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.