Tuesday, December 23, 2008

Mutual Fund investing - Know Your Customer acknowledgement

Here's a simple way to check your KYC compliance

If you wish to invest in excess of 50,000/- in mutual fund (MF), you need to be Know Your Client (KYC) compliant. Download the form from www.amfiinidia.com and submit, along with relevant documents (refer the form to know more about it) at any of the 250 terminals across India. Get a list of such terminals from Amfi website. Within a week or 10 days, you will receive your KYC acknowledgement confirming your KYC compliance. Submit a carbon copy of this acknowledgement every time you invest in a MF, along with your MF application form. 

However, if you misplace your original acknowledgement of KYC, or wish to check the status of your KYC compliance if you have carried out the procedures long time back but aren't sure of that now, visit http://www.cvlindia.com/ and click on the link on the site's home page that says 'Inquiry on KYC'. Type your PAN card number and you will get your KYC acknowledgment. Take a printout and simply, submit this. This way of getting your KYC acknowledgment is only possible if you have originally submitted PAN card copy as one of the supporting documents. 

Saturday, December 6, 2008

When is the next wave?

Is it really over? Or is the next wave around the corner? I am talking sub prime here. Yes, the damn thing isnt yet done with us. There are still plenty of unexploded grenades sitting out there in balance sheets of financial institutions in the US. It looks like the economies of the world are going to flounder for some more time.

Meanwhile the US dollar is balancing precariously on the back of the massive US fiscal deficit. With oil prices falling, less petro dollars are going into the coffers of the sheikhs and consequently less money flowing into traditional safe investment havens - US treasury bonds. With less demand for dollars to buy oil, there should be a fall of the dollar versus more stable currencies. However, given the economic scenario of avoiding risk at all costs, there is no equity market worth its salt now. In that scenario, money flows to the perceived safest investment in this climate, which historically is US treasury bonds. So the dollar might be stable because of this balance. Till the time that US fiscal imprudence crosses all boundaries and the pathetic fiscal situation causes a collapse in the dollar. Then we might well see a new world order in currency. In 2009? or 2010?

Saturday, October 25, 2008

Debt equity ratios

The plan now has to be a judicious mix of equity and debt in one's portfolio, plus a good element of real estate if not already there. You have to insure against capital erosion and give yourself a steady income with some element of debt in your portfolio. Bank FDs are offering 10+% now and FMPs are around the same, though with the potential for tax savings. However, FMPs carry some risk these days since you dont know the quality of corporate debt, but what doesnt carry risk :P

For the equity component, fresh investments have to be staggered over the next few months among Nifty Bees ETF and frontline stocks like L&T, NTPC, ITC, RIL, SBI, HDFC Bank, Bharti and maybe Jaiprakash.

At any given time, ensure that six months' salary is in Bank FD for emergency usage or if you get fired :-)

Wednesday, October 8, 2008

Benchmark Nifty BeES

With equity markets tumbling, one of the best and probably also one of the safest things to buy in stock market today is Nifty BeES. This is an exchange-traded fund (ETF) by Benchmark MF. It tracks the Nifty. No fund managerial risk involved here since ETFs are passively-managed funds, and the least tracking error amongst all ETFs / index funds. It also comes from the house of Benchmark MF- a MF that managed and specialises only in ETFs. Cost structure is also low here. 

This is a long-term product, so avoid it if you have a time horizon for a year or so. But if you're in for a long haul, Nifty BeES provides an excellent opportunity.

Sunday, October 5, 2008

Where is the Market heading

You can never time the bottom. The market is a few steps ahead than us. No body expected the downfall of the Investment banks of the stature of Lehman Brothers, Merril Lynch,WAMU,AIG ,Morgan Stanley and so on. They are institutions built over a period of several decades. The worst seems to be over. The latest bank in the casualty list is Wachovia bank. The Financial turmoil has an impact in the world market. The Funds have dried up and the cost of capital has shot up. The banks are extremely scary to lend. They have invoked the Bank guarantees and Stand by letter of credit issued by various US banks. The banks have also freezed the drawing power limits to various company's. This will certainly impact the performance of the various corporates. The YOY growth in EPS and Profits during the current year will be lot lower. The average Corporate growth should be in the range of about 15%. The inflation and higher interest rate will definitely have an impact on the corporate results.The Stock market seems to have factored this in the price correction. The Forward PE's based on trailing quarters will definitely be a lot lower. The Economic indicators still looks fine inspite of the fact that the Trade deficit has widened. The focus on infrastructure and Power projects looks really encouraging. Anything to do with power and infrastructure should do well.
My advice for investors with strong heart will be :Pick stocks with a longer time horizon.
Invest in diversified portfolio.
ETF(Exchange Traded funds) seems like a good bet. Invest in Gold funds on a monthly basis with a time horizon of a minimum period of 5 years.
FMP's(I am not a fan of it). The funds normally invests in un-secured papers and the returns are not so great. Mutual fund investments is lot preferred than FMP's. However, the nature of your investment will be purely based on your risk appetite.
Investment in Land also seems like an attactive proposition. However the liquidity is not so great. Investment in land can be looked into with a time horizon of 3+ years. Any land investment over a period of 3 years qualify under long term capital gains.

Personally, I am big fan of Stock market. The market will do good in long run and you can earn high returns only in Stock market. Picking diversified stock meticulously will never let you down.Do your own stock picking rather than relying on Mutual funds.

Blue chip stocks which can be considered investing into:

Tata Steel : The stock has fallen below 400
Tata motors: Can correct to 300 level. Good long term pick. Hold for a minimum period of 2 years where the company will start reeping benefits out of its overseas acquistions.
Sesa Goa
Seimens Ltd
Reliance Industries
IT stocks (Infosys,TCS and Wipro)
Tata Power
Godrej industries(Good chemical stock and land bank)
United Phosporous.
Dabur and Marico industries(FMCG company's) available at a song....

Disclaimer: These are recommendations based on my personal research. However, please exercise your reasonable deligence before your decide to invest.

Saturday, September 20, 2008

Time to invest...

After a week of extra-ordinary events that put the global financial market into a tailspin, it is time to think rationally, be a bit greedy now than be consumed with fear. The perfectionist in this art is showing the way. Whether it is a turning point or more bad news coming in few more months, in the long run the return will be satisfactory. Taking the plunge during these troubled times is better than buying during a bull market when you wait for correction to happen or worse buy at a higher value than a stock is worth.
This week I bought RIL, sesa goa, aban offshore, infosys.
Banking stocks may be contrarian pick now.

Other references:
How to Weather Market Panics
4 Steps to Protect Your Portfolio From the Financial Crisis

Thursday, September 18, 2008

Be a man, buy now

There is no guarantee that the markets wont go lower, that there wont be more financial institution failures. But I feel this is the bottom, or maybe 10% away from it at worst. So am starting to buy some good stocks now. Reliance, Infosys, Sesa Goa, JP Associates, Kalindee Rail Nirmaan, McDowell Holdings.

Saturday, September 13, 2008

My New picks

I added Both UB Holdings and Mcdowell holdings,Premier Explosives,IFB Agro,Rohit ferro,Adhunik Metals,Austin Engineer.
Both UB holdings and Mcdowell holdings have corrected by over 80% in the last 7 months.
The intrinsic value of Mcdowell holdings is about Rs.300. The stock is trading at Rs.120/-. This is a debt free company with a small capital base of 12 crores. The margin of safety at the current price is at 60%. The downward risk is low. They hold sizable chunks in United Breweries ltd, UB engineering and UB holdings ltd.
UB holdings is the holding company for United Spirits, United breweries,Kingfisher Airlines,etc. This stock is also attractively priced.
Both are value stocks. United Spirits is in recent news. They plan to dispose their treasury stocks and the market buzz is that the company is expecting in the range of Rs.1750+ for the stocks. UB has over 50% of market share in India .
Both Rohit Ferro and Adhunik metals do enjoy iron ore mining rights. The upside on the mining business is not fully factored in the pricing.Rohit ferro is available at an attractive PE of 3.
Austin engineers manufactures gears for the various huge machineries used in Sugar,Power and other infrastructure industries. The share is available at an attractive PE of 5.
My picks are basically for long term. If you are willing to hold on for a period of 18-24 months, the expected returns on CAGR basis will be in the range of 25%.

Wednesday, September 10, 2008


Unlike regular open-ended or closed-end mutual fund (MF) schemes that are open in their 'New Fund Offer' (NFO) period for around 20 to 21 days - or sometimes even for a month - fixed maturity plans (FMP) are open for a few days only. Companies require money for their daily needs on a regular basis, hence they tap various sources like banks and MFs, regularly. Hence, to keep the money supply going, and at the same time to tap the prevailing high interest rates as soon as possible, FMPs are launched in quick succession. 

It is also rare that your agent will push FMPs to you because FMPs are low-margin products. Unlike equity funds where agents earn as much as 2.25 per cent front-end commission (and trailing fees of up to 0.50 per cent for as long as you stay invested), FMPs have a very low cost structure. MFs earn only upto 0.50 to 0.75 per cent or so from your FMP, out of which they have to pay agents commission. Online brokerages also sell FMPs selectively. Kotak bank (online broker) and www.icicidirect.com do not, to the best of my knowledge. www.sharekhan.com does; it has a special FMP section on its internet trading website.  

So how do you buy an FMP then?
It's best to keep checking with your broker. He gets information of all the on-going FMPs. You have to take the initiative, because FMPs come and go very quickly. He may not want to go out of his way to sell you FMPs, but if you take the initiative and ask him, there are more chances of you coming to know. 

Scout MF websites. All MFs have details and application forms of on-going FMPs on their websites. Download the forms, fill them up (make sure you write 'DIRECT' in the agent's code box on the top part of your application form) and visit your nearest MF's office or its registrar & transfer agents' and submit the form. To get a list of 'point of acceptance', check out your MF's websites. 

If you are investing more than Rs 50,000, make sure your KYC is done. Also, ensure that you carry a copy of your PAN card. If you can carry your original PAN card, better. 

Where do we invest now?

Stocks are floundering with the global economic situation still very murky and massive financial messes still to be cleaned up in most US financial institutions' balance sheets (or not, since most are 'off the books' ;-)

Fixed income is far less than inflation, but it still looks like the best medium term place to park money :(

Sunday, September 7, 2008


...but watch out for the credit risk

With interest rates on the higher side, thanks to a host of factors like inflation, high oil prices, etc., fixed maturity plans (FMP) are offering attractive yields. FMPs are debt mutual fund (MF) schemes that come in duration of 1-month, 3-month, 6-month or a little over than a year to around a year and 18 months. These are closed-end schemes that invest in fixed-return instruments and then stay invested in them till maturity. They usually buy into instruments that mature a few days before the FMP itself matures. Since they stay invested in their underlying instruments and do not trade (unlike active bond funds), they eliminate the interest rate risk.

Although the market regulator, the securities and exchange board of India (Sebi), has banned MFs from assuring any return, most FMPs will tell you in advance (strictly off-the-record and through MF distributors) the indicative yield. This is the yield you are most likely to earn, but you need to stay invested till maturity. 

But in a run to be ahead of competition and thereby offer a higher yield, some FMPs invest in lower-rated instruments. A lower-rated instrument will offer a higher yield to the lender (FMP; since FMPs invest their money in these instruments) to compensate the FMP for taking on added risk. In the course of my work (I am a journalist by profession, with Outlook Money - a personal finance fortnightly) , I came to know about a prominent MF whose one FMP got into trouble recently. One of the debt papers in which it had invested, defaulted. The MF's parent company - itself a major financial powerhouse in India - had to step in, I am told, and make good the shortfall. The bad debt was then transferred to another FMP and thus rolled over. 

Typically, higher the indicative yield, better is an FMP. But don't just go for high-yielding FMPs. Look also at the MF's pedigree. An FMP, if selected well, offers better and tax-efficient returns than a bank fixed deposit. And the only way to keep apprised of the latest FMPs that are open in the market, is to get in touch with your distributor.  

Thursday, July 17, 2008

Where is the bottom?

Is the bottom around 12700? Or if the government falls next week and Oil goes to $200 I think we might see 9000... or who knows these days :)

But realistically, its a good time to look at your portfolio and keep cash ready for buying over the next few months.

It might be a good idea to buy some good MFs that are invested in a portfolio heavy with stocks you like. Its tough to decide which specific stocks to buy, so I am going the MF way, after making a few investments in some old favourites like Sesa, Aban, RIL etc.

Saturday, May 24, 2008

Texmaco & Reliance

Seems to be a good bet in the rail space. They manufacture wagons for Indian Railways and have a good order book. Recent results (Q4 Mar 2008) were superb and sales have doubled over the financial year 2007. At Rs 1550 the stock offers a good opportunity to counter rising oil prices and could be accumulated at every decline (about Rs 1400 would be a good rate to BUY).

Another stock to watch and buy on major corrections in the market is Reliance Industries. Its gas projects will come onstream in a few months and contribute to the top and bottom lines.

Sunday, April 13, 2008

Real opportunities

The next destination for investment in the real estate space around Bangalore is definitely Bidadi.

1. BMRDA township project awarded to DLF and its expected that in 3-4 years we will see something come up.
2. Industries already exist in the vicinity
3. Bangalore Metro

Plots are in the range of Rs 700/sqft at present. For a holding period of around 5 years, returns could be quite good.

Monday, April 7, 2008

Watch out for the next correction

The next correction is round the corner. Prepare your buying lists and get ready to pick up some great stocks at bargain prices. This could likely be the market bottom, so it may be offer open while stocks last ;-)

Monday, March 31, 2008

Why do liquor company stocks do well in bear markets ?

Because investors who have lost money need to drown their sorrows :-)

Monday, March 17, 2008

Bunch of overpaid jokers

Why do these so called equity analysts and fund managers have jobs? They are employed using our money to tell us when is the best time to enter or exit the market or make such calls on our behalf. AMCs charge a whopping 2+% per annum in management fees for equity mutual funds which go into the salaries and perks of these characters.

And what do they do to earn this money? Parrot the line that everyone in the market who is worth their salt knows anyway. Recommend infrastructure stocks when they are at PEs of 20-30 and paanwaalas and their aunties have already bought them. Say that the market is strong and will do well in 2008 when the subprime crisis was looming in global markets. Put out research reports on over-researched companies like L&T and NTPC. Do they deserve the money they are gobbling up?

Saturday, March 15, 2008

Medium term strategy

There is unlikely to be any spectacular recovery in the markets. On every bit of bad news, there is likely to be severe correction which might take the Sensex down to 12000 or below levels. However, volumes are thin and it means that shares are moving from weaker to stronger hands.

The strategy for the long term investor is to identify a list of good stocks (might be some from the existing portfolio which are beaten down) and buy in small quantities on major falls in the market. My sense is that this phase will last atleast till July and post that, we could see some signs of recovery.

Friday, February 29, 2008

Budget headlines

So the FM has presented a partly populist budget as some quarters feared. The populist fare dished out on the agricultural loan waiver was viewed as a big negative and also its effect on the bottomlines of PSU banks. However the budget says that it has provided for the write off so this might mean that PSU banks do not get impacted. The fine print will have to be studied.

On the positive front, the FM changed the individual income tax slabs to give a considerable tax break. The take home pay of India's middle class has gone up and this should increase consumption and savings as well. Good news for industry and the financial sector as well (though the short term capital gains tax increase put a dampener on celebrations - my view is that is will curb speculation and encourage investment, which is good).

The reduction in excise duty on things like small and hybrid cars also spells good news for the middle class and the automobile segment. In addition, a whole list of consumer products from footwear to plasma televisions have got cheaper. All this should aid the consumption story which should drive production and eventually the capital goods industry as well.

Monday, February 18, 2008

How to choose a mutual fund

Objective : A step by step guide to choosing a mutual fund for long term investment
Assumption: Investor understands basically how mutual funds work and that they carry market risk, that past performance is no guarantee of future returns and that there is no guarantee of returns blah blah :-)

If you want basic info on funds, please post comments here and I will try and do that in the next post.

Step1. Go to the Mutual Fund section on http://www.valueresearchonline.com/ (or any other finance site you like, this has a great MF section)

Step2. Use the search to find Equity Diversified funds (if you want to look at more specific sectors, factor in that risk and ask yourself if you know enough about the prospects of that sector) by different performance periods (5 yr, 3 yr, 1 yr, 6 months, 3 months, 1 month). In each period, make a list of the top funds.

Select the funds that have consistently good returns. i.e. figure in most of the top lists from step 2.

Step4. Look for how they performed when the markets crashed i.e. over the last 1 month if one is doing this today. All will most likely be negative, so the ones with least losses are probably good :-)

Remove the ones that do not figure in 1 yr top performers AND 3 yr top performers since it indicates they do not have long term performance. One can also consider 5 year returns as a factor if you want to look for really long term good performers.

Step6. This is optional and useful only if you have some idea about stocks. Open the portfolios for each of the shortlisted MFs and see if they have stocks you generally like. This is no use for ppl who dont know A stock from B stock .

You should now be able to decide which ones you want to invest in :-)

I would also suggest buying directly from the mutual fund house rather than from a broker or online banker as you can save the upfront load of approx 2%.

Sunday, February 17, 2008

Reliance power continues to baffle

After managing to get people to pay multiple times the cost of comparable companies for its shares in IPO, Reliance Power now wants to issue bonus shares to "effectively reduce the cost of the company's shares".

Where do these people come from ? Do they get manufactured in a lab which has a sign outside that says "leave all metal objects here and also your brains"?

Lets list all the reasons why this is stupid.
1. Bonus shares expand the equity capital by capitalizing the reserves.
2. Bonus shares effectively reduce the market price of the shares by a proportionate amount since the number of shares in the market will increase, reducing the resulting EPS (in R Power, there is no EPS to speak of anyway, since there are no earnings :P, but lets not worry our brains about that now)
3. Bonus shares are normally issued when the book value per share is really high and promoters want to indicate to shareholders that the business is doing well and a capital expansion through of bonus can be supported by future earnings growth. Why in the world would R Power want to do this when there is zilch earnings, leave alone growth ?
4. Issuing a bonus will bring down the market price as mentioned in point 2. So lets assume the bonus ratio is 1:1 (for every share you hold, you get one bonus share). The market price is Rs 385. The market price is effectively based on some future earnings figure divided by the number of outstanding shares. Since number of outstanding shares will double, the market price should come down by half. So now I will have 200 shares, priced at Rs 192.50. Big deal !

Rather than creating more paperwork with additional shares (after all, its an admin hassle and money will be spent on the issuance), R Power should concentrate on putting up their projects on time or sooner to deliver value to shareholders.

Disclaimer : I do not hold R Power shares.
Suggestion : NTPC seems a much better pick in the same sector.

Tuesday, February 12, 2008

Where were these morons during the IPO ?

Excerpt from an interview with Devem Choksi from K R Choksey.

Q: How would you approach Reliance Power now?

Deven Choksi: I think if you look at the comparable space, then you find a probable answer to that.

Reliance Power with about 5500 mw of capacity in 2012 would be comparatively lower to Tata Power’s 10,000-mw capacity and NTPC’s 15,000 mw capacity in 2012.

If you extrapolate these numbers and further calculate the enterprise value, if per mw issue is calculated, then in case of Tata Power, the enterprise value comes out somewhere around Rs 2.75 crore per mw and in case of NTPC, it is at around Rs 3.4 crore per mw. In case of Reliance Power, it is around Rs 50.5 crore per mw. So from these numbers, it’s clearly established that Reliance Power is an expensive stock even from that point of view and even in 2012.

If one has to look at the near term and then look at the long-term - in the near term, NTPC offers a better opportunity if one has to invest in power space because at FY09 earnings estimate of Rs 11.5 per share, you would probably find NTPC available at close to Rs 16 versus Tata Power’s relative valuations of around Rs 22.

So in my viewpoint, NTPC would be a safer bet and Reliance Power would be far off as far as this calculation goes. So, clearly the choice would be NTPC if one has to go into power space or generation space, which is expected to grow around 15%-20% in next two to three years on a CAGR basis.

Saturday, February 9, 2008

Budget Fever

The Budget fever is back.....
The media has enough masala news to brag about......
The Finance Minister will be tense for a change....
The Communist Parties starts threatening to pull off if their agenda is not met........
The Corporates have their own selfish wish list
The Market will start dancing like a drunkard....
The Big daddies(Institutions and Mutual funds) will start calling their shots
End of all, the retail investors are the losers who will have no clew what hit them...

Advice to investor's: Be extremely watchful and vigilant. Invest in the market once the suspense is over.

Tuesday, January 29, 2008

Cutting edge strategy

Markets should remain flat till the meeting since it looks like a 0.50% cut is factored in already.

If the cut is 0.25%, the markets will fall a bit

If there is no cut, the markets will crash. I will buy since it means the Fed doesnt think there would be a bad recession.

If the cut is 0.50%, markets would rally a little and I would use that opportunity sell 25% of my portfolio.

If the cut is a whopping 0.75%, markets will probably zoom and I will dump stocks (40% or more) because it would be a real bearish sign for the Fed to cut so deep.

Note - where this can go wrong is if the Fed behaves irrationally and cuts rates again to appease the markets. We would sell thinking a bad recession is on the way, but reality may be otherwise.

Monday, January 28, 2008

Fed cut and we sell ?

First, read this article if you havent already ....http://www.2000wave.com/

Then, wait and see what happens after the Fed meeting. If it cuts, it probably means there is a decent recession on the way. If not, it means it was sucking up to the markets, but the credit crisis may not be so serious.

Lets assume it cuts rates.
I dont buy the argument that the Indian economy is insulated and we will grow at 8% and therefore stay locked onto your good picks and they will grow over time, blah blah. If there is a year or more of pain in US, you can bet that FIIs arent going to buy risky stocks in emerging markets. If major banks worldwide are going to be writing off bad debts like it was going out of style, where is the money to fund our infrastructure projects going to come from ? If that lending contracts, all the rosy projections for power, capital goods and EPC companies will go out the window. "PE compression" will be the buzzword of 2008. So I'm going to sell atleast 25% of my portfolio on the resulting global market rally IF the Fed cuts.

I would look at other indicators to take a call on whether economic activity is turning positive.
See the Baltic freight indices.... they are a great signal of global economic growth. They have been falling since Q3 2007. And no sign of a bottom yet. Once they bottom, I would enter stocks again. We should have probably looked at this in Nov/Dec and sold at the time. The things one has to track these days to make a few bucks :-)

Some might call this trying to time the market. I would call it exiting when you suspect an oncoming train about to hit you.

Comments ?

Saturday, January 26, 2008

Additional picks

Bilpower - PE of less than 10 after good results

Cholamandalam DBS - EPS of around Rs 4 for Q3, giving it a PE of 17, but great growth prospects ahead.

Friday, January 25, 2008

Good buys or good bye ?

Looking at Dec-end quarterly results some stocks are just screaming to be bought.

Sesa Goa - fantastic results and expansion plans for 2008-9 would play out well with iron ore prices expected to rise upto 40% in 2008.

Banco Products - great results and PE of less than 10 for an established and consistent dividend pater.

ITC - unlocking of some hidden value could happen soon. Hold on for a great 2008.

Prism Cement - good results and insurance JV in the pipeline.

Holding some cash at this point is still a good idea. More buying opportunities could present themselves. I would add the above stocks at every large decline.

Sunday, January 20, 2008

India -Long term Growth story Vs Stock Market

Over the last weeks the market has corrected close to 1800 points(about 9% decline).

The long term India growth story is intact. Our finance minister in his recent statement announced that India will grow @ the rate of 8.8% pa.

What has the growth got to do with the Stock market?

-There are very few Economies like China(projected growth rate of over 10%) & India who can boast of growing at the rate of over 8% consistently in the next couple of years.

-US projected growth rate for 2009 is about 1%

-Japan @1.5%

-The Euro Zone expects to grow at about 2%....

We need to also bear in mind that the Agriculture sector is growing at a rate of about 3% annually and Agriculture contributes about 25% of our GDP and 70% of our population still depends on Agriculture. The remaining 30% of our population contributes to about 70% of our GDP. The Industrial sector is growing at the rate of over 12% pa.

The Service Sector contributes over 55% of our GDP akin to China's Manufacturing sector contributing 70% of their GDP.

Our GDP stands over 1.1 Trillion $ and the per Capita GDP is about Rs.33,000/-.

If you look at save investment havens , I would say India will rank in the top 5 destinations . US ranks the first.

Why money will continue to pour into the India Markets

-Our Market is much organized and transparent compared to China .

-India Growth story is intact.

-Valuation levels and price multiples are in the region of 18. (Slightly higher than the Bric countries baring China).

-Corporates are growing at an average pace of over 25% pa

-The corporate growth should certainly sustain .

-The Real estate and infrastructure focus in the coming years will grow in a geometric progression.

-The Middle class population is growing at the rate of 30% pa

-About 600 million of our population is in the age group of 20-30 years and the young population will certainly spiral the growth.

-The domestic demand is extremely high. Our exports is hardly 10% of our GDP. China depends heavily on Exports. There are economies like Taiwan,Korea who thrive mainly on exports.

Where is market heading:

Stock market is going to be choppy in the coming days. The statistics shows that there has been a constant winding of the future positions in the derivative market. The Open market interest is slowly reducing. The Put call ratio is in the region of 1.05. The implied volatility of Put option continues to be higher than the call option. The IV of Nifty index is also over 30%.

Market Wisdom:

-Invest value stocks.
-Invest in Bse/NSE sensex stocks. Blue chip fundamentals
-Invest in stocks which are constantly growing at a rate of over 25%. CAGR>25% over the last 3-5 years and has an excellent prospect to continue growing at the same pace.
-Invest in sectors like Power,Infrastructure,Banking and finance,Commodity& Energy where the demand is ever raising.
-Look at investing for a longer time horizon(18-24 months).
-Buy in small quantities and Purchase at every fall.
-Invest through Mutual funds if you do not have the time and knowledge to manage funds.
-Invest in Company's with excellent track record and available at single digit PE.
-Never try to time the market. Sell when you have got the desired return.
-You should conquer greed and greed should not conquer you.
-Invest in diversified portfolio.
-Set a maximum limit to invest in any individual stock/Sector.
-Never have attachment to any of the stocks you hold.
-Book Profits from time to time rather than have Paper profits.

Thursday, January 10, 2008

Market behaves like an Indian batsman

Tentative. Thats the word for it. The way an Indian batsman plays in Australia. At 21000, the Sensex faces profit booking at every upmove and looks for direction from global cues.

Do we care? I dont think we should. The picks we have identified in the last few months are still good and their stories are intact. At the same time, if you feel some of your stocks have hit their target levels, start booking some profits. It doesnt hurt to keep some percentage of cash in the portfolio at these levels. Large falls could present buying opportunities for us. So keep some cash handy.