USA : Further Major Financial Earthquakes expected !

It’s just a matter of time for another major Financial Earthquake in USA and the aftershocks will be felt all over the world…preshocks are already visible…Citibank,India is selling of prime residential property all over Mumbai and is rumored to be looking for buyers for it’s Eight storeyed Bandra Kurla Complex Head Quarters

In USA it’s a situation of the Pot calling the Kettle Black…those in Glass Houses themselves are throwing stones at others !

Lehman says watch out for Fannie Mae and Freddie Mac,the two biggest refinanciers in the mortgage business…they will need US $ 75 Billion just to meet their committments

Watch out for Lehman itself,say sources in the Capital Markets

Merill Lynch warns that it is not an impossibility that General Motors could announce bankruptcy!

Fitch has just downgraded Merill Lynch

Bear Stearns dropped a Zero on the weekend some time ago when it closed on Friday at US $ 30 and then announced that J P Morgan was bailing it out and opened at US $ 3 on Monday! 

Citicorp has already provided US $ 40 billion and is planning to raise billions in fresh equity,sell off assets,close branches and lay off people all around the world to shore up it’s rapidly weakening balance sheet

Every Week as Friday comes,there is a real strong fear that another Bear Stearns like scenario may be announced by a major Financial Powerhouse

3 I’s…Infosys,Inflation and IIP Numbers announced today weakens sentiment further

Sensex has reacted sharply by over 200 points and trying to stay above 13700 at 12.49 pm as the following 3 I’s take effect…further reaction expected 

  • Infosys declared quarter ended June 2008 numbers on expected lines today but did not raise Dollar EPS guidance significantly….only a cent higher to a range of  US $ 2.32 to US $ 2.36.Share Price has  dropped near 4% to Rs 1736 at 12.49 pm from yesterday’s closing of Rs 1806

 

  • Inflation for week ending June 28,2008 shows a surge to a 13 year high of 11.89 % against 11.63% for the week before

  • IIP  (Industrial Production) Numbers just announced show a shocking fall growth rate in May 2008 to 3.8% against yoy of 10.6% with Manufacturing showing just 3.9% against 11.3%

Sensex trying to resist Dow Pressure…reluctant to go below 14000…don’t get fooled by any rally

On Cue,following Dow’s 2.08% fall yesterday,the Sensex opened lower this morning at 13861.60 only to quickly regain ground to cross 14000…Don’t get taken in by any rally…remember it surged to 18000 after dropping below 14000 earlier this year…there is going to be some more pain as financial earthquakes will continue to rock USA and cause severe aftershocks worldwide….economic and political spoilers are clearly strong and they yet have to play out their full strength

It’s too risky to play the Sensex or Nifty..the uncertainty and nervousness and volatility are clearly visible……if at all you want to beat the trend adopt the bottom up approach by zeroing on selectively on certain scrips that are poised to surge based on specific circumstances and events….Zandu for example has more than doubled inside a month from Rs 6000 levels to Rs 16000 levels as promoters are aggressively increasing their holding to stave off hostile takeover bid from the Emami Group

Every SILVERLINE has a Cloud !…from Rs 180 to under Rs 20 after Capital Reduction too!

In December 2007, SILVERLINE relisted at Rs 180 after  Capital Reduction of Rs 9 in every Original share of Face Value Rs 10 and then consolidation of ten shares of reduced FV of Rs 1 each to one share of FV Rs 10…..It was quoted at Rs 13 on the original Face Value of Rs 10 before suspension in 2007 for completing this reduction process…Therefore technically it should have opened at Rs 130,but actually opened higher at Rs 180 as BSE,for reasons best known to it,gave Rs 180 as the base price on relisting,instead of Rs130 that it should have given based on last closing price of Rs 13 before suspension to complete the capital reduction process.

It is now available at below Rs 20 after reduction and consolidation…this means under Rs 2 of original face value of Rs 10 !

After meeting the promoters in December 2007,I had asked clients to await performance promised…but did a quick u turn when I realised this was just not going to happen and sold off lock stock and barrel between Rs 120 and Rs 130…a few clients did miss out on selling but their exposure to SILVERLINE is very minimal in their portfolios. 

What a fall!…once again into oblivion,perhaps?…..Big Noises were made ,by promoters and even the advisors to the restructuring ,of a rebirth and achieving a turnover of over Rs 400 crores for year ending June 30,2008 and a profit of over Rs 60 crores on reduced capital of under Rs 40 crs

Believe it or not advertisments in Economic Times were placed by the Company and the Advisors seperately at the time of relisting claiming this upcoming performance !  

 Silverline has sunk shareholders with silver lightening speed…Token shares in Silverline Animation were given in the ratio 4:100 of original shares held in Silverline Technologies to shareholders when the Animation Division was demerged….Silverline Animation still has to be listed…it was to be in January 2008

This is the same SILVERLINE that was infamously manipulated to rocket past Rs 2000 in 2000. 

How many chances do you want SILVERLINE ?…just one more so that you can commit another breach of faith !