IMF has given optimistic out look about the world economy

Friends,

What we have known by way of pleasant feeling, IMF has endorsed it based on solid data and calculation. It has raised India’s growth forecast to 5.4 pc (for China its 7.5 pc). In 2010 it sees India growing by 6.5 pc in terms of growth rate. IMF has given optimistic out look about the world economy too. This is a very important observation from the angle to judge where the Indian stocks are headed.

Indian market tanked may be on account of the deal makers who may have pinned hope on budget, may be again, as per the promises to them by some in authority. Their accumulation before the event may have pushed them into unloading and fast. There may be the possibility of still more savvy groups to destabilise the public sentiment and later go whole hog for one way buying bout. Since the reason for sell off was missing, we have to find answer in secretive and concerted action of groups which have always been finding ways to implement the quick gain schemes. Either way we surmise them working, the gains can come to us or them by maintaining the bullish vision about the market till such time where it is costly as per historic parameters or has gone too high too soon.

I recall the times in seventies. I used to read ‘Economic Times’ then, it used to be a serious paper and loaded with authentic information and articles from the learned (unlike today when lighter stuff has been thrown in). I learnt then that the USA’s steel production was 200 million tonnes. We were doing fine with about 6-8 million tonnes. I developed a feeling that if only India could start producing 100 million tonnes of steel, it would be very strong nation without poverty any more, in any pocket.

Today we have targeted 124 million tonnes steel capacity by 2011-12. I feel sorry about no prospect of seeing the poverty eliminated by then.

I may also tell you this is due to the apathy of the govts and not due to paucity of resources that we have patches of poverty. If only 1 pc of incomes of highest ten percent income earners is transferred to take care of bottom thirty percent, we will see smiles on every face of India. Only thing is to find/develop mechanism (IT enabled) to do it. I am sure the top 10 pc will not mind foregoing their 10 pc of income. Their wealth is going to be retained in any case. Here I would suggest that there should be an arrangement where the purchases from designated food stores, fees paid to designated schools, medical bills of designated hospitals and season ticket purchases from railways are reimbursed on production of bills/proof by people/families holding a U-Ipin which should be given as per a criteria and renewable every year. This kind of payment may be put a ceiling on. There may still be cases of fraud and misuse but it will be far less in proportion to what has been happening for most schemes aimed at helping masses.

Nifty is trading better this morning in Singapore, so also some of the Asian peers like Kospi,Taiwan, Strait and Shanghai. DOW has closed positive last day.

So, please be a foolhardy person and keep you funds in equities (as far as you think proper according to your appetite). The inflation is bound to raise its head and your umbrella is equity investment, it has always been. If the gold improves in value from here (about Rs 14500/10 grams), it will be signal that inflationary times are round the corner. You have to not buy gold but equity after this is signalled.

So, don’t worry, be happy investing.

HariOm,
Krsna Khandelwal

BIRDINFO Stock Rx - A prescription for stock market

Then why the sell off in Indian markets?

Friends,

The govt has announced many an infrastructure related funding conveniences, it has also aimed at taking care of the deficit and is not very late in the day.

The excise duties have been kept at low level as against the expectation of some rise there.The FMCG,cement,steel and auto off-take have been higher.Rupee is not costly as earlier and IT sector should feel respite.The corporates have raised handsome amounts through QIP.

Tatas have decided to attempt no further take-overs. They would concentrate of rationalising production and ensuring raw material security. They plan to raise capacity utilisation of their European facilities from 50 pc presently to 85 pc. They are confident of servicing debt worth $ nine billion on their books.

The Sensex PE is not at alarming level. Much worse times have been negotiated ie the two quarters of degrowth have passed and there is light at the end of tunnel.RBI may reduce interest rates further or at least keep them where they are.

If the rains fail to a bigger extent, there would be food import bill to take care and rupee would weaken. This is not bad for industry, hasn’t China thrived on back of currency under-value.

Then why the sell off? No body has an answer for this.

Nifty closed 4072 today. It has lost almost 12 pc from the recent peak. It should be taken as opportunity to enter market by those who were left out. The DOW has come back above 8200 already today.

HariOm,
Krsna Khandelwal

BIRDINFO Stock Rx - A prescription for stock market

Let us celebrate the higher social spending provisions in budget

Friends,

The budget has been rated as good by some and not so good (even bad) by some. The real concern shown by experts and foreigners is about the large budget deficit that has been left uncovered. There contention is that govt borrowing will be on a large scale and would put pressure of interest and elbow out the business borrowers. In fact this is a faulty perception.

The reality is that India saves more than Rs 20 lac crores in a year. All this has to have some place to be injected in. The budgetary deficit absorbs it through govt borrowing, large part of which otherwise would have gone into vaults in the form of bullion and diamonds because for Indians rate of interest under 7-8 pc for savings is not interesting enough, at the same time, Indian households can not be easily made to spend what portion of income they have kept aside for security of family in future years. It is on this strength that Indian families carry on for duration spanning even an entire generation without current income.

The second point is that the demands needs to be pushed for industry’s welfare. This can come about by recycling the savings in such a way that the society receives it in spendable form. The govts spending does this even if it is spread wide and thin. We know that when it rains, it rains in drops and over a wide area but the rivers start flowing to brim and even flood.

Similarly, if the govt spending is voluminous, it makes rivers of money flow every where and increases economic activity. Is is immaterial whether it has been wisely spent or has gone in hands of government-wallahs or in hands of ‘dalals’. It has been happening like this in India and pilferages have only retarded the pace but not stopped the growth. The ill gotten money in fact is more readily spent for consumption than saved.

I have discussed this all matter in detail because this has formed the basis of market’s weakness for the time being. The past experience has shown that our growth fell immediately after the FRBM was paid attention to. The fear of rise in rate of interest is not right as the rise will be always be curbed by the foreign money that is ready to rush in at higher rates.

Now, there is one more point and that is the preferability of deficit financing over tax receipts. The deficit financing requires no machinery to collect revenue through tax. To get a net taxed rupee, two have to come out of payers pocket (there is cost of administration, bribing, preparation of accounts by payee and the costs of audit and litigation etc).

The rupee through deficit financing comes directly and every pocket suffers in equal proportion. The people who are on daily wages do not suffer at all as they are paid at sustenance level only, in times of inflation or deflation.

The govt has assured that the FRBM targets will be met gradually over the next few years. This is damn right thing to do ie to put off collection by way of increased taxes to a time when the world has become ready again for larger imports of goods of Indian origin.

So, let us celebrate the higher social spending provisions in budget. Let’s first bring more people in to capacity to pay tax than crib for things imaginary.

The market did turn positive yesterday and Nifty closed up 37 points at 4202. In the mean time the US markets have lost heavily and the Asian markets are following suit. Nifty will have to cross these international hurdles to get set on course of upward journey.

HariOm,
Krsna Khandelwal

BIRDINFO Stock Rx - A prescription for stock market

India Budget 2009-10 : Simple and politically safe

Friends,

The union budget for 09-10 was presented by FM today. It was being awaited with great expectations. In my opinion it has been very pragmatic and has given what could have been given in the present circumstances and also it has not taken any thing previously given. In a very strange way the FIIs have sold heavily today and the indices have suffered badly. Tomorrow, may be, on rethink, there would be some coverage of the lost ground, if not the whole. The salient features are as under:

- the deficit will be 6.8% and is on expected lines (it was 6.2% last year). I would add here that the govt has spared industry from stiff doses of taxation and has decided to take care of FRBM at some time later. This should be seen very positively while the FIIs have not liked it. The revenue deficit is projected at 4.8%.

-the FM has had both, the long term and short term, objectives in mind and has very clearly gone ahead without making complications like his predecessor used to do.

- duties have not been upped and they stay at the prevailing level. This should in fact be celebrated because unconcerned govt would have resorted to raise revenue through excise duty hikes.

-FBT has been scrapped. This is a clear benefit to the whole corporate world and takes away many headaches. The corporate tax remains same.

-MAT has been raised from 10 tho 15% but again the reward has been given in the form of removal of surcharge.

- CTT has been scrapped. This meets a big demand. STT has been left untouched and this has been a dampener.

-personal Income Tax Free limit has been raised by Rs 10000.

There very many other provisions which do not have much bearing. The outlays have been increased substantially and the social causes will be served through increased spending. How else the govt puts money in hands of public. The increased spending will generate demand and resulting the industrial out put will go up.

The infrastructure is going to have philip as there are some announcements regarding this.

The disinvestment has been discussed as a policy but no road map is given, neither it could have been given.

All in all, we should welcome this budget and not frown as has been done some pundits.

HariOm,
Krsna Khandelwal

BIRDINFO Stock Rx - A prescription for stock market

We should remain invested

Friends,

Some of you would take interest in what I have to report to you and some will laugh at it. What I am reproducing is a piece of writing dated 21/09/01 and was titled ‘Nifty Down To Almost 8 Year Low’. This was naturally after 9/11. I was then slightly upset by Nifty’s weak behavior although the environment seemed to be conducive for growth. This was an impression I was carrying about the economy and market but had not tried to see it specifically why or what formed the basis for the feel good factor. To look at the whole matter I decided to see the tenor/import of each of the matters that form a nearly wholesome macro environment (India related). This is what you are going to read below now and you would be amazed that the whole talk seems to be related to the day today :

‘The unintended fall out of NY Twin Tower strike has been for the Indian Stock Markets to dip to almost eight year low. During these eight years a lot of improvement in trading system has been brought about. It is almost at par with the best in the world. Also during last eight years ultimate measures carrying immense value for the Indian economic system and industrial sector have been taken. Leaving apart what has happened in specific industrial sectors and companies, if we simply recount the macro level major reforms a scene, so beautiful, emerges that can only spell bound.

The list will unfold like this:

I) Interest rates domestically have been brought down to quite reasonable level when good companies may raise money from open market for medium and long term @9 pc including. Costs.

II) VRS of white collar and blue collar workers have been popular.

III) Licencing and quota restrictions have completely been removed.

IV) The weaker players have been wiped out leaving economics. Of scale and technology orientation to take fron seat in development of industry.

V) Mergers and acquisition and out right sale of facilities have become popular quite feasible and popular.

VI) Capital account movement of Foreign Exchange is now possible.

VII) Listing of shares in US and UK bourses is on, besides, raising of capital in equity as well as debt form, from overseas markets is routine.

VIII) Exposure of our technical personnel to technologies prevalent in other advanced countries is also quite common.

IX) Communication network is working at 90 pc efficiency compared to developed countries.

X) Roads are getting better. By the day and commercial vehicles of every capacity for long hauls and short distance movement are all being produced within the country.

XI) Octroi and Sales Tax reforms have gone at least to the half extent.

XII) Language barriers have come down due to exposure of large population to Hindi and English.

XIII) Privatisation of education ensures spread of training in new fields and relevant subjects.

XIV) Governance is lesser.

XV) Inflation is within bounds.

XVI) Distribution costs have come down.

XVII) Agriculture is taking care of food needs and cash-crops are aplenty to provide feed stock to industry.

XVIII) Efficiency of capital is improving and in turn labour has also become more productive.

XIX) Population is growing at a slower rate (actually India requires at least some growth in population for faster economic growth).

XX) Urban land is no more under ceiling laws.

XXI) Women are getting in to larger economic activity as their time is freed from domestic chores due to gadgets being cheaply available.

XXII) Consumption is no more a sin and adds to demand.

XXIII) Property prices are reasonable.

XXIV) Terrorism is restricted to fringes of the country.

XXV) Depreciation of Rupee has brought about automatic shelter for the domestic industry.

XXV) Personal Income Tax and Corporate Tax are at reasonable level, dividends are tax free in hands of recipients.

XXVI) Excise Duties. Are no more prohibitive.

XXVII) Air-ports and sea-ports are quite modern now.

XXVIII) Venture capital is available and 100 pc foreign ownership is permissible in listed companies (select sectors) besides FDI route.

With twenty eight counts of positive development over last eight years why should the index suffer so much is any body’s guess. There are some dark areas and require urgent attention like our railways are failing to deliver, the power sector is in a mess and the corruption is eating into developmental resources of govt besides making things difficult for foreign party to do business in India. We can well estimate the positives far outweigh the negatives yet our barometer is showing that the times are worst for industry and investor.

By way of explanation I may suggest that what the barometer (stock-markets) is showing is wrong ie actually the health is in pink. The reading should show it at 1700 mark, if the reality has to prevail. I may admit that for this to happen a moderately better dose of inflation is required. Better still will be a stiff dose but only in a short run. If we want to quantify upping of inflationary pressure to around 12 pc per year for two years, would be healthiest. This is necessary. For two reasons, one that last decade has been tough for borrowers and wonderful for lenders, the other is that. Wheels of economy require some lubrication through monetary expansion which will take care of easing the pressure on banks and development finance institutions.

Our industrial future is quite secure, come what may, no gain saying that democracy has to keep standing erect.’

The above reads as it is for today, the only thing is that democracy does stand more firmly now. So this is another good thing. It was the time after 9/11 incident in US and now is the time after big US financial crisis. This means that when US is in trouble we get scared of investing in market as well as the FIIs and this makes markets plunge unduly. When the fear is gone the return brings more money in than had moved out. This paves way for markets scaling higher heights as was the case between 2001 and 2007 (six times gain). Facts are stranger than fiction, if we assume it is a fiction the market will rise beyond the previous peak than fact may see it go high beyond 10000 Nifty mark or 30000 Sensex mark. Whatever way we look at it, it becomes imperative that we remain invested.

HariOm,
Krsna Khandelwal

BIRDINFO Stock Rx - A prescription for stock market

Nifty in green on a day when the DOW and other US indices lost heavily

Friends,

Our markets did a wonderful job of keeping the Nifty in green on a day when the DOW and other US indices lost heavily. There were some glitches and the trading hours had to be extended by NYSE.

The US job data are bad and worse in the sense that fewer hours are spent at jobs even by those who have employment. The wages are not rising either. The Obama administration has not been too successful at putting the economy back on track. The US economic weakness has affected us in the sense that our exports are going down continuously for last eight months. The Chinese scenario is no different.

The economic engagement does not end here, it goes further in terms of capital flows and currency/interest rates parity. So the there is a connection and there is reverberation of what happens in one part of the world has effect in the other parts of the world as well. The moot point is how far that should reverse the course of the economies as large as India’s by impact.

Going by the ways and means by which the US took strides in the economic development, I find many a parallels today here. And then the size and composition of population is on our side. Our industrial units can afford to have economic/optimum size of operations based on local demand. We have the road map ready for the highways, railways and airways. Bulk movement of commodities through rationalised routes/means would reduce transportation costs.

Our savings rates is robust and can take care of investment needs but some how artificially high rates of interest have been keeping the risk capital mop up slightly strenuous. It is still coming due to high returns in case of most of the established business houses. Further liberalisation and opening up with due care that the people at the bottom of pyramid do not get upset, is the need of hour.

The railway budget would be presented today, if only the minister sees the need to outsource the inputs, maintenance and passenger services, a tremendous change can be brought about at speed in the quality of journeys that we undertake. There would be certain sections where private enterprise would not be able to provide quality service at reasonable cost. To take care of such sections, the railways can offer subsidy or undertake to provide itself the needed service.

I am against the dilution of overall control and responsibility of govt in the field of railways. The competition is necessary for keeping the costs and prices down and that competition is faced by railways from the alternative means like road and air.

So, let’s wait, with fingers crossed, for Mamata’s touches on the railways’ budget as any further contribution is not expected.

HariOm,
Krsna Khandelwal

BIRDINFO Stock Rx - A prescription for stock market

JBFIND, ELECTCAST, DAAWAT, INDHOTEL - MQ:09 Stock Oracle

JBFIND @ 80 (010709) gets 1159 pancha-tattva points and you may buy this for medium term.

ELECTCAST @ 32 (010709) gets 1216 pancha-tattva points and you may buy this for medium term.

DAAWAT @ 1075 pancha-tattva points and buy it for medium term.

INDHOTEL @ 66 (010709) gets 816 pancha-tattva points and you may accumulate this on days of declines.

BIRDINFO Stock Rx - A prescription for stock market

Indian stock indices will cross all time highs by the end of this financial year

Friends,

The govt has raised the petrol prices by Rs 4/Lt and of the diesel by Rs 2/Lt. It has been kind for the housewives and has spared the domestic gas and kerosene. I may tell you here that kerosene has been a means to make profit by the oil marketing companies dishonest officers by wrong means and there have been scams related to this. It is high time that govt does not leave exploitable pockets the wrong way. We the ordinary citizens, however seen too often that the loop-holes are at times by design and not by chance. Any way, let’s look ahead.

The fuel price rise is in order as this will remove constraint of govt and oil marketing companies but the conservatism of govt is so deeply embedded that it could not a bolder step of freeing oil sector pricing. The govt would have to still bear Rs 30000 cr of subsidy burden on kerosene and domestic gas.

The auto sales have been robust for June 09 (YoY) and particularly by the trio ie MARUTI,M & M and HEROHONDA. The exports of autos are down as also the exports in general. The merchandise exports were $ 11 billion ($15.5 bn ly) in May 09.

HINDALCO has decided to close Novelis plant in UK. Novelis was acquired by HINDALCO for $ 6 billion and it has reported losses of $1.91 billion in 08-09. I am sorry for an otherwise thorough and prudent person that Kumar Mangalam is, for the non-rewarding initiative taken at long last after having missed many a buses of expansion of businesses and adding new lines in spite of having cash rich companies under his management. If only had he concentrated on the Indian operation. I, however, do hope that these trying times will shortly be seen turning for the better. It is because there has been further capacity additions and demand has to revive in the developed world after its financial order is restored.

The 10 yr govt paper yields 6.98 pc a slight drop over the week, the call rate is 3.25 pc.

USD Libor for 12 months is 1.61 pc (this is a very inviting rate for investment in India and hence the inflows will increase, keeping our markets high).

The dollar is going pretty cheap at Rs 47.89 but it sold for just Rs 43.33 12 month back.

The Nifty closed up yesterday at 4340 after see-sawing for the whole day. I reluctantly give a piece of my mind, it is a straight outcome from the recess of my subconscious which may have noticed some positives of this nature and it is that ‘the Indian stock indices will cross all time highs by the end of this financial year’. You must take it with a pinch of salt as I profess no undertaking of assessment with data and numbers. The positives may have been noted by you too, this at least would indicate that the balance has turned in favour remaining invested, whatever the budget may have in its womb.

HariOm,
Krsna Khandelwal

BIRDINFO Stock Rx - A prescription for stock market

HINDALCO,APOLLOHOSP - MQ:09 Stock Oracle

HINDALCO @ 86 (300609) gets 1115 pancha-tattva points and is a good medium/long term buy. Those with medium term view would do well to sell partly on surges to book profits.

APOLLOHOSP @ 572 (300609) gets 841 pancha-tattva points and may best be sold now, if in stock and bought on correction. Rest should wait till next result.

BIRDINFO Stock Rx - A prescription for stock market

Issue Gold Bonds to raise money for infrastructure

Friends,

The infrastructure, in fact the backbone of national economy, has been suffering from the lack of fund to carry out the important and mega projects. The govt this time is besieged of the problem of deficit in hand. Any slippage, however, will be costing the nation dearly as it did in case of Bandra-worli Sea Link (now open) which saw cost over run of Rs 1000 crs and could be completed at a cost of Rs 1500 crs. The time delay also put the nation to loss. Some 1.25 lac cars are expected to cross the bridge (sea-link) every day and would save Rs 50 lac worth of fuel everyday for the nation. There are lacs of villages in the country which are just across the rivers and nullahs from each other but the residents have to go miles and miles around to reach the other village. Thoughtfully planned, such small bridges would spur an unprecedented economic activity in the country. Power too is covered in infrastructure and its the lack of availability of power in small cities and villages that is keeping cottage and mini industries from getting modernised and rewarding decent earnings to people engaged. This also is responsible for not letting the employment generation in countryside and hence the flow into cities and mega-cities is continuing and is straining the infrastructure there. In cities, even with the infrastructure in place, the same quality of life can not be ensured as in countryside for obvious reasons. I end this endless debate about the importance of infrastructure which can be built not by individuals but by the organised efforts of govt and construction firms.

I come to the point of raising resources for the infrastructure. We know that Indians buy gold regularly out of their savings as traditionally they consider this as the best means of securing future and keeping value of savings intact. What the govt can do is to issue Gold Bonds. These can be of 100 gm denomination and redeemable in ten years in equivalent gold plus 10 pc gold as bonus. These can be issued by the nationalised banks for cash at 5 per cent premium over the days opening price of gold during the first two business hours of banks. This will be something that will be the first choice for many a gold buyers who wish to convert their saving in to gold. It should be sold to any body or organisation who has PAN number. PAN number mentioned on the certificate will make it possible for the govt to collect the capital gains tax upon redemption in appropriate cases where applicable. These can be made transferable. The govt may keep buying 11pc of the gold stock committed for redemption every year. This scheme will be generating the required cash resource for the sound infrastructure projects.

You may please forward this to Fin-Min and Pranab Babu from your end, if you endorse this scheme. Obama may do the same to generate resources for fixing US economy.

HariOm,
Krsna Khandelwal

BIRDINFO Stock Rx - A prescription for stock market

TATAMOTORS,SUZLON, INFOSYSTCH - MQ:09 Stock Oracle

TATAMOTORS @ 290 (300609) gets 967 pancha-tattva points and it will be OK to buy it in range of 250-270 for long term.

SUZLON @ 103 (300609) gets 854 pancha-tattva points and it should be sold on surges if in stock, for buying wait till next result.

INFOSYSTCH @ 1776 (300609) gets 1036 pancha-tattva points and this may be bought for medium term and particularly on days of decline.

BIRDINFO Stock Rx - A prescription for stock market

Market Operators writers are wary of writing options

Friends,

This a crucial juncture for the markets and surprisingly the open interest in Futures and Options is very low. It is just 2.26 crs in Nifty Futures and 4.75 crs in Nifty Options and for stocks it is 105.91 crs/9.52 crs for futures/options. This indicates that the option writers are wary of writing options. Therefore while public is OK with making further investments, the organised players do not want to expose themselves. Public’s investment flows are taking place in two ways ie directly and through ULIPs and MFs. I have seen that a large number of commoners consists of who wish to take risk for big gains. This is particularly true of people with reliable income stream.

The QIP route is being increasing resorted to by the corporates. This is a good way of increasing the gross market cap but this makes it difficult to judge the impact of QIP on the prices of scrips raising money through QIP. Like for example BAJAJHIND is going to raise about Rs 700 crs at around Rs 204 per share through QIP. Now some would consider it a bullish factor as the equity money is coming to company with considerable premium on it. But I would consider it a bearish factor because of expansion of equity base and the new money has not been taken for any concrete expansion plan. So, it is case of management having comfort of some liquid money in hand which has to be serviced out of post tax gains rather than pre-tax gains in case of loans. Now, the moot point is to find an answer to the question ‘as to why management opted for equity fund expansion while the sugar scenario is optimistic and increased earnings will be available to retire debt’. Clearly, what we know, management knows better. It definitely knew the best when it rewarded itself with preferential allotment (read earlier posts about BAJAJHIND). After this QIP issue, if successful, the shareholder will have comfort of share prices maintaining in a range of 176 to 215 but the rise will be very strenuous.

HariOm,
Krsna Khandelwal

BIRDINFO Stock Rx - A prescription for stock market

It will not be cake-walk for the bulls

Friends,

In spite of all the trappings in favour, it will not be cake-walk for the bulls. There is big fight to be fought for each scrip in Nifty/Sensex before any big up move takes place. The budget in fact is keeping the market in balance and people have reduced positions rather increasing them. So, for every body the 'safety' is the watchword. Rest of the Asia is also subdued today.

TATAMOTORS consolidated result have shown big loss. On top of it the servicing of debt on books will remain a major concern. TATAMOTORS have announced entry of JLR vehicles for which a separate division will be put in place to take care of all aspects of JLR marketing here. This and sourcing of components from cheaper market and lay-off of excess staff in Europe may eventually put them on even kneel but shareholders will still have a question why this big risk was taken on slender shoulders of TATAMOTORS in the first place. I hope Tatas would be much more careful with their expansion plans where it is not through organic growth.

HariOm,
Krsna Khandelwal

BIRDINFO Stock Rx - A prescription for stock market

Nifty would go free float from today

Friends,

Nifty would go free float from today as was announced previously by NSE.

US markets have gained by about 2 pc yesterday and Asia is positive today. It may therefore be assumed that in India the opening will at least be at healthy level, also, the results from TATASTEEL and UNITECH which were announced yesterday, have been OK and put behind the negative expectations about future. Both have negotiated out of woods by raising fresh money and have met most of the liability of repayments that fell due.

There is one thing remarkable about India’s large cap companies and it is that the commodity companies will be maintaining profit due to fresh capacities coming into production and most of the rest have very little debt on books and ever growing demand/order book. A few in any kind of disadvantage, have very little market cap. So, in my opinion the down side gets limited and upside without limit. The long term averages are also showing the same thing as any chartists would tell you.

The inflation for the w.e. 13 June 09 has been (-)1.14 pc. This is largely due to fall in petro goods prices, for the rest of the items its not negative. In this light as soon as the petro goods prices are opened or revised upwards, the inflation will again be, should I say, at healthy 4-5 pc.

Indian car market is showing signs of a fully grown car market. The rush for buying of high hatchback cars like Honda Jazz (Rs 7 lacs) Fiat Grande Punto and more.

TATASTEEL consolidated results were announced. Tatas have been able to remain in green by resorting to cost cutting and they would be slashing more of Corus jobs (roughly 2045). The demand for different products of Corus is at different level and the cut in production on overall basis has been about 59 pc. I hope that a leaner and more profitable Corus will emerge out of this crisis. The crisis is for every player and some would withstand like Corus because it has might of Tatas behind it who have not been facing the kind of problem the world steel industry is facing. Mittal of Arcelor-Mittal says that his expectation is that demand for steel would revive shortly in global arena.

The investors are advised to not stick with their sugar scrips and to off load. The centre has raised sugarcane SMP to Rs 107.76 from Rs 81.18 per qtl. This will make UP Govt go overboard and damage the cause of sugar industry because this kind of raises in sugarcane prices will convert more acreages to sugarcane and excess supply may again push sugar price down and raise costs. The good fortune of industry which had just come about will again be a thing of past. World sugar supple may improve too because Brazil is already finding bio fuel option for sugarcane as non-remunerative. Also that some of the sugar scrips have had more than the fair share of appreciation leaving little or no room for further improvement, they have also ensured to inflate the paid up capital without company getting the equivalent of market cap increase in its hands ( like BAJAJHIND where promoter got for themselves big chunk at almost one fourth of ruling price by way of preferential allotment, the notional loss to rest of the shareholders is over Rs 200 crs which amount can only be generated by company over many years, so, the fruits of many years have been lost to sleeping partners. You should, who can, bring this and such matters to SEBI’s knowledge).

India will be flooded with capital, Japan has decided to back bonds issue by India (of upto 250 billion Yen) with sovereign guarantee. The two oceans of lowest and highest rates of interest are ready to flow over to each other under huge pressure of differential. If only the govt can assure the investors abroad that scams like SATYAMCOMP will be prevented at any cost, there would be no dearth of money here. There should be insurance protection available to investors against suffering from loss of such happenings.

There is now the need for preparing the Indian population to behave in a way that is required of a society going on faster growth trajectory.

HariOm,
Krsna Khandelwal

BIRDINFO Stock Rx - A prescription for stock market

TATASTEEL,UNITECH - MQ:09 Stock Oracle

TATASTEEL @ 399 (250609) gets 1031 pancha-tattva points and this is worth buying regularly on days of declines and be accumulated for medium term which means that partial profits may be booked on surges. A time will come when it will go to new highs and pancha-tattva will reveal when that time approaches.

UNITECH @ 82 (250609) gets 1056 pancha-tattva points and this should be accumulated on days of declines for medium term.

BIRDINFO Stock Rx - A prescription for stock market

Keep your portfolio hedged before budget

Friends,

Nifty closed Jun 09 series at 4242 and it has lost about 2 pc in this series. This has broken a three series winning streak. But it does not matter as much as it matters that consolidation has taken place without any extraordinary and anxious moments during this period.

Mr Nandan Nilekani of Infosys has been given charge by the PM, to implement the Unique Identity Number to each Indian. This is mega project and once implemented it will give birth to some very interesting projects which will give Indian IT companies a lot of work to do. It may eventually be responsible to generate a business volume of Rs one lac crs in five years, as per my estimate.

While I think that tomorrow’s opening of Nifty will be gap up but I would say that it is important to hold 4000 or 4100 puts, by all keeping huge investment in equities and who have built long positions in F and O. The budget should be passed while you are perfectly hedged. The premiums on puts is not very high at present. Those who do not wish to buy puts may at least remain half way into cash before the budget day.

There is some expectation that the budget will open the oil sector and allow free pricing of the petro goods. May be Pranab has this ace up his sleeve which will allow him to have liberty from providing for oil related losses and thereby take care of deficit on one hand and be known for taking the bold reformist step. Of course petrol may be somewhat dearer but it will be digestible as the Indian crude basket is not that much costly as it has been at other times.

HariOm,
Krsna Khandelwal

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