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 !

So it’s finally Out…it’s a drought…the short term Monsoon,rather the lack of it, trigger begins to impact the Sensex….I had warned about this on June 24,2009……Click on

 Monsoon Fears fuel Sensex Fears

Liquidity and Momentum and Pacifying,Assertive and Assuring Government and Experts Voices in India and overseas had kept our Sensex on track for new recent highs…Irrational…given the fact that Markets had run ahead of Fundamentals yet again and the Monsoon factor had been ignored

It’s been an amusing few weeks….signal to noise ratio from the Channels continue to emanate static…..when the Markets kept rising,experts began sprouting out of the media woodwork,boldly justifying it…when they fell,they are justifying this too !

Be warned…when Investment and Merchant Bankers become really active…it’s sucker time again ! 

Valuations be damned !….Go for the Hype…suckers…Go for the IPOs…suckers….wanna bet Mahindra Holidays will go below Rs 300,it’s issue price ?…it’s 330 right now !…and wanna bet NHPC too will be available below it’s IPO Price of Rs 36 shortly after it gets listed !?

Get Real

China was down 5% today….This was the trigger…..Sensex,following cue, has crashed 640 points to 14772 as we near closing today

Get Stock Specific with critical weightage to both,relative and absolute Valuations…you’ll be safe…don’t panic that one short term factor of a  bad monsoon can destroy your long term portfolio..Lucrative returns continue to beckon in the long term

Now you know why I’ve not been in any hurry to buy in !..To be forced to make Long Term Play decisions in the Immediate Term,so as to not miss fast upmoves, is a sure recipe for expensive buying ….haven’t we all learned that before !?

As I blogged on August 4,2009 that I was not comfortable at Sensex of 16000…it had run up too fast…18 times Current Year Earnings…it needed to correct to 13000 to sustain a healthier move forward with a three year outlook…In this context,I’m comfortable now with this correction…Hope it continues…It would provide cheaper buying opportunities..New Clients should be happy to be in cash as we delayed creating New Portfolios

Cheers ! 

Borrowing a Shakespeare line  ” If Music be the Food of Love,Play on !”

What a lovely way to end July and begin August….July 31,2009 was the 29th Death Anniversary of the melodious Singer Mohd Rafi and August 4,2009 would have been the day when the eccentric and my all time favourite Singer Kishore Kumar would have turned 80, had he been alive

So on July 31,I made it a point to specifically play all of Rafi’s hits…in fact fell asleep at night listening to  Rafi  crooning out his ‘out of this world’ numbers…‘Gulabi Aakhen’,'Tere Mere Sapne’,'Chaudvin Ka Chand Ho’,'Jo Wada Kiya’,'Yeh Duniya Yeh Mehfil’,'Suhani Raat Dhal Chuki’,'Mujhe Duniya Walon’,'Kya Hua Tera Wada’……

Any yesterday it was the inimitable,magical and mesmerising Kishoreda all the way…‘Yeh Jeevan Hai’ ( What a Song !…my top favourite…I can listen to it continuously 100 times and over !), ‘Chalte Chalte Mere Yeh Geet’, ‘Sheeshe Ke Gharon Mein’, ‘Manzilen Apni Jagah Hai’, ‘ Diwana Leke Aaya Hai’, ‘Jeevan Main Hum Safar’, ‘Phoolon Ke Rang Se’, ‘Pal Bhar Ke Liye’, ‘Gata Rahe Mera Dil’, ‘Kasme Vaade’.……and can you believe this…he never trained as a singer…he was a natural…Gift from God….his yodelling was unreal !

Such legends come once in a generation…they neither live nor die…they’re eternal

And the Sensex is singing along too seeking 16000…Rafi’s ‘Aag Hai Lagi Hui’ and Kishoreda’s ‘ Humein Tumse Pyaar Kitna’ !

Yes Kishoreda ! ‘Yeh Jeevan Hai !’

This is what I had blogged on October 27,2008

Some Pundits called Sensex of 12000 irrational…some saw irrationality at 10000…So what would they call 7500 ! ? …Begin to slide in now

We saw the Sensex again collapse to 8000 levels in March 2009 after reviving from October end 2008 lows…Then we had the Elections and the Budget and Sensex has crossed 15000 on good momentum….Just be cautious at these levels of 15500….It’s now at an 18 Multiple on FY 10 Sensex EPS…Market ,driven by Liquidity,is yet again living up to it’s reputation of displaying extremes…now it’s beginning to look like exuberance on future growth prospects and the feeling that the worst is behind us….Buoyed by encouraging Q1 FY 10 results so far,the Markets seem to have begun to run a trifle ahead of Fundamentals…that’s what I sense and how I feel….Expect Volatility…Be very Stock Selective  

And Kumar,you seem to be following me like a Watchdog !…I hope you don’t become a Bloodhound ! Yes,my above Blog on October 27,2008 had said look at these Prices,IFCI at Rs 15/16 and  Sicagen at Rs 4/5…You have queried on Sicagen as I don’t feature it in yesterday’s blog on portfolio performance….You must have picked it up from my October 27,2008 Blog ! To answer your query in your response to yesterday’s portfolio performance blog,No I am no longer recommending Sicagen…It’s at Rs 8 today…Anyway such scrips have limited portfolio exposures.For your other request to elborate on Damania Group,I suggest you use the search feature on my blog,typing out ‘Damania,Core Project,Damania Capital Market,Damania Airlines,Damania Pharma or Agritech Hatcheries’…you’ll get some sense of my animosity towards this Group

And Nitin…a paid Blog !?…Nah! would defeat the purpose of this Blog…but you could get in touch with me at gaurav@scriptechgroup.com or gaurav@scriptechindia.com and I’ll tell you how you can access our Investment Ideas when we make them…For that matter,anyone out there who is genuinely interested too, can do so…We need to know your Needs and Profile,before we can suggest which of our Personal Annual Advisory Plans would suit you.They begin at Rs 25000 a year and go up to Rs One lakh a year for Retail Investors and there is personal interaction with me,often proactive…We have yet to launch our cheaper Value Based Web Advisory Plans,but where there will be no personal interaction with me  

Cheers !

Watch out for Tomorrow !

Rains are not falling…but post budget the Sensex is…..From 15100 levels on Monday before Pranab Mukherjee began his budget speech to @ 13750 at closing today

Come tomorrow,Infosys is expected to provide a cautious guidance and a Q1 EPS of under Rs 24.These Results may just be the cue for a further Sensex correction tomorrow

Rains,rather a lack of it, remain a big worry…52 Districts in UP have received just 46% of Rain….A drought situation may emerge in this Big State

90% to 95% of the Long Term Avergage Normal Rains would mean a ’Less than Normal’ Monsoon….This has been confidently projected already….The Fear is less than 90%…this would mean a Deficient Monsoon

This would have major implications on India’s Economy…lower GDP Growth Rates and more Government Borrowing and a Higher Fiscal Deficit than projected in FY 10

FY 10 remains a very challenging year….and no amount of ‘Disinvestment’ Hype being doled out will really matter in the end as the potential for Corporate Earnings Upgrades begin fading

Sensex will have to reflect this and correct some more    

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 !

At 11.55 am,The BSE and NSE reopened after a two hour cooling period after hitting circuits on opening at 9.55 am

I’m not even in Mumbai…in Ahmedabad and feeling the Heat in more ways than One !

At 11.55 am the Sensex hit it’s second Upper Circuit at 14272.63,up 2099.21 points from Friday’s closing….up 17.24%

The Nifty hit 4308.05,up 636.40 from Friday…up 17.33%

As is the Policy ,the Markets have been now halted for Trading for the Day…This is unprecedented in our Market History

In seconds the Volumes had hit Rs 3000 crs…..My Heart goes out to all of those who had shorted the Nifty or  stocks in Futures…They have not yet been able to cover and are facing massive losses and therefore serious margin issues…They may need to sell part of their portfolios to pay off brokers…Short Sellers have been Shorted !..and How !

Tomorrow Sell at these Strong Sensex Levels….15000 +?…so quick…so soon…so much of euphoria !…it’s like the Markets were drying with the drought of 2008 and had began to recover…now the recovery is with such wet vengence on election results and  with the onset of monsoons now !…There is a GOD above…..but he’s now beginning to tell us to “Sell” !  

Not because the the Indian Voter voted for Congress….but for the simple fact that the Voter was decisive and mature in not Voting in a fractured verdict,we must salute The Indian Voter

Clearly and thankfully we will not have any king and queen makers now as the India Voter has voted strongly for a National Party

The Sensex too will salute the Voter and continue to Surge ahead on more on momentum than valuation…13000 and 14000 soon ?

What’s got this Sensex so excited that it surged 50% from 8000 to 12000 in two months !?

Earnings ? Elections ?…..what’s so exciting ?

Nana Chudasama’s Banner on Marine Drive in Mumbai states ” EXCITING ELECTIONS…SURPRISES,SHOCKS,SUICIDES”…….Surely you don’t find Suicides exciting ! 

Barely had the Fifth and Final Phase of Polling closed yesterday,several Exit Polls came out fast….predictably predicting a fractured verdict…with neither UPA nor the NDA Alliance showing any significant lead….Amusingly,many Politicians,like the Communist Karat and the Samajwadi Mulayam gave sound bytes that they don’t believe in Exit Polls….The real verdict is day after tomorrow…on Saturday….when our stock markets are closed…so how will they open on Monday ?

So,what’s it going to be post Poll ?…What’s Idealogy to Opportunism ! You’re going to see blatant and pretty blunt opportunism by ALL politicians and their parties in their endeavour to be part of a governing coalition

We’re paying the Price for Capitalism…Now we will pay the Price for Democracy !….Freedom is after all our birthright ! 

As for our Stock Markets…I don’t want to be a rally spoiler….but I do think global and domestic economic woes remain heady….for one,just look at our balloning fiscal deficit and the balloning government borrowings to fund it….I’ve blogged these in detail earlier….the next government is surely going to be  really tested in it’s decisions to stimulate our Economy….Exports and Aviation are clearing begging for sops,while Cement and Banking hold out some Hope

So,with prevailing Macros,I see a Macro Sensex Valuation range of 9000-13500 and the Nifty dancing between 2500 and 4000 for the next few months,giving Multiples of 10 to 16 on expected FY 10 EPS levels of 850-900…so in a sense,I see we are currently at 10% below the top of the range and 30% from the bottom….Now,you make the Risk Call 

So in the Short Term,if you’re an addicted party animal and can’t help but party with the Sensex and Nifty ,riding the momentum with the FII Inflows of US $ Two Billion in the past two months,then make sure you leave before the party is over…Get the Drift ! 

And Remember…when you hear FII heads talking of Compelling valuations ,increasing risk appetite and Monies waiting on the sidelines….it’s all relative really !…I see more Momentum and Liquidity than Valuations currently…and riding these is riskier

• While the ‘King of Good Times’ bounces around in South Africa with his Cheerleaders cheering his ‘Royal Challengers’ in the IPL,his Kingfisher Airlines Cheques are bouncing here in India as the Airline faces more severe Royal Challenges that surely should be of a higher Priority
• Have a look at the Times of India’s Mumbai Edition this morning…The’ve got Singer,Adnan Sami and his woes in three full blown reporting pieces on Page 1,3 and even 4 !…If you put them all together,it’s nearly a full page of Times Reporting on Adnan Sami !…They don’t even cover our PM like this ! Hey Guys ! You too have caught the ‘Bug’ Adnan Bug like his wife has !….It’s rather amusing that neither Adnan,nor his estranged wife are Indian Citizens…yet to settle their internal disputes and woes the’re using our Indian Police and Courts !…This is the beauty and graciousness of our Indian Democracy…welcoming one and all to come and use it’s facilities !….Just deport both to their own lands and see how their disputes will either be solved overnight or die a natural death quickly !…Hey ! Sami ! maybe crooning your hit song ‘Lift Kara De’ may be your prayer from out of all these woes !
• Tata’s need to repay a bridge loan in June 2009 that was taken to part fund their purchase of Jaguar….Sigh !…yet again they have resorted to selling of part of their crown jewels !…Tata Sons have sold off 10 million shares of TCS today at Rs 627.25 to 15 different Institutions to raise Rs 627 crs…In fact in calender year 2008,TCS’s share price dropped by 44% ,twice the size of drop of competitor, Infosys….the reason was this very issue of selling pressure of  TCS shares by Tata Sons in 2008 
•  Sensex is now 12000 and waiting for buying suckers…expect correction…the speed and scale of this 45% rise inside two months begs for it !