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November 2010

BSE Training Weekend Program….Interesting Mix of Participants….Enjoyed the interaction….slept in my Tie !

Conducted a two days Equity Training Program past weekend at the BSE Training Institute…Interesting mix of participants….from SEBI,Exchanges,Broking Houses,Youngsters from Top Schools & Colleges,Top Management from leading Corporates Houses in Logistics and Oil & Gas,Mutual Fund Houses….

….Interesting Interaction…. fair spread of the fair sex too made it interesting to pit how a Man thinks against how a Woman thinks in situational plays…..a lot of good humour too….one young lady was worried her fiance will slap her because she invested in Suzlon at Rs 80 and it’s now below Rs 50 !…any chance it will recover to Rs 80,she inquired !…her relationship was at stake !….ran through Live from the Net how to quickly and fundamentally assess Reliance Industries at Rs 962….raised possible Sensex Valuations going forward to 2012…check updated pages on the Blog on the Sensex….USA,PIIGS,India,China…..covered the economic crisis and impacts and risks…..favourable positioning of India…..covered ,albeit briefly,80 + companies as Possible Portfolio Selections based on Risk Profiles of the Participants….How Warren Buffett and Peter Lynch think……why Investors behave irrationally in given situations….great fun    

…..was on my feet from 9.30 am to 6.30 pm both days covering 17 exclusive presentations and situational plays with the participants…enjoyed all of it….but had to call my masseur early morning  to ease away the tiredness…and actually slept in my tie !

Hope we can now take this Program all over India

Cheers !

MOIL IPO Pricing attractive pricing band of Rs 340-Rs 375 ….but Allotment will be quite poor…Check out the Choice between MOIL and IFCI !

Government got Gold with Coal India’s IPO last month…It was a Win Win Situation all around…as Issue Size was huge the Retail Segment was oversubscribed 2.3 times and also benefited from the rollover of the unsubscribed Employee Quota …so allotments were good…max 199 shares at Rs 245 less 5% discount

And Now we have the IPO of MOIL….attractive Pricing Band of Rs 340-Rs 375….However the Issue Size is Small and the Retail Segment will be oversubscribed 20 times…..therefore the allotment will not be generous

…Now a Retail Investor can apply upto Rs 2 lakhs…….Minimum application in MOIL is for 17 shares and in multiples of 17 thereafter…..On a max application of 527 shares in MOIL expect to be allotted just 25 shares…If Rs 375 is fixed as the issue Price then with a 5% discount the cost to Retail Investors will be Rs 356.25….Currently the Grey Market Premium is Rs 240…thus on allotment of 25 shares the profitability will be @ Rs 258.75 from Cost…that’s a Profit of @ Rs 6500…thats a 3.3% return in a month on a Application of Rs 197625….that’s very good and quite probable…infact fairly certain 

…but consider this…Instead of Primary market IPO of MOIL,consider Secondary Market Investment of @ Rs 2 lakhs in 3400 Shares of IFCI @ Rs 59…IFCI has slipped sharply in this correction and is available at Book Value this year and is to apply for a Banking Licence….If it moves up by just Rs 3 to Rs 62 ,the gains will be Rs 10200…There is a strong probability that it may move up much higher in December but there is also a probability that it may drop even below Rs 59 ! 

So what would you choose ?…a certain smaller gain with little or no chance of any Loss or a bigger probable gain with some probability of loss too in December 2010 ! 

Loss Aversion Psychological Tests conducted by D Kahneman and A Twersky are quite revealing…They gave these Options to a Group to choose from

A : A sure gain of US $ 250

or

B : 25% chance of a Gain of US $ 1000 and 75% chance of no gain at all

84% of the Group opted for A over B ( with the same expected payout but much greater risk)

They then reframed the Question and asked the same group to chose from

C : A sure Loss of US $ 750

or

D : A 75% chance of losing US $ 1000 and a 25% chance of losing nothing at all

73% preferred the gamble (with an expected loss of US $ 750) over the certain loss and opted for D read more

A Weak Week Gone by …Sensex shakes down 5% as Scams Surface and CBI makes ‘Listed’ arrests…have Selective Conviction

It’s been quite a weak week gone by….the Sensex shook 5% opening at 19841 last Monday but shaking in some shock down to 18955 on Friday…it has recovered to 19400 close as this week opens…..Looking beyond the Sensex shows that the shakedown has been more intense in the Mid cap and Low Cap Areas

IFCI has dropped to Rs 57 levels and IDBI Bank from Rs 200 ! to below Rs 160…both nearer Consolidated Book Value for this year….these price points offer lower risk Opportunities unless ofcourse scams unfold here too !

….what is also spooking the markets,apart from Korean War fears, is the CBI confirming a sense,long suspected by all of us really, that there have been huge sinster gameplans at work on the Exchanges…..collusions between Promoters,Bankers,Merchant Bankers,Politicians,Brokers,Fund Managers and  sadly even certain Print and Broadcasting Media…..to hype Companies and  rig up share prices to facilitate QIPs at high Prices with Fund Managers being paid off for participating in the QIPs…..it is alleged that even Exit Prices and Time Periods for this were pre decided….this would necessarily involve the need for Market Price manipulation…..where Loan has to be arranged it would involve Corruption…bribing those who can make decisions to deploy their Employers Huge Funds

CBI has made high level ‘Listed’ arrests…CEO of LIC Housing Finance….DGM of Bank of India and Independent Director of Central Bank of India,DGM of Punjab National Bank,Secretary (Investments) of LIC,CMD of listed Finance Intermediary, Money Matters Financial Services Ltd….the stink of corruption is polluting the markets….bribes being paid to Finance Heads of Listed Institutions through a Listed Financial Intermediary to faciliate Loans and QIP of Equity of hundreds of crores to Listed Corporates,especially Real Estate Companies….being ‘Listed’ seems to be the key….often manipulating the share price pays for the Corruption……..who suffers here ?….those primary market institutions and those secondary market  suckers who unknowing of this gameplan invested in the Share at an inflated price….if the situation is that of Loan Outstanding…it will probably remain outstanding till declared Non Perfoming and quietly written off after a few years !…and civil court cases takes years ! 

Maybe SEBI should report to the CBI !……..Because more often than not even this IPO High Obscene and Vulgar Pricing is a Scam of Sorts…though SEBI may argue it’s not their job to comment on Valuation and Pricing…and market forces will decide the success of the IPO…..but the truth is that most Investors are not educated enough to understand the Difference between Value and Price…and with no Protection now that the CCI Formula for Pricing the Premium gave the Promoters and Merchant Bankers will create Hype and milk Investors…we all know the Reliance Power IPO Debacle…probably only Mukesh Ambani did not invest in this !…Kishore Biyani’s Future Capital,Tanti’s Suzlon were nothing but IPO Loot Pricing….Adani Group is simply another story ! …of Satyam is now well known ! read more

Global Tensions Pushing our Sensex down…Don’t overestimate the Mini Meltdown or any accompanying Panic

India is well positioned….and in many major ways arguably in a completely different Queque…so don’t overestimate any mini meltdown or accompanying panic on global cues in our Sensex or Nifty….maybe new long positions may not be forthcoming but there should not be any serious shorts even though we see a 400 + correction in the Sensex today to 19500 levels

…..but the Ireland Bailout expected at @ US $ 100 Billion,mixed views on China’s economy  and the QE2 Measures by USA and right now the direct military provocation by North Korea against it’s neighbour South Korea clearly is spooking World markets and India is part of this….so we will be affected and pushed….but even if you argue we are in the same Queque,we are way behind….the upfront tormented Countries,like USA,Spain,Greece,Ireland,UK and Portugal and troubled hotspots like the Koreas will have a direct impact…being way behind,our Sensex will merely be pushed by the impact upfront…ofcourse we have our own issues like 2G Telecom Scam political imbroglio to deal with….but India is on the strong upmove for the next few decades…we are already living this…adds conviction to this belief…don’t let anyone shake you from this 

…..so don’t panic….two days ago I advised to stay away….no speculation and no trading…. and go smell the grass…..any significant correction will offer opportunities to buy cheaper for the long term….don’t get spooked by the increasing volatility…you have to live with this……Record FII Inflows actually lifted our Sensex back to 21k levels….a few billion dollar outflows coupled with World Economic and political tensions  will correct the Sensex….that is what is happening

….so don’t try second guessing where the Sensex will end today or tomorrow !…even the Sensex itself does not know !…..traders and speculators need to do this for they hold short or long positions to flip quickly…….Increasing Volatility makes this a risky and dangerous exercise best avoided till some stability or firm trend is seen  

Our Sensex ,currently at 19500 levels is headed towards 30000 in the next few years…but may revert back to a 16000-18000 range before continuing the march upwards

I’m observing a whole lots of specific stocks on my horizon also reacting….splendid….lower price levels will lower risk levels when bought into….will make my workshop on Equity Portfolio Structuring at BSE Training Institute this Friday and Saturday that much more fun…do come…blogged seperately on this earlier today    read more

See you’ll at my Exclusive 2 Day Equity Workshop at BSE Training this Friday and Saturday

Hey ! looking forward to seeing you at  my two days exclusive workshop this Friday and Saturday,November 26,27 at the BSE Training Institute to discuss Sensex and Stocks and lots more…Which,Why,When and Where headed….to borrow Heinz CEO William Johnson’s line ” Fish where there are Fish!”…come for the workshop

EQUITY PORTFOLIO STRUCTURING AND STOCK ANALYSISIntegrating Intellect with Instinct 

If you not yet registered ,you can do so online at

http://www.bseindia.com/training/eq_portfolio.asp 

 or call Vispi Rusi Bhathena on 9820194122 or  Roy Aranha on  9819555416 or the landlines 61363155 or 22728303 or 66545695    at BSE Training Institute at BSE Check out my earlier detailed blog on this workshop at https://www.gauravblog.com/?p=993 A synopsis of the Workshop Programme Objective:

§        Awareness of the Global Economic Crisis
§        Comprehend Market Dynamics of Equity Markets and Mutual Funds that influence Investments
§        Interpret Financial and Non Financial Data to analyze and value stocks
§        Get a basic yet firm understanding of the concept of Time Value of Money and it’s Application in Valuation of Equity and the various traditional and contemporary techniques applied in the Valuation Process
§        Understand Asset Allocation & Optimal Investing
§        Briefly examine Value and Growth Investment Styles through Warren Buffett and Peter Lynch
§        Investor Psyche and Pitfalls
§        Compute Returns and Risk
§        Risk Profiling…Objectives & Constraints
§        Portfolio Construction, Review and Rebalancing
§        Create a Strategic or Tactical or Integrated Portfolio on basis of Investor Risk Profile
§        Qualities required in a Professional Advisor
§        Building Client Relationships….Translating Theory into Application and Academics into Action
§        Portfolio, Pedigree, Psyche and Perspective

Key Highlights of the Programme:

Programme consists of Five Fundamental Modules

Module 1: Overview of the Economy
India on the Move… Global Financial Crisis….Reading the Union Budget…. Eleventh Five Year Plan…. Oil…… Interest, Inflation and Exchange Rate……Savings, Investment &                                 Consumption…..Infrastructure Boost…. Politics of Economy

Module 2: Market Dynamics
Sensex Valuation…. FII Impact…. Liquidity, Sentiment, Momentum, Value…. Decoupling Theory…. Corporate Earnings…. Global Cues…. Liberalization, Privatization and Globalization…Leveraging the India Story…..Derivative Play…India Vision 2025

Module 3: Valuation
Time Value of Money… Interpretation of Financial Statements for Stock Analysis… Relative Valuation… Absolute Valuation… Contemporary Valuation… Price V/s Value read more

Invested in S kumars in jan 2010 at Rs 45 ?…it’s now doubled and your Suit from them is now free !

S Kumars has been providing a nice joyride to bulls in 2010…intensifying this last  month after being included in the F & O Segment too…even today it surged to Rs 96 from Rs 85 on Friday….it had begun the year 2010 at Rs 45 levels…and thus has doubled in eleven months in this calender year  

If you had invested in S Kumars at Rs 45/Rs 60/Rs 75 your Suit from S Kumar is now Free….maybe New Investors at Rs 96 can  go for their Shirts and Pants !…who knows maybe a Suit would be free for them too in 2011 !

Check out my series of hints in 2010 on S Kumar on my blog in chronological sequence from January 2010

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

Monday, January 25th, 2010

S Kumars up 18% today at Rs 57…Interesting Retail Play in 2010

Thursday, March 18th, 2010

Two Rs 75 Scrips that yet look interesting…Sabero Organics & S Kumars Nationwide

Wednesday, June 23rd, 2010

Six Interesting Stocks in the Rs 70 to Rs 80 range………

Monday, October 11th, 2010

Delta Corp and S Kumars Nationwide providing bullish entertainment…..

Tuesday, October 26th, 2010

Cheers !

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