Open letter to Delhi Boy - My Response

Open Letter to Delhi Boy   - My Response

Its a nice write up but the content is too much racist in nature. I could feel the lady spitting venom while reading it.

Well to start with , I am an Indian & having stayed in almost all the major metropolitan cities ( barring Kolkata ) , I can say that what you experienced in delhi happens everywhere. Just like corruption , it's a global phenomena. Idiocy does not exactly require a geographical qualification. Just because you had an unpleasant encounter with few spoilt brats , it doesn't mean that the whole lot is bad & so the generalization based on that shows your level of maturity (rather immaturity ). 

What you experienced in Delhi ,the same can be experienced by someone else in Chennai or any other city. But that doesn't mean that that person should also write an open letter demeaning others. That would be the most stupid thing to do. On a lighter note , I guess this outburst is because you were devoid of any attention from Delhi boy :P 

But on a serious note, if you have written this to garner public attention then my heartiest congratulations to you as you have accomplished this mission !! 

As someone said, Just forget & forgive and move onto new things that life has to offer !!

Shopping Spree – local action, global reaction !!

Last week my friend Mr. Atul  was on a shopping spree ahead of his visit to his hometown. I don’t know whether  the word ‘spree’ is the right fit or not , but the way he was buying things ,even when they were not needed ,it was not less than a blitzkrieg. 

On our way back , I asked the reason for this indulgence & he very candidly replied :

 “Dude, I have got the Visa power !  “, referring to his credit card as if he is blessed with Divine power.  

So my next question was, “Who is going to pay for the ‘powerful’ bill for using this so called visa power ?“. .Pat came the reply with a rider “ Me,but only if I’ll have the money to pay .” 

“ Its people like you who are responsible for the big mess in which world economy has been pushed today .” I told him. 
“ Yaar, now  what this has to do with the world economic problem. How suddenly you have brought  world economy into this ?  I am totally confused . ” he said. 

Seeing his spending habits , I couldn’t resist the temptation to relate it the current world economic problem which has forced many European economies are on the verge of bankruptcy. 

Although my friend does not fall under the NINJA ( for beginners , NINJA is a description of type of loan or credit given to people in US with No Income No job No assets  which created turmoil that threatened  some of the biggest financial institutions of the world ) category but such type of  spending  habits have  surely  created deep fissures in the global economy.
For an individual it might be an easy & best  thing to do what we call as ‘credit default’  but in an integrated economy & in an integrated world ,what is best for an individual or institution is not always best for the system.  And the fault lines which have resulted in the present economic crisis are very systemic & each individual or institution has acted as a tectonic force which led to these fissures in the world economy.  

A wider cast of character shares responsibility for the crisis : it includes regulators, policy makers , people like Atul  & me. It’s a collective effort which is all set to take the World’s economy to the brink of disaster.  The danger of Greek default is looming large & if this happens , a chain reaction will start which is sure to engulf the other European economies like Italy,France ,Germany etc.  The picture of US economy is also not that rosy as its total debt is 96% of its GDP  & the sheer size of this debt can send shivers down the spine of even the most optimistic economist hoping for the global economic recovery.

Tough time calls for tough measures & hopefully US will rise to the occasion & take measures to check the turbulence and widespread fiscal strain threatening the global economy.

The magic 'number'

Last week, I was reading a book called ' Gods and Godmen in India' by Khushwant Singh and it was a pleasure reading that book as very few authors have the guts what it takes to charge like a raging bull to attack the epidemic of Gods( i believe demi-gods would have been more apt) and godmen that has swept the nation in recent years. In that book , he has also mentioned about four things which are mostly in the minds of Indians and one of them is market ( For other three, Read the book).So what is  stock market all about ? Is it just a number or more than that ?

For some, its a 'support' level while for others its a  'resistance' level. Some call it a 'bullish' phase while other term it as a 'bearish' phase. But why such a hype about this number ? Perhaps no other number draws so much attention in middle and upper class as the numbers on the Sensex.It takes only few swings in the stock market for the people to change their opinion about equity market.Like, when sensex touched the 8000 level, everything about the stock markets looked uncomfortable and there were talks of further dips upto 6000.

And when the recent rally took place and the Sensex touched 16K, the very people who were then skeptical about the stock market are now not tired of predicting new 'Highs' for the Sensex with every passing day. We can see the changing mood of so-calledStock pundits & leading global investment houses, thanks to change in those 'Magic numbers'. There are many experts( rather Craps , saying all the non-sense things to further their own interests) appearing on the business channels trying to grab the attention of the people by predicting the new levels of the Sensex without even thinking about their blunders in the past.

But for us,the investors, while it is natural to go with the tide, some rules of investing don't change siply because the mood in the environment has undergone a change. Some understand it easily while others are forced to understand the hard way ( after loosing huge amount). But one thing is true that equity will always provide us a good earning opportunity ( a faster one) but can never give us the comfort of safety like the one in traditional investment opportunities. It holds well irrespective of the sensex level, bullish or bearish phase.

Here, I would like to quote, Benjamin Graham,the legendry investment Guru -

" In the short term, market is a 'voting'  machine whereon countless individuals register their choices that are product partly of reason and partly of emotion. However, in the long-term, the market is a 'weighing' machine on which the value of each issue is recorded by an exact and impersonal mechanism."

HAPPY INVESTING

Sugar Outlook

With reference to our earlier post “Market Outlook” , we again reaffirm our faith in the sugar stocks.But before giving the reasons for the same, its better to understand the factors which drive the prices of this commodity.

 

 

 

 

 

 

 

 

 

There are 4 factors that can determine the price direction for sugar in future.

1)  Dollar-A stronger Dollar usually means weaker commodity prices. We saw

this when the March Dollar Index rallied from 76.30 (9/22/08) to 89.74 (11/19/08). During this same period, March ’09 sugar prices dropped from 14.72 (9/26/08) to 10.44 (10/24/08). If the Dollar continues to rise, the upside potential for sugar could be limited.
2) Equity Markets-The price movement in the equity markets can have an affect on the sugar market. A weak equity market will continue to feed fears of slowing demand. This will pressure prices and/or limit the upside.

3) Crude Oil- There was a correlation between crude oil and sugar prices between 2004 and 2006. This was due to the increase use of turning sugar into ethanol. In 2004, crude broke above the $40.00 level. This “breakout” resulted in a 2-year bull run, in which prices topped out at 78.40 in 2006. During this same 2 year span, sugar prices rallied from 5.27 (2/2004) to 19.73 (2/2006).

The correlation ended after these markets topped out in 2006. As we all know, crude resumed its bull run in 2007 and pushed to a high of 147.27 in July 2008. Sugar, on the other hand, did not get near its 2006 high.
With crude prices back around the $40-$50 level, we may see the relationship return. Some Energy analysts have talked about crude prices down to $25.00-$30.00. If this happens, we could see sugar prices move significantly lower. This lower move in sugar could lead to a good buying opportunity in 2009.
4) Demand-As with any physical commodity, demand is a key factor for price
direction. As I mentioned earlier in this report, expectations were released in the last quarter of 2008 that demand would exceed production for the 2008-2009 marketing year.

**Extracted from Commodity report

 And the following factors have made us believe that the sugar story is far from over:

Parts of Brazil have had four times more than normal rain due to the El Nino effect, adversely affecting sugarcane crop. Due to this, Brazil’s sugar production is expected to fall short of the estimated 32 – 33 mt to 30.3 million tons in 2009-10.

Besides India, Pakistan and Bangladesh also plan to import the sweetener to cater to their domestic demand. Further Indonesia, Southeast Asia’s largest sugar buyer, may also step up imports to stem the domestic prices.

World outlook

 Worldwide demand for sugar will exceed output by 9.35 million tons in the year ending Sept. 30, more

than the 7.8 million tons projected in May, according to London-based International Sugar Organization.

Please Click Here to check the sugar prices.



We reiterate our buy call on sugar stocks with good fundamentals.Some of the good stocks which will give better returns in the near future are :

1. Bajaj Hindusthan,  --     Click for  Stock  Price Details
2. Shree Renuka Sugars --Click for Stock Price Details
3.  Simbhaoli Sugars --     Click for Stock Price Details
4.  Gayatri Sugars--          Click for Stock Price Details
5. Dwarikesh Sugars --    Click for Stock Price Details
6. Ponni Sugars Erode. --Click for Stock Price Details
   
   
   
    

"HAPPY INVESTING"

NHPC IPO - The new 'blockbuster'

The recent market rally has given the much needed impetus to the IPO season and the latest one to jump this bandwagon is NHPC. The preliminary data shows that it has been oversubscribed by 7 times. Both from the short-term as well as long-term point, it seems to be a good pick . In short-term , investors can pocket a handsome return on account of listing gains and in long-term this company will offer excellent returns by selling clean energy.

Also investing in NHPC IPO will be an intelligent move as it is from the power sector which is the flavour of the season and has excellent growth prospects considering the huge untapped hydel potential we have in India. Also coming from the stable of govt., this IPO has an edge over others as govt. will ensure that the IPO is listed at a 'good' premium to earn the investor's faith. The success of NHPC would fuel the scope of further disinvestment in other govt. entities.This will be a good bet in the long run and it is essential to remain invested in this company to reap huge benefits.

The valuation seems to be perfect and this may tilt the balance in its favour. In grey market , it is running at a premium of Rs. 10 and above which means that the stock may be listed somewhere around Rs.46. Seeing the current subscription level, it seems to be difficult to get the required allotments. But there is no harm in going for it. The only cause of concern is the market sentiments at the time of listing as any negative sentiment can drive the prices southwards. But the govt. has enough financial muscle to ensure its 'smooth' listing and the prices running southwards seem to be a remote possibility, although it can't be ruled out.

"Happy Investing."

Market Outlook- Tough times ahead

With the monsoon playing hide-and-seek with us, the problems are only going to aggravate and this might prove to be a red signal to the recent rally which the market witnessed. The monsoon problem appears to be more severe than we had anticipated.The govt. may now have to come up with relief packages to support the struggling farmers who are highly dependent on monsoons for agriculture.The problem of food security might crop up due to poor monsoons and the govt. might have to build up huge reserves.

But poor monsoon is not only responsible for huge selling pressure which the sensex witnessed in the last two days.The market had run up sharply in the last few days so a correction was definitely on the cards.

But still 'intelligent investors' can make the most of this volatile market by taking some calculated risks.One commodity which has shown a continuous uptrend for the past couple of months is sugar . The prices are continuously rising and the poor monsoon may drive the prices of this commodity northwards. The prices have nearly doubled since the last few months. This may create a big hole in our pocket by increasing the household budget and but for sugar companies its a much-awaited 'business' time. So taking positions in sugar stocks like Balrampur Chini and Triveni Engineering will help us to capitalize the price rise in this commodity. And weak monsoon forecasts will only boost the profits of these companies. The target for Balrampur Chini is Rs.150 and for Triveni Engineering it is Rs.130. So it makes a good business sense to ride the upward trend the of these stocks and thereby pocketing handsome profit on the way.

Due to high volatility of these stocks, a cautious approach is needed while entering in these stocks.

"Happy Investing."

Adani Power IPO- Is it really a blockbuster ?

As I was going through the newspaper today, my eyes stopped at one of the headlines which announced :" Adani Power IPO is a blockbuster". I wonder whether it really is. But the media is working full time to portray as the biggest hit in present scenario as it has been over-subscribed 21 times. Clearly this was an intelligent move by the company to encash the positive market sentiment which is giving the much needed impetus to the sensex in its upward rally. But how long this rally will last is also a matter of debate ?

We should not forget the Reliance Power IPO which is the biggest hit of all times. There was nothing wrong with the Reliance Power IPO except the timing. But you never know about the market behaviour and its practically impossible to time the market. No one saw the economic recession coming and this company became its biggest victim. The mania that surrounded the latter last year does not seem to be there this time around. But given the current market conditions, even much lower subscription numbers for Adani's IPO are being touted as 'blockbuster'.

But is it really worth investing in IPO such turbulent market conditions. I personally think that let the company test the market for 2-3 months and then go for it if its performnce is in line with the expectations.

Many of my colleagues(Vijay Panpalia & others) have invested in this IPO in the hope of getting handsome returns. I don't doubt their business acumen but i do feel that this was not the right move. But they are also proven masters of this game and may chalk out some strategy to make the most of it. The prominent strategy being selling this once it touches 130 level which it will certainly reach. So everyone is trying to make the most of the recent market sentiment in his or her own way.

I have my own reasons for not investing in this IPO. The first and the foremost reason being its overvaluation. In my opinion the correct valuation would have been around Rs. 70-75. After all, investors have been offered shares in these companies, when these have no business revenues or profits to boast of. And nothing's going to come for the next 2-3 years as well since the power projects have along gestation period. Retail investors are again been made to see 'Power' as a 'hot' sector. We hope they do not burn their hand again given that these IPOs have been sold not on real company profits, but on imaginary profits that are 'likely' to come a few years down the line.

I am not against this IPO or any other but i do feel that investors should do their homework before investing their hard earned money.

" Happy investing."