China and USA…different political idealogies that makes for strange bedfellows….China deliberately keeps it’s Yuan low to benefit from exports to USA…get’s paid in US Dollars which it reinvests substantially in US Government Treasuries !..nearly US $ 900 billion of the US $ 2.3 Trillion Fx Reserves of China are invested in these Treasuries

USA was threatening to declare China manipulator of Currency…China agreed to revalue it’s Yuan upward a wee bit recently and also has just declared their continuing faith in the US Dollar and US Treasuries !

That’s some Consolation between the two on the surface….but the undercurrents run deep

Here are two Alerts….you can put it this way….one by China for USA and the other by USA for China! 

• Is China facing a Housing Bubble ?…the Western Countries seem to think so
• A Chinese Credit Rating Agency has just downgraded USA from  ‘AAA’ to  ’AA’ Country Rating

Is China facing a Housing Bubble ?

Have a Look at the above Graph that matches the Value of Residential Housing against the Country’s GDP for USA,Japan,Hong Kong and China

In 1989,Japan shows a peak level of 3.8  and since shrunk to 2….Japan has been facing Economic Woes for the past two decades now…..China has reached an alerting level of 3.5 and if historic precedent is to be believed for this parameter,the Fall is inevitable….China is heading for a Real Estate Bubble soon

A Chinese Credit Rating Agency has just downgraded USA from  ‘AAA’ to  ’AA’ Country Rating

Two months ago in May 2010 ago I had blogged on how the top Credit Rating Agency S & P yet continued USA’s Rating at ‘AAA’ 

S & P’s Sovereign Rating of USA remains at Top ‘AAA’….Amusing!

Friday, May 21st, 2010

Now China’s leading Credit Rating Company,Dagong Global Credit Rating Co has downgraded USA from ‘AAA’ to ‘AA’

The World’s Top Three Credit Rating Agencies…all based in the West….S & P,Moodys and Fitch….. have come in for  some scathing attacks…and justifiably too…they have lost considerable credibility in the past few years for their failures to spot and alert proactively  and, even more stupidly, reactively on Lehman’s Collapse,the Sub Prime Dangers,the Greece Problem among others….seems these rating agencies are a cartel with vested interests and agenda….when a Problem is so apparent even to a Commoner,it becomes difficult to believe that these Top Agencies run by Top People out of Top Colleges and Institutions and with Top Pedigree Degrees and Positions are really Dumb,Stupid and Incompetent or even Complacent!…..so the conclusion is that the ‘High Ratings’ maintained for Corporates and Countries by these Western Agencies is a deliberate Game plan not to break the Hand that’s feeding you…combined probably with a Political agenda too !…..Bloody Shame !

Though Dagong may not wield much global Influence,it’s action last week to downgrade USA will be seen as an unbiased and Non Western View of USA….a Pioneering and courageous forward step to call a Spade a Spade….despite the fact that China itself has a near US $ 900 Billion Investments in US Treasuries….and it may lead to a weakening Dollar and an increased Risk Premium for Dollar Investments and a fall in the Value of Dollar Investments….a True and Tough Call made by Dagong for USA, a Country whose massive Deficits will lead to Massive Debts that will soon eclipse it’s own GDP 

Where will our Sensex head now in the second half of 2010 ?

So while both USA and China continue to hope that Stimulus packages will bale their Economies out and GDP Growth rates would gradually move up or at least the decline will be stemmed,where does this leave India……Our Country is not decoupled enough yet not to feel the adverse Impact in case USA and China shrink….Fed Governor has finally removed the Gloves and warned Congress last week that the Labour,Housing and Credit Situation in USA yet remains dangerously worrisome

Our Sensex has crossed 18000 and Nifty 5400 while the Dow is struggling to stay above 10000….What if the Dow seeks lower 8000 levels by 2010 year end ! ? where would our Sensex head then !?….the way I see it on a macro level is like this…..when 2010 began I called that the first half of 2010 would see a Sensex range of 14000 to 18000…this was on the mark…..the second half has now commenced…I see our Sensex range in this half to be 16000 to 20000….the upmove range is considering that India will benefit from Good Monsoons,strong FII Inflows,Higher GDP Growth rate of 9.5% forecast for FY 11,Infrastructure and Consumption India Story being intact and strengthening of Corporate Earnings…my contention is that these positive drivers will net out the negatives of continuing High Inflation,increasing Interest rates and a possible Downtrend in USA and China Economies, Stock and Real Estate Markets….16000 on the Downside would me more by default if the Dow or China shrinks 

However on the Cautious Side,the Short Term does not strongly indicate a One Way Upward Movement for the Sensex…therefore you will have to contend with Volatility…..Therefore A Bottoms Up Approach with Specific Stock Selection would probably fetch you better returns than a Top Down or Index Strategy in the Short Term

Cheers !    

To Protest against the Congress led UPA Government’s recent decision to Hike Prices of Petroleum Products, the Opposition parties led by BJP and even joined by some UPA parties ! had announced a Bharat Bandh today….Political leaders are courting arrest…there is disruption in Road,Rail and Air Transport across the Nation….In Mumbai,Autos and Taxis are off the road….schools are closed…banks have closed shutters as have many establishments….many offices have declared an off day

There is a demand for rollback of this price rise….yesterday,our FM,Pranab Mukherjee asserted that there would be no rollback   

So India is officially Open but practically ‘Bandh’ today but Stock Markets are ‘Chalu’ !…Pun fully intended !….though they were less ‘Chalu’ today as Sensex and the Nifty closed down just 20 points and 1 point respectively at 17441 and 5246 

Cheers !  

I’m reproducing a blog I had posted nearly two years ago on September 27,2008 on what should be the Investment Strategy going forward….this was contrarion in the face of many experts at the time who were recommending selling at every rise…sentiment at the time was getting gloomier….Sensex had reacted from 21000 in January 2008 to 13000 levels at the time…I had said it will seek sub 10000 levels,which it did a month later in end October 2008…Strong advice was to buy at Distress Prices in  2008 for fantastic wealth creation by 2010….this is exactly what has happened

Ab Kya Kare ! ? Should You Buy,Hold or Sell ?

Washington Mutual (WaMu) ,one of USA’s biggest Banks was forcibly taken over by the regulator,FDIC yesterday and sold off for US $ 1.9 Billion to J P Morgan even while the Chairman and CEO of the Bank was on a flight in Mid Air…The quick move was to prevent a collapse as Depositors had already began a run on WaMu and withdrawn over US $ 16 billion in the last ten days

As we move towards Panic,Capitulation and Despondency in Equities with the Scenario in USA turning scarier than ever a lot of friends,family, clients,associates and even my Pay and Park Attendant are asking me “Ab Kya Hoga ?…Ab Kya Kare ?”

This is what I strongly advise…..

We are surely moving towards Distress Prices on the Bombay Stock Exchange and the National Stock Exchange…With the continuing disturbing scenario unfolding scarily in USA,there is clearly more Pain ahead in India as Dalal Street gets Wall”ed in

Critical Valuation Basis remains on Assessing the  Sustainable Growth in Earnings…Here is the Problem….Clearly we are seeing a rapid deceleration in the Earnings Growth

The Sensex’ earnings grew by nearly 17% in the first Quarter ending June 30,2008 in the current FY 09 supported by a 33% yoy growth in Earnings in Capital Goods Companies and a near 30% growth in earnings in Telecom Companies and a strong 44% growth in Earnings in ONGC. However, the Sensex (excluding the oil companies) saw an earnings growth of only 12.5% yoy during the quarter…..the lowest in the last fifteen quarters…compare this with the peak 40% growth in the December 31,2006 third quarter of FY 07  

EBIDTA Margins contracted by 1.8 % and are expected to contract yet further.Metals and Pharma were the saving graces and saw some margin expansion

The Earnings Momentum  going forward will continue to be impacted by hardening Interest rates and double digit Inflation and an economy slowdown,notwithstanding the Minister of Finance yet assuring of 8% GDP Growth this year assuming strong domestic consumption and Investments

From a closing Peak of Sensex of 20873 in January 2008,the correction has been a mighty near 40%…With Wall Street resembling Ghost Town,the Sensex Slide should continue to distress Levels of a P/E Multiple of 9 and 10 ( Last seen in 2001)…With the remaining quarters in FY 2009 expected to reflect continuing slowdown in the  earnings growth  I expect the FY 2009 Sensex EPS to be around 950 levels…This gives a macro Sensex Valuation of 9500 thereabouts on a derating P/E Multiple of 10…that’s another 25% to 30% drop from current Sensex levels of 13000 to 13500…yesterday it declined sharply by 445 points to close at 13102

The Danger remains that if Panic turns to Despondency then Sensex may seek even lower levels than what a Macro Valuation projects  

FII’s have been forced to sell off  their holdings big time….it’s got more to do with Salvaging Liquidity for their Bankrupt or on the Verge of Bankrupty Parent entities back in USA than  Indian Valuations…As of date over US $ 9 billion have been pulled out of India this year by the FIIs…They had put in US $ 20 billion last year.It was FII Inflowsof over US $ 40 billion from 2005 to 2007 that had driven our markets to record highs and far ahead of fundamentals with P/E multiples recording unprecedented highs of 25 with justification that India is a rerating Story of High sustained Growth and is deserving of such high multiples

What was assumed was that Sensex Earnings Growth would continue in the 30% + zone…at worst decline into the 20%-25% range….It’s down to below 15% and falling !

Reminds me of the Information Technology Euphoria of 1998…the late President of NASCOM had boasted that the IT Sector would see 100% Earnings Growth yoy for the next Ten Years !Infosys shot upto past Rs 15000 !…Once commonsense and rationalisation dawned that this assumption was far fetched it was too late as the Markets collapsed dramatically from Feb 2000 with Infosys retracting to below Rs 2000 ! Ironically it was an excellent Buy at this price in late 2001…but even if there was Investible Surplus very few had the conviction…Realising that late 2001 was a historic time to Invest in Equity,I had conceived in August 2001,even before the 9/11 World Trade Centre Attacks, a Workshop on “Restructuring, Repairing and Revitalising Your Portfolio” at the World Trade Centre here in Mumbai.It was held in October 2001…Clients who were not convinced I threatened to throw off the books…so convinced was I of the great Wealth that would unfold in the subsequent Years…I stood vindicated

I see a similar opportunity like that in 2001 emerging yet again in 2008 

So in such a depressing scenario should one Look for Opportunities to Buy…..or Sell out…or Just Hold ?   

This is what I strongly Feel…..Think Two to Three Years….In 2010 you’ll be looking back and saying why Did I not buy into Distress prices in 2008 !

I acknowledge, realise,confess and recognise that these are simply unprecedented times that brings alive the USA Depression of 1929 that lasted for years ( Check out the Pages Section of this Blog for some great Quotes on the Depression of 1929)

However I came across very two convincing chart presentations as below that should convince you to atleast Stay Invested in Equity even if you are not inclined to Buy Further

This Remarkable Chart from Data from Fidelity Investments  shows that you just have to remain Invested in Equity for the Long Term,riding out even Turmoils like that of the present…if you sell and are not invested on the best ten days your portfolio value gets halved !

It’s really a fallacy to believe one can time the Markets.Here’s what John Bogle, legendary founder of Vanguard, the most respected mutual fund company in the world had to say about market timing…

“After nearly 50 years in this business, I do not know of anybody who has done it successfully and consistently. I don’t even know anybody who knows anybody who has done it successfully and consistently.”

From Personal Experience I can say that staying Invested in  Sound and Sustained Growth Scrips is really the only way to create Wealth….In the late 1980s there were many who sold of Larsen and Toubro as the Ambanis of the Reliance group tried to take it over….even the co founder Mr Holck Larsen sold off his shares !…The company was and is a gem…those who sold off never re-invested back into the Company and if they did it was at much higher Prices…In the 1990s  I repeatedly advised Investment in Infosys when it was quoted in the Hundreds…Many sold off after getting 100% returns…and lost out on 10000% returns over the longer term !

So the Bottom line is Stay Invested in Equity for the Long Term

Now Look at this Sentiment Chart…it should inspire you to consider Buying

Currently Bearish entiment is expressed by 55% of the people surveyed…..Going by the history of the last Twenty years this would indicate a strong rebound in the coming year

The Opportunity that is arriving is clearly Historic to create Wealth over the next few years

So I take a contrarion View…Instead of the Herd of Experts and Analysts that you get brainwashed into listening to day after day, again and again, on various Stock Channels who are recommending Selling at every Rise…I say await the Buying Opportunities at Distress Prices at every Decline…The quicker you are inclined to sell,the slower will you be inclined to Reinvest…and that is a tragedy that you need avert…so dont sell…instead get convinced to top up your portfolio with fresh funds in the coming weeks and months as the Sensex seeks lower levels towards 10000  

Clients can look forward to a list of atleast 25 Stock Selections with Distress Price levels that should be the benchmark to Invest

Anyone who wishes to play the Devil’s Advocate with me…please feel free to respond

Cheers ! 

Sensex just closed down 460.03 points (2.72 %)  at 16415.76 and Nifty dropped to 4921.40,down 144.80 points (2.86%) reflecting Global Blues and cues…..Volumes were relatively high and this does not augur too well for the immediate short term…tomorrow’s opening may just be weak too

There was red ink all over,with just a few specific stocks in the green…of the Sensex 30,27 were in the red with Tata Motors dropping over 8%…three barely were able to hold on to yesterdays closing

Sell offs in India are echoing rest of Asia….Tightening in China is playing this out…with Europe and USA scenarios adding to uncertainties

Sensex is back down below 16500 from my predicted top end range of 18000 for the first half of 2010…Expect more falls…Expect Volatility to persist….Seek Opportunities for Entering or increasing Exposure to certain Stocks….Larsen & Toubro being one of them…It had reacted to below Rs 1550 a few days ago…It surged back to Rs 1670+ levels this morning and again is moving back towards Rs 1600…Rs 1400 to Rs 1500 would be good buying into range with a three year outlook

Don’t Panic and Liquidate Part or Full Long Term Equity Portfolios as long as your Selections are Sound…ride this Volatility holding a Long Term View…don’t try to play the ‘Exit and Re-enter’ Game…It would be a Tactical Strategy that may not work …..and confirm that your Asset Allocation matches your Risk Profile…you’ll sleep sounder    

SENSEX CLOSE IN 2009 : 17465..SENSEX LEVEL NOW AT 11.09 am,MAY 17,2010 : 16628

Down 367 points from Friday Close….but down 5% from 2009 Close   

FII EQUITY FLOWS AND SENSEX MOVEMENTS …A CLEAR DICHOTOMY IN 2010 

Total FII FII Equity Investments : US $ 78.76 Billion

Registered FIIs :1714    Registered Sub accounts : 5369

India remains  a great Investment Destination…But have a look above….whenever we’ve seen huge FII Inflows,the Sensex has simply run away….in 2008 when we witnessed huge outflows,the Sensex sank,only to recover brilliantly when inflows topped US $ 17 billion in 2009

But 2010 has been a revelation…There is a clear dichotomy between FII Inflows and the Sensex…In Four and a half Months yet in 2010 we’ve seen strong FII Inflows of US $ 6.1 Billion…a strong part were in IPOs….one would have expected the Sensex to power ahead…Instead it has buckled 5% till date today from 2009 close

It’s a clear Macro Warning…India remains coupled to World Markets….the disturbing PIIIGS Solvency Scenario in Europe and the Debts and Deficits of USA continue to spook the Global World…It’s a contagion that’s being tackled

Beginning of the Year in January 2010,I had blogged that the Sensex range will remain in the 14000 to 18000 for the first part of 2010…when it touched 18000 a few weeks ago,I had given a  macro warning that we’re at the top end of the range and extreme caution should be exercise when playing the Indices or Trading…the onbly way to beat the Indices benchmark would be specific selections

Don’t get unnerved by this Volatility…it’s part of the Equity Experience….just stay focussed on Long Term Goals and Proper Asset Allocation when playing out your Strategy 

And I continue to reiterate,as I’ve been for a few years now….do consider GOLD strongly….it’s moved from US $ 650/oz to over US $ 1200/oz now….My first target was US $ 1000…it reached this late in 2009…Beginning 2010,I had said that Gold would touch US $ 1200 in 2010…it’s done so in May itself !…..My next big target is US $ 2500 inside a few years…..and then US $ 5000 !……given the huge uncertainties and poor visibilities in global economic recovery in USA,Europe and Japan…and the liquidity tightening in China to reduce fears of any Asset Bubble Formation…any Investment in Equity,anywhere in the World….and even in Debt,I daresay, should be done cautiously and with complete understanding of the Risks involved   

Very Few Believed me on my ‘Against the Trend’ calls for Equity,Gold and even Oil….been called an idiot a few times too in debates and discussion with Experts !…but then Contrarions are called Idiots quite Often !

To conclude…for the Long Term,I’m bullish on all three….Indian Equity,Gold and Oil….for the Short and Medium Term,there is a huge Overhang in Global Equities and Currencies….as I blogged a few days ago…Greece is bigger than Greece…India will feel the coupling effect….don’t be in any hurry to expend your Cash….unless you want to add or increase exposure to  Gold in your Portfolio…..you’ll probably get your scrips cheaper down the line 

As for existing Equity Portfolio…don’t worry as long as your selections are sound and your weightage allocation is sensible and rational based on your risk profile…so even if your Tracker shows realtime,your portfolio losing Value…stop looking at your Tracker ! 

Get into the discipline of thinking ‘Few Years’ and not ‘Few Days’ or ‘Few Months’!

Cheers !

I’ve no bias… but feel sad for Anil Ambani…. I’m with him on this one….. Supreme Court gave a split verdict today in the RIL v/s RNRL Gas Pricing embroglio in favour of RIL

So now 2.34 is out and 4.20 is in !… One perspective is that RIL and the Government have done a 4.20 on this one!

In 2005 when the Reliance Group was split between the Ambani Brothers a MOU was signed between the brothers and blessed by their Mother too… It prescribed that RNRL would be supplied 28 million mmbtu gas  daily by RIL at a price of US $ 2.34/mmbtu….. Anil agreed to the split valuations which included this arrangement too…. He went ahead and got his company RNRL to enter into an agreement with his ambitious baby, Reliance Power, to in turn supply this Gas from RIL for the upcoming 7.4 GW Dadri Power Plant which is slated to be the biggest Gas based Power Plant in Asia

RNRL went to court as RIL refused to honour this MOU citing that Gas was the National Property and they were merely Contractors and the Government owned the Gas and reserved the right to allocate this Gas and also approve the Pricing for this…. The New Pricing Benchmark became US $ 4.20/mmbtu

High Court ruled in favour of RNRL and said that the MOU should be honoured…. RIL went to the Apex Court, the Supreme Court….. Today the three judge bench gave a 2-1 Verdict in favour of RIL and the Government, overruling the High Court Order…. their view is that

• This Gas is a National Resource and the Government is the Owner
• The Production Sharing Contract (PSC) between RIL and the Government supersedes all other agreements, including the MOU between the brothers
• The MOU itself is not a legally binding document, but can be used for inspiration in future negotiations for gas supply between RIL and RNRL… These negotiations must be concluded inside six weeks and the Company law Board should be approached to approve the same

Feel Sad that RNRL and Anil lost out here…. simply because I feel strongly as below

• This issue must be viewed with the mindset of ‘Substance over Form’… just like auditors are trained to do… also it should be viewed,like the Painter Hussain controversy, with a mindset of looking at the ‘intention’ behind creating this controversy
• The MOU was created in 2005 with this Price of US $ 2.34/mmbtu which was the benchmark then as it was a NTPC tender price….. Why was no noise created then ! ?…. Even if the MOU was secret, the price was not!…. Clearly as the Price of Gas began rising, RIL attempted to wriggle out of this committment to supply gas to RNRL at US $ 2.34/mmtu
• It was only in October 2007 that the Empowered Group of Ministers (EGOM) had arrived at a Formula for Gas Pricing
• Mukesh Ambani could easily have honoured this MOU committment… it was blessed by the Mother… and in Mother India, the word of Mother is that of God !.… apparently the boiling intensity of emotions with his brother, Anil Ambani, prompted him to decide not to supply the gas at all….. So RIL chose to default citing that Government was the authority on allocation and pricing of Gas…. clearly government machinery was being misused and the government merely became a front… moot question arises… was the Government playing favourites or truly had the National Interest in mind !?.… the answer will stare at you in the face when you search history and discover that a top RIL executive was arrested because he was caught with confidential government documents…. apparently he was drafting/suggesting/amending a Union Cabinet Meeting Agenda for a Meeting to be held!…. also the current Petroleum Minister and the late Dhirubhai Ambani were great friends from their youth…. read the banned ‘Prince of Polyester’ by Hamish Mcdonald to gauge how close!…. Anil Ambani has already emotionally made these accusations and had rightly questioned as to why the Government has not withdrawn the PSC with RIL if they felt that it has been violated by the MOU !

So what will happen now….. RNRL has already lost significant value on the Stock Exchanges today…dropping from Rs 70 levels towrds Rs 50…. RIL has regained lost ground and is up marginally at Rs 1040 levels

If Anil Ambani had agreed to the Reliance Group Split in 2005 based on the Valuations on supply of 28 million mmbtu/day at a Gas Pricing of US $ 2.34/mmbtu, he is entitled to now feel aggrreived like all his shareholders too….. Clearly he should seek adequate compensation from RIL on behalf of all his shareholders…. one way is that the brothers agree to sell RNRL to RIL at price levels near Rs 100…. because the split may have then been done at a more favourable and liberal ratio for ADAG Companies… in simple words, shareholders of RIL would have received more shares in ADAG Companies in the split than they actually did if this Gas Supply and Pricing was not to be considered

There clearly is a huge vacuum in Independent Thinking… Expert after Expert on all Channels today are simply parroting similar views…. in favour of RIL Share Price and sounding the death knell for ADAG Companies

Mark my word, Anil has his father’s courage and aggression in him…. he will rise again… just pray he creates a right set of people around him, than he has now, in all his business

As I end this Blog, just heard a very gracious Anil Ambani stating that he will abide by the Supreme Court Decision and not file a review petition… he was all praise for the SC for upholding the formation of the MOU and stating that the MOU can be an inspiration for looking at the scheme of arrangement and renegotiating…. he thanked his wife, Tina and both his sons, Anmol and Anshul, for the support… thanked his 11 million shareholder body, the largest in the world, his over 150000 employees and the media too

Anil Ambani looks forward to an expeditious renegotiation with RIL

However RIL is voicing doubts over the availability of gas itself to supply to RNRL…. creates doubts on whether any renegotiation will take place, as directed by the Supreme Court today, between RIL and RNRL…. What will RIL negotiate !? if they continue to assert that they don’t have any gas to supply to RNRL !… as Government is directing the allocation to specific companies in the priority sectors of Fertilisers and Power

Clearly RIL and Mukesh Ambani wants  to sever the umbilical cord with ADAG Companies and Anil Ambani permanently…. perhaps Anil and his Companies would be better off this way !

So where does all this leave us on the Share Price performance of RIL and ADAG Companies

RIL will register an EPS of over Rs 80 FY 12 on full Gas production … at 15 multiple that’s a Share Price at Rs 1200 levels… its’s currently at Rs 1040… so there appears little downside from here

Re Power is struggling to stay above Rs 140…. With a  question mark on Gas supplies from RIL and New Pricing, it would be advisable to reduce exposure

On RNRL at Rs 53 levels, I’m a bit of a contrarion here….. I don’t think it is, as joked, “Rahe Na Rahe Ltd”!…. It’s more than just a Trading Company in Gas… With ex Gujarat Ambuja Cement CFO, Ajit Singhvi,on board as Vice Chairman and diversification plans on the anvil, I would review it strongly to seek more clarity  on the business model and impact of changing dynamics…. in simple words, if you’re holding RNRL, defer a decision to sell out at current levels… unless you’re a conservative investor… in which case RNRL should never have been in your portfolio, unless you’re an original Allottee in the Reliance Group 2005 Demerger by lieu of your shareholding in RIL

Also, if you are not in sync with Anil Ambani’s business aggression, ambition, acumen, management coterie, risk assuming abilities and strategies he adopts to scale up and move ahead then it’s wise to not marry any ADAG Companies.. and if you have, then exit the marriage asap

On a Macro front,Sensex dropped @ 240 points to close @ 16750 levels and Nifty dropped below 5000, only to recover to barely close over it… Greece is bigger then Greece!

It’s Been a Hectic schedule and I’ve nearly missed connecting flights!….I’m on a series of Training Workshops entitled ’Focussing on Fundamentals to Add Value to a Client Relationship’ all over India for the IFAs of a leading MF

Began with one in Mumbai…..just returned from Pune,Delhi and Lucknow and will be soon off to Bengaluru…to steal a line from ‘McDonalds’..”I’m Loving it”

Interaction was great with the IFAs….and it was fun showing and convincing them that it was not necessary that Equities and Cynicism be  strongly intertwined !….Even before I began my Lucknow Sessions,a lady emphatically stated that whatever I was going to say,she does not believe me !….for a fleeting second I imagined it was my wife saying this!…set up the Lucknow Day beautifully…Opening Batsman being greeted with a dangerous Bouncer !

Workshop Arrangements were very good….was particularly impressed by the Pune Venue…The 110 seater Sumant Moolgaonkar Auditorium at the MCIIA Complex,ICC Towers….Auditorium Settings with comfortable Seating….with State of the Art Audio Visual Equipment…overhead projector,remote controlled huge pull down screen with laser pointer capability and a seperate sound studio…set up my Presentations beautifully….I had to catch the 7 pm flight to Delhi and it was pouring in Pune!…could not tele or web check in as this facility closes one hour before the flight !…managed to reach Lohegaon Airport in time to check in,clear security and board……. takeoff was on time despite the Heavy Rains

Flew Delhi -Lucknow early morning…Delhi Airport has got great facilities…was a bit early so had a South Indian Breakfast at the Food Court…and was served another South Indian Breakfast inflight!….had a bad experience with the Checked In Luggage…when collecting the Bag in Lucknow,realised there was a deliberate blade induced slit on the outside Zip Pocket and a crude ripping of the Pocket material itself…it stored only Paper Tissues….obviously the baggage handlers at either the Delhi or the Lucknow Airport were the culprits…this is not an uncommon occurrence in India  

Lucknow was preparing for CM,Mayawati’s huge Monday rally….the controversial newly errected Monuments and Statues were lit in Blue Lighting….nearly missed the flight back to Mumbai in the Evening….the Workshop Participants showed great Intensity as I covered concepts and content and the Practical Applications and there was flowing interaction….will our Sensex touch 21000 in 2010 ? Will Different NAVs,Diversification,Corpus Size make any Difference to MF Scheme Performance and in your selecting which MF Scheme to Invest in? What’s Improper Framing? What’s Reinvestment Risk?How do you convince clients to enter Equity Schemes? What’s ‘Value’ and ‘Price’?….answered these and and lots more

Interaction continues by email from the participants….Looking forward to Bengaluru now

Cheers !

Sentiment is at work at the Stock Exchanges…more visible on days such as these…when the Union Budget is announced

In the Morning the Sensex and Nifty were up marginally…as the FM began his speech at 11 am,they remained positive…90 minutes into his speech,at around 12.30 pm and around the time the BJP decided to walkout,the Indices gathered fast momentum and he Sensex rushed towards 400 points rise and  16600 while the Nifty sought over 100 points and 5000

What’s my first reaction ?….so what’s New !?…simply continuing the Fiscal and Infrastructure Road Map

• You don’t need a Visionary…any FM or a layman can do this…. to sell yours assets to part fund your fiscal deficit…Rs 25000 crs is the Disinvestment for 2009/10 and Rs 40000 crs for 2010/11…..to reduce pressures on the Government Borrowings…Borrowings has already crossed Rs 4 lakh crs in 2009/10…Government plans a lower Rs 3.45 lakh crs in 2010/11 !….My sense is that this figure may be revised upwards if Oil again crosses US $ 100 or if  Disinvestment Figures don’t work out 
• Fiscal Deficit is pegged at Rs 381408 crs or a lower 5.5% of GDP for 2010/11…Inclusive of Oil and Fertiliser Bonds,In 2008/9 it was 7.8% of GDP and in 2009/10 it’s going to be 6.9% of GDP
• Total Expenditure for FY 2010/11 has been upped 8.6% at 1108749 crs of which Plan Expenditure is up by 15% to Rs 373092 crs  and Non Plan Expenditure is up b y 6% to Rs 735657 crs
• All Media Stock Channels are excited over the increase in the Direct tax Slabs Range…so what’s new..this was already announced much earlier what the New Slabs would be from April 1,2010…it’s already on wikipedia…check it out
• DTC and GST are already scheduled for being implemented by April 1,2011…The FM only hopes he can be able to do this
• GDP Growth rate is 7.2% this year,may be revised upwards…FM wants to return to the high 9% rates…This is expected  to help reduce the pressures of funding fiscal deficits through borrowing,asset sales and deficit financing…but depending on this can throw you for a Toss if twin challenges of Food Inflation amd Potential Oil Price Surges play up the squeeze…check out a few days old Blog on this

This Budget has come and gone….markets will soon return and be guided by prevailing Sentiment and Momentum in turn guided by Global Issues

In short,this Union Budget does not give you a Clear Signal to BUY Stocks immediately…take your time to make appropriate selections at appropriate prices….Markets are not going to simply run away up fast

Gives you enough time to Reflect and then Act

Cheers !

The Sensex is keeping in a small static zone above 16000….Traders and Speculators are Bored..Investors have been bored for some time now !…..Seems only the Brokers and Stock Channels and the plethora of Fundamental and Technical Experts that proliferate and depend on them seem to think that things remain Exciting and Opportunities keep beckoning!…and that “There is Always a Bull Market somewhere “…..Bull

Been humming that Raj Kapoor classic from  his classic ‘Mera Naam Joker’….”Aye Bhai jara dekh kay chalo…aage bhi nahi,peeche bhi,…daaye bhi nahi,baaye bhi…upar bhi nahi,neeche bhi….!”…..Raj Kapoor was a visionary…..and this song was probably inspired by the Sensex !…but Hey ! this movie and the song were born before the Sensex was in 1986,with 1978/79 as the Base Year !

Raj Kapoor was truly a visionary !

Cheers !

I have been increasingly impressed by this RBI Governor,D Subbarao…..his thought process is very inspiring and rational and intellectually stimulating and challenging…..A few days ago,he humbly stated that what happened to the Financial System in 2008 in the USA taught a lot of lessons and challenged traditional assumptions

And today he showed his assertive and no-nonsense decision making ability….In light of the record Food Inflation figures of 17.40% that came in yesterday for the week ending January 16,2010,it was indicative that RBI will surely raise the Cash Reserve Ratio (CRR)….and he raised it by 75 basis points,that’s 0.75%,more than expected.The CRR is being raised in two phases in February 2010 to 5.75%.This will reduce the Liquidity by Rs 36000 crs

…..and Interest rates will firm up strongly in the coming months

The Repo Rate and the Reverse Repo Rate has been left untouched at 4.75% and 3.25% respectively

While GDP Growth Rate Projections have been raised to 7.5% from 6 %,Inflation Rate Projections too have been raised from 6.5% to 8.5%…that would indicate Food Inflation rising yet further to 20%!…I think our Agriculture Minister,Sharad Pawar will continue facing a harrowing time and calls for his resignation will intensify….Anyway,he seems to hold his position as BCCI Cricketing head and President in Waiting of ICC in higher priority…so maybe we should let him concentrate only on Cricket and relieve him of Ministerial Duties!

Credit Growth Offtake and Deposit Mobilisation rates Forecasts have been lowered

RBI is clearly aware of the potential risks of Oil Price Surges,that caused us great agony and high Fiscal Deficit in 2008 and 2009…Search for my earlier blogs on this Impact

Stock Markets initially bounced back briefly…Sensex was down 200 points at 16100 levels before the announcement but recovered…..This may just be a short bounce and Sensex will challenge 16000 shortly…maybe even today

So now the Monetary Policy is behind us…now February 26,2010 will see the Fiscal Policy thrust when Pranab Mukherjee announces the Union Budget

BUT KEEP AN EYE ON THE FII FLOWS…already US $ 2 BILLION sales have been effected in the past few days….Statistics clearly show that when there have been strong Inflows,the Sensex has sought record highs…When US $ 13 Billion reversed out in 2008,the Sensex tanked

It’s going to be a very interesting tussle between FII outflows and Induced Domestic Buying in an attempt to maintain Buoyancy to facilitate PSU Disinvestments

As I had blogged a few Days Back on ABC of Investments…(A)merica,(B)harat and (C)hina….(B) ,that is we, is sandwiched between the East and the West…we are coupled strongly and cannot be insulated from what happens at either end of the Globe…..Recovery in America is years away and there is real fear of double dip recession…..China is strongly arguing that no asset bubbles are forming in light of excessive lending

We,Bharat,despite our exciting Infrastructure and Domestic Consumption Stories and High GDP Growth Rates being intact need to be very cautious

……Monetary Policies like twitching CRR,Repo and Reverse Repo rates can have only a limited impact as India has no control over Pricing of Commodities,be it Oil,Sugar,Gold, Grains or Pulses or Metals….Price Explosion in these have played havoc with our Fiscal Deficit and raised Food Inflation rates to record Levels….search an earlier blog on this  

So don’t be in any hurry to Invest in Equities…..no matter what Experts and Anchors and Brokers scream out at you from the Stock Channels !……Look for strong sub 16000 Sensex levels for better Opportunities to Buy into selective scrips which you have identified as having strong growth potential to leverage into the India Story and have a Long Term View

Cheers !