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Month: January 2010

RBI announces a CRR hike by 0.75% to 5.75% to tackle Record Food Inflation at 17.40%…Interest rates must rise soon !…Equities will React

Leave a Comment / Controversies, Economy, Foreign Institutional Investors, Global Economic Crisis, Interesting News Sightings, Investing Themes, INVESTOR MISTAKES, Reflections, Sensex, STOCKS / By

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 read more

Sensex sheds 490 points and 3% to close at 16290 in this turbulence…What Now !?

Leave a Comment / Broker Index Forecasts, Derivatives Strategies, Foreign Institutional Investors, Interesting News Sightings, Investing Themes, INVESTOR MISTAKES, Nifty, Reflections, Sensex, STOCKS, VALUATION / By

Imagine you’re aboard a Plane in Flight and hit turbulence…the Plane drops altitude…sometimes very sudden…..Sensex is akin to this situation…dropping 2.1% on Jan 21 and then near 3% today…Suddenly from reaching up for 18000 recently it is now poised to dive below 16000!…It closed at 16290 today…..and those who were proclaiming glory are quickly reversing opinions to predict a sharper fall ahead…some even to 12000 !…Remember the Nursey Rhyme “Ring a Ring a Roses….Pocket full of ……Hush ah Bush ah we all fall Down !…you gonna hold hands with those who are singing this,you will fall down !

Despite continuing World Economic and Political Turbulence, and intense FII selling past few days,Indian Equities remains in the best position to move up…20-X is going to see  a Sensex range that could extend down to 14000,maybe 13000, and up to 20000…so we are at 16000 right now…we are not going to test 8000 again,like we did in March 2009 and October 2008…so macro situations and large caps trends are going to be harder to read in 2010….It’s a bottom up low and mid cap approach that’s going to get you the Winners in 2010….So playing the Sensex or the Nifty or the Large Caps,either in Cash or Derivatives may cause you tense moments…like today

Concentrate and Focus on Specific Stocks in the Low and Mid Cap Range…..Most of Our Clients Portfolios over Rs Ten Lakhs are in 25% Cash at this time….New Clients have been advised to hold Cash and not be in any hurry to invest…..and at any given time we have @ 15 stock selections…..portfolios have from 3 to 10 scrips from this selection……one scrip was on upper circuit this morning and we reckon atleast three of our selections would be clear and minimum money doublers in 2010  

So we enjoy such falls in the Markets….gives us opportunities at lower prices

But if you’re a die hard macro and large cap player because of high volumes and liquidity,then do a simple exercise…Make a list of your Top Ten Sensex Scrips from the 30….Rewind to 2009 when the Sensex was 13000 and 14000 and 15000 and record what were the prices of these Ten scrips at those levels……will give you some sense of where these scrips can yet correct to !…and save you the agony of jumping in impulsively

Cheers !

Two Interesting Bulk Buys…Essar Oil by LIC at Rs 140 and S Kumars by Merrill Lynch at Rs 47.60

Leave a Comment / Bulk Deals, Corporate Governance, Foreign Institutional Investors, Insider Trading, Interesting News Sightings, Investing Themes, INVESTOR MISTAKES, Reflections, Retail, STOCKS, VALUATION / By

Among the Bulk Deals that took place last week,two interesting purchases caught my eye…..even though I’m not a great Fan of the Ruias (Essar Oil) or the Kasliwals (S Kumars)…both gravely let down shareholders and other Stakeholders in the 1990s and even into the 21st Century…there were several Corporate Governance Issues too 

  • 20 Million Shares of ESSAR OIL (currently Rs 141/142) were picked up by LIC at Rs 140 on January 22,2010 in a Rs 280 crs deal….seller was Matterhorn

and

  • 1.375 Million Shares of S KUMARS NATIONWIDE (currently at Rs 45) were picked up by MERRILL LYNCH CAPITAL MARKETS ESPANA at Rs 47.60 on January 20,2010 in a Rs 6.55 crs deal

S Kumars is already one of our second half 2009 SS 2 Recommendations

Essar Oil was spotted by us as a SS 3 Multibagger at Rs 4/5 in 2003/4…Over the past 6 years Essar Oil has reached the following Highs….it taught us a lesson though…If you have caught it early,Do not Sell too Early,even if you see 200% Appreciation in the same year…that would be Rs 5 to Rs 15 ! in 2004………If your’e catching a Train from Mumbai Central to Ahmedabad,do not get off at Borivali !…..Stay with a good scrip which has good to great potential  for the long term over many years and it will give you quantum appreciation…Selling off in 2004/5/6 would have given strong % returns…but not as strong as from 2007 !,even considering the decline in 2008 and 2009 

Year…….High……..Absolute % Appreciation from 2003/4 at Rs 5…..In Number of Years

2004…….33……..560 %……One Year

2005……..48…….860 % ……Two Years

2006……..80……..1500%…..Three Years

2007……..333……6560 %…..Four Years

2008……..380……7500 %…..Five Years

2009……..194……3780%……Six Years

2010 till date….162…..3140%…..Six + Years

Clearly 2007 was a spectacular Year for Essar Oil when from an earlier Year 2006 High of Rs 80 it zoomed 316 % from this High to a New High of Rs 333 in 2007 

Watch out for both these Scrips in 2010

Cheers !

20-X registers it’s first major Indices correction of 2.4% on the bourses today

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Don’t lose sleep over today’s correction

Sensex closed 2.42 % lower at 17051 today from yesterday’s close of 17474…The Nifty dropped 2.44% to close 5094 today from 5222 yesterday’s close

This was enough to spook the low cap and mid cap scrips that have risen smartly in the recent month….Most of them reacted strongly by even 5%…some even by more….causing agony to Short term,intra day and even tick traders…They had a rough and tough day today as did most brokers too…expect them to collect even the smallest debit cheque too from clients today or tomorrow !

As I reiterate…don’t lose sleep over this fall as long as your stock selections are sound…but if you’re playing this High Beta game this past  month then you just may get restless…..just stay true to your risk profile…don’t get aggressive if you’re going to sweat on such a fall as today’s and create High Risk High Beta Short term Equity Portfolio….It might just become unnerving!   

Think Long Term…Think Rational….Think Sound Scrips for most part of your Equity Portfolio…..That’s really the only way to grow Wealth in Equity

Cheers !

What’s Bubbling in BOC ?…closed at Rs 218 but after recording a 52 week high of 227….Volumes are twice the two week average

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BOC’s Share Price is bubbling…It reached a 52 Week high of Rs 227.50 on BSE today but closed lower at Rs 218 + ….Volumes were 3.32 lakh shares,nearly twice the two week average of 1.70 lakh shares….41 % is marked for Delivery……The Market Cap is Rs 1860 crs,but the float is under Rs 200 crs

89.48 % of the Equity is held by the foreign parent.In 2007 it held 54.80% but in January 2008 it received a preferential allotment of 36.2 million shares and also acquired 13.21million shares in June 2008 to take itto this current stake of 89.48%

At the 73rd AGM on May 29,2009 in Kolkata,the Chairman,Mr S M Datta was quite assertive that there was no intention of any buy back or de-listing.He announced capex plans of Rs 1000 crs over the next three years 

Well,the fact is that the float has to increase to 25% in a phased manner for BOC to remain listed…the other alternative is to offer to buy back the remaining shares and apply for delisting

So what do you think ?….Dilute stake back to 75% or below or delist !?

Clearly Shareholders are smarter and will not accept any offer below Rs 300 thereabouts….The foreign parent would need to shell out Rs 269 crs to buy out the remaining shares at Rs 300…..That’s small fry to get rid of over 25000 shareholders !

Interesting Days ahead for BOC on the Bourses…..take a bet 

Intel launches New Chips…delay your purchase of Computers for a month and Check out HCL Info at Rs 160 and Zenith Computers at Rs 27…Investing Theme being Computer Scrips

Leave a Comment / Computer Hardware, Interesting News Sightings, Investing Themes, Reflections, STOCKS, VALUATION / By

Intel has advertised today the launch of new Chips….i3,i5 and i7

Currently Computers and Laptops and Netbooks are powered by Intel Core 2 Duo or an Atom processor

By month end we can expect all the major Computer Brands to launch Computers with the New Chips…so delay your purchase till then….you’ll get the new chips or some fabulous deals on the Computers with the earlier Chips

The New series of Chips has the following advantages

  • nearly doubles the processing power
  • shrinks the size of Components inside the Chip by nearly 30% thereby reducing the chip size,power consumption and heat emission
  • Transistors or Switches are 32 nanometer in size compared to the current 45 nanometer….a nanometer is one billionth of a meter
  • Each New Chip will hold 440 million switches against the current 290 million 
  • The Memory and Graphic Controllers,which were earlier housed in chips adjacent to the main processor,will now be withing the Main Chip itself
  • The shrinkage in size of Components allows the Laptop to be slimmer by another Inch
  • The operating speeds will be maintained within 1 to 3.7 gigahertz
  • There will be no immediate price impact as the New Series are priced more or less at same levels as the Core 2 Duo Processor,especially for desktops…For the New Chips For Laptops the price is a little higher…A 32 nanometer i3 Chip laptop will be priced at Rs 35000 
  • The Laptop Chip’s Clock Speed will be 2.1 GHz….This speed is turbo boosted by 10% to 110% in the i5 Series chips which will cost Rs 2300 more than the i3 series…Both i3 and i5 laptop chips will consume 35 Watts while the high end i7 will consume 18 to 35 watts 
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