Sunday, April 18, 2010


The past 12 months saw hope triumph over despair and bulls tightening their grip on the Indian stock market. Generous stimulus packages had the desired effect of propping up the global economy. Those who had the courage to remain invested are now laughing their way to banks

PSYCHOLOGISTS say hope, fear and greed are the three basic elements of stock markets. And whenever fear is the overriding factor, it is time to enter the market and remain optimistic. But, in reality, to go against consensus is not easy.
In April 2009, fear and scepticism were at their peak. Data coming out of economies were poor and even political leaders were cautious before making tall claims of recovery. Home sales in the United States were down and jobless claims were rising every month. Nobody was giving a chance to equities. Every central banker was preparing for another round of bailouts and was sweating at the thought of ill effects such as high inflation.
It appeared that every economist and analyst had turned into an environmentalist and `green shoots' and `yellow weeds' were heard from Dalal Street to Wall Street. It is tough to take a contrary stand in life, but the people who had the courage to be optimists in the gloom of April 2009 are the ones who are laughing today with equity valuations surging.
Dow Jones Industrial Average has crossed the 11,000 mark, and, in India, everyone is talking about when Sensex will break its high above 21,000. Some people are guessing that Sensex will set a new high this year.
Predicting Sensex is a hazardous business. One should not try to time the market. Instead, one should look at valuations of companies and decide whether to buy them or sell them and ignore the free advice doled out by analysts.
After May 2009, the world started to realise that liquidity, which most central banks had injected into system, was going to have some impact on asset prices. Much before economic recovery gained a foothold, assets began to gain weight.
This brought institu tional investors back into equities, especially in emerging markets such as India, where growth had only slowed down.
Aggressive hedge funds entered India anticipating a rupee rally, considering the surge in FII and FDI flows. These inflows accel erated when federal elections threw a surprise and a stable government came to power.
The global market also started to improve once it was clear that the worst was over for the US financial system and another major failure was not on the cards. But Europe did not show any sign of such recovery, except in Germany, which, technically, was the first country to come out of recession.
In the case of India, gains from equities have been extremely high as the economy showed considerable strength during the crisis. Corporate India has come out stronger, and the better than expected sales of Jaguar and Land Rover are examples of Indian companies successfully taking a contrary stand and passing with flying colours.
A basic strength of India is its population. It is a country of young people who have the opportunity to spend what they earn, making India a big domestic consumption story that is going to grow over the decades. Indian markets are going to beat their peers despite the occasional phases of underperformance due to overheating. 14,284.21 May 18, 2009 Sensex climbs 2,110.79 points on UPA win 14,658.49 July 2, 2009 Petro prices raised by Rs 4, diesel by Rs 2.01 14,265.53 June 18, 2009 The rate of inflation falls to negative zone for the first time in history 14,043.40 July 6, 2009 Union budget 2009-10.


  1. Rajeev,
    Wish to know your views about IL&FS Transportation Networks.

    Based on the reviews given by Nirmal Bang before the IPO (Last Month), this scrip is trading at PE=22. Where as the IRB is at PE=28. Considering this scrip valuation could be Rs. ~350.

    But, the Debt/Equity is also high for IL&FS (2.38)

    However, the company is having projects in pipeline from NHAI worth 2500 Crores.

    With a calculated risk, is it OK to have partial exposure to this scrip?

    Please let me know your views on this.


  2. Rajiv ji
    any idea about shivalik bimetals(Ln mital group co)and jayswal neco at cmp.
    is it buy at cmp for long term

  3. Rajiv ji
    i know from last one year power of holding.
    in past i buy so many good scrip at mouth watering price and sell after 50% to 100% profit from my buy price and i think i m very clever invester but after my sell those scrip go to sky high.
    But from last year i follow some BHISM PITAMAH of stock market(you are one of them I proudly say)and know some scrip which i sale on above 50% profit are strong buy when i sell.
    actualy more buy and sell specialy day trading and short term trading we do for broker only.
    if we buy any good scrip at lower level and stay invested for long time we earn more than short term trading.
    i request your timely and always guidance.
    thanks again Rajiv sir

  4. I have the same experience as Ashok ji. the gallant metal i have entered at Rs 11/- and sold it for Rs 14/- immediately now it is 27/-. so many scrips are there to say as example. but a discipline we have to follow based on our financial position, risk taking, etc.,

  5. ashok and hema,
    let me again write.....
    "Even you wants to book profit at 25% or it.....but never sell the whole quantity".....THAT IS THE BOTTOMLINE....
    Write this down at your desk where you can read it daily...means harroj uske upper nazar pade....

  6. Dear Rajeev Desai,

    In this kind of volatile market what is your advise for buying safe stocks like MNC buy back candidates.

    In case market drops in India i know each and every stock will drop and in bad market all stock are bad.

    I feel still MNC with buy back calls can withstand down fall slightly better.
    My comments is for Alpha Laval BOC MICO Novarites Wyeth.

    I have seen you blog for the first time and liked it very much

  7. Hi manher,
    Alpha Laval is an excellent stock even if buy back do not come.....excellent pick...I have already mentioned as a buy 6 months back...
    MICO also looks are Novarities , Wyeth etc.....but Alpha Laval is my top pick....undervalued too....

  8. Rajeevbhai,

    Thanks a lot for your quick response.

    Manher Desai

  9. Pls mention your comments on BOC India when you are free.

    I am long term holder in all above stocks. I had Alphalaval was picked at 37 in 1884/85

  10. Hi Rajeev,

    Monsoon predictions are good is this is good for stocks like Lt foods

  11. motabhai(manhar ji) and thinktank ji
    LT FOOD and KOHINOOR FOOD both looking good but
    we see some firework in fertiliser stock. today spic start new upward journey. RCF also looking good on dips.
    i beleive in theme base story.fertiliser and agro base stock may be one of the next theme.
    may be i m wrong