Thursday, December 27, 2012

Are we really in a Digital Age?

Most of us use either a blackberry or other android phones,we talk heavy tech and love to buy gadgets with the latest specs.But do we really use all the Apps that we download?Use the extra memory/RAM or bits that our gadgets have built into them?

Speaking for myself - NO.Almost 80% of the applications used as a sales pitch by the guy in the corner store who sold me that stuff never got used.Maybe it gave me a good feeling to have a phone or laptop with more features than Mr Jones,but did I use them all?

Sadly No.

Most CFOs,CEOs,senior executives that I speak with can hardly operate more than the basics and most simply do not have the time to learn.

There is an inherent contradiction in India.Most companies still have not harnessed all the power and information that the new digital age has brought on our doorstep.Offcourse there is my friend Basil D'souza sitting in Bengaluru tinkering with data for Hindusthan Lever on which part of the country buys which specific shampoo etc

But clearly that is a miniscule audience other than the IT cos that use 'data mining' or develop applications for the Fortune 500

Yet the average Indian CEO is loth to spend on esoteric programs that might lead to a better understanding of consumer behaviour or in prioritising leads or even the use of social media in marketing.They simply cannot see beyond the spend on maintaining networks!

A time comes when in addition to a CEO and CFO we will necessarily need a CDO(Chief Data Officer) to handle the streams of data information flowing through systems on a daily basis relating to clients,vendors,distributors etc

I know of CEOs who recieve 5000 emails as a matter of daily routine.Who separates the wheat from the chaff?How can their attention span encompass such volume of data or help them to decide the merits of each piece of information?

That has been my fundamental reason for being bullish on the Indian IT scenario where the high number of consultants who today do outsourcing for global companies will turn their attention inward and bring the much needed efficiency to various stages of production or sales.The cost savings in terms of manhours and doing the right sale to the right segment will mean a direct addition to the bottomline of diverse balancesheets.

We underutilize the data at our command and it will take a few years before Indian companies start clamouring to have their data analysized on a 'conveyor belt' basis.Till then the Sales Manager is totally dependent on the feedback derived from his team,how close to fact that feedback is,depends on the absolute judgment of the asset on the ground.

Something to think about in the new Year!


Wednesday, December 19, 2012

Fiscal Cliffs and White Christmas...

Its being quoted by analysts on the idiot box as one of THE events of the year.The tax cuts approved by president Clinton will get taken out to impact the middle class taxpaper.

The Obama administration's plan to increase taxes for thos earning above $2,50,000 has drawn fire from the Republicans.Here you have people like Buffett and some CEOs of fortune 500 companies screaming that they be taxed more yet the senate cannot decide.

The trillions of $ of deficit may not be halved if the rich are taxed,but it will have some impact unlike the Republicans argument.Strangely they agree that if the tax cuts lapse then any increase in tax for the middle class as well as on investments will have a negative affect on investments and growth.

Whatever may be the case,Indian equities have given a 30% return,not bad for a year in which most analysts asked investors to stay away from-India,equities...in that order.
Suddenly the Yuletide spirit has swamped Indian markets from increased FDI inflows to the positive move in metal counters over the last week.
Even the world seems to be a more joyous place notwithstanding the internecine battle in Syria,political unrest in Egypt,nucluer missile tests by North Korea etc
The hard landing envisioned for China has not happened and commodity demand should pick up.Asian Regional index fell fom a 16 month high on Fiscal cliff and a stronger Yen but we certainly seem to have a brighter dawn ahead in 2013.
Short term support for Nifty is at 5850 and stcoks to watch - Tata Global(read my earlier post),Hitachi Home,LIC Housing Fin,Sterlite for 20% gain in 6 months.Merry Christmas and a very happy,profitable New Year!!

Wednesday, December 5, 2012

Tata Global...High on Tea

For all those who love their morning cuppa brew here is a reason to cheer...
Tata Global formerly known as Tata Tea is a Kolkata headquartered subsidiary of the Steel to retail  Indian behemoth Tata Group.
It is the second largest manufacturer and distributor of tea and a major producer of coffee.It is India's version of an MNC with strong presence in the non-alcoholic beverages space.It became a recognisable name with the $430 million buyout of Tetley Tea of UK.In 2012 it formed a 50:50 JV with Starbucks for entry into India with flagship starbucks opening in Delhi and Mumbai.
I feel it has the potential to go much higher than CMP 165.A midterm target of INR 250 is quite possible given the growth trajectory followed.Jubilant Food-the master franchisee of Domino's Pizza and Dunkin Donuts for India,Pakistan,Sri Lanka,Bangladesh and Nepal has a market cap of 8000 crores with stock price of INR 235 whereas Tata Global has a market cap of 1000 crores?

5Year stock price movement

It means that the profit from the starbucks franchisee comes free for the investor who invests at the current market price of TGL(Tata Global).

The Book Value(BV)per share as of march 2012 was INR 35.74,adjusted EPS INR 3.55,GPM of 10.79% and a Dividend Payout Ratio(net profit) of 50.76 as per information available in the public domain.

For the serious investor who eschews the esoteric,the exotic new ideas,TATA GLOBAL happens to be an ideal investment for 2013.


Tuesday, November 20, 2012

The Lion & Hyenas

Once in the Serengeti in Tanzania I came across a single Lion that had killed an impala.It was surrounded by five or six hyenas which mobbed and finally intimidated the Lion into relinquishing his kill.
Israel reminds me of that Lion,surrounded by hostile states of Syria,Jordan,Lebanon and Egypt as well as the stateless Palestinians.
There was a time when the experienced war machinery of Israel defended the Kibbutz and other expansions in the west bank and probably were the first to invent counter-terrorism,now offcourse almost all armies in the world have a counter-terror division either in intelligence or special forces.
All that Israeli expertise born out of their battle for independence after the British left Palestine in 1948,created a chaotic country - Jordan and left the jews at the mercy of 5 Arab armies.As if the holocaust and Hitler were not enough.Then on the holiest day in the Jewish calendar the Arabs again attacked in what is known as the Yom Kippur or Six Day War when the Israelis wrested the Golan Heights from the Syrians.
"Lo Kol-Kach Tov"-All is not well
Yet this time there is an exhaustion visible with israel and the amount of firepower used is giving good PR ops to Hamas and everyone else.Its no secret that the Arabs from Ayattolah Khomeini to Saddam Hussein used these people for their own political goals and that is continuing.On the other hand so many young Israelis after serving their mandatory term in IDF come to India to rest scarred psyches,battle wounds-physical and mental.Having spoken to many I sensed a disappointment with War,with the leaders who still persevere with a 'Cold War' mindset.
Living in India,in a pincer like state with an aggresssive China and belligerent Pakistan-I am an unabashed admirer of Isreal,its people,technology and sheer bloodymindedness.Yet the bombs are heading towards Tel Aviv.Next might be Ashkelon,Haifa.Jerusalem remains divided.
The repercussions of a strong Arab-wahhabi network and weak Isreal is not a positive sign for a liberal world as well as without any alternative to Oil a scenario where Arab states curtail production or in a worst case situation blockade the west would be net negative for economies already on the waterline of recession.The Al-Saud dynasty seems on its last legs and the Wahhabism patronised by them has become a veritable monster set to devour the longest rules state of Saudi Arabia.
It leaves western politico-leadership open to being arm twisted as seen in the Iran case.I am certain they will build a nuclear device while the US and UN plan sanctions,protests or armed intervention.After Afghanistan and Iraq the US does not have the heart to go it alone and general consensus looks improbable.Iran will do what North Korea and Pakistan did!
In addition to acreage shrinking for crops and no new tech to mine natural resources I am very bullish for the next decade on commodity prices moving up despite the measures taken by national governments.

Tuesday, November 6, 2012

Who Cares About The Longterm...?

Every analyst I have spoken to in the past couple of years has two views,one is for the short term and another for longterm.Depending on individuals the definition of 'long term' stretches anywhere from One year to a decade.
There is unanimity that if you hold your investments for the 'long term' you will always get a higher return on your investments.The truth is not always so simple!
Generally the value does go up in segments that are in demand or those having inflationary pressures.Gold,silver have responded to safe haven demands giving average returns of 20% YoY after stagnating in the 1980s-1990s.
Art on the ther having given phenomenal returns of 130% in the mid 2000s has been -19% since 2008.
An exception does not prove the Rule.It breaks a generalisation.
What I want to get at is the duration of holding your investment becomes important ONLY if you have picked the right one(or close to the right one!).No point holding something for 10 years if it just returns you the capital invested.
The guy from whom I buy fruits at the local bazaar on being queried on high prices for common fruits that used to cost pennies a couple of years back,asked me a very pertinent question,"Where is the land to grow fruits and vegetables when all available land is being taken over for apartments and offices?"
I keep saying that the inflation in India is supply side dynamics and its sticky simply because our infrastructure is unable to prevent wastage or better storage and we will not see it below 7.5% in the forseeable future whatever measure the Goverment takes.
Pay more attention to choosing the investment options than on leaving it.Audit them on a yearly basis(I would prefer to do it half yearly)and you need to spend time,get a financial services professional if you cannot give time.The bucks you earn should give you a decent return(10%+ in India) to stay ahead of the race and build a retirement corpus.
Those who dream of sipping a martini on a golden beach in Bali watching the sun go down need to get aggresive in managing their returns.Silver(MCX  58015) looks like surprising on the upside with demand from China and a taget of around 64000 in the next 6 months for those who like commodities.Finance and capital investments are required by  infra,capital goods,consumers at all times and the best conduit are the Banks.Banks with manageable NPAs and with scalable business models with presence in Tier-I&II cities stand the best chance.
But do ask yourself....how long is long term??

Sunday, October 7, 2012

Emerging markets once Again...!!

There are two sides to every thing in Life.What differentiates the winner from the non winner is the patience to wait through those tough phases and emerge with your ethics,beliefs and theories intact.
Such has been the case with Indian markets that I saw a lot of experienced clients and 'experts' lose their perspective about the longterm viability of the economy.Suddenly there is a surfeit of panelists on the business channels once again peddling their high targets for the nifty and sensex.The way termites emerge from the woodwork...
If this does not change quickly then the average investor will lose hope in the 24 hr monologue that is used as a filler by these business channels!
The 9%+ upmove in the nifty in September was not a real surprise,what with Europe managing to somehow hold on and some bright numbers in the US.
Although the rally here was chiefly fuelled by the liquidity released into the system by continuing QEMs by Mr Bernanke and company,I woner when the assets in the US will seem cheap to the PE and Hedge funds based there to consider pulling out some funds from emreging markets and buying cheap there.Till date only The great Warren Buffet has invested(maybe that is why he is the greatest because he gets onto trends even before the trend begins!).
But then I have waited over a year for that to happen.
Till then the nifty looks good as long as it stays above 5600 for short term traders and the momentum in midcaps keeps them moving.Apollotyres,JP Associates look strong for a 5%+ move in the short term.
Those who kept reading my blogs,kept believing the Indian economy or through sheer luck were on the buyside,here and now is the time to book some profits and wait to buy again a little lower down.

Saturday, September 22, 2012

Politics with Economics...

Finally the Prime Minister had to come on television and tell the way it is with the Indian economy right now.

Such is politics that these squabbling politicos cannot rise above their pettiness even for the Country's sake.The FDI in retails is for cities with a population density above 10 lacs and for those states that approve an inflow.The biggest proble is the lack of investment in cold storage chains,distribution networks which is de rigeur for the new players in retail.I feel that this will g a long way in increasing the efficiency of the farming sector and break the stranglehold of wholesalers who have established their patterns for centuries.

The 'Made in India' label once derided for poor quality is now making headway in the international markets,apparently the opening up of the economy has not wiped it out which is the main argument given by these political types!

The pervasive system in india is to offer freebies,reservation etc in return for votes.Why cannot we strengthen our education system to provide competent education to those below poverty line rather than try to give them rice at Rs 2?(in most cases it doesnt even reach those who need it the most)

The UP Politician who has desire to become prime minister has enough disproportionate assets and other cases and this person is supposed to stamp out corruption??I shudder at the  prospect of the Mayawatis and Mulayams becoming holders of national mandate.Where is the tradition of Pandit Nehru,Shri Rajendra Prasad,Lal Bahadur Shastri or a Jay Prakash Narayan.Has our country stopped producing selfless Leaders?

The irony is not lost when a Chief Minister of an intellectual state has a person arrested for making a cartoon of her and then she talks of democrasy...!!But then such is the time that we are forced to look towards this class of people to lead the Country out of a morass.

Tuesday, August 28, 2012

Endangered Species:'The Indian Farmer"

As the World becomes a smaller place and our aspirations increase manifold,there is the spectre of famine and food scarcity across countries.from the late 1800s to the 1970s there has been increased mechanization of tools and methods such as the the Israeli 'drip irrigation' system.

Yet the story of the Indian farmer is different!They haven't heard of Combine harvestors,Zybach's system etc .The bullock and the plough are the symbol even after a thousand years.Governmental apathy,almost no investments from the private sector have led to suicides in Maharashtra,Bengal and parts of Andhra Pradesh.

From what I have seen,the population boom has led to smaller plots of land and in some cases in Punjab the division between brothers has led to such a division that the person holding the smallest portion finds it virtually untillable.

Most shocking is the lack of direct investments or incentives to farmers,many well known companies like Reliance,Bharti Group have bought up millions of acres but their plans are unclear.This lack of remuneration,the divide between big farmers and sharecroppers has led to increased migration to urban areas.

In 1970 the agricultural sector emplyed 68% of the population which in 2010 stood at 39%.The other sectors have developed leaving agriculture at the mercy of the Monsoon and soil erosion.I know of a barber who came to the city in 1968 from Munger,Bihar.Over the years he would go every summer at harvest time but eventually he brought his 3 sons and bought them shops.Now with age he this year sold off his lands and has moved to the city permanently.It is this trend that shows no sign of reversing that is leaving India's fields bereft of expertise and hands to till and sow as well as putting pressure on the urban jungles to provide more facilities or opportunities.

Main cropping season in India:-
(a) Kharif: Crops are sown at the beginning of the south-west monsoon and harvested at the end of the south-west monsoon.
Sowing seasons-May to July
Harvesting season-September to October
Important crops: Jowar, bajra, rice, maize, cotton, groundnut, jute, hemp, sugarcane, tobacco, ete.

(b) Rabi: Crops need relatively cool climate during the period of growth but warm climate during the germination of their seed and maturation.
Sowing season-october-December
Harvesting season-February-April
Important crops: wheat, barley, gram, linseed, mus­tard, masoor, pea~ and potatoes.

(c) Zaid: Bes;des the kharif and rabi crops, there are certain crops which are being raised throughout the year due to artificial irrigation.
The yield is abysmal and combined with Global drought its showing with wheat prices up 50% since mid june.A lack of efficient distribution system with almost 20% of grains,legumes rotting means that inflationary tendencies get built up into the system right at the outset.

My commentary is not an indepth research project but a macro pointer that unless we do something for the farmer and the framing sector in India,supply side inflation cannot be tamed despite whatever pronouncements made by the bureacrats at Delhi,neither will the dream that is India come to fruition what with all the inequality present!

Thursday, August 16, 2012

Middle of the Road for Indian Equities in July&August

I have not felt like writing about the Indian markets since last month as they have meandered aimlessly in a narrow range.My prediction was for either 4600 or 5400 on the nifty and today it is 5400...!!Those who followed my reccomendation of buying 5200 Aug call and a 5000 Aug Put have made a 50% return with less risk.

Every month data from the US and Europe shows some uptrends and some downsides,its definite that Europe is in recession.I see a lot of solid companies trading below their book value(BV).The S&P has doubled in value from the low of 666 in 2009 where Europe is below their lows.

Will the Hedge/PE Funds get in and buy in Europe or wait for more clarity before moving?Till then the emerging markets,especially India,have enjoyed unexpected inflows and this liquidity has kept markets high.

The monsoon has been very unevenly distributed,inflation is stable around 6-7%levels as we head into the festive season.The consumer stocks look overbought,nothing much happening in infrastructure or cement stocks.Looks like the markets have a positive bias and every dip will be bought into.After the infamous 'Blackout'and the grid collapse in North and East India,the Government methinks will focus on power distribution cos as well as providing incentives for more generation.

Its a trader's market for the moment,keep tight Stop Losses and book profits whereever you get them.The Futures segment on NSE is at a six year low in terms of volumes but do not let such things frazzle you.

Wednesday, July 11, 2012

Is Infosys in danger of becoming a dinosaur?

Infosys was not a firm,it was a harbinger of India's newly risen clout in the world of business in the 1980s.Yet over the last 4-5 quarters their revenues have dipped,n fresh ideas have emerged and most worryingly with the ageing of the founding partners no one has challenged the established order.

A company famous for challenging the 'established order' is stuck with outsourcing as the main business and the squeeze in margins from Europe and USA has not improved matters.despite all this it still remains a formidable force even after cutting FY13 dollar revenue guidance to 6-8%.Rupee rate assumptions however should drive its FY13 EPS to 176-180.

Macro view however is net negative with IT spending cuts of 15-30% in Europe and US.Infosys is behind peers in market penetration in Latin America where TCS and Wipro have a first mover advantage.The bigger issue is the predictive management style,lack of growth triggers and expected HR attrition.

The expected raise for Infy employees is expected at 8-12% and 30% of bench is not deployed on projects whereas a Wipro or TCS plans to recruit 50,000 new engineers  that shows a strong pipeline.

Sitting on a cashpile of $4.2 billion without organic growth plans or even a dividend for two year it seems clueless as to which direction to take.For longterm investors a range of INR 1800-2000 would be an attractive valuation although with their pedigree an five year horizon should see this stock becoming a multi bagger.Question being,how many are willing to see the bigger picture?

Tuesday, June 19, 2012

Growth or Austerity?

The IMF is trying to enforce an idea that is going out of fashion rapidly.....AUSTERITY!The current generation brought up on an excess of consumption cannot grasp it and there is also no denying the pain of joblessness,hunger and the helplessness it engenders in all and sundry as seen on the streets of Athens and other cities in Greece and Spain.

I belong to the Nouriel Roubini school of thought that says that GROWTH is the way forward.Create investments,create jobs,create consumption.That will take care of the violence on the streets,provide an alternative to the youth and create a cycle of fulfillment in the citizens.In the Indian context I may add that its not a secret that inflation in India is more a result of supply side imparity than anything else.Gone are the days of cyclical inflation that rose and subsided with the monsoon.

I do not think that the average joe is too worried about Fitch downgrades or S&P warnings....its the cost of food,transport and business sales that shows whether the country is in trouble.By that yardstick the Indian is in a lot of pain.

A government that supposedly looksout more for the 'common man' on the streets has not had the time.The ambition of the current Finance Minister to be a Prime Minister or hold high office is well known and now that he has got his wish we hope that the focus of the Government will shift back to the economic front and rise above personal ambitions?

The gut feeling though says that the political circus will continue,even after 60 years of independence our politicians will show immaturity and the country will keep slipping into the mire.What is worth mentioning is that it needs little initiative to turn around the environment and with base commodity prices slipping it will help the capital goods sector bring down prices and have a macro affect on core inflation.The continued prudence at the private sector and most PSU banks will also help,as the average CAR of Indian banks is 8%+
For investors,infrastructure stocks and banking stocks have seen positive valuation emerge and look a good bet.After the short sellers had their funlast week the Bulls seem poised to keep the nifty above 5000 levels for a week or so.Grexit may still happen.Spain and Italy may slip further as seen with the rising cost of Spanish debt sales and which Euro nation is next on the list?No guesses...

Sunday, June 10, 2012

The New Imperialists...

Sometimes it seems that imperialism never ended, just that new players disguised it in a different more disingenous form.An article in the newspapers recently caught my eye stating the wide disparity in social wealth in China and how the rich can never sleep in peace if the have-nots do not have enough to survive properly!

I have been saying the same thing in my blog as well as interaction with the entrepreneurs and other sundry business who have been to China and been dazzled by the broad highways and steel and concrete highrises.Many eons ago I saw the glitzy side of Shanghai and also the old city with its warren of filthy streets,subsistence quality of life and crime.Yet,most travellers who are shown the newer infrastructure believe that is the true China.The one party rule ensures right publicity but that is getting more difficult by the day.
Even if the US Pacific Command puts in more warships in the Indian Ocean it will not help China as the US administration has a record of never doing the right thing at the right time and the Chinese might browbeat them into not interceding in case of a conflict.With its nuke subs operating in the Bay of Bengal and bases at Hambantota,Sri Lanka and a new one in Myanmar they already have an axis ready.They beat their wardrums to keep everyone out of the Spratly isles and the South China Sea.

The sad massacres in Syria and Yemen is a reminder that there may not have been any world wars in six decades yet the violence is only increasing and the World remains a volatile,bloody battlefield.

More QE might exacerbate the Lehmannish problems yet its better to do something rather than nothing...!!The mollycodldling of its population by these welfare states has left them near-bankrupt,its driven them to ban emigrants and putting up walls will leave them isolated from the fresh energy and ideas they might otherwise have used.

For investors in India I would ike to quote Rothschild,"The time to buy is when there is blood in the streets".Businesses in europe are quoting at record lows,so is real estate.My only fear is that if assets in the US or Europe get any cheaper then funds will flow out of the country and we do need FDI to pull up the infrastructure here.

Weekly time interval chart formed strongest Bull candle which engulfed price action of past three weeks. This is a potential trend reversal signal from technical perspective as lows of the week at 4770 levels remains a major support from medium term perspective.
 Going ahead challenge for Nifty remains at 5135-5160 range which is seen as major hurdle being: lower range of the March-April consolidation (5160) and 200 day exponential moving average that is present at 5135. Pullback in prices from this resistance is expected to garner buying support in the 4960-5020 range
 In the month of June (till June 7, 2012) , FIIs were net sellers to the tune of 594 crore while DIIs were the net buyers to the tune of 1903 crore
 Key data to watch globally would be US Advanced retail sales, Consumer price inflation and Initial jobless claims and Euro Zone CPI. In India, data to watch would be IIP numbers and monthly wholesale price index

Let the short sellers and options writers enjoy till then.

Friday, June 1, 2012

GREXIT...and other Worries

After the not so merry month of May we head into June in further turmoil.Life as a stockbroker,equities/commodities trader and even an investor is not easy at most times but these past two years have been excruciating even by the normal yardstick.

The global and Indian markets have bled every month and the issues just keep piling up while the powers that be decide whether its austerity thats required or even more stimulus to keep main street thriving.How many of us have willingly taken bitter medicine,even while knowing that it would make us better?

The muddle in Indian politics just gets more tangled with the Bengal chief minister seeming in the NDA camp as I saw the strike in Kolkata and the administration took a softline even when the BJP leadership does not know who to listen to!The Finance Minister is more interested in taking long walks in the Presidential Palace and the Prime Minister's cheif economic advisor keeps making some noises about policy action to change the laissez faire.

What effect the probable Greek exit or Spanish banking trouble will have on india I cannot predict but I do know that the valuations of a lot of firms in consumption,textiles,maufacturing and banking is going to be 'mouth-watering' at some point in June-July.The slowdown in GDP does not come as a surprise although corporate profits on average have grown at 15-18% YoY and I do not not have to be an oracle to predict that it will take a couple of quarters for the corporate results to catch up with the GDP.

Cooling of Oil and base metal prices augurs well for Indian manufacturers.We are facing a litmus test and in the months ahead there will be plenty of talk about deficient infrastructure,redtape,access to cheap funds being net negative for India and maybe a few downgrades.But if you are an INVESTOR(not trader)then good times are round the corner for you.JUST BELIEVE in the India story.

P.S.A country growing at 5% is still the second fastest growth market in the world.And the exit of Greece...or Spain...or Portugal or Ireland is not the end of the world.Greece contributes just 2% of the Eurozone GDP!

Wednesday, May 9, 2012

The Merry Month of May

So wrote James Jones in his novel about the student revolt in Paris.It was about love and betrayal and the passion about ideals that drove people.Unfortunately the equity markets have been most un-merry in April and May.

"Those who cannot expect to lose 50% of their portfolio during bear markets have no business being in equity - Warren Buffett

I am reminded of this by a surfeit of phone calls from clients disillusioned by this market.I met a gentleman during my travels who has been involved with equities for the previous 22 years.Last 3 years he has suffered a loss and talks about getting out and doing something different!I mean 3 bad years out of 22.....?Whats the ratio?

I have given this as an example because people/investors/traders tire very quickly and this to-ing and fro-ing,be it in equities/commodities or even different mutual fund schemes will leave you frustrated.Just when the markets are about to turn these kind of people shift their focus and then repent or blame their luck!

Important to have that focus and passion,so if you feel that investing in equities is the way to go then stick it out.Most investors make money by chance because when the news and markets are at their worst,people simply refuse to buy,although everyone knows the adage,"Buy low and sell high".

The elections in France and Greece have cast a pall over the world although the rise in home prices in the USA bodes well for the global economy.In India the negative balance of payments situation and 4% current account deficit is being crucially highlighted.To me of more concern is the government apathy and if we have to wait till 2014 for reforms then things will get worse before they get better.

Corporate results still show a 10%+ growth in revenues and there are a lot of fundamentally good stocks in the market quoting close to their PBv.For investors a good chance to keep accumulating if the nifty does show 4600.Good value assets come cheap only when panic happens and even now I am yet to see that stampede!!

Thursday, April 19, 2012

Equities in April:The Monsoon prediction...

It was interesting to read Mr Mahindra's tweet about India where we join the ICBM club by successfully testing a missile with 5,000 Kms range and our railways leaves 3 dead in Mumbai due to a faulty tower placed dangerously close to the tracks,all in the same day!

That sums up the contrasts that make this country interesting and a hugely difficult read for many analyts even today.The markets have been relatively flat and not reacted to global news.Some of my analyst friends say that the Nifty might mirror the fate of the rereleased 'Titanic'but I am yet to come round to that view.Greece may need another bailout and Italy bond yields have gone back to the 8% levels so a fresh,immediate crisis seems unlikely.The growth in US markets,although stilted is still above worst case projections.No fresh Euro nations look to be in serious trouble.

For this month I would again buy on any dips unless the 4900-5000 levels are violated on a closing basis on the Nifty.

In fact,I see some re-awakening of interest in riskier assets across the globe.I continue to be bullish on Indian real estate and those with slighlty conservative habits might be interested to invest in Hindusthan Unilever or other consumption stories.I feel tempted to risk investing in KRBL(biggest Indian basmati rice exporter),some power producers like Powergrid,NHPC,REC or even Areva.

Even this year is likely to be a stock picker's market.I bet on Kingfisher airlines hanging in there at a price of Rs 16 and in One month its moved to 10-20 levels.With the passenger traffic growing close to 23% YoY basis and some downshift in jetfuel prices I would be tempted to hold this for a couple of years.

There are many interesting stocks like this in the market right now.If the Met's prediction of a normal Monsoon holds,if my prediction of some cooling in commodity prices worldwide holds THEN Indian equities will once again outperform the global indices...!!

Thursday, April 5, 2012

The last Institution...

It has been disappointing to see the Army getting embroiled in matters of Politics.We who have had so many family members serve in the armed forces recollect the discipline,uprightness and the positive force that shaped and formed what is and remains the Indian Army.

I thought when one of the brighest and most tech savvy of generals became the chief that now India as a nation would match its economic might with the military equivalent.But as often happens those on whom we have the most hope disappoint us the most!

Going to court rather than retiring gracefully,bringing up allegations a year or two from the date they happened reeks of a calculated strategy.Of all the institutions in India I would dare to say that the citizens considered the Army to be uncorruptible and above any religious or class bigotry.What a disaster its turning out to be.

What the brave jawans lacked in weaponry,armour or equipment they made up through sheer bravery and the derring-do of the brave young officers as attested by the Kargil War.The same leadership that made it unmatched in internal or external conflict today shows a crevice as  deep as its wide.

With the newspapers trying to up their circulation and seeing shadows where there are none leads to such negative publicity for an institution that has won wars,stopped riots,terrorism etc

 I remember my uncle(then a captain in the sappers) telling me that during the Golden Temple attempt to takeout Bhindranwale,the jawans took of their shoes and ran into machine gun fire so as not to harm or give offence to the Akal Takht,the temporal seat of the Sikh religion...!!

Young men and women who should be persuaded to join the army and put the nation above self(at least for a couple of years)are reading this trite in the daily newspapers....impressions are not hard to guess.

I just hope that this last bastion of India emerges unscathed and continues to  modernise and be the effective fighting force it has been as its a major part of statecraft.Read Chanakya and his Arthashasthra to understand the importance.

Wednesday, March 21, 2012

On The Edge

Markets are again headed towards volatilty with the India VIX placed at 21.Post Budget the markets have flattened out to a certain extent and the next trigger is again dependent on RBI cutting rates and the latest inflation figures.

Goldman Sachs report says that this is the best time to buy equities in the US with the treasury yields being what they are.I have held that view(and my previous posts would be a testament to that)since 2008 with the feeling that FIIs would prefer to invest in their home markets where the risks are understood rather than EMs with their political and economic variability.

Yet I get to hear the experts predict a huge flow of liquidity into EMs,especially India.Guess that the Fund Managers belief in US equities is particularly low which has benefited some dodgy balance Sheet firms here.

As a contrarian bet I would invest in Real Estate stocks- DLF,Infrastrucure-maybe an IVRCL and my old reccomendation RCOM that has moved from 75 to 100.It remains a traders market and only those with belief need get in at this time.Pessimism still remains high and that is a good signal.the failure of Nifty to go below 5100-5200 range for now means that any news based fall would be a good time to invest some funds.

Made a short trip to Odisha and the development in Bhubaneswar,Puri,Ganjam and Khurda is amazing.The potential was always there and Bhubaneswar has rapidly become an educational hub in the East.Those with a 4-5 year return horizon can invest in good projects as the prices,especially a little away from the main city,are at a fair level and a 60-70% net return in 5 years would be my conservative estimate.

The Monsoons as an indicator is a few months away.....and for now liquidity,local politics and the RBI hold the key to Indian equities.

Thursday, March 15, 2012

Budget 2012:A Non Sequitur

Another Year, another Budget from the man who always wanted to be king but never was and the chances dim with each passing year.I talk of the honorable FM,Mr Mukherjee who once had ambitions of being Prime Minister.The chances of UPA coming to power in 2014 are slim unless they can put the economy back on track and at the very least project a strong and clean image.

Will he be bold and throwing caution to the wind come out hitting with bold reforms viz.FDI in retail,pension reforms,agri-distribution,cold storages,blueprint on SEZs,Freight Corridors.Will he push infrastructure,increase excise,decontrol diesel and Gas prices?

Will it be a subsidy laden budget with more schemes for the so called 'aam admi',full of reservations for various ST/SCs,freebies in education and additional deficit in the current account.We might not be running a debt of 230% of gross GDP like the Japanese but it wont take long to destabilize our fragile development.

The rising crude prices are raising inflation again although there is elbow room to cut income taxes to promote internal savings to icrease from current 8% to at least 10%

A best guess is a neutral budget.....but if Mulayam Singh's SP has come to an understanding with the Government then Mr Mukherjee can ignore Mamata Banerjee's Trinamool as he should cause politics should not hold the Nation's growth hostage.

At worst...the slew of various...Jawahar-Indira Plans will put further pressure on those who pay their taxes honestly or get them deducted as TDS...!!!!

Keep investing regularly and do not let the Budgets and other such events distract you from your main purpose.

Saturday, February 25, 2012

Climbing The Wall

Crude is on the boil...Republicans say dig more Oil Wells....Saudis want nukes.....Afghans kill,not because they do not have any food,but due to some Qurans being burnt at an army base!!

The new world is a complex,modern,tech marvel with the social tolerance level of the Dark Ages or the Crusades.Yet Wall Street is almost at a Four year high.What does the American public see that we in the "developing" world do not?

I travelled to one of India's most mineral rich states-Odisha.For many years to call someone an "oriya" was derogatory and meant someone with low level skills.I have a lot of Oriya friends and was amazed to see how well the infrastructure is developing with good roads,modern highways and good management of the iron ore resources so far.Yes Niyamgiri is an exception but on the whole they seem to have taken the 'green earth' policy quite seriously.Being an Oriya will I guess be a matter of pride from now on for all the residents of this marvellous state.

When compared to Bengal,the future definitely seems to be shifting towards the south eastern state and all my investor friends should certainly look at investing in and around Bhubaneswar,the capital of Odisha.The Flip Flop politics of Bengal is not helping.

Whatever is happening to the Dow,Nasdaq-Indian markets are likely to consolidate but my gut feeling is that the beaten down infrastructure space is a good BUY as are the midcaps in business leadership positions in their respective sectors.I am on the long side in ITC,Pantaloons for the next ten days.

The Rupee looks set to trade around 49-50 vis a vis the $ and Gold may outperform silver although in the long run i am more bullish.

A couple of months back I had given a strategy of selling Gold and Buying crude and those who did that are still making a decent return of 25% .Its always nice to talk of things that went right as i have spent One whole year being bullish on India when the nifty gave a return of -24%.Feels good to be vindicated although the rally has been mainly on account of liquidity.Yet the portends for a Bullrun are there and nifty levels of 4900-5000 would be a good place to start accumulating.

Wednesday, February 15, 2012

Pers(ian) Problems...

So the Iranians finally decided to unsheath their 'velvet'gloves at last!

Although Iran has never been counted in the same group of 'Mad Mullahs' comprising Afghanistan etc it seems that the desire for sabre rattling and the creation of the state of Israel cannot be digested.

Its truly a dickensian world where Obama led Americans will give $ 2.4billion to Pakistan for killing the Coalition soldiers,arming the Taliban and Kashmir insurgents and sharing nuclear tech (thru A Q Khan) with Iran.Some ghosts never go away.All field reports have categorically warned of the ISI-Taliban-Al Qaeda nexus yet the mandarins in Washington play their own games.

By covertly supporting the nuclearization of Korea,Pakistan and indirectly Iran,I think China this time has been a little too smart in the long term planning they so like.If the Islamists gain sway in south Asia,the small Chinese problem in Uighur can in a decade become a serious threat.

The western world did not understand that the covert support in Afghanistan and Kashmir would come back to haunt The US within a decade and its destroyed the economic fabric of at least one country.Historically,Islam has been a tribal religion and when they did not find a common enemy then the Shias fought the Sunnis,the Ahmadiyas etc

Threats in the Straits of Hormuz,cutting of oil supply when Europe is on the verge of a recession and an election bound President in the US do not make good reading for the economic world and high commodity prices.

The Israelis i feel have a window within the next six months if they can reach the facilities at Bushehr as its unlikely that President Obama will take the risk.Unlike the past their fighter jets have air-to-air refuelling capacity now and they do not need a friendly power to transit through.

What effect will it have on equity markets?A correction would be healthy and let off the excess exuberance that has built up in india in the new year.A nifty level of 47000-5000 would be a good place to start buying beaten down real estate,infrastructure and power cos with good balance sheets and not too much leverage on their books.

Can look at India hotels(around 70),Lupin(around 470),Indiabulls real Estate(around 77-79).Rcom to be bought on dips around 77-88 mark.I would write a few nifty calls around 5500 level because I havent been short on indian equites since 2010.

Sunday, January 22, 2012

The Indian Entrepreneur is Alive!

On a chilly winter morning I took the train to one of the most historical of places in Bengal - Murshidabad.The way led through places like Plassey,where Lord Robert Clive defeated Nawab Siraj-ul-Daula in the 1700s and laid the foundation of British Rule in India.

The neglect of such historic sites is monumental to say the least and I imagine Lord Clive would not feel out of place was he to wander back today to the site of his triumph!goats loitering on the platform,mudbrick houses and green farms,ducks swimming in muddy ponds,a typical scene from rural bengal and nothing to denote thate this place once was responsible for changing the face of modern India and indirectly leading to the formation of a great nation from a conglomoration of princely states.

On the positive side,having travelled cattle class for this short 5 hour trip I saw a surfeit of home grown entrepreneurs selling books,incense,boiled eggs,home made sweets,a flute player and a magician as well as a stand up comedian.The energy shown by them was amazing.

Its a lot easier for the IIT-IIM-Harvard educated citizen to get PE funding or other sources to start a business.But here were people from the 'have-not' side,how did they capitalize their business?Funding?What profitability?

Especially when there is no safety net(other than family support I suppose) and their dependents mean that they cannot afford to fail.

It was a vibrant thriving community that has demarcated areas of operation as well as the product to be sold.It is such as these that bring their village craft to those who live in suburban areas and provide a minute glance at the indegeneous industry.Wonder how many craftsmen and craft we have already lost?

But as long as this vitality thrives,no amount of redtape and bureaucrasy can styme the development of India.I hope things will only get better from here...

Thursday, January 5, 2012

Cars and All Those Things...

The Auto Show in Delhi shows that automobile manufacturer's are finally going with their gut.For many decades India had either very big,flashy and expensive cars or tiny tinboxes that did service on the roads.The need for an SUV or crossover that was affordable,drivable on India's mad roads and scrambled parking and did not cost a bomb...was simply a dream.

2012 is changing that with Renault,Ford,Ssangyong etc bringing in smaller city based SUV,RUVs and hopefully buyers would be spoilt for choice soon.It underlines a distinct maturity in the economic sense with more clients leaving the 'low cost'model and having higher aspirational values and more disposable incomes.

I am shocked to see the number of Audis,BMWs on Kolkata roads as its never been a city that believed in 'flash'.A lot of it is due to the lease method used by these companies to hire their cars rather than sell them outright,but it does underline a major change in tastes or is it the demoghraphic change in age and aspiration?

Despite the looming slowdown in growth I believe Tatamotors and M&M are poised to grow fast as they have the niche products to sell in Indo-China where most of the demand is coming from.

The Fords,Chryslers,GMs got taken out by the Japanese when the shift to small car segment happened in the late 80s and now I believe these US companies have dumped their gas guzzling SUVs and taken to the lower end they have made another mistake.The brand built by Jaguar,Landrover has been revived in Asia by Tata motors and that has been a master stroke.

The shift to high cost and a higher margin product will make a difference to the annual Balance Sheet next year as demand has not shown a major negative blip yet.Honda toward has declared a price war and when these Japanese get something in their craw they keep at it till the end so would be interesting to see how Hero Motors reacts to their former business partner in India...