People beam in so many things into your drawing rooms.So do they in my drawing room.And when it comes to business channel even the viewer feels he is part of corporate India.But the fun is does anyone on those channels or we in our drawing room really understand what we talk about economics.Jury and opinions both are open about this and so every one is entitled to have his opinion.
Coming to the the point, India is facing a problem of inflation and when it is inflation governments have goose bums.The problem is we hardly understand the problem. The problem started way back in in 2009. And at the same time the FII's were pulling out of our stock markets. So the noise was markets are crashing and we will have current account deficit. Then came May 16 UPA 2 voted back in historic verdict and FII's started pouring out whatever they had into Indian equities and boom we started a party on Dalal Street. But "Rain Gods" ( i call them La Nina and El Nino cousins) weren't that amused and we had below normal monsoons. And then started the problem of spiraling inflation in agri-commodities.The problem got a nomenclature from pseudo business pundits on channels as "Food Inflation".Anyways everybody is entitled to do so after all its your Fundamental Right under Article.20.
Well the fun wasn't ending there we started having a big baggage of export deficit. Again we had this problem of current account deficit so we knew we needed help somebody has to pour in money. And we(all emerging markets or third world countries of yester-years) have a very good friend sitting at FED Reserve Big Ben. Actually it amuses me whether printing money is a passion for him or just a compulsion.Recorded economics of last few hundred years just seems to make to impression on him. What on earth makes him think that people get out of economic crisis by printing money. But Mr.Ben Bernake just feels that we can print his way out of any economic problems. If that was the case Bangladesh would be richest country in the world because they print lots of money.But it seems that the just wants to defy any economic theory of past and create a new one.So back to point, our friend start printing money and FII's started pumping it into India. The party started and Dalal Street bull got steroids to run. Estimated 14 billion dollars made it to Indian markets and we hot 20000.So we should thank Ben for doing this but then we all should have problems with him.
This money that is flowing into India was basically meant to ease the recession in US and fix problems in there but instead it is flowing in markets like ours. Add to it it is creating large amounts of liquidity in domestic markets and again helping inflation. The RBI governor was right when he seemed concerned about the inflows and there impact on inflation.Because irrespective of what monetary tightening he does here he cannot do anything substantial to curb inflation if this FII money keeps coming.
The dilemma is we have a completely integrated capital market with the western world so whatever happens there ripples are felt here.And we are a capital thirsty economy so we have to dance to FII's tunes and allow them to pump money infact welcome it.The western world is exporting its recession via inflation to us. They have a problem of deflation and that is creating inflation here. At least we have found our friends "Rain Gods" who have taken care of us this year and we have good monsoons. and since US & Europe are still fighting recession so we don't have problem of spiraling industrial commodity prices.
But the real problem is , somebody in New York was irresponsible and he contributed for this big recession and poor man working under NREGA in India has to bear the repercussions of his irresponsible spending. Its so unfair for my Indian countrymen but that is a sorry state of today's economic world ."Like it or hate it we have to live with it".
Friday, September 24, 2010
Monday, September 20, 2010
New orbit opened
By closing above 5900 and sustaining there the Nifty has opened up targets of 6221 in the short and above that 7000.It is a trending bull market which well maintain its trend even with a 5-7% blips.
Now the orbit we have opened is phenomenal one I dare say this but all indicators on technicals and fundamentals indicate a sign of 56000 on Sensex and 17000 on Nifty but the second quarter of CY2014.
Only risk is macro economic imbalance that has developed on current account.
Regarding the double dip the chances of that happening are bleak.US would go through a phase of 1-1.5% growth rate with lots of liquidity gushing into the system.The Chinese bubble is tough to understand but we feel that Chinese economy cannot sustain unless US consumption picks up. All economic theories are going to catch up with China and it would now go into a slow growth and a violent internal problems.China will not outpace India in growth now on .India's economic growth is likely to breach the single digit mark.Double digit GDP will become a reality in India. The Indian tiger has finally arrived on world scene. The new orbital of economic growth is going to push India to a consumption market of enormous size. Well have double our per capita to $1100 in five years. Now when we shall double this in next 3 years we will usher in a huge consumption boom. This is a exponential consumption lead growth curve which we are just beginning.Look at consumption stocks and hold them.Don't buy because somebody recommended you but because you understood it. Warren Buffet missed the "dot com boom" but he still beats the benchmarks because he understands what he buys.
If you use a toothpaste, buy at a mall, use a soap, drive a car or even use a TV or Watch , buy the stock in the listed space of the same item. Spotting stocks is easy but the conviction to hold it is important. Remember smoking can be injurious to health or even consuming alcohol but buying that manufacturing company can always improve your financial health.Understand and buy stocks. If you have your account with a broker buy his listed parent or even the bank you go to and operate for along time. Be a customer as well as share holder of businesses you have conviction in.
Its not when you buy is important its what you buy is important.Prices in markets are game of money and demand supply. But businesses are sustainable and generate true wealth if managed properly and held for long periods of time. Always expecting returns of more than 20% annually is unreasonable and dangerous.Because Ambanis, Tatas, Birlas and Mittals do put in their day in and day out to generate returns close to 20-22% annually. Its such a irony that we think we can outfox them by generating returns in excess. 20% annual return when compounded creates huge amounts of wealth. So keep investing and stop speculating.
HAPPY INVESTING TO ALL!!!!!
Now the orbit we have opened is phenomenal one I dare say this but all indicators on technicals and fundamentals indicate a sign of 56000 on Sensex and 17000 on Nifty but the second quarter of CY2014.
Only risk is macro economic imbalance that has developed on current account.
Regarding the double dip the chances of that happening are bleak.US would go through a phase of 1-1.5% growth rate with lots of liquidity gushing into the system.The Chinese bubble is tough to understand but we feel that Chinese economy cannot sustain unless US consumption picks up. All economic theories are going to catch up with China and it would now go into a slow growth and a violent internal problems.China will not outpace India in growth now on .India's economic growth is likely to breach the single digit mark.Double digit GDP will become a reality in India. The Indian tiger has finally arrived on world scene. The new orbital of economic growth is going to push India to a consumption market of enormous size. Well have double our per capita to $1100 in five years. Now when we shall double this in next 3 years we will usher in a huge consumption boom. This is a exponential consumption lead growth curve which we are just beginning.Look at consumption stocks and hold them.Don't buy because somebody recommended you but because you understood it. Warren Buffet missed the "dot com boom" but he still beats the benchmarks because he understands what he buys.
If you use a toothpaste, buy at a mall, use a soap, drive a car or even use a TV or Watch , buy the stock in the listed space of the same item. Spotting stocks is easy but the conviction to hold it is important. Remember smoking can be injurious to health or even consuming alcohol but buying that manufacturing company can always improve your financial health.Understand and buy stocks. If you have your account with a broker buy his listed parent or even the bank you go to and operate for along time. Be a customer as well as share holder of businesses you have conviction in.
Its not when you buy is important its what you buy is important.Prices in markets are game of money and demand supply. But businesses are sustainable and generate true wealth if managed properly and held for long periods of time. Always expecting returns of more than 20% annually is unreasonable and dangerous.Because Ambanis, Tatas, Birlas and Mittals do put in their day in and day out to generate returns close to 20-22% annually. Its such a irony that we think we can outfox them by generating returns in excess. 20% annual return when compounded creates huge amounts of wealth. So keep investing and stop speculating.
HAPPY INVESTING TO ALL!!!!!
Thursday, September 16, 2010
5900 very crucial
We need to breach above 5900 and stay there or else we shall fall very fast by about 900 points close to 5000-5100 levels.
Be cautious double top formation taking place at 5900 rally might just halt and we may fall really fast from here to 5050 levels be very cautious in this range itself, we have changed our over bullish stand because of some signaling indicators.
We need a close above 5900 soon for a sustained rally to 6221 but else we will fall really in the next month to 5100 levels.
Remember we are trading at 25 times on trailing basis and at 22x FY11 and 18x FY12.
Buy some puts on Nifty and hedge your positions.
Be cautious double top formation taking place at 5900 rally might just halt and we may fall really fast from here to 5050 levels be very cautious in this range itself, we have changed our over bullish stand because of some signaling indicators.
We need a close above 5900 soon for a sustained rally to 6221 but else we will fall really in the next month to 5100 levels.
Remember we are trading at 25 times on trailing basis and at 22x FY11 and 18x FY12.
Buy some puts on Nifty and hedge your positions.
This is a serious move
People are missing a point this ferocious move in the markets is serious one.
Its not just charts are being breached its like the bull run is going beserk.
Its not just charts are being breached its like the bull run is going beserk.
Wednesday, September 15, 2010
New positions
Reliance industries is breaking out of a range like the market is buy Reliance around 1000 for a 100-150 points rally will lead next leg of this rally don't forget to buy.
Tuesday, September 14, 2010
We are running too fast
This rally is running too fast to digest. Too much of money is running for too few stocks. We need to consolidate or else bubble will start forming for medium term correction.
Technically no resistances look ahead until 6357 previous top.
It was during Dec 2007 when we got similarly charged for a fast blowout upto Jan 2008.
Watch out for the volatility. Once we get volatility coming into the markets just start turning cautious.
Keep a close eye in INDIA VIX and not on what analyst say.
Indian markets trend only in low volatility and stop watching any business channel all idiots who have not made a single rupee in their life are advising you.
The day the stop being cautious and turn bullish you turn bearish and sell whatever u have in your portfolio.
Technically no resistances look ahead until 6357 previous top.
It was during Dec 2007 when we got similarly charged for a fast blowout upto Jan 2008.
Watch out for the volatility. Once we get volatility coming into the markets just start turning cautious.
Keep a close eye in INDIA VIX and not on what analyst say.
Indian markets trend only in low volatility and stop watching any business channel all idiots who have not made a single rupee in their life are advising you.
The day the stop being cautious and turn bullish you turn bearish and sell whatever u have in your portfolio.
Monday, September 13, 2010
MARKETS UPDATE
Nifty trading at 23 times this years earnings so this rally may lead to a abrupt correction. We are looking for levels like 6221 and 6600 on Nifty but we will surely turn bearish once we reach levels close to 6300.
Stock specific buys:-
IDBI at 140 very safe stock for long term as well as short term.
Reliance Capital at 780 is a great long term buy likely to hit 3000 by 2012.
Be cautious about markets only good news is we are trading at 3.7 times book which is comforting
because usually we correct once we at 5 times plus. So this aspect opens up range upto 7000 on NIFTY for rallying.
But markets looking very likely to hit new high and only those investors who have risk taking appetite should be aggressive in short term.
Stock specific buys:-
IDBI at 140 very safe stock for long term as well as short term.
Reliance Capital at 780 is a great long term buy likely to hit 3000 by 2012.
Be cautious about markets only good news is we are trading at 3.7 times book which is comforting
because usually we correct once we at 5 times plus. So this aspect opens up range upto 7000 on NIFTY for rallying.
But markets looking very likely to hit new high and only those investors who have risk taking appetite should be aggressive in short term.
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