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Tuesday, August 6, 2013

Emerging Market Equities:Have Patience or Stop!


The eminent economist Mr Raghuram Rajan becomining the next RBI Governor is an indication that the Government will push the agenda of economic growth as the main lever of bringing the Nation back into the Trillion dollar Club more so in getting things working again.That according to me is a serious positive!
 
Unless Mr Rajan draws the shield of doddering practicality and keeps the present Governor's straitlaced policies intact.Stranger things have happened!
 
My previous post dealt with the fact that though the Nifty seems to be drifting a few percentage points below the all time highs the mayhem in specific stocks has left them adrift of the Index by a huge margin.
 
The Confidence has crumbled literally.Just when it looked like Europe was recovering,the USA had got over the fiscal cliff,China was transitioning to a soft landing and India was managing to hold on the Rupee depreciated 27% nullifying the falling inflation,crude,Gold imports etc
 
 
The daytrader as a species looks almost finished in the Indian equity markets.The favourite midcap counters have fallen 30-60% on average,sometimes in one day!With all promoters overleveraged on debt,speculators have taken pleasure in bear hammering these stocks out of shape.Its so disheartening to see investors take daily losses and lose their capital.Investors who have been active since the early days of the 1990s.
 
I am seeing valuations emerge in Infrastructure and Metals.Nothing rejuvenates an investor than to find stock prices of blue chip firms quoting below fair value levels.My given target on the nifty of 5400(given  in June 2013) is nearly done.
 
1.Tatasteel 180-190
2.Hindusthan Construction 8-10
3.Tata Global   120-35
4.Britannia  around 705
5.Delta Corp  around 40-45
6.Reliance Industries-debt free company
 
The factors that were instrumental in the Calcutta Stock Exchange going bust have surfaced in the National Spot Exchange(NSEL) mess.Happens in emerging markets with new products and services coming online.Thats why the risk.
 
4-5 quarters of slow growth is not worrisome.The Rupee depreciation and the threadbare response of the RBI certainly are.Unless the USDINR finds a trading level of 54-56 we will continue to have frequent selloffs in the markets.
 
Find Value
 
Stick to your Belief
 
Keep the Patience
 
If pessimism swamps you get out of trading/investing.The Liquid and Income Funds gave 4% negative returns in July due to RBI suddenly raising rates.Buy these Debt side Funds if equity aint your cuppa tea!