Tuesday, December 30, 2008

SUN TV NETWORK
http://www.sunnetwork.org/index.htm

  • SUN TV was launched in 1993 by Mr Kalanithi Maran.It is a South-India based company and holds a bouquet of 20 top-rated channels in four Indian languages (Tamil, Telugu, Kannada, Malayalam) and 43 FM Radio stations. Every single South Indian channel that boasts of a No. 1 slot among its viewers belongs to the SunTV Network.
  • Sun TV Network has a unique business strategy and enjoys a monopoly-like status in south India with an all-India audience share of 19%. Shift to digital distribution market, high advertising income, stable broadcasting revenues and good radio advertisement revenues can help the company register healthy growth in the next 2-3 years. Sun TV, through its new division, Sun Pictures, has released its first film, "Kadhalil Vizunthen" (Tamil) on 26 Sep 2008.
  • The stock came down from above 450 levels to 122 in just a year or so on conflicts between Marans and M Karunanidhi. But recently the feud has been resolved and the stock once again started trending up.
SUN TV CMP 169 has broken out of a down-channel and can see levels of 205-210 in days to come. Buy with SL 150.

Monday, December 29, 2008

Maruti Suzuki Ltd:-

  • Maruti Suzuki India Limited (MSIL, formerly Maruti Udyog Limited), a subsidiary of Suzuki Motor Corporation of Japan, is India's largest passenger car company, accounting for over 50 per cent of the domestic car market. Maruti offers full range of cars- from entry level Maruti 800 & Alto to stylish hatchback A star, Swift, Wagon R, Estillo and sedans DZire, SX4 and Sports Utility vehicle Grand Vitara.
  • Since inception, they have produced and sold over 7.5 million vehicles in India and exported over 500,000 units to Europe and other countries.
  • Turnover for the fiscal 2007-08 stood at Rs. 178603 Million & Profit After Tax at Rs. 17308 Million. The company has maintained more than 50% market share for the last 7 years on trot.
  • At current valuations, Maruti stock has more market cap than even General Motors, indicating more interest from global investors. US Auto industry has its own problems but Indian story is having temporary problems. Car sales may have risen in December after economic stimulus from government and price-cuts from car companies.
  • Maruti Suzuki on Friday said its domestic car sales - boosted by price discounts and other incentives - are likely to rebound in December after two consecutive months of decline. Compared with November, December sales should be higher by 22%-25%," a Maruti Suzuki executive, who asked not to be named, told Dow Jones. Versus December last year, it should be a rise of 11%-12%." Company sold 58,401 vehicles in December 2007.
  • Maruti says to start Nissan shipment by March2009. Maruti Suzuki's 1st A-Star Export Batch On Way To Port, Maruti Suzuki is Suzuki's exclusive global manufacturer for the A-Star, which will be sold as the Suzuki Alto in Europe, the company said.

Buy Maruti CMP 510 for target 600-620 and above in 2-3 months.

Sunday, December 28, 2008

RELIANCE COMMUNICATION – A VALUE BUY

Company Web Site http://www.rcom.co.in/webapp/Communications/rcom/index.jsp

About the company:-

RCOM is an integrated player in the Indian telecoms sector. It was listed following the de-merger of Reliance Industries. RCOM is the second-largest player in the mobile segment, has an 80,000km-long India-wide optic-fiber network and owns the FLAG submarine cable network. RCOM has three business units: 1) Wireless, which includes a nationwide wireless network on CDMA and GSM; 2) Global Business comprising wholesale voice and data; and 3) Broadband for both retail and enterprise.

Near-term triggers:-

  • RCom wants to do a big rollout of their GSM network – market sources say it will happen in early January 2009. Looking at aggressive marketing of the group so far, this service can help RCom increase market share also.

  • RCom has been the first company to buy back FCCBs in global market:- RCom’s FCCBs are listed on the Singapore Stock Exchange and, till about two weeks ago, the company’s shares in the domestic bourses were trading at a discount of more than 50 per cent to the FCCB conversion price. It is like you take a loan of Rs 10 and have to pay back only Rs 5, it’s something like that. http://www.thehindubusinessline.com/2008/12/12/stories/2008121251801000.htm
http://economictimes.indiatimes.com/News/News_By_Industry/Telecom/RCOMs_the_first_co_to_buy_back_bonds_in_global_market/articleshow/3882728.cms

  • Recent media reports (Economic Times) stated that potential strategic investors, including Europe/US telcos are in talks with the promoter group of Reliance Communications to acquire 20-26% stake in RCOM via a combination of fresh equity issuance and stake purchase in the secondary market. In a press release on Dec 11, RCOM has stated that it receives proposals from international telcos for expressing an interest in acquiring a strategic stake from time to time. http://www.bseindia.com/qresann/news.asp?newsid={890B4F9E-9E70-469B-A998-04B4B766EA2B}&param1=1

  • Only three months after launch, Big TV, Reliance Communications’ DTH service in India, has passed 1 million subscribers. The key drivers have been aggressive sub acquisition through subsidies of set-top boxes and monthly fees, as well as an impressive marketing and distribution network across 4,000 towns and 103,000 retail outlets.

The company is one of leaders in Indian Telecom sector and warrants a place in the portfolio given its size and brand image.

Buy around 200-220 for investment target of 300 and above in 3-4 months. (Even 1-year timeframe is good enough for such a target of 35-40%)

Friday, December 26, 2008

Market Outlook for Year 2009 by A K Prabhakar (Please wait some time to load the document)
Market Outlook for the Year 2009

Monday, December 22, 2008

BGR Energy Report (please wait some time for loading the report)
BGR ENERGY

ORIENTAL BANK OF COMMERCE:-
CMP Rs 157.70 Book Value Rs 231 EPS Rs 33.60 NPA 1% RoE 14.8%
(2008 figures)

  • OBC, established in the year 1943, is a state owned bank with government ownership at 51.1%. As on 31st March 2008, it has a balance sheet size of Rs. 909 bn with deposits at Rs. 779 bn and advances at Rs. 546 bn. All the 1323 branches of the bank are under Core Banking Solutions. OBC has a predominant presence in metro and urban centres with 55% of its branches in these centres.
  • Alliance with Indian Bank and Corporation Bank
  • The bank has entered into an alliance with Indian Bank and Corporation Bank for building E Payment systems, sharing of IT and Treasury resources, bancassurance,business syndication and sharing of training resources and common procurement of IT and other assets where feasible.
  • Life insurance joint venture with Canara Bank and HSBC
  • OBC has entered into a joint venture for life insurance business with Canara Bank and HSBC Insurance (Asia Pacific). Canara Bank would be holding 51%, HSBC 26% and OBC would hold the remaining 23%.
  • GTB losses a thing of the past
  • Post its merger with erstwhile Global Trust Bank, the bank had to take a hit on its net worth. The bank has been providing Rs. 2.4 bn. per annum on account of write off of GTB losses. However, in FY08, the bank has written off the entire losses with the result that the bank would not have to take further hit on its profits going forward.
  • Short-term goals for the company
  • 100 new branches to be opened in current year and increasing customer base, thrust for business into Semi-urban and rural areas, creat branch network of 1500 branches by March 2010.


The stock is moving up with very good delivery volumes. It broken out and can target 195-200 levels in next 3-4 months. One can keep SL of 140.

SOUTH INDIAN BANK:-

  • One of the earliest banks in South India, "South Indian Bank" came into being during the Swadeshi movement. The establishment of the bank was the fulfillment of the dreams of a group of enterprising men who joined together at Thrissur, a major town (now known as the Cultural Capital of Kerala), in the erstwhile State of Cochin to provide for the people a safe, efficient and service oriented repository of savings of the community on one hand and to free the business community from the clutches of greedy money lenders on the other by providing need based credit at reasonable rates of interest.
  • South Indian Bank has a technology enabled network of 500 branches and 210 ATMs, with presence in 23 states and 2 union territories. This is a professionally run bank with widely held ownership making it ripe for takeover once Banking regulation bill is passed. South Indian Bank(SIB) has now established the largest network , in the private sector, of Core Banking branches next only to ICICI Bank , HDFC Bank and AXIS Bank.
  • South Indian Bank(SIB) Is The Best Performer In Asset Quality - In the "Analyst 2008 Survey of Indian banks" conducted by the 'Institute for Chartered Financial Analysts of India' ,South Indian Bank has emerged as the 'Best Performer in Asset Quality' category among private sector banks which include the new generation and the traditional banks in India .
  • The bank has recently tied up with ICICI Prudential life insurance for the selling of insurance products at over 296 SIB branches in Kerala. The bank also has made available Mutual Fund products to their clients.
  • A Host of Many Firsts: SIB has many firsts to its credit . Chief among them are - the first private sector bank from India to provide managerial support to an Exchange House in the Middle East , the first Kerala-based bank to start extended banking hours (12 Hours Banking ), the first Kerala-based bank to go on-line through a centralized Core Banking solution, the first Kerala-based bank to introduce a credit card, the first in the private sector in India to open an NRI branch, the first private sector bank to start an Industrial Finance branch in India, the first Kerala-based bank in private sector to become a scheduled bank, the first private sector bank from Kerala to implement 100% CBS.

Buy Rs.56-58 Target Rs.70-74 Stop Loss Rs.52 on closing basis Term 4-6 months.

Click image for larger picture

Saturday, December 20, 2008

BGR Energy CMP 155

  • The Company was originally incorporated in 1985, as a joint venture between GEA Energietechnik GmbH, Germany and the Promoter, Mr. B. G. Raghupathy, to produce and sell On-line Condenser Tube Cleaning Systems, Debris Filters and Rubber Cleaning Balls used in Thermal and Nuclear Power Plants. On June 28, 2007 the Company name was changed from GEA Energy System (India) Limited, to BGR Energy Systems Limited.
  • BGR is one of the leading players providing BOP (Balance of Plant) and EPC services for power sector. With recent wins of Rs 8000 Cr orders, BGR is now a much bigger name in the EPC space.
  • BGR energy has a current order book of approx. Rs.11000 Cr diversified across power, oil and gas, air fin coolers, environmental engineering, captive power, electrical and infrastructure division. The current order book to sales ratio on FY08 sales stands as 7.2x which gives strong revenue visibility for the next 2-3 years at least.
  • The company came out with IPO when market was at all time highs and the stock was issued at Rs 480. Looking at the position of the company and healthy correction in the price, it is a very good buy at current valuations.

Buy BGR Energy between 150-155 SL 140 Target 195-200 in 2-3 months

Click graph for larger image

Thursday, December 18, 2008

Buy BHEL around 1410-1425 SL 1370 Target 1570-1590
ABB Buy around Rs.440-460 target Rs. 550-570 2-3 months period

Monday, December 15, 2008

Punj Lloyd CMP 155 Book Value Rs 79.50 http://www.punjlloyd.com
  • Spanning five continents, Punj Lloyd Group provides integrated design, engineering, procurement, construction and project management services for the energy, infrastructure and petrochemical sectors. The group comprises of Punj Lloyd (India), Sembawang Engineers and Const (Singapore) and Simon Carves (UK). They offer a wide range of EPC services including Oil & Gas, Process, Renewables, Power, Utilities, Infrastructure, Buildings, Asset Mgmt, Telecom and Broadband.
  • As on 30 September 2008, Punj Lloyd Group had a healthy order backlog of Rs 21,675 crore which provides strong visibility for the next 18 months.
  • Punj Lloyd recently entered into an MoU with Thorium Power. The MoU establishes a framework to explore and identify the strengths of Thorium Power in areas of the deployment of Thorium Power's nuclear fuel designs in India, Southeast Asia and other territories. The Indo-US Nuclear Deal has opened up many investment opportunities and with this MoU, Punj Lloyd aims to take forward India's long-standing commitment to the thorium fuel cycle, notwithstanding the opening up of trade in conventional uranium technology. India has the second largest deposit of thorium in the world and the successful launch of thorium technology will make India self reliant with its own fuel in the long run.
  • Share holding:- Promoters hold 45% in the company, MFs 18% and FII holding has come down to 15% from around 38% a year ago. Reasons can be redemption and genuine selling also. But as broader markets have stabilized and looking to go up, the stock looks well-set to be once again a favourite with low FII holding. Buy for investment as well as for short-term.
BUY BETWEEN 145-149 SL 127 TARGET 188-192
Click image for larger chart.

ICICIBANK Investing + Short-term Pick

  • ICICI bank is a huge financial conglomerate in India spanning across all financial services. It is India's second-largest bank (after SBI) with total assets of Rs. 3,849.70 billion (US$ 82 billion) at September 30, 2008 and profit after tax Rs. 17.42 billion for the half year ended September 30, 2008.
  • The Bank has a network of about 1,400 branches and 4,530 ATMs in India and presence in 18 countries.
  • ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries and affiliates in the areas of investment banking (ICICI Securities), life (ICICI Prudential) and non-life (ICICI Lombard) insurance, venture capital (ICICI Ventures) and asset management (ICICI Pru AMC).
  • The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established branches in Belgium and Germany.
  • ICICI Bank fell largely on account of various rumours in recent past but the management has time and again came out and stressed about strength of company's fundamentals. Its CAR (Capital Adequacy Ratio) rose to 14% in first half of FY09 from 13.4% at the end of FY07.
  • ICICI Bank currently holds 74% stake in each of ICICI Life and ICICI General Insurance, it has 51% of ICICI AMC stake.ICICI Life holds 29% market share in private insurance and overall 9% share. ICICI General has around 36% share in private sector and 13% overall. Both of these are the largest private insurers in India and ICICI AMC (market share around 12%) is among the largest Mutual Funds in India. These subsidiaries are expected to add a lot of value to the bank.

Click graph to see larger image

State Bank of India CMP 1216

  • SBI is India's largest bank with around 16% market share in deposits and loans
  • Together with its seven associate banks (ownership ranging from 75% to 100%), the SBI group has more than 20% market share in deposits and loans, has stupendous network of branches of more than 14000, 8500 ATMs and more than 90 million customers.
  • The Government of India owns majority stake (around 60%) of the bank. SBI is a banker to most state governments, and has a dominant share of government fee business.
  • SBI has a presence in other financial services through subsidiaries and joint ventures. It has a joint venture with Cardiff for life insurance and with GE Capital for credit cards. It also has a presence in asset management, investment banking and primary dealership.
  • State Bank is the largest provider of infrastructure debt and the largest arranger of external commercial borrowings in the country. It is the only Indian bank to feature in the Fortune 500 list.
  • The bank intends to expand Rural Banking base and aims to cover 100,000 villages in the next 2 years or so.
Click graph to see chart and comments on it

Sunday, December 14, 2008

Cement Sector: The recent reduction in excise duty from 12% to 8% and the Government's effort to revive the ailing realty sector brought in new hopes for the battered cement stocks over the week. The cut in excise duty and drop in coal prices will bring down cost of production to Rs 12.50 for a 50 kg bag.

Diesel down Cement transportation cost domestically may also come down with the cut in diesel prices. The reduction of 5 to 6% in diesel prices will result in 1.5 to 2% drop in freight rates for cement companies, depending on the road and rail transport mix. Companies will also benefit on transportation of fly ash — an important raw material — besides clinker to the grinding units-BL

http://www.thehindubusinessline.com/2008/12/13/stories/2008121351601100.htm

India Cement: Cmp=Rs.95

Book value=Rs.92

Face value=Rs.10

Trailing 12 earning=20.89 P/E=4.55

http://www.indiacements.co.in

  • The Company is the largest producer of cement in South India.
  • The Company's plants are well spread with three in Tamilnadu and four in Andhra Pradesh which cater to all major markets in South India and Maharashtra.
  • The Company is the market leader with a market share of 28% in the South. It aims to achieve a 35% market share in the near future. The Company has access to huge limestone resources and plans to expand capacity by de-bottlenecking and optimization of existing plants as well as by acquisitions.
  • India Cements also acquired the franchisee rights of the Chennai Super Kings cricket team in the recent Indian Premier League for a phased US$91m payment through a bidding process. Media reports suggest that the team broke even in the first year itself. Its stake in the Chennai Super Kings cricket team of the Indian Premier League may be value-accretive given the huge success of the team and its good performance.
Click graph for larger image and comments on the chart

Corporation Bank: Cmp Rs.181 http://www.corpbank.in

Book value: Rs.294.80 FV: 10 Dividend Yield= 5.8%

Trailing 12 earning=53.86 P/E=3.36
  • Limited exposure to sectors that have been hit by recent recession in world markets - real estate sector (Rs 800 Cr as on 30-9-2008) and textile sector around 5% exposure
  • In this quarter on account of declining yields of bonds, the bank should be able to write back a major part of investment depreciation provisions made in Q1, positively impacting the profits.
  • The bank has 981 branches, 15 extension counters and 975 ATMs to serve its clientele.
  • Started about 102 years ago in 1906, with an initial capital of just Rs.5000, Corporation Bank is all set to cross Rs. One Lakh Crore mark in business this year.
  • The Bank has many " firsts " to its credit - Cash Management Services, Gold Banking, m-Commerce, " Online " approvals for Educational loans, 100% CBS Compliance and more recently, its pioneering efforts to take the technology to the rural masses in remotest villages through low-cost branchless banking - Business Correspondent model.
Please click graph to see enlarged image and comments

Friday, December 12, 2008

Raymond is a potential turnaround story Cmp Rs.91

Raymond is zeroing in on smaller cities with less than 1 million populations for expansion in a bid to avoid being crowded out and take advantage of lower real estate cost. The company plans to open 50 stores, mostly franchisee, in smaller cities by the end of current financial year http://www.raymond.in Raymond With a capacity of 33 million meters in wool & wool-blended fabrics, Raymond commands over 60% market share in worsted suiting in India and ranks amongst the first three fully integrated manufacturers of worsted suiting in the world.

  • Raymond runs 390 stores, of which 60 are owned by the company http://www.raymond.in/grp.asp#2
  • Raymond also has hidden assets in the form of real estate120 acres of land in Thane, current plant shifting by Raymond could unlock value of ~US$250m.
  • To shut down denim facility in US and Europe by 4QFY09

Raymond has made Loss in June2008 Quarter results due to VRS scheme and loss made in denim unit.

Face value: 10

Book value: Rs.227

Raymond forayed into garmenting through highly successful ventures like Silver Spark Apparel Ltd. and Regency Texteis Portuguesa Lda (for fine Tailored Suits, Trousers and Jackets), EverBlue Apparel Ltd. (Jeanswear) and Celebrations Apparel Ltd. (Shirts).

Raymond most highly respected apparel brands: Raymond, Raymond Finely Crafted Garments, Manzoni, Park Avenue, Color Plus, Parx, Zapp! and Notting Hill.

Click image to see chart and comments on it.

Wednesday, November 26, 2008

INVESTMENT IDEA - ALEMBIC LTD

In these times of global turmoil, we need to look at companies with promoters having credentials of coming through downturns and Alembic is one company which has done it so far. Alembic is a 100-year old
company, which itself indicates a management that has survived well through all the tough times.

About the company:-

http://www.alembic-india.com/index.asp

Alembic is a fully integrated player in Anti-infective segment which is the largest segment for this company accounting for over 60% of sales. Alembic has its presence in over 75 countries globally by a chain of agency tie-ups and user tie ups. The company has a distribution network that spans 29 states in India and has manufacturing facilities in Baroda and Baddi.

Recent development:-

The stock has come down from a high of Rs 108 in Nov 2007 and now the stock is consolidating at current price. The buy-back activity is scheduled to start on 8 Dec 2008 and investors can buy this stock at CMP of around Rs 30 for stable returns. Important thing is that the company will itself support the price and as a result the downside is limited in the stock. As investors we have to buy with some margin of safety, and this development assures us the same thing. Buy-back itself stresses the confidence of the management in the company valuation and no company can complete a buy-back if it does not have enough cash.

Sunday, November 16, 2008

WHY NOT TO FEAR EVEN IF SENSEX DOES 6000?

WHERE DO YOU FIND SENSEX IN THE NEXT 3-4 YEARS TIMEFRAME? IF THE ANSWER IS NEAR 20000, BY CURRENT LEVELS OF 9000, THAT WILL BE GROWTH OF 122% (22% PER ANNUM CAGR) IN 4 YEARS ALSO. NOT BAD BY ANY STANDARDS! AND WHAT'S THE ANSWER FOR WHERE DO YOU FIND SENSEX IN NEXT 3-4 MONTHS? 12000? 8000? OR IS IT 6000? EVEN IF WE DO 6000, RISK IS ONLY 3000 POINTS BUT WHAT ABOUT REWARDS? THAT IS 11000 POINTS FROM HERE. SO IS IT RISKY? NOT REALLY!!! RISK COMES FROM NOT KNOWING WHAT YOU ARE DOING – WARREN BUFFET. BUT NOW YOU KNOW THE RISK, SO GO AHEAD AND BUY!

Thursday, November 13, 2008

  It's an interesting article by leading economist Mr Yogesh Chhabria.   

LATELY, I have been thinking a lot about the Lehman crisis. Spending money that they didn't have and going beyond their means is one of the main reasons for their situation today. In fact that is the cause for the current economic crisis in the US. 

When I see all this happening, I can only remember the good old days. Then, karz was bad. People looked down upon those who took loans. Parents would not give their daughter's hand in marriage to a man with loans.

 

But of course, the times have changed now. Everyone I know has a loan. The buzz word is EMI (equated monthly instalment). Today, you can buy everything on EMI - a house, a television, even an i-Pod. In fact I know of someone who just bought a fancy BMW 3 series on EMI, instead of buying a cheaper car outright with cash. I mostly prefer to take public transport, but then I am an old man with old thoughts! 

Anyway, coming back to what caused the crisis. 

Imagine having Rs 2 lakh in your bank account, no regular income, yet buying a house worth Rs 65 lakh, in the hope of selling it for a higher price. Even if the price of the house fell by just 5% (that is Rs 3 lakh), you will go bankrupt. This is what Lehman Brothers did; with around USD 20 billion they went and bought assets worth over USD 600 billion. Isn't it suicidal and simply foolish? 

 

I am sure things would have been different, had I been the head of Lehman brothers. But who wants an old conservative man like me to head a complex financial institution. 

But there are a few lessons that we can learn:

 

*        Live a balanced life and avoid overspending. 

*       Don't buy things we don't need. 

*       Don't buy Branded goods. 

*       Don't buy excess Food, Cloths, Cosmetics, Footwear, electronics and Fashion accuracies just think before you buy. 

Tip: World still has a lot of growth ahead and the future holds immense opportunities for us. Let us make the most of it and save and invest it wisely instead of wasting our precious little on things we don't need. 

*        Try to balance life with work (No one is happy to work in their professions). 

*       Don't stress out yourself, after work try to do some extra activities like swimming, yoga, walking, running where you can divert your mind from stress. 

A thumb rule: Health is more important than money. 

*        Try to understand each other (Wife and Husband) in financial matters and help each other. Tip: As soon as you get your monthly salary, set aside a fixed amount, usually 35 per cent, for insurance, savings and investments. You can then spend the rest. 

Not all loans are bad. Loans that are 'need based' (home loans, education loans) can always find a place in your finances against those that are largely 'want based' (Credit cards, personal loans, car loans). 

 

*        Borrow only if repayment is financially comfortable. 

A thumb rule: Keep EMIs within 35 to 45 per cent of your monthly income  

In that respect, there is one American who I really respect - Warren Buffet. He has lived in the same ordinary house for over three decades, drives his own medium sized car and leads an extremely regular 'middle class' life. If that's all it takes for the richest person on earth to be happy, why do all of us need to take extra stress just so that we can get things which aren't even essential?

Sunday, November 02, 2008

"I have not committed a crime. What I did was fail to comply with the law." -- Former New York Mayor David Dinkins

So if you are not abiding the law or at least not knowing the directions of the law, you are committing some crime. What's the result of a crime, some punishment? What is happening now is governments all over the world are indicating that shorting is not a good idea for anybody at this point. Didn't we hear US SEC ban shorts for some days? Didn't we read about Karachi Stock Exchange announcing support prices for stocks? It has all happened very recently, not even 3 months back! Governments have always tried to support markets when the crash is so untimely (in their view). India is not really different in that aspect too. Our markets have crashed more than Dow Jones did and Indian government has been very quick to improve sentiment. RBI has cut its benchmark rates and ratios (CRR, SLR and Repo) so many times in the last 2 months. Just 4 months back we were fighting with inflation and now we are fighting with liquidity, times have really changed. SEBI is also not behind in regulating, they have changed the circuit rules (I view them as bullish, why? Read !), they have allowed promoters to do creeping acquisitions beyond 55% up to 75%, provided they buy from open market, that even not through bulk deals (source). SEBI has been time and again cautioning FIIs about stopping overseas lending of securities. It released the list of shorts also just 2-3 days back, saying openly which scrips FIIs are short in. On 29 October, 2008 FM meets RBI and SEBI chiefs and on 1 November, we see all CRR, SLR and Repo being cut through a single announcement. Yes, it is not a perfect co-relation, but it does convey a message that SEBI, Government and RBI are resolving the issues of financial markets collectively. May be we will see fuel price cuts also happening in near future. And when all these forces are indicating bullish behavior, are shorts committing a crime here!

A quote by Peter Lynch "I've found that when the market's going down and you buy funds wisely, at some time in the future, you will be happy. You won't get there by reading, 'Now it's time to buy'." When it is panic, you have to buy your stock at your value. When bad things flow, all news is negative, but tide changes and everything looks positive.

Monday, October 27, 2008

Now probability of upper circuit is big in my view:-

Markets fell like a house of cards on Friday and around 2 pm, everybody was wondering about how NSE didn’t apply the circuit breaker and halt trading even after a 10% drop in the indices? The new directive from SEBI says that exchanges should apply circuit of 10%, 15% and 20% to quarterly closing of the index and it should be a point-based circuit. E.g. Nifty closed at 3921 on 30-9-2008, last day of the September quarter, so 10% of this is 392 points which will be the circuit for every day in this quarter. Now one thing to note is that as market moves down, it becomes more and more difficult to hit circuit because of higher percentage moves needed. But other way round happens when it comes to rising markets. So after hitting this low of 8566 on the Sensex and 2525 on the Nifty, can we see some upper circuits in months to come? From 21000 Sensex, it has been BUYER BEWARE but now I think it is BEAR BEWARE!!!

http://www.thehindubusinessline.com/2008/10/25/stories/2008102551841500.htm

Sunday, September 28, 2008

Why did Warren Buffet buy $5bn stake in Goldman Sachs - my take on it

Through Berkshire, Buffett is taking $5 billion worth of perpetual preferred stock in Goldman in a private offering. For that, he'll get a 10% dividend and warrants to buy $5 billion of common stock with a strike price of $115 a share. He'll be able to exercise the warrants at any time within five years. Until now, Mr. Buffett, who has navigated the stock market with legendary prowess, has largely refrained from investing in the stricken financial industry, saying repeatedly that things could get worse. But may be Mr. Warren Buffett is thinking about the worst being nearly over for the finance industry or at least for Goldman Sachs!

Goldman is one of the few big free-standing investment banks left on the Wall Street after collapse of Bear Stearns and Lehman Brothers recently. "Goldman Sachs is an exceptional institution," Buffett said in a statement. "It has an unrivaled global franchise, a proven and deep management team and the intellectual and financial capital to continue its track record of outperformance." On Sunday, Goldman won Federal Reserve approval to become a bank holding company, giving it easier access to financing and adding to speculation it might buy another bank.

Warren Buffet invests when he sees monopoly – Coke, P&G, Washington Post, Walmart, Nike and many more. As he says, “Be fearful when others are greedy and be greedy when others are fearful.” But only in next breath he may utter, “Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years. “ OR “Our favorite holding period is forever. “ So it is not necessary that this is the bottom for GS or the US stock markets, things may take time to improve– but the important thing is, smart money has come in somewhere! Future will only tell if Goldman also becomes a monopoly like other investments of Warren Buffet.

There won’t be a better time than this to take a bet on US financials stocks. Goldman is a pure Buffett play: - it is a blue-chip organization, it has a long and successful track-record, he is investing in a stock that has already plummeted from $248 to around $130 now. If the warrants do get exercised, it would give Warren Buffet nearly 9% stake in GS and most probably a seat on the board of directors to be involved in decision-making. He is still getting 10% on the preferred stock also, which is not at all bad as far as US interest rates are concerned. These shares are senior to both Goldman's other preferred stock and its common stock. That means no other shareholders will receive any dividends until Buffett has been paid his 10%, in full, each year.

But that was all about “FUNDAMENTALS”; it seems there is more to this deal than meets the eye. Mr. Buffett has a close relationship with Byron Trott, who heads Goldman’s Chicago office. It was Mr. Trott who brought Mr. Buffett into Mars Inc.'s $23 billion acquisition of Wm. Wrigley Jr. & Co. earlier this year. Mr. Buffett agreed to put about $6.5 billion into the deal. It wasn't immediately clear what role Mr. Trott may have played in Mr. Buffett's decision to invest in Goldman. Other thing is the US Government is in the process of finalizing the $700bn bailout for the finance industry. If the bailout goes through, GS will have the US Govt as a buyer of last resort for its bad mortgage debt. Goldman has dropped nearly 50% from its peak going towards which Warren Buffet can get all his investment back by exercising warrants. Warren Buffet has time and again said that the bailout is needed for USA.  To quote him, “We are looking over a precipice in terms of the economic condition of the country for the next few years. If Congress doesn't help us on this, heaven help us. Thank heavens that Paulson had the imagination to step up with something that is of the scope that can really do something about it." Why should Warren Buffett after striking a best deal be interested in Bailout package of U.S Govt where the Govt doesn’t take stake in any bailout company and they will buy only distress asset? Is that Paulson who holds ESOP in Goldman Sachs helping Buffett get the best possible deal, so that his asset valuation grows in times to come? And who can better oversee investment interest of Warren Buffet in Goldman Sachs than Henry Paulson, the ex-Chairman and ex-CEO of Goldman Sachs? Should I have to mention about “something cooking”!

Thursday, September 04, 2008

United States presidential election of 2009- a view by A.K.Prabhakar

The United States presidential election of 2008, scheduled for Tuesday November 4, 2008 will be the 56th consecutive quadrennial United States presidential election and will select the President of the United States and Vice President of the United States. The president-elect and vice president-elect are scheduled to be inaugurated on January 20, 2009.

Bristol palin, 17, (center) held her brother as her mother, Sarah Palin, stood with Sen. McCain at an Ohio campaign stop Friday (29/08/2008).

On August 28 McCain offered Senator Sarah Palin the vice presidential spot just moments after their meeting concluded.

Facts: U.S hasn’t had a women president or Vice-president while most of the world countries have had women at high post, so called 2nd biggest demo-crac(z)y has failed, while fundamentalist Iran had 2 woman Vice-president 1997-2005 Vice-President Prof. Dr. Masoumek Ebtekar, Iran and Currently from 2005- Vice-President Fatemeh Javadi, Iran. Twist and Turn: Barack Obama has been in lead as per survey and if he wins he will be the first non-white to do so and Democrats had a woman or Non-white choice but republics had to do catch up game which can be filled in by Sarah Palin in my view and the one sided contest has changed into a tough touch and go. What matters most are people who vote on 4November and to whom they vote.


http://en.wikipedia.org/wiki/United_States_presidential_election,_2008 U.S election data


As per U.S laws a person can’t be a president for more than 2term each term is 4years.


Why do we need to know about U.S election 2009?

Traditionally Indian market and Global market has reacted to U.S election I have presented a graph below where 1992 and 2000 have seen major bear phase and even in 1996 we did see major correction. And now in run-up election in 2009 we are seeing a correction which has extended from Jan2008 till now and may extend till Jan-Feb2009.


When do you see recovery coming?

Past record of 8year rally, high in 1992 saw a low made in 1993 and High in 2000 saw a low made in 2001 and most important is the all time high was crossed only in 1994 after 1992 high and 2004 after 2000 high. So we have made a high in 2008 and low can be possible in 2009 and new high possibility arises in 2010 or after that.


What would be the impact to Global market?

U.S policy undergoes major changes in an 8year cycle and that have impacted global economies in major way. While father and son Bush attacked Gulf (Iraq) in there respective term which saw high Crude oil price, Clinton term saw a surplus of $599 and Crude prices were in control.


What impact it would give to Indian market?

After almost a gap of 17-18years U.S payroll data and employment data is worst and there is a feeling that U.S outsourcing to India and other Asian countries has to be controlled and visa rules made strict, this has been election issue from 1997, 2001 and 2005 and this time the impact has been worst in 20years. This can impact Tech, BPO, KPO and other outsourcing industries, many are skeptical real impact will be known latter.


Which sector would benefit?

Alternate energy would be one major sector to watch, and Carbon credit (Non-polluting) Industries can benefit as new Govt may favor reduction in green house gas emission.


Senator Barack Obama http://en.wikipedia.org/wiki/Barack_Obama

Obama stated that if elected he would enact budget cuts in the range of tens of billions of dollars, stop investing in "unproven" missile defense systems, not "weaponize" space, "slow development of future combat systems," and work towards eliminating all nuclear weapons. Obama favors ending development of new nuclear weapons, reducing the current U.S. nuclear stockpile, enacting a global ban on production of fissile material, and seeking negotiations with Russia in order to take ICBMs off high alert stat.


Highlight: Many fear that Indian Nuclear deal may face problem if it doesn’t pass through before President Bush term ends.


Senator John McCain http://en.wikipedia.org/wiki/John_McCain

If inaugurated in 2009 at age 72 years and 144 days, he would be the oldest U.S. president upon ascension to the presidency, and the second-oldest president to be inaugurated.


On the economy, McCain says he would make the Bush tax cuts permanent instead of letting them expire, he would eliminate the Alternative Minimum Tax so as to assist the middle-class, he would double the personal exemption for dependents, reduce the corporate tax rate, and offer a new research and development tax credit. At the same time, he pledges to eliminate pork-barrel spending, freeze nondefense discretionary spending for a year or more, and reduce Medicare growth. McCain is also opposed to high salaries and lucrative severance deals of corporate CEOs. Another proposal of the Arizona senator is to build 45 new nuclear reactors by 2030, in order to fight climate change and establish U.S. energy independence.


Conclude: U.S election has always had its impact on Global markets and Indian markets and this time possibility of Indian election following (Before May2009) and SEBI policy silent about PN-Notes which expires in March2009 makes investors to go slow. Sector rotation, many get struck up as new policy initiative changes the leadership in growth sector. As a long term investor above 3-5years I would be bullish on Indian markets and this would be the market which would lead the Global recovery, but problem is many fail to understand long-term. Market to correct from peak of 20,000 levels started distribution from November 2007 till January 2008 3months and few days of false rally one should not get carried away


Quote: When we were young kids growing up in America, we were told to eat our vegetables at dinner and not leave them. Mothers said, think of the starving children in India and finish the dinner.”

And now I tell my children: 'Finish your homework. Think of the children in India who would make you starve, if you don't?' THE WORLD IS FLAT- BY THOMAS FRIEDMAN


Recap: I was going through the entire news summary I have sent from Nov2007 to Jan2008. November2007 in Bangalore seminar a market correction from 20,500 to 14,000 levels was predicted and announced and time period was given as next 3months. I went through all the mails I sent many interesting facts, loads of warning of coming crash we have talked about 8year cycle and we were first, 7/1/2008 we talked about how U.S market correction will impact Indian market- Just a sample below.

Market summary for January 3rd 2008-A.K.Prabhakar (for use of ANANDRATHI)

When caution is given traders and short term investor short sell the markets and they get trapped, caution is given seeing excesses in market, euphoria, rampant manipulation which is part of euphoric bull markets. Predicting the top & bottom of any market is very difficult. we have almost 1000 stocks hitting upper circuit on average which is never good for healthy markets, Many want tips and news and not quality research report and no one is ready do basic homework.

Many rumors are spread on Reliance energy IPO that markets are held till that and Reliance pack will move heavily from today, these are news and rumors spread on vested interest. Fundamental is the one which is time tested and has proved over the years to be beneficial. Insiders and manipulators have never crossed one cycle of markets (4 to 8 years), so please understand the dynamics of markets and take your risk.



Author A.K.Prabhakar



Monday, September 01, 2008

DAILY REPORT FOR 01 SEPTEMBER, 2008

NIFTY (4360 +146 pts)

Supp 4315/4280/4250 Res 4400/4435/4480

SENSEX (14564 +516 pts)

Supp 14460/14350/14220 Res 14670/14790/14900

Review of the previous session:-

  • It was a solid start after many lackluster trading sessions as markets shrug away the gloomy mood on the first day of a news series. Fall in inflation and crude prices added the needed boost for the bulls as Sensex closed up by more than 500 points.

  • Banks, realty and metals were major gainers. Only 1 stock CAIRN closed in the negative from the Nifty 50.

  • BSE Breadth 1851 Adv- 790 Dec NSE Breadth 969 Adv-239 Dec Upper Circuit -187 Lower Circuit –109

  • BSE Vol Rs 5430 Cr NSE Vol Rs 10626 Cr F&O NSE Vol Rs 43170 Cr

  • FIIs sold Rs 364 Cr in cash market and MFs bought 281 Cr provisionally. In F&O, FIIs bought Index Futures worth Rs 1015 Cr and sold Stock Futures worth Rs 447 Cr. Their Outstanding position in Futures is 30423 Cr and Options is 20232 Cr.

  • Additional Data:- Gold $837.70/oz Nymex Crude $115.59/bbl

  • SGX Nifty Index Futures (Singapore) 4315 (-45 pts) at 7.35 am

  • Indian economy recorded its slowest growth for any quarter in over three years at 7.9 per cent owing to a dismal performance by industry. The deceleration was on expected lines as a tight monetary policy by RBI to control over 13-year high inflation had made borrowings of the industry costlier, impacting output of growth engines, particularly manufacturing.

F&O observations:-

  • Long build-up – KS Oil, Noida, Titan, Infosys, Moser, BhartiAir, IDFC, Educomp, Renuka, Balrampur, BankIndia, ITC, Punj, RelCap, BHEL, NagarConst, ONGC, IVRCLInfra, TCS, IFCI, RNRL, SBIN

  • Short build-up – Sun TV, MahSeamless

  • OI 62726 Cr (+6048 Cr) Nifty OI Up 2% PCR 1.37 (from 1.36)

  • It was bullish all the day through as money flowed into many stocks on the first day of settlement. BankNifty and GT Offshore saw major short-covering indicating some cap on upside for those instruments.

Global markets:-

  • U.S. stocks tumbled on Friday, led lower by tech shares after computer maker Dell warned that companies worldwide are cutting back on technology spending. The Dow Jones Industrial Average closed down by 171 points with all 30 constituents closing in the negative.

Outlook for 01 September, 2008:-

  • The trend is still uncertain with volumes not confirming the rally. A weak opening on the back of negative global markets is not ruled out but Nifty has strong supports at 4315 and 4280. Major selling is possible only below 4280. Nifty to face resistance at 4430 and 4480 going up.

  • Bullish stocks in short-term :- NTPC, NIIT Tech, TCS, Welspun Guj

  • Negative stocks :- Chambal, DLF



  • April-July No Hit Rs 1, 15,980 Cr against Annual Target of Rs 1, 33,287 Cr

Indicating clearly that managing the fiscal deficit is going to be an uphill task for the government, official data released on Friday said the fiscal deficit in just the first four months of the financial year touched 87% of the level targeted for 2008-09. According to data released by the Controller General of Accounts (CGA), fiscal deficit for April-July stood at Rs 1,15,980 crore against the annual target of Rs 1,33,287 crore.


  • The Reserve Bank of India released its Annual Report for 2007-2008.

Overall Performance

The Indian economy continued to perform well during 2007-08, although the growth moderated marginally. This was the third year in succession when the Indian economy achieved a growth rate of 9 per cent and above. This was also the highest average growth rate achieved during any three year period in the history of independent India. During each of the last three years, the growth rate of agriculture was well above the trend growth rate with foodgrains production touching a new high in each of the last two years. Industry also registered robust growth with the growth rate in the previous year being in double digits. Services exhibited double digit growth in all the three years. Although the Indian economy has been generally performing well in the post-reform period, the performance during the last three years was indeed noteworthy and it was second only to China among the major countries,

Read complete article at http://tinyurl.com/5v6cx8


http://tanmaygopal.blogspot.com/


Disclaimer: These recommendations are based on the theory of technical analysis and personal observations. This does not claim for profit. I am not responsible for any losses made by traders. It is only the outlook of the market with reference to its previous performance. You are advised to take your position with your sense and judgment. I am trying to consider the fundamental validity of stocks as far as possible, but demand and supply affects it with vision variations.


Friday, August 29, 2008

DAILY REPORT FOR 29 AUGUST, 2008

NIFTY (4214 -78 pts)

Supp 4185/4150/4110 Res 4265/4300/4340

SENSEX (14048 -248 pts)

Supp 14000/13750/13600 Res 14150/14340/14480

Review of the previous session:-

  • Indices opened flat but slipped into the red very quickly. F&O pressure became apparent in late trade as we tested 4200 on the Nifty. Metals, capital goods and banks ended lower.

  • BSE Breadth 898 Adv- 721 Dec NSE Breadth 294 Adv-929 Dec Upper Circuit -144 Lower Circuit –135

  • BSE Vol Rs 4063 Cr NSE Vol Rs 13070 Cr F&O NSE Vol Rs 66164 Cr

  • FIIs sold Rs 187 Cr in cash market and MFs bought 390 Cr provisionally. In F&O, FIIs sold Index Futures worth Rs 376 Cr and sold Stock Futures worth Rs 142 Cr. Their Outstanding position in Futures is 28962 Cr and Options is 18505 Cr.

  • Additional Data:- Gold $837.20/oz Nymex Crude $115.59/bbl

  • SGX Nifty Index Futures (Singapore) 4290 (+57 pts) at 8.40 am

  • The annual wholesale prices index rose 12.40 percent in the 12 months to Aug. 16, below the previous week's 12.63 percent rise.

Outlook for 29 August, 2008:-

  • CSO to announce Indian quarterly GDP estimate today and it can give some indication as to the pace of growth of Indian economy. First quarter results have been more or less flattish this time around, inflation is already in danger zone and now GDP figures will guide further.

  • Markets to open strong on positive global sentiment but 4330 to 4360 need to be crossed for further gains. Support for the Nifty is at 4150-4160. Banks and realty may see some upside because of slight drop in inflation, but they can best be avoided for now.

  • Investment pick - Exide

UTVi poll expects Q1 GDP growth at 7.9% http://tinyurl.com/6p87p7


http://tanmaygopal.blogspot.com/


Disclaimer: These recommendations are based on the theory of technical analysis and personal observations. This does not claim for profit. I am not responsible for any losses made by traders. It is only the outlook of the market with reference to its previous performance. You are advised to take your position with your sense and judgment. I am trying to consider the fundamental validity of stocks as far as possible, but demand and supply affects it with vision variations.


Thursday, August 28, 2008

DAILY REPORT FOR 28 AUGUST, 2008


YOU ALL HAVE BEEN LOYAL VISITORS TO MY BLOG, READ MY NEWSLETTERS/VIEWS, FOLLOWED THE CALLS TOO. I THANK YOU ALL FOR ALL YOUR SUPPORT. BUT FREE SERVICE CAN'T CONTINUE FOREVER AND NOW I PLAN TO START MY TECHNICAL CONSULTANCY, JUST TO SERVE YOU IN A BETTER WAY. THOSE WHO ARE INTERESTED IN THE SUBSCRIPTION CAN MAIL TO tanmaygopal@gmail.com. THANKS ONCE AGAIN FOR ALL THE SUPPORT AND I HOPE THE RESPONSE WILL BE CONTINUED IN THE FUTURE.


NIFTY (4292 -45 pts)

Supp 4280/4245/4200 Res 4330/4365/4400

SENSEX (14296 -185 pts)

Supp 14130/14000/13750 Res 14380/14560/14670

Review of the previous session:-

  • After opening firm, supply was seen from higher levels. Heavyweights like Reliance and ICICI Bank weighed down on the indices as we got sold off in late trade. Realty and Banking were major losers.

  • BSE Breadth 1021 Adv-1583 Dec NSE Breadth 443 Adv-775 Dec Upper Circuit -144 Lower Circuit –138

  • BSE Vol Rs 3701 Cr NSE Vol Rs 8769 Cr F&O NSE Vol Rs 47535 Cr

  • FIIs sold Rs 32 Cr in cash market and MFs bought 163 Cr provisionally. In F&O, FIIs bought Index Futures worth Rs 8 Cr and sold Stock Futures worth Rs 24 Cr. Their Outstanding position in Futures is 34406 Cr and Options is 24358 Cr.

  • Additional Data:- Gold $834.00/oz Nymex Crude $118.15/bbl

  • India’s inflation index, WPI expected around 12.82% Vs 12.63% last week, a survey of economists said.

  • Moody’s has projected that India’s economic growth would decelerate to 7.9% in the current fiscal from 9% in 2007-08, on the backdrop of rising interest rates and slow credit growth. The forecast by Moody’s on the growth of Indian economy has come just two days ahead of quarterly release of GDP data for fiscal 2008-09 by the government.

F&O observations:-

  • Long build-up – Bajaj Auto, KSK, Educomp

  • Short build-up – Opto, WelGuj, GTOffshore, MLL, Minifty, GTL Infra

  • OI 83143 Cr (-251 Cr) Nifty OI Up 1% PCR 1.03 (from 1.07)

Outlook for 28 August, 2008:-

  • Nifty is taking support around 4245-4280 and once this level is broken, more downside will be seen.

  • Markets to open flat but being F&O expiry, some volatility is not ruled out. More selling in Realty stocks can be seen.


http://tanmaygopal.blogspot.com/


Disclaimer: These recommendations are based on the theory of technical analysis and personal observations. This does not claim for profit. I am not responsible for any losses made by traders. It is only the outlook of the market with reference to its previous performance. You are advised to take your position with your sense and judgment. I am trying to consider the fundamental validity of stocks as far as possible, but demand and supply affects it with vision variations.