation for the last 16 years. There is something called Indian Infrastructure that we have been presenting since 1994. The only thing I change is the date of the presentation. It is a permanent bull market story, boss. We never do any infrastructure, so it’s always in the future; the past is terrible, future is bright.

What about our execution capabilities?
Obviously, something will change — I am hopeful. The only thing I worry about is we take on the mantle of trying to do the Commonwealth Games, and we make such a mess of it. Now nobody has heard of the Commonwealth Games except the countries that were colonised, so the bad name will not spread across the world. But of the Bric pack, India is the only country that has not hosted or is even close to hosting the Olympics. Brazil is hosting the next one; China and Russia have done it already and I doubt if after the Commonwealth Games we will ever get a shot at staging the Olympics even if we could write a cheque for it. I find that we have become too self-congratulatory by way of our achievements and that is very dangerous. We have already started congratulating ourselves, merely because someone put us in a group of four countries (Bric). But I think China is 100-200 years ahead of us. The Chinese are very saddened that India and China are being spoken about in the same breath. On every parameter they are ahead of us. I mean, they have 1,300 ports and we have 13. We have managed to convince the world that we are a peer of China, and once a certain thing gets coined it’s very hard to shake it off, boss. That’s the way marketing works.

But a lot is said about India having better democratic institutions than China, which works in India’s favour in the long run...
See, India has terrific things. It has a democracy or a so-called democracy, in which I get to vote once every five years and then we can forget about democracy in the intervening four and a half years. And then we have annual accounts and quarterly accounts in English, which is very good. All those things greatly appeal to foreigners. It is a country which has built itself to attract foreign capital, in a manner of speaking. That we don’t get enough of it, I think, is a shame. My view is that we should completely unfetter foreign capital and let it flow in as much volume as it wants to, and forget about trying to use monetary tools to curb its flows. Let them come here, pump up the domestic economy, inflate to a size of a huge bubble and ultimately the bubble will pop. Who is the biggest loser when it pops? Not me, because I don’t own anything. It is largely owned by the foreigners, right? I have kept my money in the bank, so I am safe. The guy who owns the majority of the bubble is the guy who is going to lose the most. The foreigners own the majority. The bubble implodes. Markets go down. Property goes down. Cement plants go down. Value of steel plants goes down. Then, I, as a local, I will go and buy those assets, on the cheap. It is ultimately a zero-sum game. Sounds terrible. But that’s the simple arithmetic. Somebody walks in with $50 billion and leaves with $10 billion he has left $40 billion of wealth for me as an Indian. But people don’t get this. If I say this to somebody they get very offended and tell me how can you say that they will lose money here. I am saying that it is not about India. That’s the nature of the beast. Every bubble collapses.

If there is such a pessimistic view on what might be achieved….
I am not pessimistic. I am being realistic. All I am saying is that we are becoming too self-congratulatory. That’s all I am saying. India has done a reasonable bit, but not quite enough to deserve the billing that it is getting. If you call that pessimistic, so be it. But on all human parameters, development indices, we are way behind. And for me, as an Indian, that is more important than just looking at the Sensex and saying that the index goes up to 22,000 and India has progressed by 30%. That is not just correlated, boss. They are two different things. The Sensex is just a two square mile phenomenon — Fort to Nariman Point. That is about all that is interested in the Sensex. Large parts of the country have no interest and thank God for that! When their life’s Sensex goes up, that is when I will truly become bullish. This market going up is benefiting 25 brokers, 200 promoters, 100 funds. Iske aage kisko fayeda ho raha hai, boss?
500 entities is what the total interest groups involved in the stock market will add up to. That’s it. In any meaningful term. Don’t tell me that there are 50 lakh demat account holders and all that. Those are just numbers. Investors have 100 shares of something or 200 shares of something else in those accounts. They don’t even look at it. It doesn’t affect their daily lives.
Talking of equities, there is concern that money that came through exchange-traded funds (ETFs) in India is leaving…
If the sentiment turns negative on emerging markets, you can see a reversal in ETF flows. And that is actually quite dangerous because ETFs don’t discriminate between markets or stocks. It’s just a big blanket trade, which becomes quite a dangerous thing in a bear market because it is non-discriminating money, that does not distinguish between companies. An ETF will sell an equal quantity of Hindustan Lever (HUL) and Jaiprakash Industries, as much as what is represented in the index.

You just talked about HUL. In the last 10 years the stock hasn’t gone anywhere?
More. From 1997-98, for the last 12 years, it has been in a bear market. It’s all-time high was Rs 324. It has gotten close to that price, flirted, but not quite there.

What’s wrong there?
Nothing’s wrong there. The fact is that we overpaid for what was back then a great company. I don’t think it is a great company now. I think they lost their way and other companies like Nestle did phenomenally well and they cashed in on the big consumer boom that happened in India but Lever somehow lost its way. ITC, coming out of nowhere, has done a pretty good job. We overpaid for Lever back in the nineties. We were paying, 50, 60, 70, 80 times earnings. It was a great company. I used to argue many times that it’s a great company, but 80 times earnings for what yaar? And then people used to say that “consumer boom India mein hoga (will happen in India). And hua bhi (it happened). It was the 800-pound gorilla of the industry, which was at that point considered as a strength — that it could spend Rs 550 crore on advertising, which was morethan the turnover of a lot of other companies. But unfortunately, life is never that simple. Lever became so large it had to leave or vacate a lot of profitable or smaller pockets of the market, which other companies got into.
That’s the way large companies wither away and smaller ones grow. Lever is a classic example. We overpaid for it and it never boomed because it was already a very large company and by virtue of that size, any boom will never come in the largest category, it will probably come in a relatively small category and you will wake up only when the small category has become very large. When a Rs 100 crore brand becomes a Rs 1,000 crore one, then Lever will say, Wow man, this is a damn good business, let’s go back into it. But it has missed the first-mover advantage; somebody else has taken away the turf. It’s like the mobile business. When Sunil Mittal got into it, it was a nothing business. When it became large, everybody jumped into it. But he has made the money. Nobody else is going to make that much money.

What are the three key reasons for the markets to go down than up?
The first reason is obviously the dollar has been beaten down too much and there is a case to be made for a counter-trend rally in the greenback. Second is increased protectionism, which will probably cause the second leg of the downturn. We are already seeing that beginning to happen. And the third is the implosion of the China bubble. I am convinced about it. It cannot last. And that’s what has propped the emerging market trade by and large. I mean, if you think about it, India is not really as commodity-centric in as a Brazil or Russia, but actually our large companies are all commodity-centric be it is Reliance, ONGC, Cairn or Tata Steel. A large part of the index is actually very commodity-driven, boss. But nobody thinks of us as a commodity-centric country. So oil goes to $40, I can tell you that RIL, Cairn or ONGC will not hold up. Or for that matter the commodity basket itself because oil will not go down alone, it will drag down steel also, it will drag down copper also, you know.

What is your view on the dollar?
I think cyclically we are due for a rally in the dollar, which again correlates well with where the markets are going, which is when we have a relatively stronger dollar. Then we have weakening emerging markets. So I think the trade which worked in 2008 is coming back, which is long US and short emerging markets. I would rather be long in the US and short emerging markets than the other way round right now.

What about gold?
I am not a believer in gold. I have been negative for many years. Save for when it was at $250-280 (per ounce). I thought there was trade in it then and it would go to $600-700 because it had been a huge bear market for 30 years. So that said, I think gold is a completely nonsensical trade. If inflation is going up, I’d rather buy something that people would buy more of in order to produce the goods and services that they want to. Like copper, for instance; that has use, right? Gold, why should I go and buy if prices for foodgrains or whatever are rising? I don’t see the connection. This is another of those old-wives tales.

What about other commodities?
Again, broadly speaking I am not a big believer in commodities on a philosophical basis, that’s not to say that I will pass up a good trade. My view is that the world cannot have a commodity bull market for one major reason —- it actually impoverishes people, it doesn’t enrich us, unlike a bull run in other asset classes. We love a bull market, we love bubbles.
A property bull market, property boom, property bubble — we love it. Stock market, we might own 200 shares, but a boom still makes us relatively richer. The only bubble populations hate is the commodity bubble. Save for, let’s say, the gold bubble, and forget about that. Inflation is only a matter of enriching a few Indians. But broadly, all commodity price inflation is going to hurt you and me. I do believe that there is a natural human barrier to paying higher prices for a commodity. And governments will, by force, by fiat, by any means possible, legally or illegally, ensure that commodity booms are pricked. You can play it as a trade but I don’t belong to the Jim Rogers school to believe that there is a perennial bull market in commodities.

Not even agri commodities?
It has to be pricked, boss. What will you do? Look at sugar, halat kharab hai ekdum (the situation is pretty bad). But then wohi hota hai (that’s what happens). For a while it will run, but then something will happen. Controls. Or people will simply stop consuming. We end up buying more of stocks and real estate when they are running up. But we don’t buy more of tur dal and sugar when they are running up, right? We don’t fill up more petrol because oil prices are rising. We probably think of cutting back here or there.

What do you make of the Obama administration attempts to end proprietary trading by investment banks?
Not just prop trading, he has talked about offshoring also. I don’t think we should underestimate that particular issue even ifthe IT industry may shrug it off. Look, we all thought Wall Street was a holy cow and no US politician would ever do anything that hurts its interests. But this guy Obama is clearly thinking differently. So when he talks about offshoring becoming the new enemy I think we have to take him very seriously because if he can hurt the interest of Wall Street banks, which are a huge interest group in the US and they dominate a lot of a policy-making there, what are half-a-dozen Indian IT companies? We are not there even on the radar by way of any influence. I’d be very concerned. Fine, we can always say six months later that nothing happened. And I’ll be glad because my fear is that if a tax is imposed it clearly becomes a big problem for Indian companies. In India growth has been from the domestic consumption story and the IT boom has driven a very substantial part of it for the last 10-15 years.

What about the Union Budget? Not too much of a case for the market to anticipate much?
Yes I agree. But to be honest with you, I mean again I attach too much rational sense to what the market does. It all depends on what the general events around that day are on the global macro and corporate fronts. We should be slightly careful in ascribing market moves after the Budget to just the Budget. Sometimes the market is just poised to fall and it does. Sometimes it is poised to rally and it does. And the Budget, anyway, I don’t think has much of an effect on the market beyond the first week because I have never seen anyone even remember the Budget or its proposals unless it is something terrible like fringe benefit tax, which is remembered for 5 years.
Do you expect the Budget to take measures on fiscal deficit?
I doubt they will do anything immediately. I don’t think they will roll back whatever they did in December 2008 or January 2009, whenever the so-called stimulus package was brought in. I don’t think it was a stimulus package, but for lack of a better term, we started calling it that. But I just think because the markets are very nervous and on top of that there’s the divestment plan which stretches out all the way into the horizon, I doubt if they will do anything immediately. It will happen at some point. But I don’t think they will upset the applecart just yet.
Divestments will also depend on the market…
Which is why they will not roll back or at least they will not contribute their bit to bringing the market down.
What do you read?
I don’t read newspapers.
We didn’t mean newspapers…
But I do read DNA Money, by the way. And I am not saying this out of politeness. I think this is the only newspaper I read because I think it’s a terrific paper. I really find something useful in it almost every day. But by and large I don’t read newspapers.
What is the last good book you read?
Actually I have stopped reading books on finance also.
Generally speaking. It need not be a book on finance…
Oh. I read a lot. Everything other than finance I read now.
Chetan Bhagat?
I read Five Point Someone many years back when it had just come out.
That was his best book…
Yeah, after that people told me the other ones are not that good. So I thought let’s stop it at the peak, boss. Right now I am engrossed in watching this serial called 24. I am absolutely addicted to that. I keep watching that and that has affected my reading. Crime thrillers are something that I have been reading since I was a kid. And there are a lot of books lately that I have bought. Superfreakonomics I am half way through. The Logic of Life was the last book I read and that was interesting.