LONG TIME NO SEE!!!!

Hai friends, it has been long time since I wrote in my blog. The Indian stock market is going from strength to strength, atleast Indexwise, much again my expectation of a good correction from 5400-5500(Nifty) levels to 5000 levels. but many of my market friends say that they are not able to make money as most of the shares in their portfolio are not moving up. So it is only the FII money which is propelling the index to newer heights. Most of the problems in the western world are still far from being resolved with TIME being the only healer. But the outlook for India in particular, among emerging markets, is quite positive inspite of all its inherent problems. I am happy that the stocks I have been recommending are doing well, like Spicejet, INOX Leisure, Cairn India and IFCI to name a few. I am still convinced that there will be a sharp correction of 300-400 points in Nifty and 1000-1200 points in Sensex sometime soon but when and from which level is really difficult to predict. Lets wait and see!!!

SHORT TERM EXCITEMENT ON OMCs

Dear Friends,

It has been a long time since I posted an article in my blog. The sudden change in my job and return to India from Saudi Arabia and other committments at home kept me busy.
Like I have written in my last article dated 27th March, the Indices are going nowhere but 5-7% up and down for the past 9 months. Of course individual stock stories are playing out nicely either on corporate/sector developments or on manipulation.

Last week, the UPA Govt mustered all its courage to announce a full decontrol on petrol and a partial decontrol on diesel. Kerosene and LPG prices were hiked but they will continue to be under Govt control.And predictably,the famous media channels and their anchors/analysts gave too much hype about the same. on top of their euphoric voices, they mislead the Investors by saying that any reduction in Global oil prices will be beneficial to them. I fail to understand how???

Let us first analyse the issue clearly:

1. The decontrol is NOT total and Govt has retained the right to intervene anytime whenever it feels that the global oil prices have gone up TOO HIGH(which is highly subjective)

2. While the OMCs(OIL MARKETING COMPANIES) should reduce the selling prices when there is a fall in crude prices, they can not increase them beyond a level due to various factors like Govt intervention, inflation and others.

3. The increase in prices or the partial decontrol only changes the cash flow position of the OMCs and not the profitability. Previously the shortfall in prices were met by the Govt as OIL BONDS which these companies were showing as revenue. Now they are replaced by market prices. At the most, they will have some savings in their interest and administrative costs. Thats all.

So I dont understand, how these companies will be benefitted when there is a fall in global crude prices. Of course, any reform process will have a long term benefit of reducing the Budget deficit and so looked upon as positive by long term investors, be it FIIs or others. For the short term a 10-12% rise in the stock prices,more than reflect the positive sentiments, which has already happened in the last couple of days. So be causious of buying at these levels as the global markets are sinking.

I will post a detailed article on the global market situation during the weekend. Take care. Happy Investing

CONSOLIDATION WITH DOWNWARD BIAS

This current phenomenon in Indian Stock Market is very strange. Contrary to the general saying that " THE SUM OF PARTS IS EQUAL TO THE TOTAL(IN SOME CASES MORE THAN THE TOTAL)", the stock market as a whole appears to be going up but many sectors/
stocks are trading lower. Just a simple example. The Sensex on 30th September 2009 was at 16500 and the NIFTY around 5000.Today after 6 months, the SENSEX is just trading 6% more than that and the NIFTY also at 6% more. But so many sectors like Sugar,Brokerage,Real estate & Infra have fallen more than 10-20% during this 6 months. Only Banking,IT and Auto sectors are showing some upside.

With the global economies still under tremendous pressure on growth and huge deficits to tackle, it would not be anytime soon that the markets will see new heights. So play safe and holdback atlest 40% of your portfolio as cash to deploy in the second half of the year when SENSEX can come down to 15000 and NIFTY to 4500 levels.

Regarding specific stocks, I continue to recommend SPICEJET with a revised target of 90-100 in 12 months. My new recommendations are INOX Leisure and CAIRN India with an upside potential of 30-40% in the next 12-18 months.

GOD SAVE AMERICA! IT IS BERNANKE AGAIN!!!!

It is not a surprise that President Obama supported him for a second term because he does not have an alternative. Atleast for overseeing the mess he has created and the after effects it is going to create, Ben Bernanke should be in office. Otherwise he may easily be let off the hook when the real effects are felt after a couple of years.
The Unemployment rate is steady close to 10%, the commercial real estate still under huge pressure, the bank closures happening at a steady pace(140 for thefull year 2009 from the 115 when I last wrote in October2009)and 10 for January 2010, the end of the tunnel is still far away before lights can be seen.

The global stock markets had a jolt last 10 days to the unsustainable rally of the last 10 months. Very few market participants were prepared for this and naturally they are caught again on the wrong foot. Now they search for reasons for this fall and point fingers to China' curb on bank lending, cooling of commodity prices and selling by hot heeled FIIs. In my humble opinion, the only reason should be valuations. It will be foolish to expect shares to keep going up after a run of this magnitude in 8-9 months.

I feel, the Auto and Oil Marketing companies have completed their upmove and so provide good opportunities on the short side whenever they go up 10-15% from the current levels(close to their recent peaks). I am happy to note that my recommendation of SPICEJET at 37 in October 2009 has done well. Hold on to it and add more whenever it falls to 48-50 levels.

Happy investing.

STOCK MARKETS AND OCTOBER

So it is proved once again that the month of October is not good for Stock markets. Over the past 80 years, starting from 1929, the month of October is always a bad omen for stock markets world over barring few exceptions.Remember how bullish/positive most of the market participants were just 10 days ago and see how things have changed dramatically. While the uptrend or so called strength during the last 2 months was labored and with declining volumes, the fall is sharp and swift to say the least. Like the famous words in U.S nowadays(TOO BIG TO FAIL) we are now hearing lot of voices now which say - IT WAS EXPECTED AND/OR I SAID SO. But as far as I know only very few stayed away for buying at 5000-5100 levels(nifty)even after the INDEX doubled in less than 7 months saying that every correction is a buying opportunity and lot of money is waiting in the sidelines to support the market at lower levels.

On the macro side, the closure of small regional banks in U.S is happening faster than the H1N1 deaths as the number has gone upto 115 as of yesterday(30/10/2009)from less than 100 at the start of the month(as mentioned in my article dated 2/10/2009).


Federal regulators close 9 banks, mostly in West; marks 115 US bank failures this year

And as per the Federal Reserve's own statement another 330 banks are in the watchlist.

The telecom sector was the worst performer last month in India, with the market leader BHARTI AIRTEL losing 1/3rd of its market cap. Amongst many others, one of our knowledgeable market analyst Mr.Ramesh Damani, candidly recommended short in telecom and long in Airways as a contrarian bet sometime ago and he is spot on in his reading.KUDOS to RAMESH DAMANI!!!!!!!(He also mentioned as one of the reason for the industry's tough times is the new emerging concept"GOOGLE VOICE"). By the Way,I am not a technology man by any stretch of imagination.

With U.S market in lot of mess still and the printing notes and giving stimulus is not the solution, the crisis created by 40-50 years of borrowing and spending can not be corrected in 1-2 years. My reading is that it should take atleast 5years if not more and so we are in for long testing years before the new highs are made in any sustainable basis in emerging markets or elsewhere. So learn to be patient and tone down your expectations. Happy investing. BEST OF LUCK.

MY ONLY RECOMMENDATION: SPICEJET(BSE:500285) CMP 37.05 TARGET Rs.60-75 in 12-15months

RALLY IN ITS FINAL LAP

The problems in the U.S economy are not only continuing inspite of the liberal printing of currency notes by the Federal Reserve but are actually worsening day by day. Take a look the recent economic news and numbers:

1.UNEMPLOYMENT

This is threatening to touch double digits soon but President Obama continues to guarantee jobs to everybody everyday.

2.CLOSER OF U.S.BANKS - REGIONAL

Regulators have shut Warren Bank in Warren, Mich., and two small banks in Colorado and Minnesota, boosting the number of failed U.S. banks this year to 98 as loan defaults rise in the worst financial climate in decades, as losses have mounted on commercial real estate and other soured loans in the wake of the financial crisis and the recession that has gripped the economy. The failures have cost the fund that insures bank deposits about $25 billion, the FDIC said Tuesday.

The fund has been so sapped by the wave of collapsing banks that it now has fallen into the red. The FDIC now expects the cost of bank failures to grow to about $100 billion over the next four years -- up from an estimate of $70 billion made in the spring. Most of the $100 billion in costs are expected to come from failures this year and next.

3.SOCIAL SECURITY COSTS

As more elderly people who are losing jobs are not able to get another job, they are opting for the social security and medical benefits which is already putting a strain in that fund.

4.The major buyer of U.S.Bonds/treasury paper today is China which is now open in its view that it wants an alternative currency to U.S.Dollar and that it is looking at investments which are in real assets/value than in paper form.So, if China decides to stop funding the borrowings of U.S then imagine what will be the result. This situation is without taking into a/c the possibility of China selling U.S bonds/treasury papers?

The stock markets world over are in their own self,going up on easy money flow and discounting the positives only like signs of growth(or worst is over). These same theories are talked about even in December 2007 when U.S Fed cut interest rates from 5.25% to 0.50%. The money flow was there and also lot of MONEY WAS WAITING IN THE SIDELINES to buy at every fall. But we all know that the money in the sidelines never came to the market even after SENSEX came down from 21000 to 7700.

I am fairly convinced that this liquidity driven rally is in its final laps now and may soon end gasping for breadth as it has no final target to end the race but will have to end on its own only due to exhaustion.BEST OF LUCK

Return of recklessness

Is it deficit MONSOON? Who is talking about it. Are the stock valuations fair and reasonable or overvalued? Nobody seems to care about it. Have all the negatives on corporate workings and financial tightness resolved? Who is bothered. All every trader and strangely the INVESTORS want is to make money, that too quickly and everyday. And for this, all of them want the market to keep going up. And the sentiment is adequately supported by the money supply and the cheerful faces of some business channels who are always talking about market going up only.

It is shameful that many analysts and business channels who talk about decoupling theory are also talking about Dow Futures and S&P 500's chart. Why should they be worried about them when they are convinced of our(INDIAN) markets decoupling? I dont understand.

I am convinced that the short term money(about which neither the Govt nor the SEBI is bothered) which is driving many stocks to unreasonable valuations will dry up soon and then we can see a collapse similar to what we saw after the Budget. The Dollar Index is suggesting a sharp reversal and the stocks and commodities will follow suit in the opposite direction. So be very choosy in buying, if at all you want to buy.Otherwise sit tight on your money and deploy it from 4200 to 3800 level. ALL THE BEST

For consultancy and advice contact: sairam_1983@yahoo.com

WHEN & WHERE IT WILL END??????????

It has been an eventful year for Stock markets worldwide, so rough and bumpy that it could challenge the Chennai Autorikshaw wallas.As all good things come to an end, the 5 year bull market also did the same, though the end was painful enough to remove all the happiness that the good times provided. And nobody knows as of today whether the pain is over or not.After scalling steadily from 3000(sensex)in April 2003 to 15600 in September 2008(which I thought was the peak),sensex became senseless after the cut in U.S.interest rates,which started on the 18th Spetember 2007 and went on to hit 21200 by December 2007. Now the U.S.interest rate is down to 0-0.25% but the same senseless SENSEX is down 50% from the top. So once again it is clearly established that market discounts the fundamentals far ahead(6-12months) of the actual events.
Now that the interest rates,commodity prices- particularly Crude Oil are all coming down, the buzzword in the market is SLOWDOWN. Now the slowdown has hit all sectors and the sentiment is full of gloom and doom. The last 2 negatives to come out in the open in the next 3-6 months are CORPORATE RESULTS and ELECTION. This also coincides with the expected TIME WISE Correction of 18 months.
So, in my opinion, it is time to list your PORTFOLIO CONSTITUANTS now and get ready for the next bull market. By March 2009 you should have invested atleast 15-20% of your surplus and by June 2009 atleast 40-50%. To know which sector and what shares,
please wait for sometime or write to me at: sairam_1983@yahoo.com. Take care. Have a great year ahead.

HERE COMES THE CENTURY

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TIME TO BUY????????????

It was panic selling all around the world in the last week of October 2008.Nobody knew which market was following the other, as it became a vicious circle with one falling after another.Then came a sharp pullback of 30 to 50% in most of the markets in a quick time before grinding lower again. The Friday(21st Nov) rally starting from Hongkong, minutes before the Indian Markets opened, threw a surprise to many in India after a fall of more than 400 points in Dow on Thursday.Again it looks like a temporary relief rally after 7-8 days of continuous fall.

Now the question in Every body's mind is, when and where will we see the market bottom. While the numbers swings widely from 1600 -1900 for nifty and 6200-6900 for sensex, there are a vast majority who are convinced that there are screaming valuations in many front line and mid cap shares. But still only 1 out of 10 are buying and a lot more who actually wants to buy dont have the money to buy. And as it happens always near the bottom, those who are having money to invest prefer to keep quite, while many others are selling their shares either in fruastration or on the hope that they can buy them back at lower prices later.

I am of the opinion that the October low of 2252(NIFTY) and 7698(SENSEX)may not be broken deeply. I would put a 75% chance for the same. I am reasonably convinced that it is time to build one's portfolio and not worry about the bottom which is only a number. I am of the opinion that with a downward risk of 10-15% there are many stocks which can give a return of 50 to 100% in the next 2-3 years. My assumption is based on quite a few factors which I can not divulge in open as it is my source of income.

So go ahead and start buying in small quantities and on the days of sharp fall. First identify the shares you want to buy and make a clear plan of investing. Or else contact me at sairam_1983@yahoo.com

HAPPY INVESTING.

IS THE END IN SIGHT?????????????

In my last article dated 29th september, I predicted the Nifty to fall to 3425-3475 levels in 3 months time but truly did not expect the markets to tank like this in just 2 weeks. The Nifty touched a low of 3099.90 yesterday making it a significant bottom for the time being. Now all the bad/negative news are out in the open like:

1.The Financial mess in U.S housing & banking sectors

2.The Slow down in Indian Corporate growth & earnings

3.The extreme pessimism in Job markets in India and world over

4.The panic created in few Gaint Indian Corporates like ICICI Bank & Jet Airways similar to the collapse of few gaints in U.S.A & Europe.

5.The expectations that another 4-5 million houses will come under default in U.S

and so on & so forth. While markets may fall for 1 or 2 days when the negative news actually comes out in the open, the fear of unknown is largely discounted. And the concerted efforts taken by the Regulatory Authorities world over will start bearing fruit in the next 3-6 months.

As far the Indian stock market, 3000-3100(nifty) seems to be a good bottom for now with strong resistence between 3525-3650. I recommend buying Nifty close to the support levels of 3000-3100 for decent profits.Even if the Nifty is to breach 3000level, it will bounce back quickly & sharply to make sure that you make an exit by protecting your capital.

I am also recommending to BUY ICICI Bank around 360-380 & Praj Industries @75-80 range for decent trading profits.

If you are still not sure of putting money directly in stocks or managing it yourself,please feel free to contact me at sairam_1983@yahoo.com for an attractive assured return of 18% and the 100% safety of your capital.

9.25am(IST),17th October 2008

IS IT THE BEGINNING OR THE END??????????

After watching many financial Institutions shuting shop in the last 2-3 months, the question in everybody's mind is - where all this will stop? For more than a year since the sub-prime crisis broke out, the U.S.Govt and its high flying corporate big-wigs were in a denial mode. They kept saying(intentionally and/or foolishly) that the sub prime crisis will not spread to the overall economy and that the financial instituions carrying billions of dollars of these toxic securities are safe and so on. Now it is open to all to see that years of constant borrowing and spending is costing the U.S.A very badly and it is dragging down the world along with it.

I was surprised and little shocked that many pundits and analysts in India were talking about a phenomenon called "De Coupling" theory.When the going was good - they wanted all the money from the west and when the west had a problem, they were talking as if India is immune to the troubles of the west.And please remember that while they(FII's) invested many many billions in India markets in the last4-5 years of bull phase, they have withdrawn only about 9 billion U.S.dollars since the fall started from 21200(sensex) in January2008.

As it happens in any bull market, the real estate,construction & infrastructure sector shares went through the roof in valuations and the stories were properly in place to justify those hefty valuations. Now these shares have lost anywhere between 60 -80% from their all time highs.

Though the nifty broke the previous low of 3790 today, it had a nice pullback to close at 3850 giving some hope for the bulls/optimists.But I feel this pullback maybe short lived and Nifty is sure to break todays low of 3775 and come down to around 3425-3475 in the next 3 months. But I am still not sure whether that will be the bottom for the market. I wish I know the answer. So, till then, like all of you, I will also wait (im)patiently.

TIME TO KEEP YOUR EARS OPEN

It has been a long time since I posted my last article on stock market. The last 2 months have been hectic for me in the form of travel,both personally&professionally.
The stock market, throughout the world in general, and India in particular are in a strong downwide momentum and gaining speed as it breaches important support levels.
The Nifty, after a brief rally upto 5275-5300 in May, has become distinctively weak and all subsequent rallies were quickly sold into turning any investment buying into loss for the time being.
Now with Inflation at 11.50% and crude at 140 dollars/barrel, market is in no mood to reward any buyers or contrarians.Though lot of analysts and fund managers are expecting a fall of only 8-10% fall in Index from these levels, nobody is willing to buy shares for long term as there are too many uncertainities surrounding the market.
In my opinion, these levels of 4000-4100 may hold on as bottom for this July series and may move upto 4350-4375 on the upside.Keep your ears open and as more and more people talk negatively abt market in general and index levels in particular, start investing steadily for doubling your money in 3 years time.Best of Luck!

HOW MUCH THEY CAN CORRECT?????

It is now very clear that the 5year old bull market which started April 2003 has ended in India with more and more number of stocks hitting 52 weeks low everyday.And as usual people are still not accepting reality and are buying at every fall or every feeble rise thinking that the bottom is nearby.These are not investors(atleast most of them) who is buying with 2to3years holding in mind.But they may become such long term investors because of market conditions.So they are long term investors not by choice but by force.
Now the discussion going around in the market circles and the media is how long the market can keep falling? How much a DLF or Punj Loyd or Reliance fall? I am giving here some statistics for you to understand how much stock prices can fall, especially after the bull market peaks with crazy valuations for any sector or for the market as a whole.

If you take the last 20years, the 1st major bull market we saw was in 1991-1992 - the Harshad Mehta(BIG BULL)Bull market.Cement companies were the heros in that bull market.

1.ACC: The share touched a peak of Rs.400.97(adjusted for Bonus,rights and split)in April 1992 and then fell to touch a low of 84.47 in June 1993 - a fall of 78.93%
That 1992 high was crossed again only in July 2005 - a long wait of 13years.

2.GRASIM:Touched a high of Rs.700.00 in April 1992 and then kept falling for the next 7yeas to touch a low of Rs.113.00 in April 1999 - a fall of 83.85%

3.MADRAS CEMENT:Touched a high of Rs.1200.00 on October 1994(the mini boom when FIIs were allowed to invest in indian stock market) The share touched a low of Rs.287.00 a fall of 76.08%

4.INDIAN RAYON(now Aditya Birla Nuvo)Touched a high of Rs.493.00 in August 1994 and a low of Rs.43.50 in May 2000 - a fall of 91.17%

5.INDIA CEMENT: Touched a high of Rs.169.19 in September 1994 and a low of Rs.12.85in April 2003 - a fall of 92.40%

Now let us see the I.T bull market and its aftereffects in 2000-2001.

1.INFOSYS: The share touched a high of Rs.1726.61 in March 2000 and then crashed to a low of Rs.269.50 in October 2001 - a whopping fall of 84.39% for one of the best companies in India.

2.WIPRO: The share touched a high of Rs.1633.32(in absolute terms this Rs.10/-face value share touched Rs.40000/- duering its peak)and crashed to a low of Rs.131.87 in May 2003 - a fall of 91.92%

3.SATHYAM COMPUTER: Touched a high of Rs.727.50 in April 2000 and a low of Rs.55.50 in September 2001 - a fall of 92.37%

And remember except Infosys none of the other I.T companies crossed their all time highs after 7 years till today
Also remember, that the index normally corrects from the peak of bull market to the end of correction anywhere between 40 to 60%.So from the high of 21200 touched in January 2008, it can correct down to 12720(40%) or 10600(50%) if not 8480 which a 60%correction for the sensex from its peak.

So have these points in mind and dont be in a rush to buy shares in Infrastructure, power,real estate and construction sectors as they still have got lot of room to correct.ALL the best.

DOESES OF OXYGEN FAILING???????

The expected sequence of events are unfolding in their own classic way.First the relentless easing of interest rates,easy liquidity,over leverage leading to heating up of asset prices and that leading to over optimism and greed.While it is understandable that an individual or an Institution takes reasonable risks in the money making exercise, it is indeed suprising and sometimes shocking that so called or perceived big and safe ones resort to excessive leverage or risks far beyond any permissible levels of imagination.It is more so shocking to see that such large institutions resort to the most common practice of individuals who are in the last stages of becoming bankrupt or insolvent known as "Teaming and Leading" - an exercise of borrowing from one and returning to another to keep floating.And also these large instituions resorted to borrowing for short term to meet the short term and in some case long term committments - a must no by any prudent money manager. So as the supply of short term money dried up these institution chock and suffer massive attacks like run on the bank and/or bankruptcy.It happened in the case of the bank"NORTHERN ROCK" in England last last year and it may well happen to"BEAR STEARNS" in U.S sooner or later.And I feel this "Bear Stearns" case is just the beginning of the bigger failures we may see in the U.S banking system which will have its logical contageon effect in world financial markets.
Coming back to our Indian Stock markets, With economy slowing down,corporate profits likely to shrink in the next few quarters and valuations still not cheap in any of the sectors that propelled the market to dizzy heights, the correction is far from over.Not many may remember that after the 2000-2001 ICE(Information,Communication & Entertainment)meltdown, even the topline shares like Infosys,Satyam and Wipro corrected 70 to 80% from their peak prices and the index corrected more than 50%While many may have stopped buying for the time being now, many will start selling from nowon only,first the liquid ones and then the others. With hardly 10 stocks hitting new highs(52week) and 300 stocks hitting new lows, we are clearly in for a prolonged bearish phase if people still dont want to call it as bear market yet.With these local and global factors,I will not be surprised to see Sensex around 12200 to 12500 and Nifty around 3700-3800.You may not be able to buy stocks at their lowest prices but certainly you can buy a lot of them at 20-30% lower than current prices. You may not be able to time the bottom but you can surely potpone your buying for the time being.Best of Luck!!!!

PAYING DEARLY FOR PLAYING EXCESS

The predictable results are on their way. Afer falling a good 16% in January alone, the Indian Stock Market continued to show its weakness in February also. And adding to the unfolding stories of misery are the devolvement or withdrawal of IPOs like Wockhardt Hospitals and Emmar-MGF. As I had observed in my posts in October and November 2007, the market went up from 15500 to 21200 without any change in fundamendals but only with sheer madness under the pretext that the interest rate cuts in U.S will help moneyflows to Emerging Markets. And I am sure atleast a small percentage of that madness was contributed by the TV Channels who were celeberating every 1000 points rise by cutting cakes and wearing clown caps, not knowing that market will make them look so soon. I am also surprised by the fact that lot of them are still hoping for an uptrend in the market as quickly as in february under the pretext that the refund money of Reliance Power IPO will flow into the market or the pre budget rally and all. Again they make the same mistake of talking abt cheap valuation because the prices are 30-50% cheaper than they were 1 or 2 months ago. In my view, this bull market which started way back in April 2003 with SENSEX at 3000 has risen 18000 points. So a correction of 50% of that say 9000points is a possibility. That makes it a possibility that Sensex can come down to 12200(21200-9000) but taking into account the corporte growth and PE expansion it may halt between 14000 to 15000. The credit crisis in U.S and Europe are far from over though the steps taken recently may start bearing fruit in the next 6 months or so. But remember we, in Indian Market have to catch up with lot of downside as the virtual collapse of IPO market and the OVERSUPPLY and OVER INVESTMENT in Real Estate sector will show their ugly faces in the coming days. So dont be in any hurry to invest now. Even 3 months later you may get many stocks at the same rates if not lower. So plan your taxes, enjoy your summer holidays and spend time with family and friends rather than with Business channels and stock market. HAVE A GOOD TIME.

The insanity gets a break

For the first time since the U.S Fed started cutting interest rates in September2007,
the Indian stock market stopped its manic and insane bull run for this week after galloping from 15500 to 21200. It simply disregarded the global events like the write down of billions of dollars and all the big banks of the world's largest economy running for cover to shore up capital and their balance sheets. And adding to the mania was the theory of Growing indian economy, pouring money into Indian markets and new found theory of demerging several divisions of a company to take advantage of the insanity.

Just look at the following absurds.

1.Reliance Energy seperates Reliance Power and while Anil ambani acquires shares in Reliance power at Rs.17/- per share, issues it to the public at 450 and that in turn expects to get listed at 800-900. And the project will take 6 years to equal the capacities of NTPC or Tata Power which are trading at significant discounts. It is not anything but insanity?

2. The High court of a state government just recommends a lower price to be paid by the sugar companies for the procurement of sugar cane and immediately all the sugar shares(even the ones which are not in that state) jump 10-15-20% as if all is rosy from then on. The forgotten facts are that they are all already bleeding with losses last 2 quarters, the crushing for the current season got delayed by 30-35 days and the sugar prices in the international market is still near its 1 year low.

3. The so called oil marketing Navrathnas loose crs of money everyday and the annual loss is estimated to be around Rs.70,000/- crs due to under recovery and subsidies but the government does not allow them to raise prices even though it has OFFICIALLY
dismantled the APM - Administered Price Mechanism way back in 2002.

4. The U.S dollor continues to plunge across all major currencies and most of the I.T majors accepting that further strengthening of rupee will surely affect the margins. Thats is why when the sensex is just 10% off its all time highs as of yesterday(18th Jan 2008) most of the I.T heavyweights like Infosys,NIIT Tech,Patni Computers,Satyam and Tech Mahindra hit their 52 week lows.

5. Now if the real estate boom was predominently aiming at these IT bigboys for commercial purposes and their young,aspiring and well paid engineers for residential purposes, how will that sustain when the industry is reeling under margin pressure and slowdown.

The negatives goes on and on but the stock market is disregarding all these and on the contrary went from strength to strength(or shall we say speculation to over speculation)only to create a bubble that finally went bust this week.

While many may think that this sharp fall is an opportunity to buy, I see a further fall of atleast 1000 points in sensex to 18000 levels and in case of worsening situations in U.S like bankruptcy, a possibility of 16500-17000. So get back your sanity and invest for long term.

WHERE THE MARKET IS HEADING?

Reuters India Technicals (Phil Smith)
You may see in the first graph that there was a gap opening created on 29th october which is now filled in this week's correction. There is one more big gap created when sensex opened with a big gap on 19th September after the 0.50% rate cut by U.S.Fed. It also coincides with the 61.8% retracement levels. Once the lower tops lower bottoms are confirmed in the coming days, we can be reasonably sure of seeing the sensex touching 15600 levels and if this happens over a period of 6-9 months then we would have had a time-wise correcton also. So be patient and accumulate your stocks slowly and steadyly. Happy Investing.

LETTER TO UDHAYAN MUKHARJEE

For the first time after many months, Indian stock market closed on the negative on all the five days of the week which included a short 1 hr auspecious Muhurat trading session. The arrogance(as Mr.Udhayan Mukharjee of TV 18 called it) with which the sensex crossed 20000 even after the P-Note issue, could not lost long as it has been proved so many times in the past.Even an act of Vengence, particularly by one who has failed before, can succeed but not an attitude of arrogance. Any cricket lover will still remember how arrogant Amir Sohail was, to show our Venkatesh Prasad where he will hit the ball and where he should keep his fielder and got out the very next ball and rightfully Venkatesh prasad with vengence showed him where the pavilion was. And our friend Udhayan Mukharjee went one step above that.After a conversation with the great investment guru mr.Mark Faber, who said the U.S economy and the Sub-prime crisis will be a catastrophe and even emerging markets will correct by 20-30%, Udhayan simply said that Mr.Mark Faber is saying this last 2 years and the market is only going up. He does not understand that Mr.Mark Faber is not like CNBC TV18 which sees the market every 5-10mnts and look for directions from Asia and Europe for a 50-100 points correction. People like Mark Faber make in depth study and invest in 10-15 yrs cycle and so will always be ahead of times. We all know how arrogant operators in Indian stock market in the past were punished not by anybody but primarily by their own weight of arrogance. We all know that nobody is consitantly right in market timings or stock picking. So taking a personal pride when somebody is wrong is an act of perversion and making a hue and cry when market falls is an act of helplessness. And for a person who is merely a reportor of the stock market happenings, both are unnecessary and unwarrented. Mr.Udhayan Mukharjee - MARKET WILL DO WHAT IT THINKS AND THE SCREEN WILL SHOW IT - You just do your work of reporting that and dont go gung-ho when market goes up and put down your face and voice when they are down. ALL THE BEST!!!!

20K conquered

29th october 2007 is a historic day in Indian Stock Market. The BSE Sensex crossed 20000 for the first time in its history - a phenominal performence considering that Sensex was just below 3000 in April 2003 when this Bull market started.In fact after touching a high of 6150 in March2000 during the I.T boom and then falling to a low of 2595, it took more than 4 years for Sensex to break 6150 again but has taken again just 4years to touch 20000, by no means a normal achievement.While many of the I.T shares have never seen their peak again and on the contratry still trading at huge losses after 7 years, this new bull rally is triggered by a lot of sectors like steel,cement,banking,real estate,contruction,infrastructure,power and so on. So the rally was certainly broad based and supported by large flows of foreign investment.
Though there were some pockets of speculation and over valuation, the market showed lot of resilience, particularly on the political front, and gain from strength to strength after every major correction.And like every bull market enough stories are said now to justify the valuations and infact suggesting even higer valuations because China is trading at higher PE, more foreign flows will come in because of the Indian growth story, the strengthening of Rupee and weakening of dollar and so on. Like many I was also on the camp that there will be a steep correction - time wise - and stayed with more than 50% in cash. But since nobody can time the market and I have seen more than twice these excesses getting evoparated quickly, I still prefer to see the opportunity loss rather than to invest fully and take actual loss and also not have money to buy when that correction actually happens.With Fed likely to cut rates again today, markets may rally once more to a new high before realising the seriousness of the trouble in U.S Economy at some point which will surely trigger a global sell off.