As with nature's five elements - namely earth, water, fire, air and sky - we look at five economic and financial aspects based on company's quarterly results to form our valuation. For this reason this technique is called the Pancha Tattva Stock Teknik. Each valuation is given in terms of a delta change from neutral value of 1000 points. Higher the value the better the stock is. 

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Monday, October 06, 2008

Market Matrix - Nifty closed nearly at 3600 level

Friends,

Last week has been one of the most action packed and still has passed without any historic single day fall in any of the markets around the world with an exception of DOW which lost maximum in a day for the past eight year period, if not all time.

Today markets in India have lost further ground, so much so that Nifty closed nearly at 3600 level. This level gives Nifty a PE discounting of just 15.43 and P/BV ratio just 3. These are best ever ratio in the past five years. The analysts used to be talking in term of not the current discounting but discounting at expected earnings for the year next when there was bullish time. I am basing my optimism solely on the asset values (revalued) which are now way up above what is represented by the present share prices in case of most companies barring the Pharma and FMCG. Pharma and FMCG have some intangible assets in terms of brands and patents. If these intangible assets are given values too, there would be the similar case in respect of these sector scrips too. So things are pretty much in favour even after the future being termed as not so rosy from the earnings angle. Besides, the additional capacities would be coming to production in case of commodity players and for the service sector the markets are expanding on a continuous basis.

There is a welcome and timely development that the RBI has announced reduction in CRR by 50 basis points and banks would be reaping rich rewards for the money released in their hands will be without cost and they would be able to lend all these funds at very favourable rates to industry starved of funds. The rupee has weakened further and is going to act as shield for the domestic industry on one hand and would get more rupees in hands of IT companies for the billing in dollars. Exporters will be advantaged too.

The quantum of money is not any lesser in the world of today but the crunch is being felt due to slowing speed of money. This situation has come about due to the mutual distrust of banks. When the money does not revolve fast, the transactions are settled quickly and remain pending. This unnerves those who are out in market for exchange of their assets for money. The situation get gloomier when the need to sell is for meeting some commitment. This is what is plaguing the western world and have rever berations here. This is, however, not an affliction without cure. The US govt has acted very rightly in thoughtfully deciding to exchange money with presently non marketable assets. The central banks are busy increasing liquidity and once the balance turns in favour, which it has to, the reverse will be happening in all markets.In our country however the beaurocrats are reluctant to be bold enough for the fear of getting flak for deviating from the laid down practices. You would remember that I had warned about the hawkish stance of Reddy when the RBI was tightening money supply. The problem today is invited one. The inflation had nucleus some where else not in money supply. I was due to demand for oil and commodities from the growing economies of India and hence was due to a natural readjustment in relative pricing of all things trade able.

The SEBI has now thrown open the doors for the PN route entry for FIIs. The developments which will see markets stabilise are taking shape but the intervening period is frightening due to some rumour mongering and due design of some as always happens. If you take trouble to see the posts in Oct 2007 and Oct 2006, you will appreciate that how early in the day I gave warning signals,explaining things over and over again. I am doing it now also.

For India, exclusively, the cheaper oil would be a great help. The oil bonds released will be imparting liquidity in system.

So, there are a host of welcome developments, only thing is they have to have effect which usually happens with some time leg.

The puts have been offered in market at lower premiums and the calls command higher premium, on interpretation it would seem down the line the there is some hope. The results will further give direction.

HariOm,
Krsna Khandelwal

BIRDINFO Stock Rx - A prescription for stock market
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BIRDINFO Stock Rx
India
We are India based equity research group and BIRD stands for Business Information Research Dialectics. We have developed a unique system to do analysis of stock markets. The regular recommendations for stocks and industry sectors are available on the site. We also advice our customers for stock market investment based on our Pancha Tattva Analysis System tested for more than a decade. We provide paid advice for one year @ INR 1000 per stock. The advice at the time of volatility and quarterly result announcement by companies is extremely useful for taking Buy or Sell action. You have to make advance payment through our HDFC Bank Account to avail our services. Please send your request via E-mail. The Pancha Tattva analysis (study based on five basic parameters) of a portfolio can also be done on payment basis and investors are requested to contact via E-mail for a formal quote. The content and our recommendations are subject to disclaimer clause posted on this blog site. © Copyright 2006 BIRDINFO Stock Rx All rights reserved. We shall try to provide satisfaction on all our services. E-mail us at krsnakhandelwal@yahoo.com or birdinfo@gmail.com
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Pancha Tattava Stock Teknik - 5 dos & dont's

We give below the important points to remember for the new visitors of our site who venture out to trade/invest on the strength of Pancha Tattva Stock Teknik:

a) The Pancha Tattva (five basic elements described in Indian scriptures) points for a stock are computed at market price and indexed taking 1000 points for value neutral stock. The stock is weaker if it has points under ‘1000′ and is stronger if it has points over ‘1000′. The variation against 1000 level does not always denote the exact proportion in price strength.

b) The points and its resultant attributes are ascribed after careful derivation of certain ratios based on the most recent quarterly results, management strength, industry prospects, political climate, price history, interest rate scene etc. It actually takes care of every aspect effecting the price. This point level along with advice is posted on site after quarterly results for some stocks.

c) The trading/investment strategy given in each case should be followed.

d) Since there are always fresh developments effecting the price, a stop loss mechanism should be followed. You may sell off half the quantity upon slide in price to the extent of 3-5% and sell entire quantity upon 6-10% fall in price.

e) Once out of stock you should not look back at the same stock until fresh point level is given after announcement of next quarterly result. In case some unusual movement is seen in between result period, you should not forget to ask for fresh points level computation and advice. This should be made use of as much as possible.