Monday, September 25, 2017

Hi Nifty or Hai Nifty !!!!

Well after a stupendous run and more the Indian markets have begun a descent.

Will it be a perilous steep one or will the markets find a ledge to recuperate,revitalize and try to climb their way back up the cliff that is 10K only time will tell?

However the murmurs about growth not panning out and DeMon(etisation) and GST taking the blame is really not the true story.

Mr Modi and his PR team started taking themselves too seriously and their agenda of cleanliness and anti-corruption while a very good one never really created any jobs in the past three years.Not just that their attempt to change every process right down to trying to bring in far right RSS obscurantists back into the history books has been nothing short of a massacre.

Yogi as CM is a disaster.In India's largest state there is utter business paralysis,children die like flies,people are beaten on the streets,women raped yet the Government only gently chides him from time to time.

I seriously think Mr Modi is a secret admirer of Late Indira Gandhi and has embarked on a course where he wants to be remembered by historians as a "tough guy".

The little rocket man and trump sideshow is just a secondary act that could any day turn vicious.

I am told by some very knowledgable folks that crude will never get back to its old prices again but I see a sustained breakout above $50 that could cause some damage to India's BoP.

Hi is a somewhat upbeat greeting......and means good times wherein Hai connotes a more negative or mournful expression....so its anybody's guess at this point.

However I am very upbeat on specific stocks that will see earnings catch up with valuations and many ignored stocks that have withstood the tests.Nifty should see 9600 levels before getting back into the swing post January corporate results which are likely to be more 15% rather than the expected 20%+

Sunday, August 20, 2017

Infosyian Roads....!!

One of the companies that has never been out of the Nifty 50 since the incepton of the Nifty is at tipping point.

INFOSYS                                                                                                                 CMP Rs 896

Considered the bell weather of the Indian Information technology industry since ages and a laggard of late is still an impressive business.Established in 1981 and listed on NYSE its a US $ 10.4 billion company with a market cap of approximately USD 35 billion.

From 2004 to 2016 it has moved from a revenue of USD 1 billion to USD 10 billion which Mr Sikka when he joined promised to double by 2021.From banking software to ERP to now getting into Cloud computing there are few things that Infy has not been doing.

I strongly feel that the ouster of Mr Sikka will not have any material long term impact on Infosys bottomline or strategy.The executives at the top level have been trying to find strategies to counter the change in environment especially after the election of President Trump.

Promoters of Indian companies do not know how to let go and Mr Murthy moving out of executive roles on turning 60 was a welcome change where children and grandchildren acquire an early role in management of family companies.It is not surprising that he too was unable to let go.

Mr Seshadri the chairman had been some scrutiny in his previous company Essar and elevating him was Mr Murthy's biggest blunder.Was it friendship or something else is not clear but it was an irrational decision from a logical person.

Mr Sikka with his MNC background and capitalist business methods were bound to clash with the orthodox tamil brahmin culture at Infosys. And it has happened.

Yes there will be attrition and short term disruption again depending on who becomes the new CEO.Going ahead my feeling is that in a couple of years infosys will adapt and change to its environment and become a better ROI generating business.

They have the pedigree and long term investors can buy a solid business at disruptive prices !!

( I have not taken into account the buyback offer at Rs 1150 which is at a whopping 26% premium to today's price)

Tuesday, July 25, 2017

Nifty 10,000:From Here to Where and the China factor?

So the indexes have hit another new high.Since December 2016 its been one way traffic not just in India but globally too.With crude prices hovering at historic lows and the general situation appearing to be better the markets have not found any reason to go down.

Its funny how every time there is a new high the "experts" come out of the woodwork predicting all kinds of numbers in the next 5 years.Everytime.

Yet its been a slow journey to reach new peaks.From 5K in 2007 its taken a decade to double yet during the heady bull run of 2006-07 there was talk of nifty getting to 25000 by 2020.

That dream remains a dream.

I have a feeling that the Indo-China standoff,the Fed and regulatory action by the Indian government will become the reason for some profit taking in August - September 2017.

For long term investors that would be a chance to add some more quality businesses to their portfolio but i fear for those dealing in penny stocks that will once again leave them holding worthless stocks at improbable prices.

Pharma,infrastructure,some Banks,some NBFCs look like continuing the positive trend and the focus once again will shift to quality managements,moats,margins(3Ms).

A level of 9400 -9500 would be a comfortable entry point for those with a longer term view and the inability to not look at prices daily.

Employment generation has been poor,infrastructure development has been poor,the Cow was made the central issue by this government and it might become its achilles heel.

PM Modi is not the maverick everyone thought,he is a dyed in the wool bureacrat who despite his thumping majority believes in the traditional ways and means with policies that are more PR than reality.Disappointing.

Yet India and its economy will continue to grow and with slight management a growth rate of 7-8% should continue.

Xi Xinping the Chinese president is a throwback to medieval princes and I worry about a new belligerent China that has discarded its victim approach and appears set to be a bully in the mould of imperial Japan and Nazi Germany of yore.

"Made in India" has been a complete failure till date and unless the trade imbalance and the growing clout of Chinese companies in the domestic economy is taken care of we might lose the economic war with China before losing militarily,because surely this is war.

Other than Modi there are no leaders in India,only cattle.

Hence there is no plethora of ideas just the ONE way.Sad to say.

Yet the inherent energy of India and its people will prevail.A lot needs to be done and that is where opportunity lies.In building roads,ports,heavy industry and human values!

Wednesday, July 19, 2017

A Tale of Two Brothers:Losing my Sandy

December 2015.It is a strange but common tale I am about to tell.

Three weeks ago my daughter brought home two stray pups from the road outside.Of a mother dog that survived and scavenged on the streets.We fed them and tucked them in our room at night.In two weeks they developed the curiousity to venture out on the streets.To try anything that looked new.

How important environment is I have learned at this age.They adapted to the TV in the room,the doormat and towels that provided warmth and slept in my daughter's arms.Ate out of a bowl.

In their naivete there was no difference between pampered pets and these survivors.

I have learnt a lesson in attachment.Soon we as a family were worried if they looked sick,if we did not see them for a few hours.Calling up from office to ask after their welfare.

I have learnt a lesson that intelligence and talent is everywhere,even in those whom we disparage.In the curiosity of these two fluffy brothers one a little plump the other a runt we found two lovable rogues with their individual personalities.

There is no cast,no creed,no religion.Just the necessity to survive Life.They have given us such a time,chewing sandals as their teeth developed.Running at each other,mock fighting to develop the skills they would need to live.

And I have learnt the hard lesson that Life is unpredictable.One of the brothers sickened yesterday,did not see him for the night and today my daughter came home crying that our 'chottu'was dead.

This while we were busy as its brother was already sick and we were feeding it with specially bought chicken(my wife is a vegetarian).Sacrifice.

In one day our routine was devasted.How one can love and lose and feel an abyss.All in four weeks.Just shows its not the quantity but the quality of the relations in our life that matter!!

As I write the surviving little pup has eaten a little and drunk some water.It seems a small victory.

Today I know why I have always supported all the 'underdogs' of the world.

Why I have never cared about the rich - poor,insider or outsider.People talk of building legacies and long term views but who knows what tomorrow will bring.

I can but try to understand a microcosmic bit of what Buddha or the other Indian sages have tried to say.Its not difficult to hold on.

Its most difficult to let go.

17th July 2017.The surviving little pup now one year and nine months old just died from jaundice.By the time we realised he had sickened and his usual naughtiness was missing it was too late.

12 days of IV and a host of antibiotics and a tale of doctor negligence latter my Sandy is gone.Gone the verve with which he welcomed us back home from work.Gone the morning biscuits,gone the running like a greyhound from one side of the house to another.
Gone the standing on table and nibble the ear.Gone standing on two paws on the balcony  to see us of to office.

He came into our life as a storm and left as a tempest,coming to us sick and weak and dying of a heart attack quietly on the bed surrounded by his foster family - us.What moments of affection of sheer joy of(especially)for me coming to know through him so many purely humanistic traits - a love of bengali sweets,a love of mutton.

The sense of loss is beyond belief.The house seems empty and I keep expecting him to pop up out of the other routine.Not having to get up on time to cook chicken or fish or mutton for him,his empty food bowl and water container stares at me accusingly.Too young,too full of life to go so suddenly leaving behind the memories of his shadows.

Somewhere up there he waits to be reunited......

Friday, June 23, 2017

Ask Yourself "Do Memories Affect Your Routine?"

I write this post not as an expert but as a layman who just feels strongly as I have personally experienced the affect that memories have on our decisions and our everyday life.

I am no psychologist or psychoanalyst so here it goes....

Today I heard of the demise of  a gentleman who was Principal when I was in school in 1988.An immensely knowledegable lookalike of Omar Sharrif with a fantastic sense of humour,integrity and the ability to give a shy teenagers the space to discover themself.

Its been 29 long years since those days but i still ask myself if Mr Mcready would approve of my decision whenever i have to decide on something big!

The people one meets and those who influence us leave behind memories and though the saying goes that "time heals",there are always certain event memories created by such people that remain pristine bright while other memories curl at the edges like paper stored for too long and vanish in wisps over the years.

But I guess everyone has someone they encountered in their life who left an indelible(and hopefully positive) impression on them and one felt like imbibing their best qualities?I know I did(at one point I wanted to be Clint Eastwood !!).

So a lot of values that we hold and the thoughts that we have are not really ours.Scary but true.Who are we if not a collection of our memories intepreted in a way unique to each individual and I guess that makes us,us - from the way we walk to what we consider right or wrong.

I used to think that it was only a passing summer fancy,a childhood fad but now i realise that trully we never grow up,its just a patina or a gloss put on for public affectation - a serious mien but underneath seethes the contradictions of yore.(Shakespeare you were right!!)

Do certain smells or music recall certain incidents from the past.Why on sudden days or particular times?Why this year and not the year before?

Truly the human mind is an enigma and its power frightening in its avatar to create or destroy.Hinduism has a god-symbol for each emotion.

I wonder if Shiva of the legends is simply our brain.


You the Life that infuses its breath in Me
Did you reach in by itself or was it I that asked
And return me you shall to that nothingness that is Death

let the breeze of sweet remembrances refresh the musty relics floating on the Past
To do,to believe,to Act
Let this silent breath raise me beyond oblivion

Friday, April 28, 2017

30,000 is Just A Number

So a lifetime high for the Indian markets !!I have stopped counting.A lot of other stockmarkets across the globe are also at or near historic highs.

The last Two Years have seen a sustained drive to new highs matching the spread of the BJP in the political landscape of India.

This is also that time when even those with no relation to stocks or financial news talk of great things and how they have started investing too and how things look really truly positive which actually is never true.There are always some dark clouds on the horizon.

It does not presage to be totally pessimistic.More dangerously,it does not pay to be outstandingly positive either !

Liquidity by Central Banks has driven stock prices higher and it does not seem that this tap will be quickly turned off.Keynes was always for deficit funding but I dare say not at the cost of  fiscal discipline which many keynesian supporters seem to be forgetting.Valuations have gone up with earnings yet to catch up and I see many IPOs lined up at exorbitant sums and the demand to lap them up continues?

As a Fundamental value investor I may feel negative about (a)valuations (b)prices (c)PE ratios but the trader in me wants to follow the old dictum of 'THE TREND IS YOUR FRIEND".

Right now the trend is positive and any dips should be an opportunity to invest.But opportunities rarely stay the same.A small slip by the US armada or a moment of madness by North Korea's mad dictator could turn geopolitics into the World War III.China's issues with almost all neighbours,Spratly island,Syria,Iraq all hold the seed of a terrible future.

Details of Tax cuts announced by president trump,British relations with EU post BREXIT,the bonhomie between Russia and China are to be watched.

In India with interest rates very low,many companies are raising a lot of capital without any visible avenues of deployment or rising sales?yet I am heartened by the Startup bubble leaking and the over the top values toning down although I see many startups without a disruptive idea still commanding(or pretending to command)high prices.

Even well known ones like BigBasket and Grofers do not have enough manpower to service demand as I found out myself post demonetisation in the November - December period.Yet they have recieved millions of $ in funding but the services are pathetic.Will skeletons tumble out of startup founders cupboards because some of them have started thinking that they are beyond questions and can burn cash any way they feel as with the Stayzilla case.

I have been slightly positively surprised by Adityanath's handling of the Chief Minister's chair in Uttar Pradesh but this harsh rhetoric and 'hard hindutva' is disappointing.

In a democrasy it so often becomes the Tower of Babel,yet,every citizen has the right to choose what to eat,drink,wear of SAY.That is non negotiable.That is what separates this idea of India as a Nation from Pakistan or China or Libya or Saudi Arabia.

And we should keep it thataways.Keep investing in solid businesses,Infrastructure looks like picking up.India will always need good roads,warehouses,resthouses for its vast hinterland and topography composed of mountains,deserts,tropical jungles and plains.

It is our responsibility to uphold that legacy.

Monday, April 3, 2017

Brand Resurrection.....Can it Really happen ?

The middle of the 20th Century,post independence,few companies and fewer brands jostled for mindspace.I mean,you could count the brands with the digits of both hands.As recently as the 1980s.

Most people drove an Ambassador(or Amby for short),wore HMT watches,drank Campa Cola and cooked with Dalda or Postman oil !!

Offcourse there were many others besides but in each sector there were not more than THREE top brands.

Ambassador owned by C K Birla group recently sold itself to Peugeot of France for a pittance.Dalda is long forgotten and more remembered as an unhealthy vegetable oil that gave Indians coronary disease.HMT is bankrupt. Campa Cola dead.

Murphy, Konica , Premier Padmini , Dyanora ,Binaca.....the list is endless.

Yet some businesses have refused to give way,change with the times and manage a toehold.An Onida is trying to revive flagging sales,Nirma still has marketshare,Lifebuoy by HindLever re invented.

As an investor looking for 'value picks',are there some other brands that could revive and become competitive,win marketshare,sales and ultimately give their companies a stronger balance sheet?

Many Tata,Birla,Hindusthan Lever and ITC brands have prospered with time.

Internationally too there was Compaq and Enron and TWA and Arthur Anderson and Woolworths and General Foods....

What is it about brands like Amul,Maggie,Glucose D and Maruti that have endured.Majority have disappeared from view that within two generations people are unable to recall.

Hidden in each story is a lesson.That is not what this blog is about.We want another Bata that staid banal shoe company that not just survived but thrived and diversified and the stock price went from  Rs 72 on 3rd January 2000 to Rs 561 on 3rd April 2017(I have not accounted for dividend,Bonus or split)

I am looking at brands that survived and might even have the capacity to resurrect themselves(offcourse with help from their promoters) and us as investors enjoying a windfall.

One can be a stock market "SHERLOCK" sometimes  !!!!

Tuesday, February 21, 2017

Tata Motors:Look beyond the Numbers

For Tata Motors the commentary goes thus...

For the quarter ended December 31, 2016, Tata Motors reported consolidated revenues (net of excise) of Rs.67,484 crores as against Rs.70,567 crores for the corresponding quarter last year (unfavourable translation impact of Rs. 10,670 crores). Consolidated Profit before tax for the quarter was Rs.599 crores, against Rs.3,414 crores for the corresponding quarter last year. This broadly reflects:-
In Jaguar Land Rover business -
  • Strong retail sales, up 8.5% y-o-y on continued strong demand for the product, revenue (in £) up 13.1% y-o-y ;
  • Lower wholesale volumes and relatively weaker product mix (including the run out of Discovery) in Jaguar Land Rover business, overall higher marketing expenses partially offset by credit relating to the recovery because of explosion at the port of Tianjin (China).

In Standalone business -
  • De -  growth in the M& HCV segment and flat LCV segment partially offset by growth in Car segment.

Consolidated Profit after tax (post profit / loss in respect of joint ventures and associate companies) for the quarter was Rs.112 crores, against the Consolidated Profit after tax (post profit / loss in respect of joint ventures and associate companies) of Rs.2,953 crores for the corresponding quarter last year.
For the nine months ended December 31, 2016, the Consolidated revenue (net of excise) was Rs.1,99,429 crores against  Rs.1,92,543 crores (unfavourable translation impact of Rs. 18,840 crores) for the corresponding period last year. The Consolidated Profit before tax for the nine months ended December 31, 2016 was Rs.4,149 crores against Rs.8,237 crores for the corresponding period last year. Consolidated Profit after tax (post profit / loss in respect of joint ventures and associate companies) for the nine months ended December 31, 2016 was Rs.3,220 crores, as against Rs.6,467 crores for the corresponding period last year.
The various numbers PAT,PE,PEG,EV,BV are important when looking at the stock price of a company but what really excites me is to look beyond mere mathematics .
Five years ago I personally felt the desire to own an SUV but was unable to buy an Audi or Merc and felt if these automobile companies developed a local variant there would be many guys like me willing to take the plunge.That happened and the so called 'urban compact SUVs' are all the rage and the best selling segment in India.
Next I feel is the localisation of the sports coupe - what one sees in the in the Ferraris,lamborghinis or maseratis.If only we could have a poor cousin of the sports coupe,let us say priced somewhere between one and half to two million rupees,it would be a big hit with the millenials and the value conscious.
Tata Motors with its base of really low end on one side to the Jaguar - Landrover capability on the other is best placed to take advantage in introducing an 'affordable' sports car.
The Marutis and Hyundais,even the Fords,Nissans are still far away from developing a platform for such and it could be a real differentiator for Tata Motors especially in the mass based India - China market half a decade hence.
Today the stock price of Tata Motors is Rs 460 and my recomendation is to buy on every fall in price and hold with a 10 year horizon.Even after discounting dividends and bonuses it will be a multi bagger and by then you will be able to trade Tesla in India !!

Wednesday, January 25, 2017

USA is now Micky & Donald Co

The new president of the United States of America seems like a child handed a toy that they know not what to do with.Cannot resist asking,”Americans how could you elect a liar like Trump to the highest office in the land?

If you are a stock trader/investor or an analyst,you should be really really afraid.
When market pundits expected markets to fall they rose,when they said they were certain it would fall,the markets rose higher !!

Mr Trump is removing ‘Obamacare’,backing out from Trans Pacific Partnership(TPP),planning a wall with Mexico,trade sanctions or anti dumping tarrifs against those who have trade surplus with the US and many other measures whose repercussions cannot be gauged at this moment.

Is his strategy really deep or is he a simpleton with limited knowledge,an overblown ego and a perennial foot in the mouth ?

As seen from the data,post 1980s US import and export curve almost matches each other signifying goods and services exported to US and revenues used to buy imported products from the US has been about the same.

Trade deficit of the USA in 2015 was approximately $ 500 bn.Higher import tariffs will lead to higher inflation and consequently less dollars in the hands of exporters most of which are being invested in US $ backed securities? So is reducing imports such a good move ?

There are many such issues.Alternative facts and post-truths

The  Economist defines post-truth as "a reliance on assertions that "feel true" but have no basis in fact."

Indian markets on the other hand have continued to climb,the Government figures on GDP seem misconstrued or even a barely camouflaged lie and instead of 30% currency not being demonetized as per Government expectations the fig is only 3%.

After all Trump has made it fashionable to be trashy and rude and sexist.

The isolationist policies in the US and Britain will enrage the rest of the world and it will not be easy to steamroll China into submission.Neither to tame the ISIS.

There is talk of Indian corporate profit growth 10-12% and a GDP of 6.5%.Still talk.Most sectors yet to recover from demonetization,election in the politically vital state of Uttar Pradesh as also Punjab and Goa will be a litmus test of Modi magic.

Look forward to the Budget on 1st February with trepidation as this prime Minister seems to see the stock markets as a place of speculation and not as a bellweather of the economy.Are higher ‘service taxes’ coming and maybe a few goodies for the so called “POOR”.

The middle class that pays the taxes will probably get a few sops as in housing loan limits getting upgraded but higher taxes in other spheres will make a it sum zero game.
Beggar the Middle class then give it a few handouts to show that the government is in support.Really nothing has changed from Indira Gandhi’sgaribi Hatao” to all these “Abhiyans” – swach,swadeshi…

The poor remain poor,the rich get richer,manufacturing dies a slow death,Chinese buy up companies,traditions lost,cultures bereft.

It is indeed a strange India with all the inherent polarities of the past six decades intact.Only the veneer has changed to saffron.

Henry Vivian DeRozio must be turning in his forgotten grave in Park Street as must Washington,Jefferson,Franklin and Lincoln.

Tuesday, January 10, 2017

2017:Exciting or Weird But Definitely Not Boring !!

Ten days of the new year are over.Donald Trump is still reacting to every poke.He really needs to strengthen his social media team if he is to react to each and every comment that is thrown at him.

Mr Jaitley the 'shadow' finance minister(real one being a ceratin Mr Modi) is pushing some figures to show that the demonetisation unleashed by his captain has not had any effect on the economy where as the on ground situation is quite alarming with wholesale markets yet to recover from a lack of currency.

The 'Marie Antoinette' moment is complete.

Mr Rahul Gandhi who is trying to convince us as to his ability to lead the Nation decides to take a holiday every 3 months or so.Someone please tell him that leading a country like India aint no childs play !!

Donie Trump is filling up his team with family,friends and probably the most nepotism ever is visible in brazen presentation by the new US president.A man of little geographical - political knowledge let us see if his gambit of wooing Russia away from China will or won't work.

Where are the Leaders in India ?Most are simply falling in line and kissing the feet of the most powerful Indian Prime Minister in recent times.It would be pertinent to not forget that the worst of things are done by the most well intentioned.

Auto sales are down 20%.Agricultural production is down 19%.GDP down to 7.1%.The useless Planning Commission replaced by the more pointless Niti Ayog.Much disappointed by the proclamations of Arvind Panagariya.Just being some chair or the other in some US university does not mean that you understand the issues facing India.

I hear spokespersons for BJP denigrate Manmohan Singh,Amartya Sen .I hope our politicians will have some respect for contrarian views in 2017.

I have real respect for our 'didi' Ms Mamata Banerjee who follows her emotions and supports the views so diligently even when it would be so easy for her to shake hands with the party in power,CBI and ponzi cases notwithstanding.The civic amenities have definitely improved in Bengal and her attempts to promote tourism,handicrafts and small scale industry are commendable.

I hope she remains the fearless,indomitable leader in 2017 that she has always been.

2017 will be an interesting time for Indian markets with many points of news to watch.Fed moves on interest rates.Trump's Wall(or lack of it!!).US move on outsourcing,visas,immigration,ISIS.

GDP and inflation in India.Offcourse good solid businesses will remain and am sure the storm over the removal of Cyrus Mistry(why was he appointed in the first place?) by Tatas will remain a storm in a teacup and a good price point to enter the various businesses of the Tatas.

2017 will be for fearless traders,those with a strong heart and a thick skin....!!