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“In India, companies may fall sick, but promoters rarely do!”

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September 21, 2010

Sensex stopped relying on Reliance to surge ahead….So should you

Interesting…..Sensex has regained 20000 levels …last seen in January 2008…..but Index heavy weight Reliance Industries has actually lost ground since then !…..Sensex bypasses Reliance weightage hurdle to regain 20k levels

In January 2008 Reliance Industries reached a high of Rs 3252 on BSE while the Sensex soared to a High of 21205…..Reliance Industries is currently Rs 1032 while the Sensex has regained 20k levels…adjusting for a 1:1 Bonus in late 2009,Reliance Industries would be Rs 2064…..that’s a drop of over 36% and Rs 1188 from January 2008 Highs 

Reliance Industries however hangs to it’s top position in Market Capitalisation…today it’s Rs 337941 crs…..but ONGC is near it….today ONGC closed at a Market Cap of near Rs 300000 crs….ONGC was at a high of Rs 1357 in January 2008 when Sensex hit record highs….Today it’s regained these levels and kisses Rs 1400….so it’s regained Market Cap levels……Reliance Industries’ decline in it’s Share Price has caused the decline in it’s Market Cap and helped ONGCs market cap come nearer it

An oft quoted school of thought expressed on Stock Channels on TV advises to buy Reliance as it has not participated in the Sensex rise at all…and the next Sensex rise would come from it’s weightage and it’s rise in it’s share price……….

While Reliance Industries remains a part of Core Segment in Clients Portfolios,I would urge readers of this blog to seek comforts of Valuation,rather than emotion….the emotion that Reliance has to rise if the Sensex has to rise…we’ve seen how this common,confess that I too held it,assumption belied in the past two years

So stop relying on Reliance to make Money…stop assuming that if the Sensex has to move up,heavyweight Reliance must move up first…..but if I’ve to throw the cat among the pigeons…then if Reliance Industries does rise,it would make the Sensex rise that much more easier and certain…….

Cheers !

Sensex soars to 20000 and Nifty to 6000 as FIIs Inflows soar…let’s revist what I said in Jan 2010

Beginning of the Year these were my views on various asset plays going forward in 2010 and beyond

2010…what’s likely to Go UP and what’s likely to Go DOWN….will help you in rebalancing your Portfolio

Thursday, January 7th, 2010

An extract for Indian Equities from the above is reproduced

INDIAN EQUITIES….It great to be an Indian !…..India recovered brilliantly in 2009 and remains truly the best positioned in 2010 to move up from current Sensex Levels of 17500 as Forward Macro Valuations are fair ( 16 times FY 11 Sensex EPS) and Record FII Inflows, Domestic Consumption and Infrastructure Spending Stories remain intact….In fact I reiterate there is no better and compelling Investment Destination than India and FIIs,no matter what they state,will have litlle option but to continue to come to India in a big way…….  Selectively, on micro valuations,the returns would be more compelling…..Expect the Quantum of Primary paper through PSU Disinvestments and other IPOs to  be high…this could be a short term dampener for the secondary market….other risks remain rising Food Inflation and Fiscal Deficits…..

What really has played out is that no matter the doublespeak of FIIs,they had no choice but to allocate bigger funds to India as they were getting low returns,low interest and low growth prospects in their  own countries and elsewhere…we will remain the best investment destination for years to come…offering great opportunities on scale in Infrastructure and Consumption stories….No Global Investor and Fund Manager can afford to ignore us and not invest here….the prospects of higher returns at relatively lower risk levels are compelling 

We have seen FII Inflows cross US $ 16 Billion so far in 2010,with the last ten trading days itself seeing FII Inflows directly on Stock Exchanges cross US $ 3 Billion 

I suspect this sudden surge of FII Inflows in September 2010 is largely because the allocated funds of US $ 20-25 Billion for India for 2010 were being gradually invested……most funds were waiting to be invested on Corrections that were indicated especially by Global Cues….Such corrections simply have not materialised and we have just a little over Three months left in Calender 2010 and the allocation for India for 2010 had to be invested fully…they could wait no longer on the sidelines for the awaited correction….we should therefore see a few more billion coming soon….this would propel our Sensex and Nifty to cross the record Highs reached in January 2008….Valuations are high and therefore  so is the risk for the short term…FIIs continue to Invest despite their  doublespeak on this…….  read more

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