Keep a watch on Bajaj Finserv…it’s the holding company for the Life Insurance and General Insurance Jvs with Allianz Group….It’s at Rs 449 today…52 week High/Low is Rs 557/250 with all time high of Rs 999 reached two years ago in May 2008…FV is Rs 5…Capital is Small at Rs 72 crs….Strong Upward Movement is indicated over the next three years for three top reasons

• If the pending demand for FDI limit to be liberalised to 49% happens soon
• Insurance Companies begin making profits
• Warren Buffett’s Berkhire Hathaway invests in it…undercurrent has been sensed

Bajaj holds 55%,FIIs hold 5%,DIIs hold 12% and the Public holds 28% of the Equity

USA Treasuries and Corporate Yeilds…..Have a look at this Yield table below

For the First Time ever,the USA Treasury Yield is higher than that available on Top Corporate Bonds for similar maturity periods !

So for the risk free rate we can now stop referring to the Treasury Yield,but instead use as the proxy, the lower yield offered by Warren Buffett’s Berkshire Hathaway !

That’s an ominous warning !

Lenders Trust Top Corporates more than they do the US Government !…even though the Government enjoys a Top AAA Rating currently….When queried whether USA would lose this Top Rating of AAA,Tom Geithner,the Treasury Secretary emphasised on ABC News ” Absolutely Not !…that will never happen to this country!”…Emotional…Patriotic….but unrealistic and impractical…if US ,like it has little alternative,continues to borrow and print currency to fund it’s deficit,it will have to increase yields to tempt lenders

Clearly The Huge Spiralling National Debt and Fiscal Deficit Situation that has reached record levels of Trillions of Dollars is unnerving Lenders….This situation is more likely to escalate in coming years,rather than reverse 

The Demand for US Treasuries has ebbed at the auctions…and the Government is being forced to offer higher yields to attract subscriptions….dangerous ,but an inevitable trend setting in

This will create increasing pressure on the US Currency and lead to the US Dollar weakening…..this should inspire Gold Prices in the Years to come

Rough and Tough being an American in America these days!…going to get much rougher and tougher!

It’s always a ‘Must’ read every year….Living Investment Guru,Warren E Buffett’s Annual Letter to his shareholders of Berkshire Hathaway….his insights,his ‘packing a punch’ at many issues,his confessions,his core heartwarming values,his demystifying the rationale for his investment decisions,his philosophy and his fabulous sense of humour…and he’s all of 79!

Warren E Buffett has never authored a Book…does he need to!…If ever there was a Nobel Prize for Financial Journalism,his Annual Letter would be the Winner every year !

Access his latest one of February 26,2010 below

 http://www.berkshirehathaway.com/letters/2009ltr.pdf

….and I’m sure you’ll want to become a Shareholder of BH to access the Annual Meet which Buffett himself bills as the ‘Woodstock of Capitalists’!…it’s traditionally held on the First Saturday in May….this year it’s on May 1,2010

Mind you it’s BH share is not cheap….One Original ‘A’ Common Stock is quoted at US $ 124080 !…that’s Rs 57 lakh or Rs 5.7 Million Rupees (US $ 1=Rs 46)….To make it affordable BH issues in 1996 the ‘B’ Common Stock which was prescribed by BH to be valued at 1/30th of the ‘A’ Share but carried only 1/200th of Voting Rights

Interestingly on November 3,2009,BH passed a resolution to splt the ‘B’ Share 50:1 ratio to facilitate small shareholders of Burlington Northern Santa Fe to get the BH ‘B’ share in the acquisition deal,should they opt for it…..This has resulted in the Share Quotation of the ‘B’ Share to be under US $ 83 yesterday (just Rs 3800)…this computes to a pre-split share price of US $ 4150 (Rs 1.91 lakhs)

In 1981,there were just 12 shareholders who attended the Omaha Meet…In 2009 there were 35000 who did !…This year they obviously expect much more….Both ‘A’ and ‘B’ Shareholders get the Annual Report and an Invite coupon attached with it for the Annual meet…they need to fill it and send it back to BH…and within a week their Credentials will arrive for the Meet…As I’ve said,the Meet is always held on the first Saturday in May…this year it’s May 1,2010…and the Report is send to shareholders as on Record Date ,which is normally 60 days before the Meet Date…It takes three days to register you as the shareholder from your date of purchase…so play it safe and buy the BH share by the third week of Feb if you intend attending the BH Meet that year…you will receive the Report early March and can initiate the process to attend the Meet

For a die hard Value Investor,Omaha is the ‘Mecca’…even for others,it would be an experience worth experiencing….So begin Planning to be in Omaha on Saturday May 7, 2011 now !

Cheers !

Warren E Buffett,while warning of consequences of the ‘Greenback Effect’,  is bravely being Optimistic and Patriotic ,like every true blue blooded US Citizen should be !

Says Buffett, ” The United States remains by far the most prosperous country on earth,and it’s debt-carrying capacity will grow in the future just as it has in the past”

Check out Buffett’s Op-Ed Column in yesterday’s edition of New York Times

Buffett is happy that Obama and his Men showed the much needed Wisdom,Courage and Decisiveness required to address the US Financial Crisis…He urges them to continue this Momentum and make some hard decisions

USA ,maybe out of the ICU,yet remains in the Woods…financial situation remains critical….Fiscal Deficit will climb to 13% of GDP this year…that’s US $ 1.8 trillion Dollars…This would be funded half by a Net Current Account balance of  US $ 400 billion(China-Foreign Debt Dependence)  and Expectations of National Savings of US $ 500 billion and that these will be routed through the Banks into the Economy…The other Half Funding of US $ 900 Billion will probably be from Fresh Printing of New Currency Notes

What if China reduces,or even halts, it’s Investment in US $ Treasury Bonds for fear of a Weakening Dollar !?…Currently it has an exposure of US  $ 800 Billion in such Bonds in it’s  FX Reserves of US $ 2 Trillion…China,while retaining it’s US exposure, may opt to Invest the Dollars it’s earning from US exports,in other US assets,like Real Estate,Stocks and Buyout of Companies ,rather than in US Treasuries

The Net US Debt will climb to 56% (from 41%) of GDP…that’s a huge US $ 7 Trillion of Debt

There are paradoxical and Catch 22 situations that exist….The USA Citizens need to both, Save and Consume ! to stimulate the Economy…the former will help in Capital Formation and the latter will stir demand and revive American Industry…With Unemployment at 10%,where is the Income in the first place for Millions of the American Workforce !…Yet,when Push has come to Shove in USA,we’ve witnessed Savings climb to 5% from lows of 1% and 2%

Obama’s stimulus packages may have prevented a collapse and depression and a meltdown but the critical growing levels of Fiscal Deficit and National Debt and their adverse Impact on the Dollar is causing sleepless nights,not just in USA but the World over

USA remains in critical and uncharted territory….Future Generations may get bonded with this Growing Debt and a period of High Inflation and a Weakening Dollar,for no real fault of theirs

It’s really amusing to now hear Economists discuss whether the Worst is Over or not and what type of Recovery will take place !…L Shaped ? U shaped ? V shaped? W shaped ?…They’re just playing with letters !

Infosys declared It’s Q1 FY 10 Results this morning…….as per IFRS……..as per Indian GAAP

I don’t see any headwind in Infosys…I will be surprised if it climbs more from the current Rs 1750 levels….Infact I expect it to drop below Rs 1500…..Read on to understand my thought track 

It has managed to show a little higher Basic EPS at Rs 25.56 than expected for Q 1 but has given a lower FY 10 EPS Guidance Range of Rs 94.59 to Rs 96 down 9.6% and 8.2% respectively yoy 

Market has reacted positively to Q 1 Results and Infosys is up 4% + at Rs 1755 with the Sensex at 13844,up 87 points just past 2.30 pm….This Price gives a Forward Multiple of 18 for FY 10

In April 2009 ,Infosys had warned of a 3% drop in margins in FY 10….This is not reflected in Q 1 as Infosys has deferred Heavy Investments to the remaining three quarters in FY 10…The margin contraction would be lower at 1.5% in FY 10 says Infosys CFO,V Balakrishnan

The Consolidated Networth of Infosys at June 30,2009 is Rs 19827 crs ( US 4.13 Billion) while the Market Cap is currently five times this at over Rs 102000 crs ( just under US $ 21 Billion) 

Infosys is cash rich and has US $ 2.51 Billion currently,that’s over Rs 12000 crs …It’s reflected in the fact that Other Income has shot up by 129 % to Rs 269 crs in Q1,indicating an 8% to 9% annual return on this…This would contribute nearly 20% of Total Profit for FY 10 !…This contribution % would move lower if Infosys does shift, as planned, some of the Cash to Business Investments…so you will probably see an Other Income Element of @ Rs 750 crs to Rs 800 crs,under 15% of projected Earnings levelsof @ Rs 5500 crs for FY 10

Now RONW in FY 2009 was 32.80 % with Infosys earning a consolidated Rs 5988 crs on Year end Networth of Rs 18254 crs…You could take the average Networth as the Denominator but the implications would remain the same…..With a near 10% decline in Earnings forecast for FY 10,the RONW will drop sharply to below 23%…In fact to maintain it’s RONW at last years levels Infosys has to register a 40% jump in Earnings !

So with no incremental Earnings and a reducing RONW will Infosys increase it’s Dividend Payout ?…In FY 09 it gave a 470% dividend…That’s Rs 23.50/share…that’s a payout of 22.5% on a Basic EPS of Rs 104.60…It’s Surplus Cash is earning just 8% to 9% pa…If the IT Business fails to generate incremental earnings and if the recovery is only in the Long Term,Infosys should reconsider to increase the Dividend payout…or,just a thought,look to diversify in another growth business…Jerry Rao of Mphasis has done this…he is also now in the Affordable Housing Sector….Infosys can extend it’s superior management capability to build yet another Business from Scratch !  

Another Interesting observation is that as per IFRS Accounting ( This is not yet mandatory),Infosys has shown in Q 1 FY 10 an Exchange Difference Gain of US $ 236 Million on Translation of Foreign Operations…this is huge…when related to the US $ 313 Million Operating Profits shown….In Q1 FY 09 it had shown a loss of US 274 Million on this account ! and this has dropped the Profits to a very negligible amount as per IFRS Accounting !….this is due to great exchange volatility

When IFRS becomes mandatory inside two years,it would really be very interesting to see if the Share Price begins to reflect the valuation as derived from IFRS Compliant Accounts…Currently it is clearly not.

Investors would be interested in what the Share Price Range would be in 2009-10…Let’s have a look…Currently it is at 18 times Forward Earnings at Rs 1750…If you want a 25% return on Infosys the Share Price must move to Rs 2200…Here the Multiple moves to 23 times…quite unlikely…..my guestimate is that it should trade in the 14-18 multiple…That is Rs 1350 to Rs 1750…it’s already at the top end of this range….Don’t see much headwind ahead…Expect a sharp correction in the short term 

Would you believe this ! 

A 37 year old Chinese businessman,Zhao Danyang paid a record US $ 2.1 Million to win an eBay charity auction last year to lunch with legendary Investor,Warren E Buffett at a steakhouse in New York City

Just a day before the lunch on June 24,2009,Zhao Danyang played the Media by telling them he was going to recommend a Chinese Retailer,WuMart to Warren Buffett….Share Price of WuMart began moving up smartly and by the time Danyang returned to China,the price had shot up 25% and Danyang’s holding in it was up by more than US $ 16 Miilion…so he made a cool,though notional, US $ 14 Million net of his lunch 

So the lunch at US $ 2 Million was not so expensive at all !

Warren Buffett has not even committed to WuMart….all that has happened,Danyang insists,is that he has handed over the Annual Reports of WuMart to Warren Buffett during a three hour lunch….and he has no inclination to sell his stake…. The Share Price of WuMart will surely fall once the Chinese realise Warren Buffett treated this Lunch,just as Lunch !

Immediately an Indian scenario comes to mind when Warren Buffett’s name was used…rather misused…It was some years ago and the time of the IPO of the behemoth PSU,ONGC…and Arun Shourie was trying hard to sell the issue….someone started the rumour that even Warren Buffett had committed to Invest in the IPO of ONGC…This was an attempt to hype up the issue. There was simply no shred of truth in this

On the Flipside and Just thinking out loud….what if Warren Buffett does invest in WuMart !? 

We would then stop slamming Danyang and be calling him shrewd,savvy and smart !

And a Final Thought….In Future the  Charity Auction Bids for Lunch with Warren Buffett will soar to newer records…so maybe it will serve Warren Buffett well for his Charity,to actually invest in WuMart !….Look at the bigger Picture ,Warren !

It’s Uncanny really !

Two super Powers,USSR and USA being brought to their knees….the former suffering,both, physical and economic disintegration and the latter in the midst of it’s worst economic crisis…self inflicted,I daresay.

Breaking up of USSR in 1991

Vladimir Lenin founded the Union of Soviet Socialist Republics or USSR for short in 1918.It was born to die ! It collapsed into the Commonwealth of Independent States in 1991…The Soviet Communist Regime Lifespan lasted less than 75 years and died in the same Twentieth Century…The breakup was aggravated,provoked and prompted by the fast plunging economy and several area disputes between many republics that were leading to armed conflicts

Breaking up of USA in 2009

It’s July 4,2009 today and  USA celebrates it’s Independence Day…..Nothing really much to celebrate though,as  It’s first Afro American President has inherited a disastrous Economy…it’s States are fast disintegrating fiscally…..will each Independently fall !?….California is bankrupt.It is USA’s most populous state with 38 million people and a GDP of US $ 1.8 Trillion,twice that of India alone…as it’s celebrity Governor,Arnold Schwarzenegger pleads “ Our Wallet is empty.Our Bank is closed.And our Credit is dried up “

Expect California State Bonds to be downgraded to junk status…..It’s going to send Stocks crashing in USA ….Danger of other States and Counties living this Californian Nightmare too is very real

Unemployment figures in USA ,that were just released, show a further 467000 rendered jobless in June 2009 ….taking the Unemployment rate to 9.5%,the worst in over 26 years..the figures shoots over 15% if you consider the part time and discouraged workers

We have had 52 US Banks failing this year more than twice in number already from the 25 that collapsed in 2008 and we had three sinking in 2007.As of last quarter end the Federal Deposit Insurance Corp (FDIC) had 305 Banks on it’s troubled List with US $ 220 Billion in assets

Increasing Unemployment is leading to acceleration in Defaults to Banks…this compounded with Banks exposure to high risk Investments like CDOs is a double whammy…Banks have lend and they have invested and both Assets are in default mode with severe recovery problems

It is feared that Employment statistics will only improve and stabilise by 2012…only then will we begin to see a revival in the Real Estate market in USA as Citizens will have monies to invest in Houses…The Asset Bubble that developed in Real Estate is largely to blame for the near collapse of USA’s Financial System….High Unemployment is a hurdle to any Revival in the Real Estate Sector…It is estimated that in USA, the earliest that we’ll get to see Real Estate at prices of 2007 again,will be in 2017…five years after Employment is expected to stabilise 

The Dow has sunk 500 points in past few days reflecting this…No Green shoots visible at all…as Warren Buffett says jokingly “I can’t see any green shoots…maybe because I’ve just undergone a cataract operation !”

Dow’s Impact on our Sensex

So if Dow collapses from 8000 +levels to below 6000 as the second half of Calender year 2009 unfolds,I’m just thinking out aloud… will this affect our Sensex !?…wll we see a sub 10000 Sensex again ! ?  Are we now decoupled enough for it not to ! ?

Investment Prisms are different…If you look at USA,the Dow is set to weaken to reflect deteoriating fundamentals….If you look at Emerging India…the Sensex,despite short term hiccups in the offing, is itching to rise from even near 15000 levels….. to reflect the impact of fast track reforms from this UPA Government led by Congress enjoying a clear mandate and now undeterred by any serious opposition from coalition partners …the first official confirmation of this is expected from reform pronounements in the Union Budget to be presented on Monday

So maybe,a Bad Dow may not mean a Bad Sensex

India is better positioned

Infact we’ve already seen evidence of increasing FII Inflows…capital will flow to where returns are more certain and more visible and appear less risky…India qualifies well as an Investment Destination on this.

In challenging times,our GDP Growth rate dropped from 9% in FY 08 to below 6% in FY 09…the target is 8% for FY 10….relatively strong when mapped against recession hit developed countries which saw GDP declining in absolute terms

Ofcourse the Sensex may correct post budget euphoria,as I said in an earlier blog today,to reflect Valuations,high Fiscal Deficit,Impact of an erratic and less than Normal Monsoon,increasing supply of Primary Paper and our Export dependence on the recession hit and troubled developed markets of  USA and Europe

Patriotism aside,It’s about time we charted our own Independent course fuelled by a growing domestic consumption story…makes our 1200 Million population,excitingly most of them are young, our Dividend and not our Dilemma

We’ll soon see a time when our Deficit and Infrastructure Spending is not financed by High Borrowings,Printing More Currency or Selling off Public Assets but more by Increased Revenues,Controlled Expenditure,Decreasing Subsidies and raising Equity in India and Overseas in a vibrant Capital Market…opening up sectors and increasing Investment caps for FDI is a contentious issue…but is does speed up the Inrastructure building process…government,alone,cannot create sufficient capital formation for the hundreds of billions of dollars required to build our Nation’s Infrastructure…It will need Private participation too…Corporate Governance will be a winner as Accountability,Transperancy,Responsibility,Efficiency,Corruption and Productivity issues will be addressed…Air India’s sad plight comes to mind immediately….It’s bleeding badly and the Chairman now tells us that the choice is between Austerity and Oblivion ! The writing was on the wall years ago but tough decisions were deferred on political and vested interest compulsions

A lot to think about this weekend………before we hear Pranab Mukherjee’s Union Budget on Monday

Or would you just prefer to disappear into the expressway to Lonavla and enjoy the lovely rain induced weather……

Cheers !

Returned late night from Bengaluru at 1 am in the morning as Flight was delayed after delivering a two day Equity Workshop at the weekend…the  eight in a series for a Broking House…It was pouring as we drove to the New Airport,50 + kms away from the City…but we had a Mad Max Driver who drove as if his life,and ours !, depended on it ! weaving at 100 kmph through stranded cars in the fast flooding roads ! and despite incessant rain whipping the windscreen…paid a ridiculous Rs 260 User Fee to access the Airport

Had gone earlier on Thursday,to spend two days at a friend’s 75 acre farm, 20 kms outside Bengaluru,on the fringe of the Bannnerghata Wildlife Park…what a great break !…could hear the silence !…had friend’s three dogs ( Small Datschund and Large Dalmatians!) all over me…Elephants and Monkeys destroy crops and so commercial farming becomes a tedious affair …tried to spot a Gharial in one of his four water harvested ponds on the farm…it had probably slipped in from the forest through the canals….relaxed company , great organic food,fresh vegetables,fresh mangoes,fresh coconut water,fresh jackfruit and fresh rains !…too short a break,though !

Then switched to workshop mode on Saturday Morning….It was truly satisfying…When I threw the House open  for any questions on Sunday ,prompt came the first one “When will you come back to Bengaluru for your next workshop !?….Thanks! Karnataka and Andhra Pradesh ! for some great participation

We had some fun discussing Valuations of Reliance Industries,Satyam and Reliance Power and even Jaiprakash Hydro among others companies…and am glad you’ll were genuine in your reactions when we played the Integrity,Insider Trading and Irrational Behaviour Scenarios

Now you know how Mumbai,Vadodora and Rajkot got excited  on Reliance Ind Valuations in March and April 2009  at Rs 1100 to Rs 1300 !…maybe I should have come to Bengaluru first !

So all of you know what is the appropriate Valuation Basis to use for Satyam…and how you can make some money on it ,based on an event based risk in June 2009 ! 

You are now acquainted with the Valuation Risks of Reliance Power at Rs 180 and Jai Prakash Hydro at Rs 70 ! 

Shanteeth,I hope we do get to 23000 + on the Sensex in 2009 itself, as you aggressively suggested at the outset of the workshop based on Technicals…though  I showed you why it looks highly improbable on Fundamentals !…glad you loved the Book I gave you “Screw it ! Just Do it! ” by Richard Branson…now pass it on so someone else enjoys it too !

And Shiv Prasad,I hope you can now scale up your business by some rational thinking and by trusting more !…and not succumb to Improper Framing when applying Investment funds

And Vincent,you’re a good thinker…very few have sensed the reason why ,that when one’s business is not doing well and the product is not selling , you raise the price and the product starts selling !….Economics would have dictated otherwise.

And Prabhu,you’re smart…not many would have guessed why one particular Slot Machine in the Las Vegas Casino gave higher revenues to the Casino Owner

And Nagendra,as you touch 60,the need for protection of wealth needs to be re-emphasised when growing it !…actually to ‘Protect’ and to ‘Grow’ Wealth is the Prime Function of Asset Allocation and Optimal Portfolio

We played out Investor Mistakes and the Reinvestment Risk…we discussed Investor Icons,Warren Buffett and Peter Lynch and their Investment philosophies and whether we can apply these in India

We discussed Concepts of Value v/s Price,Beta and it’s role in Hedging,Valuation and Investment Strategies…..Global and US Economic Crisis and it’s Impact on India…are we decoupled enough ?…our Fiscal Deficit Problems and our Extraordinary High Government Borrowings to fund Non Plan Expenditure,especially Defence and Subsidies

We saw the Market Dynamics impacting the Sensex…it’s macro valuations in the past and levels projected based on Earnings and Multiples…the Sensex CAGR over 5,8 and 18 years

We saw the impact of FII Inflows and Outflows from 2005 to date in 2009….How FII’s have reversed outflows and May 2009 itself saw an inflow of US $ 4.14 Billion !…and if US $ 10 Billion more comes in,as expected this year,how it will continue to fuel the Sensex 

I’m sure I’ll be back in Bengaluru !…maybe we can all have the workshop in Mauritius as we discussed when computing the Interest Cost on the EMI Scheme of ‘Fly Now,Pay Later’ covered during the ‘Time Value of Money’ session !

Cheers !

On September 27,2008,seven months ago the Sensex was 13000 and I had put up a contrarion blog http://www.gauravblog.com/?tag=contrarion-investment-strategy

I had said the Sensex is moving towards a Distress Zone and will break below 10000 to provide a great opportunity to build wealth over the coming years…so one should bring in Fresh funds to top up their portfolios and not sell 

Just a month later,on October 27,2009 the Sensex dropped below 8000,having begun the month at 13000 levels….from there,six months later on May 4,2009 it is kissing 12000,a rise of 50 % !

Yes of course,there was a problem end October 2008 with both,Cash and Conviction….. most were simply just too reluctant and resistant to add to their Eroded Equity Portfolios,lacking either one or both….but some who did,have reaped good returns…Their portfolios have recovered faster than those who just stayed put.

For example a portfolio that had eroded 50 % from Rs One crore to Rs 50 lakhs in 2008 by October 2008,infused fresh funds of Rs 25 lakhs…The portfolio would be currently, having crossed Rs One Crore,  moving towards Rs 1.25 crs,thus recovering the full portfolio erosion…If this fresh infusion was not made the erosion would yet be 25% in the portfolio,whose value would have climbed but only to @ Rs 75 lakhs…In fact many scrips that had a brilliant 2007,like IFCI that touched Rs 130,have barely recovered from their 2008 crash…IFCI has moved just from Rs 16 to Rs 27…yet a far cry from Rs 130 !…making the recovery process that much more difficult…Unitech is another prime example…

However there is great Historic precedence in the Belief that Long Term Investors should never exits Shares of Core,Strong Growing Companies…..Reliance,Larsen,BHEL…..instead on significant declines like we witnessed in 2008,fresh funds should be infused to top up portfolios…the recovery is that much faster

As I end this Blog past 1 pm,the Sensex has crossed 12000 having  surged 607 points and 5%,while the Nifty is just a shade below 3650

As I blogged last week….don’t short this market…you’re up against Momentum and Liquidity….However do blend Optimism with Caution at these levels….Our General Elections Results will be out on Saturday,May 16,2009……You get a Hung Parliament….Expect the Sensex to Hang too !

The Jury is yet out on whether this is merely a strong Bear Market Rally that may last a few months…Commodity Guru,Jim Rogers thinks so…..or it is the confirmation of a new Bull Market…Mark Mobius of Templeton,Abbey Cohen of Goldman Sachs and even Fidelity’s Head think so

There is an old saying…the Market will remain irrational longer than you can remain solvent !…so make the Trend your Friend when Trading…..don’t be tempted to short ,nor be tempted to enter at these levels…if you missed this surge,don’t worry…these are equity markets and they will give you opportunities in the future too !…Let’s now get the Elections and Earnings uncertainties out of the Way…Oh ! and we need some more clarity on the impact and Intensity of this  Swine H1N1 Flu too !

They poetically say that ” Sell in May…and Go Away”….What I say is that assess your Risk Profile…and stay true to it under any market condition !…use these surges to reduce Equity Exposure,if you’ve sweated bad in 2008 and cannot bear to have seen such portfolio erosions

Buying a Protected Nifty Put would also not be a bad idea to protect your portfolio value and keep the upside open…Right Now the Prremium for the  May 28,2009 Nifty Put of Strike Price of 3600 is Rs 151…So for each contract size of Rs 1.80 lakhs ,you will be paying just over 4% premium,Rs 7550…High, but worth it in such volatility and with election results coming up mid May….So for a Rs Ten lakh Portfolio,assuming Beta of 1,you’ll need to buy atleast Five contracts for a near total hedge….That will set you back near Rs 40000 as a premium for just one month,inclusive of Brokerage….A Hedge worth considering