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On economic stimulus, Spence says it should be withdrawn slowly.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......


  1. TCS, Patni in large companies and Spanco emerging star Ranks the first to fit this massive IT conversion of the great sweet story of India as they are already handling many govt projects

  2. Hi Rajeev,
    once again good article.
    Thanks for your suggestion of Spanco.I entered at 70. It has way to go up as its still so below its BV.
    One query - How is MIC electronics for LT?
    With Regards,

  3. rajeev bhai
    do u think kpit will benefit in this???

  4. Top 100 Emerging Companies in India
    Some of the sectors that are expected to continue performing well are Infrastructure, Oil & Gas, Power, Telecom and Pharmaceuticals.

    In this report, we have identified 100 emerging Indian companies which are expected to register exceptional growth in 2010. We have shortlisted only those companies with market capitalization greater than Rs.100 crores, and which have demonstrated net sales growth greater than 20% in the FY09.

    01. Aban Offshore Limited
    02. ABG Shipyard Limited
    03. Ahluwalia Contracts (India) Limited
    04. Allied Digital Services Limited
    05. Alstom Projects India Limited
    06. Amar Remedies
    07. Amara Raja Batteries Ltd
    08. Apar Industries Limited
    09. Aurobindo Pharma Limited
    10. Axis Bank Limited
    11. Bajaj Electricals Limited
    12. Bartronics India Limited
    13. Bayer CropScience Limited
    14. Bheema Cements Limited
    15. Bhushan Steel Limited
    16. Chowgule Steamships Limited
    17. City Union Bank Limited
    18. CORE Projects and Technologies Limited
    19. Coromandel International Limited
    20. Cummins India Limited
    21. DCM Shriram Industries Limited
    22. eClerx Services Limited
    23. E.I.D. Parry (India) Limited
    24. Engineers India Limited
    26. Everest Industries Limited
    27. Everonn Education Limited
    28. Exide Industries Limited
    29. Gammon India Limited
    30. Gammon Infrastructure Projects
    31. Gateway Distriparks Limited
    32. Geodesic Limited
    33. Geometric Limited
    34. Goa Carbon Limited
    35. Gujarat Fluorochemicals Limited
    36. Gujarat Alkalies and Chemicals Limited
    37. Gulf Oil Corporation Limited
    38. Hanung Toys & Textiles Limited
    39. Himatsingka Seide Limited
    40. ICSA (INDIA) LTD
    41. Indowind Energy Limited
    42. IVRCL Infrastructure & Projects Limited
    43. J.B. Chemicals & Pharmaceuticals Limited
    44. Jaihind Projects Limited
    45. Jindal Drilling & Industries Limited
    46. Kajaria Ceramics Limited
    47. Karma Ispat Limited
    48. KEC International Limited
    49. KS Oils Limited
    50. Kwality Dairy (India) Limited
    51. LIC Housing Finance
    52. Lupin Limited
    53. Madhucon Projects Limited
    54. Mcleod Russel India Limited
    55. Mercator Lines Limited
    56. Mukta Arts Limited
    57. OCL India Limited
    58. Oil Country Tubular Limited
    59. Opto Circuits (India) Limited
    60. Page Industries Limited
    61. Patel Engineering Limited
    62. Pratibha Industries Limited
    63. PSL Limited
    64. Rajesh Exports Limited
    65. Rallis India Limited
    66. Relaxo Footwears Limited
    67. Renaissance Jewellery Limited
    68. Repro India Limited
    69. Sabero Organics Gujarat Limited
    70. Seamec Limited
    71. Selan Exploration Technology Limited
    72. Shiv Vani Oil & Gas Exploration Services Limited
    73. Shree Cement Limited
    74. Simbhaoli Sugars Limited
    75. Simplex Projects Limited
    76. Solar Industries India Limited
    77. Sonata Software
    78. Spice Mobiles Limited
    79. Sterlite Technologies Limited
    80. Subex Limited
    81. Supreme Infrastructure India Limited
    82. Surya Pharmaceutical Limited
    83. Swaraj Engines Limited
    84. TATA Chemicals Limited
    85. TATA Sponge Iron Limited
    86. The Andhra Sugars Limited
    87. The Indian Hume Pipe Company Limited
    88. Tide Water Oil Company (India) Limited
    89. The Tinplate Company of India Limited
    90. TRF Limited
    91. Tulip Telecom Limited
    92. UB Engineering Limited
    93. United Spirits Limited
    94. Visaka Industries Limited
    95. Voltas Limited
    96. V.S.T. Tillers Tractors Limited
    97. Welspun Gujarat Stahl Rohren Limited
    98. Yes Bank Limited
    99. Zydus Wellness Limited
    100. Zylog Systems Limited

    To know more and to buy a copy of your report feel free to visit www dot tinyurl dot com/ycfuezv

  5. Spanco Daily new 52 W high, This Budget special allocation will be made for modernization of various govt divisions that would add high momentum into Spanco

  6. Mr Ravi

    your cent percent Correct, Thanks
    for Mr Rajeev to spot this gem

  7. Market Khabar from Original Promoter of KARVY (Kutumbha Rao) Recommends Sujana Towers Immediate target 95. Please note in the name of KARVY-K stands for his name he left KARVY several years ago and is a full time Pvt Equity Player now a days read out what he has to say on Sujana Towers "Renewed buying interest seen in power transmission companies such as Sujana Towers, Jyoti Structures, KEC International and Kalpataru Power. Sources indicate that Powergrid Corp is likely to release orders worth nearly Rs 10,000 crore for setting up transmission towers. Heightened activity in Sujana Towers indicates short term target of Rs95"

  8. hi rajeev....i understand you dont project the market short term movements...bur since a very imp even for the mkts (the budget) is just around the corner...would like to u have any take on the overall mkts..before & after the budget....rgds, deepak

  9. Dear Rajeev,

    Posting an article from deccan chronicle by Mr C. Kutumba Rao who was the founder of Karvy.

    Renewed buying interest seen in power transmission companies such as Sujana Towers, Jyoti Structures, KEC International and Kalpataru Power. Sources indicate that Powergrid Corp is likely to release orders worth nearly Rs 10,000 crore for setting up transmission towers. Heightened activity in Sujana Towers indicates short term target of Rs95

    C. Kutumba Rao is a Hyderabad-based stock market analyst.

  10. Oops. Looks like S.ravi had already mentioned it.

  11. hello ,
    spanco has started correcting ? or that is an opportunity to accumulate ?

    Please clarify

  12. Spanco wins Rajasthan SDC Order this is awesome, Shortly Spanco would win many orders from Govt and ever Power Grid to update transmission and power network..God knows how big this order can be

  13. OM and others,
    I have always written what needs to be looked for investing.
    One need to go through these parametres by him/herself and try to make a decision on his/her own.
    One needs to culativate that expertise otherwise one can fell in totally wrong stock.
    When I recomended Spanco Ltd, first thing I wrote and emphasized was Mcap and Sales.
    The sales is going up still and Mcap is also going up due to price going up but one can always look at bse site and see what the Mcap is, at anytime.
    The Mcap is still around 240 cr while the Sales is 1200 cr.
    I have also explained that if Mcap is much less then Sales then it means that the stock is going say with Spanco , a 1200 cr co and profit making ,one can buy for just Rs240 cr!....the Sales and Mcap ratio can be or should be do the maths and project what price Spanco can attract....Same was the reason when I recomended Surya Roshni.....

  14. Hi Rajeev ji,
    I am on BSE site , opened spanco details.. can u pls suggest where can I see Sales figures 1200 Cr?
    Also what is the diff between full and floating Mkt cap ?
    please dont mind my these questions, hv lot to learn from u in investor mode.

  15. Hi Rajeev ji,
    Do you track EMPOWER INDUSTRIES (BSE Code: 504351) ? is it good for long term ?

  16. Om,
    Sales is the the bottom right in results tab, for every qr and we have to calculate it for whole year...
    I don't understand the free float thing....

  17. Om, Empower was my old call at mmb days which I gave at around 13 -14 and then it tripled....It is very highly speculative......

  18. Deepak,
    Seems market will consolidate at this level befor a jump......Individual stock will outperform according the news.....but I am atleast not seeiung 12k, unless another major economic crises occurs......but I may prove wrong.....


    hi RAJEEV,

    LIC to invest Rs 10k cr by March
    NEW DELHI: The country’s largest insurer LIC on Tuesday said it will pump in about Rs 10,000-crore in the stock markets by March-end, taking its annual equity investment to Rs 60,000 crore this fiscal. “Our investment in the equity market so far has already crossed Rs 50,000 crore and we expect to close the fiscal (2009-10) with an investment of Rs 55,000-60,000 crore,” LIC executive director (investment operations) N Mohanraj told PTI. During 2008-09, LIC invested Rs 40,300 crore in the equity market, Mr Mohanraj said. This fund infusion in the market by the country‘s biggest domestic financial institution boosted the sentiment at bourses, which witnessed volatility, especially after the collapse of Lehman Brothers in America in 2008.

  20. Spanco Ltd has informed BSE that the Company has been awarded the Rajasthan State Data Center (SDC) project by the Government of Rajasthan. This is the second SOC order which the company has received after Orrissa SDC in the country and is the part of the core infrastructure under the National eGovernance Program (NeGP) instituted by the Department 0f Information Technology, Government of India.

  21. Hi Om and Rajeev,

    Free float is market capitalisation of those shares which are not locked-in, not held by promoters, not pledged to banks etc. In other words, those shares that can participate in stock market transactions.

  22. Hmmn Krishna,
    That is a great revealation....