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Thursday, December 29, 2011

Hope...

A Government made up of lawyers is arguing like a flock of birds while the country's governance goes to ground.A fear of accountability hangs like a shroud over our politicians and its ironic to see these champions of democrasy cower at the thought of opening up their accounts and personal finances to the public.

I have not been a big supporter of Anna Hazare yet am veering round to the view that without a shock our system will not move forward.The economy grew at 8% even without FDI in retail so we shall survive,what will not encourage investments is the huge list of pending projects across the country,the lack of direction in checking the huge wastage in the production to consumption  cycle etc

Giving reservation to tribals,muslims and sundry will not ensure advancement.Scheduled castes were given a 20% advantage in academic performance in which their marks were considered to be at par even when 20% lower.How many academics or administrators has it produced?

Giving subsidies has been the most visible and straight line method for the Government so that it can "show" what its doing for the people.Why do we Indians never see the long term benefits?As i write the Indian cricket team has collapsed against the aussies in melbourne,somehow it was always expected that they would not be able to measure up.

I hope the country as a whole can show a collective 'backbone' in 2012 and rather than try to make a circus be it in going green....a small matter of mixing 20% bio-fuel with diesel has not been agreed to by the Government and the oil marketing countries have a monopoly and all the bio-fuel can only to sold to them directly.The saving to the exchequer may be 3000 crore or less but the cost to the environment is immeasurable!

Haldia port is almost silted up,nothing being done.West Bengal is the only state in India that has snow clad mountains,sand beaches,India's largest river flowing through it,yet where is tourism?I once wrote a blog where i wished to see yachts in the Hooghly.I am sure that will remain a pipedream in 2012.

The roads have craters as big as those on the moon,so where are we after 60 years of Independence.Yet I have HOPE.Yet too I do not want this country to grow as per China model which does not care for cultural identities and the destruction of the environment.I do not think we could survive such a path.

Why think the Sky is the limit....when there are footprints on the Moon.

Wednesday, December 21, 2011

2011:The Year That Never Was and the Cycle of Life

I would like to forget this year in a rush.A lot of Indian Icons left us with unforgetable,watchable memories,a few songs,some great acts.....Jagjit Singh,Bhupen Hazarika,Dev Anand and a few like George Whitman,the one whom i never met but spent a hugely wonderful time surrounded by the musty,wet smell of old books in his Shakespeare and Company in Paris.

The Euro crisis did to equity markets what the Subprime issue couldn't do!Here in India we have learnt a few hard lessons that always lay somewhere over the horizon viz.without the 'Growth Story',India is simply a concoction of bad roads,corruption,economic imparity and a collection of states pulling in different directions?

The Arab Spring that brought so much hope is falling into bloodshed at the very same Tahrir square.Syria is killing itself.Iran doesnt know if the mullahs run the government or is it the politicians masquerading as mullahs?The Americans pulled out of Iraq but are threatening to walk into Iran.

China wants to control the internet,the Indian Ocean,every word that its own society writes or thinks.Its growth slowing,the mighty engine is looking for a landing that is neither soft or too hard at the moment.is the world in 2011 a more open,socially egalitarian place or are the old fault-lines window-dressed and presented as something new.

Coming back to Indian equities,I still believe that its a great time if you are an investor with approximately 150 largecap stocks hitting their lifetime lows.For a contrarian the infrastructure sector that has not performed for almost half a decade is a prime pick with some stocks at 30-40% below Book Value.The pressures of mindless expansion and borrowing through ECBs shows survival of the fittest at its best.

There are a lot of companies with good managements that made some bad decisions,will they be punished more than they have in this bear market?The jury is out there...

I would like to bore the reader with some quotes from Peter Lynch(he of One UP On Wall Street fame)

# You cant see the future through  a rearview mirror

"Whenever I am confronted with doubts and despair about the current Big Picture,I try to concentrate on  the Even Bigger Picture.The Even Bigger Picture is the one thats worth knowing about,if you want to be able to keep the faith in stocks"

So whatever issues I have mentioned will always be present in some form or the other.Its important to look at businesses that will grow,make money for the investor,pay bonuses or dividends,generate employment.

It is the Cycle of Life.


Monday, December 5, 2011

Is the World Round or Flat?

I have been reading a lot of articles over the weekend and the inference I can draw is quite puzzling.With modern technology and analytics.....where everything from the number of times we drink water to the choices that an unborn child will make can be predicted!

But truly,the World has become a more difficult place to predict.As the subprime crisis underlined,this Sovereign issue in Europe has highlighted.So Black Swans exist in the middle of so much data flow and number crunching?how could assets become toxic so quickly?systems that have so many checks and balances develop sudden stoppages?

In hindsight,it becomes easier to guess where things started to go wrong.Yet its still not clear what exactly went wrong in the first place.The same has happened this time around.

Its so much easier to pontificate on what is wrong with systems,politics,economy etc yet there are few efforts i see happening that try and read the sitaution and find a workable solution.In One week i have seen or read seven different 'experts" predict a recession and and some that said we are still some steps away from one and few who said that we are in the middle of one!

For me,the rise in inflation and high food prices on the ground,the general insecurity about jobs,the creation of few new jobs,the persistence of "shadow"employment(especially in Agriculture) means that Indians are having a hard time.

The Chinese wanted to curtail inflation,bring down the money growth in the economy and even they dont know if they will have a 'hard' or 'soft' landing!The Russians depend on their mineral exports and China on consuming those to produce growth through manufacturing.Is that an example of a Flat World.

The World has become a harder place to predict.Even with AI and all the numbers getting spewed out and talk of BRICS and emerging powers,come june the farmer in a typical Indian village waits for the Monsoon rains and the crops depend on that.The price on the wholesale market depends on the supply.The level of water in the rivers depends on the ice melt up in the Himalayan Glaciers.

How has technology impacted Change?

Wednesday, November 30, 2011

Acid Test For India Story?

The GDP of 6.9% is the lowest in nine months.With IIP expected at 5% for the full year the slowdown in growth is begining to come home.Inflation is stubbornly high.

A major slump across all sectors lent a hand to this disappointing number. Agriculture growth came in at a meager 3.2% and manufacturing at 2.7% against 5.4% and 7.8% respectively for the same period last year. However, it was de-growth in mining that was the major blow.Services sector too has taken a hit and with manufacturing being down quarter on quarter is adding to the pressure.

The comfort zone for RBI in terms of inflation is 4.5-5% band but I do not think that it will go lower than 7% unless the bottom falls out of the economy and we go into recession.My reason is the food inflation component and with lower production,higher wastage,almost 40-60% in perishable items,the supply chain contraints cannot be wished away neither repaired immediately unless massive investment is undertaken in refrigerated stores and depots and the role of middlemen diminished.

The policy paralysis just adds onto the pressure.I do not see the Eurozone having a more than superficial impact but yes the sentiments have turned negative to a large extent.How will the Indian markets take the 51% FDI in Retail.Is this trigger enough to make the sentiment in equities positive?

An acid test for those who believe in the India story!How can we attract massive investments into the critical infrastucture segment?How to develop services AND provide social security to the organised and unorganised sector.

A funny corollary of development-Bihar.It was India's most underdeveloped state and cheap labour would flock to the rest of the country to,be it daily wagers in real estate,cab drivers or servants in households.A Bihari servant was as ubiquitous a scene as a Nepali watchman in most residences.Now with the NREGA scheme a lot of people are not moving out of Bihar as a result there is a huge shortage of labour for builing roads,bridges and apartments.

Its all leading to rising wages and more inflationary pressure,another vicious circle.It feels like an opportunity for longterm investors as there are plenty of companies trading at less than book value,4% Yield,PEs of 4-5 and RoEs of 20

Time to build or rebuild a portfolio.Consumer focussed,agribusiness stocks.Bharti annouces 50 million users in Africa and those who read my blog regularly will remember how aggressively i have recommended Bharti with an eye on the future.Its one of the stocks  I reiterate a buy on,everytime it declines.

Wednesday, November 23, 2011

The Chaos Theory

I have become a believer....


Just when it looked that the US was not going into recession,PIIGS were on the verge of getting over their sovereign debt issues,BRICS han tould keep growing quicker the developed world,the Arab Spring would breed more democracies,comes a throwback......

Again issues in Spain,Italy,subdued outlook in the US,another Tahrir Square,the slowing growth in China and an upcoming stagflationary situation in India.The Chaos Theory states that the complexities of different factors makes a longterm prediction almost impossible.

The lack of political will to undertake reforms from a Government that has a majority is not only puzzling but downright asinine.Have we frittered away the chance to make this country a dream destination?A leader of the emerging world?Only hindsight will provide an answer.

This time at least the sum of the parts seems to be not greater than the whole!

The answer is to keep the faith and keep investing......SiPs(systematic Investment Plans),every month and month on month to gain the advantage of TPoA(power of averaging).It allows you to keep your exposure to risky assets low as well as giving time for the markets to adjust to the vicissitudes of market dynamics.

Like the weather,the equity markets are a 'natural system'and its difficult to quantify,determine and factor in all the happenings-be they political,economic or natural phenomena.Anyone who thinks they have built a system that can read the differentials and come out with a single answer is welcome to try it on me!!

Till then believe in your instincts,invest in companies that have scalability and grounds for growth,an honest management that has at least one Leader(mind you i did not say MANAGER).

This blog has not talked of individual stocks for a long time and the time comes in Indian equities when sectors and companies can be identified and I look forward to doing that...in my own way!

Monday, November 14, 2011

Crude Reality...

Even before the shadow of an Israeli precision strike on Iranian nuclear facilities becomes a reality and threaten to drag the entire mideast into a war that no one can win,I have been bullish on crude.My reasons are as mentioned below:-

1.Biofuels and other green fuels are still half a decade from fruition and being able to replace the current
   usage
2.The last great year for "big"discoveries was 2009 when BP found a giant deep water well in the Gulf of
   Mexico and Anadarko made a discovery in Sierra Leone.The wells in the middle east are going dry
   i.e.Dubai,Abu Dhabi,Sharjah are trying to turn into financial centres and only Kuwait has some supplies
   but historically since 1980s the discoveries have not kept pace with demand
3.Exploration remains a risky, and costly, business, where some deepwater wells can cost up to $100
   million. From 30 to 50 percent of exploration wells find oil.  
4.The greed of OPEC
wpe5.jpg (20529 bytes)

SUSPICIOUS JUMP in reserves reported by six OPEC members added 300 billion barrels of oil to official reserve tallies yet followed no major discovery of new fields.

5.The technolgy for drilling oil wells in the deep sea are still extremely expensive and unreliable which adds
   to the cost of production
wpe3.jpg (53494 bytes)
GLOBAL PRODUCTION OF OIL both conventional and unconventional (red), recovered after falling in 1973 and 11979. But a more permanent decline is less than 10 years away, according to the authors’ model, based in part on multiple Hubbert curves (lighter lines). U.S. and Canadian oil (brown) topped out in 1972; production in the former Soviet Union (yellow) has fallen 45 percent since 1987. A crest in the oil produced outside the Persian Gulf region (purple) now appears imminent

Into this if the Israelis decide to take out Iranian nuclear facilities located as per the map...
then a war involving Palestine-Syria-Iran on one side and the US-Iran-NATO powers on the other hand looks inevitable.
Iran Nuclear Program MapSuicide bombers,terrorist attacks would be the first line of attacking the US and the situation is scary.

For India oil at $100 might not lead to recession straightaway but the economic impact will be hard.

Politics,Business and Oil will set the tone for the decade to be...

Monday, November 7, 2011

C for China...C for Counterfeit...

U.S. Finds Chinese Counterfeit Parts in Military.....screaming headlines on Bloomberg.

"Counterfeiting in China has reached a crisis point." This common view is heard from many foreign executives and government officials. The problem appears to be getting worse each year: Not only is the quality of counterfeits improving, counterfeit goods are appearing in more overseas markets".-anonymous Chinese Government official.

What many people might not be aware of is the tacit official support provided in the early 1990s when China began a push to become the manufacturing centre of the world.60 Minutes found a corner shop in Donguan, China, selling clubs by Callaway, the American manufacturer of the famous Great Big Bertha driver.


The Chinese government didn't want 60 Minutes to bring our cameras, so they did - undercover. Inside, they saw a club that looked and felt like the Great Big Bertha. Not only that, they were offered Callaway irons, putters, golf bags, gloves, and even a Callaway umbrella.

My sources say there are streets in Shenzhen and SEZs in Donguan and Yiwu which is a 2hour drive from Shanghai are the main centre and anything from Tiffany's jewels to Nike shoes(counterfeit) offcourse can be found on main street.

What started as an enterprise to satisfy the aspirational urges of a few is now a roaring billion dollar industry that exports to Thailand,Vietnam,India and now as per CBS and Bloomberg its heading back to the US!

South Asian countries are more at risk as they can be browbeaten politically to accept more such products as well as them being a cheaper import and destroying the local small scale industries en masse.Just to put things in perspective India's trade deficit(excess of imports over exports)jumped 160% to 23.9 billion $.

Add the cheap poisonous material used in manufacturing(such as children's toys) and the social cost goes up further.

Offcourse it makes sense for China as it kills competition,gets its product into sensitive national security areas and creates a monopolistic environment.It will be important to see what happens if the purchasing index in Europe and US slides and there are fewer orders?

I keep saying in my blog that if there is to be armageddon it will have to come out of China.They are not counting the environmental cost....polluted lakes,forced shifting of population,uprooting whole villages to construct Special Economic Zones.Controlling state media and information services might last another half a decade.

The brutal policy of Chinization of Tibet is being applied in varying degrees in other parts of mainland China as well.If and when there is an "Arab Spring"it will be the Mother of all revolutions!!

My feeling is that the Chinese are superb at ultra long term planning and have an excellent grasp of global political realities BUT just somwhere they seem to be neglecting what is just in front of their nose.The muslim revolt by Uighers is but just one symptom.Those of you who travel often to China do keep ur eyes peeled...hahaha.

Thursday, October 27, 2011

Why You Will Get High Returns during Recession?

The year that was has been stupendously bad for the equity markets,the real estate market,general business,European governments....well the list goes on.

Recent Vanguard research finds that since 1926, the average real returns of a hypothetical portfolio evenly balanced between stocks and bonds have been statistically equivalent regardless of whether the U.S. economy was growing or in recession.
"The calculations are complex, but the underlying rationale is rather straightforward," said Vanguard's chief economist, Joe Davis.

Just goes on to show that sometimes the 'herd mentality" approach doesnt work.In my 15years in the financial markets i have rarely found an investor who ever sat across my desk and wanted to invest when times were bad as they are now!

I have always been a strong advocate of investing regularly be it through SIPs or at frequent intervals and not shaking when you see your investments down 10-20%.What you should worry about are the fundamentals of the stock,the sector performance,management history and the sustainability of the business.

Rarely do I look at the PE ratio(i leave that to the real analysts),I would rather depend on PEG(relative to growth) and on the macro factors

 From the "Roaring Twenties" through the "Great Recession," a hypothetical portfolio with a 50/50 stock/bond balance was, on average, likely to enjoy remarkably similar real returns regardless of prevailing economic conditions:
Average annualized returns for a 50% stock/50% bond portfolio

My advice and I reiterate is to invest especially in the Indian equity markets where a 7-8% GDP growth and annnualized 12-14% corporate PAT growth for the decade can be expected unless Al Qaida lays its hands on a nuke,Mt Vesuvius explodes,remaining middle eastern potentates implode...

Those having the risk appetite should invest in quality midcaps that offer an upside potential of almost 50-70% per annum.Interested?

Friday, October 21, 2011

Dictators and the "Equity Affect"

So Gadhaffi has gone...finally and this will ring a lot of bells around the World.Gone are the days when the US propped up a Batista in Cuba and Marcos in Phillipines and sundry other tinpots in Africa and Latin America.having to fight the mujahideen the CIA created in Af-Pak belt is a good lesson.

Having strong men rule respective countries is easy for the politicians as they have to deal with one alpha personality.What is really does is hide the character of the majority of the country,its traditions and cultures.In the short term there might be confusion till the country finds an internal balance between its various regionisms!

Are we headed for a more egalitarian world.....the "Occupy Wall Street" movement shows that the people are tired of being ruled by representatives who seem to lose their heads and sense of responsibilty once they enter the legislature.It bodes well for the checks and balances that make the final difference to any policy.

Be it cloud computing,people's revolution,right to information or the global co-operation to trace unaccounted money...the 21st Century is turning out to be a century of change.From the enivornmentalists who till a decade were thought of as a idealistic dandys with stars in their eyes to those doing research on tech etc,there is a new found respect.

In this situation,the investors are in my mind in a better position to judge where to go and on what to do.Although there is a lack of depth to the Indian equity markets at the moment,I see no reason to doubt that growth will happen,even with government inertia the sheer pressure to create a PPP model that benefits the citizens as well as the public services will really push things along.

For now I would prefer to buy a Bharti(PE 26,PBv 3)-play on growth in Africa in telecom as well as their retail food business

Reliance(PE 13,PBv 1.6)-their presence across sectors,their zero debt status and the sheer power of their balance sheet(their budget is bigger than a state like Uttaranchal).One can also look at Larsen&Toubro.

I am a big believer that the fall in banking is overdone and Indian banks remain highly capitalized,their CAR being above 10% on average and the lack of banking in rural areas that form a vast catchment area.Axis Bank,SBI,PNB remain my top picks.

Invest when the bad news is flowing or you will invest at the top levels and any correction will demotivate you from equities.I continue to remain bullish on crude and bearish on Gold and Silver at the moment.


Monday, October 17, 2011

Return to Gunboat Diplomacy

The sabre rattling by China on Indian firm ONGC's pact to explore for oil in the South China Sea jointly with Vietnam has caused some discomfort to the Chinese on what they consider their own patch.Yet they press the Burmese to build roads and pipelines,they help the Pakistanis in Kashmir and they are building ports in Sri Lanka.

History - truly a magnificent record which shows that time moves on but countries and diplomacy Sikkim remains the same albeit more couched in legalese and verbose yet like the British sending in their naval gunships to back the East India company in the 19th century to fight the Maharajas!

What puzzles me is the lack of vigour of the Indian army to respond to the Chinese aggression in Sikkim,Arunachal,Ladakh.Does it lack the confidence in its own men and machinery?Its copybook Sun Tzu,encircle the enemy and test its defences,bluff and swagger and measure the response.

India is losing the resource and mineral war in Africa,it seems that even our own borders are not sacrosanct.Yet there is hope with this move by ONGC to explore the sensitivities of the Chinese in their back garden.

They have swallowed a country called Tibet and the Han chinese settlements have crushed the indigenous culture yet the world watches.I have spoken to so many who fled over the border into Nepal and then India and the tales are harrowing and brutal.Of a nation enslaved systematically and destroyed.Dharamshala stands testament to that.

Most countries are afraid of hosting the Dalai Lama,yet we live in the age of democrasy!

風 Swift as the wind
林 Quiet as the forest
火 Conquer like the fire
山 Steady as the mountain

It is said that if you know your enemies and know yourself, you will not be imperilled in a hundred battles; if you do not know your enemies but do know yourself, you will win one and lose one; if you do not know your enemies nor yourself, you will be imperilled in every single battle.

I too am a Sun Tzu fan,the 3rd largest Army in the world must stand up and be counted,because i am afraid that fighting the kashmiris and the maoists etc have softened the core and a battle is brewing which we will see within a decade.Will it be the Chinese?Or the Pakistanis backed by the chinese?

Thursday, September 29, 2011

Gold or Crude?

I have been following the commodities markets for a while now.Unlike the 'specialists' I leave the predictions to the pundits.Yet the feeling remains that the co relation between commodities is a topic that needs more exploring.

Everytime I switch on the television someone or the other is delivering a monologue on why they think what will happen.Same with long winded columns in the pink papers.

The Economic activity in the US is definitely slow but nowhere near a double dip neither has it stalled.The growth concerns of the Global Economy are frankly overdone.For the year I would buy crude and sell gold at current levels with the expectation that a growth of anything over 2% in the developed world and 7-8% in the developing BRICS economies would revive crude demand and the overlong speculative positions in gold would reduce.

Listening to Jeff Imelt say that the confidence on the ground amoungstUS cos is greater than it seems from commentors is a very intuitive comment.I am yet to see any demand destruction in India and even the Chinese are aiming for a soft landing in growth rates to bring down inflation and till now there have been no drastic repercussions.

Again the retail investors are sitting on the sidelines and not buying frontline stock,some of the top companies are available below 1 of Book Value and a PE of  8-12.Are they repeating the historic mistakes of the past?

I feel 8 to 10 months down the line a lot of investors would be rueing why they did not start investing...but then thats what happens all the time.....!

Thursday, September 22, 2011

The World is Not Enough

Interesting times we live in.Is the US in double dip?Is The EU finished?What will Greece do next?Is Germany faltering?Is the Indian Rupee back to is familiar level after half a decade?

These and many other questions have roiled the experts and cast an uncertain net over global economies.The Political will and talent to face the crisis and resolve is missing unlike 2008 and that seems to be the biggest impediment.I do not see inflation going down quickly as the population explosions of the last two decades have created strong demand pressures and it seems the Keynesian policy of curbing money supply isnt working any more.

2011 has been a year of natural disasters viz.earthquake in Japan and these have added to economic burden on the respective economies.What surprises me is how quickly the experts predict that the worst is over and the minute the markets fall they assume the worst.

Europe is bad and will remain so for some time,USA will grow like a tortoise.South American and African economies will take time to create an impact.What is China doing?For 3 months their manufacturing index has been in the red.But I do not seen an implosion in China and that leads me to believe that there will not be any explosions in world economies.

For India-natural resource(and I have talked so much about this in previous posts)remain the key and any fall in the commodity cycle bodes well for us.Our exports are now majorly out of the US-EU bloc so the danger of a slowdown is exaggerated.

The Banking segment in Indian equities has seen a 30% correction and at current levels most of the private sector banks are an 'investment'buy,not so much the PSU banks that have the burden of "priority sector lending" and various other government provisioned schemes.

Unlike experts I believe we will remain in flux in this decade with problems of finding new technologies,resources,medical advancements and finding clean fuel to run the world.With sundry 'Arab Springs' across the world,politically it will be interesting to see how the new blocs shape up and like a post-USSR world we might just see one post-NATO.

Thursday, September 1, 2011

Military Economics:India and the Rest

So the rebels are on the verge of Sirte,the last Gaddhafi stronghold,yet the urbal warfare that will surely follow will be chaotic,crazy and with no guarantee of end results.Speaking of which reminds me that the one army with almost half a century of tackling urban warfare,be it in deserts,mountains or tropical forest areas,cities and the outback-The Indian Army,is yet to have a written war code.The few officers I spoke to either were not aware or its really top secret.

The US army fighting in Iraq,Afghanistan has shown how many casualties can occur even in the face of overwhelming firepower.Their contacts with the Indian army have resulted in join exercises but no serious effort at the kind of "hearts and minds' campaign run in Kashmir or even in Nagaland,Mizoram and Assam.

Yet our politicians have not shown the desire to use the Army as an economic tool.My friends who have served in the UNPROFOR(UN Peace Keeping Force)just reckon that we do not take on social projects unlike the Chinese army and are content just being policemen.

The Chinese do not even have a decent air-carrier and in the next 3 years are incapable of even landing their infantry across the Strait on Taiwan,so poor is their Naval capacity.Yet they push into Africa and the middle east and are slowly encircling India with spy stations in Burma,Sri Lanka and pakistan.

I for one am all for an agressive expansion policy where Indian foreign policy initiatives should have a mobile strike force capable of reaching any part of the world in 72 hours.Having seen the China border in Sikkim and interacted with the 1/4 Gorkha,1/6 Dogra,293 field Artillery,63 mountain Brigade....I know how poor the basic infrastructure of the average jawan is.Snow boots are only for those on duty and with special permission.Yet man for man our jawans are the best in the business and they overcome these issues through sheer courage and perseverance.

Securing Natural Resources in the future is a battle that will involve corporates and nations and we cannot be a superpower unless our share is safe!Those guarding are borders have a close involment with the stock markts and it will only get more pronounced.


Thursday, August 25, 2011

The Arab Spring

As the Arab Spring winds down into a tepid state except for Syria and Libya,it should have a calming affect on crude and on the world markets.

The rebels have pushed on to Sirte and if they can take Ras Lanuf then 75% of Libyan oil production will be in opposition hands.Still a tribal country,resistance from gadhadfa tribe to which Gadhafi belongs will ensure that complete peace remains elusive,but with Tripoli having fallen the crude prices should settle down into a range.

I strongly feel that the slowdown in the US is overdone and a huge number of columns have been devoted to this topic.Eurozone is in a difficult position to assess as news out of France and Italy is not good and the slowdown in the previous Qtr in Germany means a lot of resistance to chancellor Merkel to spare funds to bail out the rest of Europe.Why should Germany?

India too is in political flux and although i am stoutly behind the anti-corruption movement I do feel that the methods have become coercive and its taking on the shape of an agitation.We all love agitations cause they provide a welcome break,BUT yes if we are to become a clean(and green) country a la Singapore then some pain in the short term is bearable.

The Indian equity markets are nervous and with rumours galore of big European banks failing we remain on the edge.Further liquidity easing in the US will lead to higher commodity prices....a Tatasteel or a Sterlite looks an attractive buy.

Tuesday, August 16, 2011

Blinkered Government Powerless Prime Minister

The circus that has happened in the last couple of days regarding Anna Hazare and the movement on corruption shows a government that seems to be speaking in a babel and acting like a thug.Corruption touches us in India at every stage of our Lives,which starts with the municipal clerk asking for a bribe to hand over a birth certificate to more severe cases.

Most of us seem to take it in our stride and have become deadened to its insidious presence.How many ministers are there against whom some case of intimidation or thuggery is not registered?They exploit the loophole of not being convicted to carry on and riding in cars with a red beacon seems to give them the right to do as they please.

I am glad that its taken a freedom fighter to show that we should awaken our conscience if we are to make this country great again.To make this country what it aspires to be.To make this country a lodestar for its citizens.

In a country where an Olympic shooter wining a medal is given 10 million,the soldiers that guard our borders and who die in the line of duty,their families are on the verge of starvation.Shame!

In a country where a Khudiram Bose was hung by the British for rebelling,today kids call each other a "Khudiram" in case they get caught doing something stupid!Shame!

Either we elect the role models to parliament who will remember the ethics that we so readily give up,be it in a queue or in a school admission or we  need to give a lesson to those who matter that this is not a police state.It is a democracy and the freedom of expression is enshrined in the constititution.

I think Mahatma Gandhi taught Indians the civil disobedience movement just a little too well.The British left but the Indian public refuses to obey general rules as seen when they cross roads or spit or litter anywhere they feel and forget that the public parks etc belong to all of us,throwing the rubbish out of your house into the street will simply blow it back into your own space but I have seen this being done just once too often.

Corruption was always there,hidden underneath the surface of society,just that now its out in the open.The lines from the Bhagwat Gita....".Whatever happened was good...whatever will happen in the future will be good....we came here with nothing and we shall leave with nothing."

After countless millenium,it still rings True.



Friday, August 5, 2011

The World Wont Collapse and India will Grow

 After today's global selloff and since the middle of 2008 I have had more phone calls from scared clients and investors than I can remember in the past couple of years.

Yes the US economy is deaccelerating,Europe is under a mountain of debt,commodities and food prices are at an alltime high.Asia has inflation and infrastructure issues.Come to think of it the money printed since the Lehmann collapse had to show its affect at some point so cannot say that this turn of events was entirely unexpected.

The Positives are the fall in crude and downturn in the commodity circle which for India will have a beneficial affect although in the short term the capex expansion by most firms will cause some pain.

I keep hearing the Finance Minister of India say that Inflation will soon be at 5%.How?With the rapid urbanisation and 9% of agricultural land being turned into urban settlements in india in past 2 years the pressure on food prices will not ease unless new technology comes into play and really quickly.

Since the Israelis introduced drip irrigation I have not seen any new innovations in my village in Punjab and for those who do not know the best place to see the latest tech is to watch the Punjabi farmer in his fields.

I think the value investor in India can try a bottoms up approach in indian equities,commodities or real estate.Ask me if you need specialized advice.

Monday, August 1, 2011

What if the US is downgraded?

The whole of last week finance sector professionals were agog with the Aug 2 deadline to raise the debt threshold in the US.Now that the event is behind us and the fine print is being read the next event is a possible "downgrade" of US by rating agencies.

My thinking is slightly different from the majority view that variously has been predicting a tsunami or a Lehmannish situation.A knee jerk reaction would certainly happen but would it be such a drastic event?I do not think so.

The National Association for Business Economics said its 47-member panel of forecasters increased its estimate for the 2011 federal deficit to $1.4 trillion from $1.1 trillion in its previous survey in November  and the statistics are GDP increase in 2nd quarter of 2011 is 1.3%.Core inflation is also expected to rise to 1.2% by end 2011.

Its been known for a decade that the finances of the world's sole superpower have been in disarray and this is but a last wake-up call.Let us now see where the spending cuts will happen.The Indian IT firms need another 3 or 4 years to develop business in South America,Africa so they will face revenue pressures,otherwise i do not feel a major impact as exports from India are not exactly hi-tech.

What will help is that Indian firms are into outsourcing and that is a cost-save tool not a cost-expend one.China with its total dependency on exports may rather have more to worry and as the example of Chinese engines failing and thereby almost halting the Pakistan railway system shows how much cost can you cut before quality gets affected?

That is the reason i do not worry about Chinese impact on India as the world moves to a more quality conscious,eco friendly environment.But that is another story...

Thursday, July 28, 2011

What Happens if China Slowsdown

“Risky things are not in themselves risky if you understand them and control them. If you do it randomly and you are sloppy about it, it can be very risky.” The key to success, he said, is figuring out “Where is the edge? And how do I stay the right distance from the edge?”

How far away is China from the Edge?China's growth faces downward risk in the coming months amid global economic uncertainties and fast-rising domestic inflation, the Asian Development Bank (ADB) said.
However, there won't be a "hard landing" for the world's second-largest economy, because "policymakers have learned lessons from the 2008 financial crisis and they have the ability to avoid bad results", said Iwan Azis, head of the ADB's Office of Regional Economic Integration.

The risk of the US sovereign rating being cut to AA from AAA is likely to increase borrowing costs and accelerate the depreciation of the dollar, meaning losses for China and other countries that hold US Treasury securities in their foreign exchange reserves

The GDP growth projection by the same bank has been decreased from 10.3% to 9.6% in FY11 and even 9.3% in FY12.

Lu Zhengwei, chief economist with Industrial Bank Co Ltd, said that the August CPI figure might climb to 6.5 percent, and that might not be the year's highest level, considering rapid rises in food and non-food prices.
"Although the economy shows signs of a slowdown, it is moderate, which means a hard landing is unlikely. Another rise in interest rates is affordable for China and the central bank might lift rates in August," Lu said.

Despite all this even a stuttering China will demand commodities as inputs for manufacturing activity.Assuming that the exports fall,demand from the US and Europe slows and  commodity prices come down there is a silver lining that crude and food items will see a slower price rise which may have a tempering affect on the inflation that almost all South Asian countries are trying to control.

It will also have a positive affect in greenhouse gas emissions where in the past decade huge swathes of forest land in Brazil has been cut down to make way for soybean farming.Certainly this  is just an added benefit in the fight to save the planet but on a financial level might lead to a cycle of high demand and low production,so China is the key.

2nd August 2011

All eyes on President Obama as time draws a curtain on the debt row in the USA.Will the limits be enhanced and the bickering settled or will political vendetta let the country get into a quasi default situation.The commodity cycle will turn negative and the looming rating downgrade from AAA to AA,an unthinkable idea for the US.

The potential of a situation worse than the Lehmann Bros crisis cannot be ruled out.Similarly if the issue is settled it will signify some more financial easing and a flood of fresh money in world markets.Commodities will get new legs.

So 2nd Aug will decide trend for global markets,once India  and the FIIs  adjust to the rate hikes and the Monsoon being near normal the macro factors will turn slightly positive at least for the Indian equity markets.


Wednesday, July 27, 2011

The Day of Pundits...

I have not looked at the ticker tapes for a longish while,just seen afew interviews of Mr Nouriel Roubini etc and the mess in mess in Europe the debt imbroglio in the USA.Strange that in the 21st century most economists and their ilk are still feeling their way round data points and giving various interpretations.

In India,RBI says that the data used for declaring GDP,inflation by the Government is not reliable!In an era of information overload its still hard to quantify quality from the rest.Will a big Bank in Europe go the Lehmann bros way?Will Spain,Portugal follow Greece?

I feel the commodity prices are crucial and the RBI is wasting time hiking rates,the critical player is the Government that should look at the supply side issues and unfortunately the requisite infrastructure to support a growing economy has just not delivered.

Rather than fancy penthouses we need a strong Road development policy at the earliest.Just look at the conditions in even so called B Towns like Nagpur,Bhopal,Lucknow and you will understand.Yet the 'experts"predict a bleak outlook for Infra stocks!!

I would not be carried away by the interest rate hype,Indian banks are well capitalized and well managed,the top Real estate firms will ride out the slow down,don't think a growth differential of 7% or 8% will matter,what will matter that we keep growing consistently for another decade to really scale up and real the tribal areas where development will truly thrust this country into another orbit.

Tuesday, July 19, 2011

The Indian Stockbroker

Having seen one of the worst recessions in living memory 2008-09,the coming turbulence is a reminder of the unique way the Indian retail broking industry functions....big expansions when markets rise and vice versa.

Having spent a comparative amount of time in the rather staid retail banking sector I fail to understand why brand building,advertising,public relations budgets are slashed precisely when they are needed the most?I have not seen any innovation in products in the last 5 years,yet the pressure is on the frontline staff to sell,sell sell.

Why after 15 years of the IT bandwagon we still use it primarily as an esoteric appendage to all the varios facets that make up broking?Its only now that a few of the top brokers are buying CRM software to manage data and still it remains a very individualistic industry.

Some analysts are also bullish and some always bearish so 50% are always right!All one needs is to buy some airtime and say what comes to mind,there are no safety nets for that poor soul who depends on his information on business news channels.

In the Age of Information there is still a huge paucity of the "right"information.IT behemoths may be conquering the American and European shores but here hardly is an application developed for the equity markets.Hubris is evident in the channellization of the whole process

The Indian broking companies are market leaders in their own geographical areas but yet to make a dent on a National basis and yet the whole of South Asia awaits...

Is there a Leadership crisis in India,I for one always keep seeing the same old faces and they keep saying the same old things.Are our education systems such that we are afraid to say what we feel and look for the comfort of the herd?


Tuesday, July 12, 2011

Zimbabwe's Che Guevara-Josiah Magama Tongogara

You have probably never heard of Josiah Magama Tongogara, but he is Zimbabwe's Che Guevara, a liberation icon with streets named after him in almost every town in the country. Tall, bearded and charismatic, it was he who, as commander of the guerrilla army Zanla, towered over the Lancaster House conference that led to Zimbabwe's independence and the end of white minority rule.

Many expected him to be the first president of the free Zimbabwe, with Robert Mugabe, head of Zanla's political wing, Zanu, as prime minister.

But six days after the Lancaster House agreement was signed, Mugabe, on the Voice of Zimbabwe radio station, conveyed "an extremely sad message" to "all the fighting people of Zimbabwe": the 41-year-old Tongogara was dead, killed in a car accident in Mozambique on Christmas Day 1979.
Two questions have haunted Zimbabwe ever since. How different would the nation have been had Tongogara lived? And did Mugabe have him murdered?

As a child, Tongogara worked on the farm owned by the parents of Ian Smith, Rhodesia's last prime minister and the man whose racist regime he took up arms against. When he couldn't get a secondary school place, he left for neighbouring Zambia, where he later abandoned his job as bar manager at a white amateur dramatics club to join the struggle. His people's need for "land, land, education, land" was what drove him, he said in his last interview. In 1966, he led a group to China for military training.

Zanla's first Rhodesian prisoner of war, Gerald Hawksworth, said after he was released that Tongogara was always smiling, referred to him as "Comrade Hawksworth" and plied him with cigarettes during his captivity. He was fighting the system, he told Hawksworth, not a racial war.

The future of at least one African nation might have been different.

Thursday, July 7, 2011

House Cleaning in Indian Politics

Dear Reader do not say that you did not know that Murli Deora was close to the House of Ambani?The Marans did not armtwist those who stood in their way,not just them but a lot of Indian business families."The Polyester Prince"by Hamish Mcdonald will make interesting reading for those interested.

Every day the sun rises on a new minister facing news of corruption enquiries etc etc,Its not as if corruption never existed in India before the 21st Century!

I say its good,let us clean our house and admit that some people do get carried away by power.What disturbs me is the fact that the powerful IAS officers rarely face any look in although they are the true originators of most policy decisions and the ministers mostly a rubber stamp that changes every few years.

Let us be an open society,have respect for women and stress on charity thats genuine a la Narayan Murthy or Shiv Nadar.The corporate sector will be all the more global and attuned to the requirements.

Green energy along with food security is a theme I keep thinking about.It will be important to have clean energy as also uncontaminated food.Suzlon Energy,Indowind,Jain Irrigation all have the potential to be multi baggers.

You will remember my buy call on SBI when it was 2130,today the scrip is 2500 when the Chairman of SBI has turned bullish on his company and feels that it will be in the fortune 100.Easy for me to say,"I told you so!!!"

Friday, June 24, 2011

What Is On My Plate?

Once upon a time villages used to abut Cities and now its cities that reach upto the villages,that is how urbanisation is spreading its tentacles and for me its as noxious as pollution,cancer or tobacco!

Rising population and reducing agricultural land to grow staples is the main reason why the inflation in India is not falling despite fiscal measures,policy meets etc

I am bullish on companies that are buying up land to grow crops,eq KGL,which has bought thousands of acres in Kenya,Tanzania,Sudan(although i have my apprehensions about the management).This is the space where scalability will not be a factor and the clamour for food will ensure high prices.

I am bullish on wheat(low prices this year notwithstanding),maize,soya,oilseeds.Those who cannot trade in commodities can alternately invest in those firms that deal in food products.

Another thought that has been in my mind is the propagation of processed foods that will form a  30-40% part of daily life in the next 5 years up from the current 5%.Obesity,high salt content means more healthcare.

If I was a longterm investor i would buy into food&healthcare and ensure I exercised regularly,ate healthly and thought positive!

P.S.Those of us in financial services have not thought positive for the last six months!

Sunday, June 12, 2011

Dont Let the Pessimism Keep you down

So the global situation is bad,Europe is having E.Coli,the USA growth pangs and debt worries.China and India facing inflation,The Middle East-Syria,Yemen at war with itself,Gadaffi is still being bombed and no one knows who is running the oil wells?

Situations like these have given birth to investment "gurus" like Warren Buffett,Soros,Mobius etc,whne the day is at its darkest someone has to take the call on whether we face Armageddon or will will endure.

Indian equities are fairly valued(if you know what fair value is!).I know I would buy real estate,consumer stories as the land required to live and grow food in the emerging markets is at a premium.The real unemployment rate in India is 10% funnily our analysts only see the US figs.Its probably down from around 18-20% in the last decade and the growth in Per Capita income has camoflaged the unemployment effectively.

Infrastructure stories are for those investors who want to invest for minimum 10 years although at the end of the day at least for another quarter take the profits of the table and go for bonds and bank deposits at a risk free return of 8-9%

But KEEP INVESTING!!

Wednesday, June 1, 2011

A Little Bit of Everything

The month of May has been bad for the equity markets in India.Those who rushed in to buy have seen a 30% fall in their assets and those who went in to short have seen the indexes rebound.

I have kept away  reading up on investing strategies,alternate assets,a bit of fiction.Finally India seems to be taking Africa seriously.I have written about the resources in earlier blogs but what surprises me is the ARPUs of telecom companies especially Nigeria and Kenya.

If Oil companies raise prices,govt earns more excise duties,inflation rises,oil prices aligned to crude prices,international oil cos sell in india,would not the Indian Oil Cos go running back to Big Daddy for more handouts as their inefficient distribution networks would ensure another LOSS?

So those investors thinking of buying Indian Oil Co stocks should do some groundwork and not let the babble on business TV channels take your breadth away!

Of all the rumours I keep hearing I feel that the lows made in June should hold up as a normal monsoon is expected and the 2nd half of the year might redeem the day for Equity traders although the news has been systematically negative internally and Globally.The record Drought in Europe is adding to the misery and we have to live with high food prices.

I have strongly believe the inverse corelation between high rate of urbanisation and higher food prices.Will write a more detailed article on this...

Sunday, May 22, 2011

Great Expectations

So I have seen History being made,a new Chief Minister in Bengal on 20th May 2011 and the 1st Lady!She has quite contrarirly to my analysis made a very determined businesslike start to her tenure.

What struck me were the muted celebrations and lack of victory processions that have been the norm after previous elections and I am sure the restrain did not come easy after winning a Three decade struggle.

Industry,Infrastructure,Administration.After Ratan Tata led Tatas did CM Mamata Banerjee the favour of handing her an emotive issue for an aggitation that has culminated in her  siting at Writers Building will he do her another by building a factory on the remaining 600 acres for a job hungry Bengal.

Without doubt we have enough intellectual capital for high end industry to establish and flourish.Howrah has the people to make it the Sheffield of India(its a misnomer as Sheffield is no more the industrial buzzword).The coming weeks,months will be crucial...

Friday, May 13, 2011

Ratan Tata behind Mamata Sweep in Bengal?

Had the Tata's not decided to start the Nano manufacturing in Singur,Bengal and the Left Front's ham handed approach,Mamata Banerjee would not have got an opportunity to do 'dharnas' and resurrect a fading  movement.

The thing about real leaders is that they persevere.Almost three decaded after she came to prominence in 1984 she has finally managed to overthrow the Left.I saw her getting lathi-charged at Esplanade in 1989 and the strength of the woman was amazing then as it is now.Then she was alone and i guess she has not forgotten that even amidst the sea of humanity that surrounded her after the win yesterday.

A Salute and a long hard road ahead.....a bankrupt state,poor infrastructure and crony capitalism,the signs are bad but all in ingredients for a fairytale story are present,the cost is a once mighty State's turnaround.If only she can walk the talk now!

Tuesday, May 10, 2011

Friday the 13th Election Results

Have heard most of the exit polls and we have have seen how spectacularly theu can be wrong.Bengal looks certain to go with a new Government which is more a vote for change after 34 years than any real commentary on the opposition.

Tamil Nadu might just keep the encumbent Karuna Govt in power because Jayalalita madam hasn't distinguished herself in anyway.

Kerala again will be a vote for change.Begets the question,why the politicians see formfter a biting a government to fill the coffers rather than make any meaningful policy or infrastructural changes.

After a bit of mayhem Life will settle down into its routine and the Indian Summer will exact its humid toll on all of us lucky enough not to have flown to the hills or Switzerland.

Thursday, May 5, 2011

Summer Vacation-yachting on the Hooghly





There are days when you just want to stay away from the markets if you are a trader.The 1st week of May has been one such period when thoughts turn maudlin and wander.

The cooler climes and the old treks in the Himalayas remind me that time is flying past and one needs to find a diversion lest the mind becomes the devil's playground.Kolkata having the Ganges(or Hooghly) passing right down the middle has been unable to turn it into another Thames.I see no Yachts in the Hoogly yet but the opportunity of Leisure activities in the middle of the city is too good to pass up.

Mumbai has more boating activity and I am hard pressed to find a travel guidue or even a boat building firm in Kolkata that has any concrete plans.The potential to develop water sports a la Hussainsagar Lake in Hyderabad is immense but who will come forward?

The Buggattis,Feraris and Audis have made their mark and I strongly feel that this is going to be the next big thing in India.So lets wait and watch and in the meantime lemme find a few sailor types!

Monday, May 2, 2011

Uncle Sam, the Osama Obsession and a Pandora's Box...

So Osama Bin Laden is dead and the US rejoices as they should.10 years of manhunt and a few billion later the USA finds him in the heart of Paki country and not the Tora Bora or other mountain fastness.American Technology wins the day!

I feel strongly that a Pandora's box has been opened yesterday and the biggest reason for believing that is despite huge rewards there was no HUMINT(human intelligence) about Bin Laden.So the Al Qaida brotherhood held its secret and there was no betrayer.It suggests a deep seated hatred/fear of the anti-islam factions despite all the conciliatory noises made by them.

ELINT(electronic intelligence) with the pilotless drones,spy satellites etc can provide critical pointers but its the lack of  inside news on the ground that leads to strategic battle wins.The Soviets controlled Kabul but their lack of support in the countryside meant they did not control the night.Even the Spetznatz and their Hind gunships could not do the long range patrols necessary to keep out the opposition strike corps.

I hope that the terrorists have been disabled but Bin Laden at best had become a figurehead and a lot of the Al Qaida thinktank sits in shadowy Yemen and even Saudi Arabia.Either the US Army takes them down or we will hear the reveberations of yesterday for the years to come..

Sunday, May 1, 2011

Invest in Infosys






Now that Mr Kamath is expected to work the same magic as he did at ICICI Bank over the last quarter century,some of the uncertainty that surrounded Infosys is history.

Adjusted EPS of Rs 99.46,Current Ratio 4.28,Dividend Payout ratio28.84,trailing P/E of 25.9.Lets put aside the cold stats for a while and remember the words of Mr Buffett,"Be greedy when others are fearful and be Fearful when others are Greedy".

All the analysts I talk to seem to be 'fearful" for the future of INFOSYS what with TCS,Cognizant snipping at its heels,the Leadership looking defensive and margins slipping.

It makes a compelling case for a 5-10 year investment.IT will be more than a need,its already a necessity,could be Cloud Computing,Nano networks or simply vanilla outsorcing.I see Infosys adapting to the market changes in the coming years and its formidable reputation alone will win it many mega $ contracts.

I see a huge opportunity in Africa and South America so the next contracts could be in pesos,Rand etc
At current market price of Rs 2900 its a BUY with additions at every dip.Have the courage to hold it for 5 years and the Dividend(tax free) alone will make it worthwhile.

Thursday, April 21, 2011

Earning Season-Sectors to Watch

As the quarterly and annual results of Corporate India await entry into the public domain,I presume this season will be fundamentally different from the last couple of years.

Investors have given the "go by" to the Cement sector along with Infrastructure which till last year was a "hot" investment segment.Comodity&raw material prices have risen by almost 30% and especially for India the hike in coal prices is a major infaltionary factor.As a contrarian I would be interested in investing in:-
  1. Cement
  2. Fertilizer stocks
  3. Agro based(excluding Sugar)
  4. Alcholic spirits
No 4 I have put on the list as every city i travel to I have seen ques in front of the so called expensive FL(Foreign Liquor) Official Shops!
When you invest, whether it's in stocks, bonds, gold or mutual funds, you're betting the value of the asset will be more in the future than what you paid for it.



Saturday, April 16, 2011

Investing in India

What triggered this blog is a question someone asked me on the issues they face in getting clients in India.I would like to point out the following major issues:
1.No 10,000 ft view-one cannot treat India as a country,its a Sub-Continent and you cannot analyse the  
   needs,products,pricing sitting in Manhattan,London or even Singapore.
   This was tried by the MNC broking outfits in 1998-2000 and led them to exit the market till 2004-05

2.Each zone-East,West,North and South is a heterogeneous market with distinctive tastes and preferences.
   Just one example;Rice is the main staple in East and South but least preferred in the North,someone selling
   in the North can probably sell 1 variety-basmati

3.India is still a conservative country and even the Corporates are still burning their fingers in IRS swaps and
   Currency hedging and these are supposed to be some of the best brains from the best Indian Colleges

4.The Urban and rural populations are again another division,just 1 company ITC with its E-Choupal
   initiative has been successful,products that constitute 80% of urban sales are negligible in villages-cosmetics

5.Bank fixed deposits comprise 76% of the savings,equity investing is 2% and total insurance coverage
   of the Indian population is 14%,Savings rate is approx 33% of GDP and one can do the maths as to
   the size of this market

6.The Southern States with their high literacy levels need a more planned approach whereas the more
   gung-ho Northern parts need a return based solution.East India has the highest number of day traders and
   15% of the derivatives trading volume in the NSE is from this region

As much as I would like to give statistics,its all about connecting at a more emotional level that will be called for.I would reccomend a "solution" based strategy rather than a pure "sales" approach.This article is in no way a detailed analysis....I am keeping some thoughts to myself for another time and another place...

Wednesday, April 13, 2011

Steady but not Spectacular-Tata Chemicals

Tata Chemical has never been one of those stocks the mere mention of which sent Traders pulse soaring.With average P/E 11.8x,dividend yield 2.5% and a PEG Ratio of .90% its been steady if not spectacular.
With its investment in Olam international's greenfield fertilizer project in Gabon,Africa its taken its products closer to the major markets of the US,LATAM countries and Europe.A good deepwater port and relative political stability are important factors.The Indian Governmentis likely to increase gas allocation for Fertlizer sector thereby increasing the bottomline by 100-150bips at least.

Its a BUY at current market price(CMP) Rs 354 and a TARGET price of Rs 430+ which is a 20% upside from current levels.Its a good investment for the midterm

Monday, April 4, 2011

In The Shadow of Big Deals

My analyst friends have gone to town about International Paper buying Andhra Paper,a 100 year old company of the Bangur family,before that we had Vedanta-Cairn,Reliance-BP etc

Here I am in a contrarian mindset and I feel that India as a market is still not a uniform economy where one swallow can make a summer!Each firm and sector has its own exigencies and USPs as well as bottleneck and unique strategies to overcome them.

Infrastructure is still stuck in the quagmire of bureaucratic redtape,project cost overuns,land acquisition factors that make this sunshine segment a very visible but overhyped area to invest in,unless someone has a 15+years horizon.

I see these problems happening all over the country and feel quite negative in the medium term as to the quantum of funding required and how efficiently those funds can be used.The building technology in India still remains outdated and a bit of a museum sideshow but have not seen many manufacturing firms taking up the challenge.Can anyone find me 3-4 such cos that produce equipment for construction in India?

Monday, March 28, 2011

The Banking Licence Saga in India

We have been hearing a lot of stories on how new banking licences are to be granted after almost a decade,to roil things up the RBI,SBI,Finance ministry have been playing footsie on the issue.

Amoungst investors the names IFCI,Religare,indiabulls,Reliance Capital have been bandied about with gay abandon.Its pertinent to look at MM Finance from a purely short term speculative interest.At Rs 820-30 can buy it on "swing"delivery with a stop loss below 800 and an upside of 5% from current levels.

I had earlier reccomended LIC Housing,IFCI and all the recent activity makes me believe that the investor would be smart to hold onto these stocks if bought at the lower levels irrespective of which way the markets flow.

A broad band of 5500-5760 for the nifty is the consensus with the analysts I have spoken with.

Wednesday, March 23, 2011

Indecisive Nations

Operation Odysessy marks another chapter in the "Allies" quest to bring order to the World.They waited for half a month while Gaddafi bombed and shot his own people before getting the No Fly Zone in place and then the air jocks of the US/UK and France decided for some target practise of their own.


Does "Enduring Freedom" and "New Dawn" ring any bells?Those are names of American intervention in Afghanistan and Iraq,whoever selected the names must have done so with much irony.It goes far back to Mobutu Sese Seko of Congo,Siad Barre,Jean Bedel Bokassa and more recently Larent Kabila .They have made merry while the World's one Superpower sat on its haunches or sided with them in their many massacres.


We talk of an economic order yet it takes so much time to see to the HMQ(Human Misery Quotient) and its present in almost all countries of the world.Are we still afraid to face our own people?Too late for the Mubaraks to ponder but it raises the question of how quick our response will be in future.


In my earlier blogs I had talked of Nostradamus and The Tower of Babel,I read and see it everyday and too some extent we are already robots,being fed propaganda through newsprint,television and visual media.


I am sad to see  doctors  sell health drinks,dentists selling toothbrushes,preserved food being shown as more nutritious.The Nations are exerting an affect on its citizenry and more and more local area conflicts will arise in the years to come.A CNN or Fox news will need to cover every neighbourhood as a unique zone in itself.
Life already complicated,is destined for more unimaginable twists...


A poet called Iqbal,who wrote the Indian theme,"Sare Jahan Se Acha,Hindusthan hamara",but later migrated when India was partitioned to Pakistan and who lived as a revolutionary poet in Paris once wrote,"...Jis khet se dehka ko mayasar nahi rozi,uss khet ke har khosha-e-gandum ko jalado,utho meri duniya ke garibo ko jaga do".
Loosely translated in english it means,"rise up poor farmers of the world,if your land/grain cannot provide you enough to eat then burn down that land/grain till the last particle".
Have the Nations forgotten

Tuesday, March 22, 2011

Invest in this Old Gem

Bombay burmah [ BBTC ] is the 2nd oldest listed co on the BSE . It belongs to the Wadia stable.
Equity : 13.9 cr
Consolidated NP [ 06 ] : 49 cr
EPS : 35
CMP:Rs 423
 
The stock is a pure asset play.
 
It is  into tea, auto ancillaries, dental products, orthopaedics.....and a few other smaller businesses.
 
the interesting part is BBTC through its numerous subsidiaries / associates owns :
 
1] 25% of Britannia valued @ 750 cr at current Britannia market price
 
2]  14% of Bombay Dyeing valued @ 360 cr at current Bombay Dyeing price
 
3] other equity investments+fund holdings + cash @ 400 cr [ equity inv / fund holdings on basis of cost -realisable price will be much higher ]
 
p.s: holding in GO air is just 3%
 
Consolidated debt is 225 cr.
 
I am convinced that the wadia group will see major retructuring over the next 2-3 yrs with major value unlocking. The Sceptic Club may ask why now after so many years ???? I sense that this may be neccesitated by the need to give both the sons Ness & Jeh their own seperate space and direction.
 
At prevailing price of its holdings ,BBTC's holdings are valued @ 1000 / share .
 
Current price is 423 which is under 40% of the  price of its holdings + BBTC businesses are available free.
 
I recommend one must invest at current levels and wait for market to pay the correct price.
 

Wednesday, March 16, 2011

Nostradamus is laughing...

What a year so far...the fires burning in the Middle East,highest recorded eathquake in Japanese History,the Palestinian issue simmering,US bogged down in Iraq&Afghanistan,Europe in financial pain,Africa no closer to losing dictators

Is this the way the world was supposed to end???As famously said,"Not with a bang but with a whimper".Seems to me that its all bang-bang out there!

India is facing rising fuel rates,FIIs withdrawal,falling agricultural output and governance issues.But still where in the world will you get 7-8% growth,consumer driven economy and a stable democracy.A good monsoon,some push for infrastructure and a general rise in US GDP,already in Feb Indian exports have grown by 25%,could pull up the export driven sector.

One small example,bitter gourd that we used to hate eating as children as they were bitter as well as the cheapest vegetables around have risen by 500% in half a decade as even these are being exported to the Middle East.With better preservation facilities and less wastage food inflation might not be as big a devil as thought.

I am an optimist and feel that the 1st half of FY11-12 might be surprisingly positive and we might yet snatch that shadow of a smile from Nostradamus.

Thursday, March 10, 2011

Beyond the Sands...Carpe Diem!

The events in Libya once again demonstrate how easy it is to get bogged down.And also the fact that Robert Frost was not only a poet but a visionary.There are always forks in the road and there is always a road less travelled!

If tonight the no fly zone is enforced and the battle comes to a conclusive end and as reportedly Kuwait has asked for an expeditionary force to end the impasse we shall see crude at sub $100

If Gaddafi's troops continue to bomb Marsa al brega,Ajdabiya and the oil terminals dotting the surroundings then a spike up to $115+ will be a huge drag on the GDP of India,Pakistan,Thailand,Vietnam,Korea(TIPVK)and affect growth by almost 200 basis points.

Moreover an uneasy silence hangs over Riyadh and Teheran and this time no news is bad news.How will the markets react?The Indian ones are trading in a edgy range.Any guesses about next week?

Saturday, March 5, 2011

Political storm in India....macro view

The DMK withdraws support.Did the insiders know about this last week?Seeing the market reaction in hindsight I believe it was expected.Will Jayalitha(Amma) extend support.Will Mulayam Singh and his Samajwadi Party come into prominence once again?

Will the reform process be affected?With Bengal,Tamil Nadu&Kerala going to the polls in the coming months will the UPA find itself bound into a tighter straitjacket?

I feel it should galvanise the Government into action and we can expect a stiffening of the "spine"leading to more meaningful policy action.Very unofficially some "friends" in the met office tell me tha the El Nina` effect is likely to be milder hence expect a good monsoon.

The Nifty might react negatively but it would be a good bet to buy Nifty out of money/at the money calls for march expiry.A much maligned word "Infrastructure" is coming back into focus,those who have been invested in these theme funds plz remain invested.I find silver a more promising investment than gold but I believe I should present my case with more in depth analysis and bore you with a lot of facts and figs..!!

Thursday, March 3, 2011

A Subtle Story

Well the Budget sting was in its tail....for the bears!

With the NATO warships heading for the Libyan coast and Muammar Gadaffi waving  the white flag at half mast,crude should be back to sub $100 levels.Iran's influence set to increase if he Muslim Brotherhood&allies gain in Egypt,Tunisia,Bahrain,Yemen.But mind you it the only sia majority state in a predominantly sunni middle east.

That is a story for the future.In the Indian markets Auto&banking sectors look good "buys" on retracements and the nifty support comes in at 5450 to keep the bulls in the frame.FIIs and DIIs both turned buyers so the week should end on a positive note.

Sunday, February 27, 2011

Budget - An Annual Tamasha

Its that time of the year again when the equity markets in india hold their breath!This time the euphoria is tempered with the happenings in Libya and OIL!The Middle East is burning brighter than the mythical " Eye of the Tiger"

Still to put things in perspective the expectation as per my talk with a few movers and shakers is that the gems and jewellery sector,low cost housing,agriculture should have positive surprises.Changes in GST,maybe income tax rebates might take the sensex temporarily higher but beware the demon that lurks in crude!
Watch Rajesh Exports,Gitanjali gems,Lok Housing,LIC Housing...expect OPEC to announce higher production under US pressure.Nifty anywhere between 5100 - 5600?

Thursday, February 17, 2011

Revolucion`

A 100 years from today we will look back on these days and  remmeber that a Revolution took place that diminished the violent agitations of the 20th Century in its sheer reach,size and lack of orchestrated bloodshed.I talk of Tunisia,Egypt and now Bahrain.Yemen?Libya?.....Iran?
A new country South Sudan will be born too.

Virtue cannot separate itself from reality without becoming a principle of evil-Albert Camus

For the marketing gurus it would be interesting to study how the tools of mass communication can drive the thought process of millions in a single direction at a single point of time in history!What social networking sites and the internet have done no esoteric experiments in psychic management  or mind mapping has been able to achieve!

Why cannot the same energy be turned to packaging and selling products?There is a shift coming-science will move from simply the technology development platform to a tool to read the human psyology.Then truly will science become an Art.
So Revolutions lead to many roads-from improving the leadership,infrastructure,employment opportunities to  more diverse/mundane thoughts on manupulating our "wants"

As usual I finish the day before the sea, sumptuous this evening beneath the moon, which writes Arab symbols with phosphorescent streaks on the slow swells. There is no end to the sky and the waters. How well they accompany sadness

P.S.So now you all know I am an Albert Camus fan!

Tuesday, February 8, 2011

Cricketmaniaaaaaaaaaaaaaaaaa

The cricket world cup starts in mid February.India is cricket mad.Cricket in India is big money!

If we add all the dots it leads to theconclusion that this 1 month long fiesta of cricket will enrich quite a few companies that stand to gain from millions of minutes both soundbytes,visual as well as the written word.And that does not mean simply the journalists or television hosts or even the players.

How will the investors play this World Cup?Along with the cricket follow the below mentioned scrips as they 'play' on the bourses.

Print,Direct-To-Home(DTH),Radio to gain whereas multiplexes and movies will be net negatively affected.I would put a BUY on the following:-

Deccan Chronicle(cmp 84)
Jagran Prakashan(cmp 117)
HT Media(cmp 149)

So let us see the results after a month....not the Ides of March methinks

P.S.One bet that I reccomended that has gone horribly wrong is Koutons.When I spoke to the top management whom I have known for some time I did not fathom the depth of financial strangulation they faced neither the paucity of ideas to save their stakeholders.

Saturday, January 29, 2011

Good Chaos,if you are an investor!

Chaos is good for investors.

It allows you to pick good quality stocks for reasonable value and if held for a reasonable period of time will give you a (reasonable) return!

Countless investors(I think they are traders) have approached me in January 2011 asking if the Indian markets are done for.They want to know what will happen in the next couple of days or at most a week.Frankly.I do not know.Seeing it through their eyes the sudden fall in the Nifty&BSE has been brutal,unnerving and even an oversold market is not even giving a 'dead cat' bounce.

On a broader spectrum,from the high of Nov 5 the market has retraced around 12% and it could be 30-40% before it stabilizes.I see no reason not to remain invested in cash and do the ocassional averaging in the Nifty 50 stocks that appear relatively valued at the moment.

The scams,food&energy prices do look  a little scary.....but when during my travels across the country I see the markets,stores full of people,the good credit demand...my faith in the "India Consumption" story remains intact.

That is what I wish to share with you.Back your conviction and at every 5% correction use 25% of your available cash to buy quality stocks and HOLD.

Wednesday, January 5, 2011

State of Flux

The indian markets have again shown how unpredictable and capricious the economy can be.High commodity prices,oil and high interest rates.Most investors start asking,"is it the end of the road?"

I re-iterate,BELIEVE in the India story.We all knew there was corruption its just that the "breaking news" brigade has brought to the fore more scams that would have remained hidden from public view a decade back.

WE need a free media,conscientious objectors,whistle blowers to make this country the free spirit that made the USA such a power state.We need the raw energy that our entrepreneurs have and the stinginess to save costs and be efficient.

Enterprising use of natural resources will be the key to the future and all the social enterprises,green companies are just the begining.If the whole world had 100% literacy then who would want to do menial work?

A more educated,aware world will demand the right practises,whatever that "right" might mean!In the 1960-70s in India,brass was a 'controlled" item and the Government would give "quotas".My forefathers stopped making pipe fittings as it was more profitable to sell the brass in the "black"market.

I fear that natural resources will get rationed and this time it will mean war not between competing firms but between nation states.
China rumbling on India's North eastern borders and we try to appease them and maybe a repeat of the 1962 Sino-Indian war?

If India is to have its place in the sun our foreign policy has to be a lot more aggressive.What is a blue water navy for?We have to take the fight to the terrorists be there economic or physical.We need to fight for resources.Nice guys finish last,and India has been the nice guy so far.