Archive for the 'China' Category

Market Matrix – Nifty and Sensex lost 33 pc in Oct 08 series

October 29, 2008

Friends,

The Oct 08 series has closed today in a quiet manner but the losses seen by it are enormous. Market turnover is good for the day at Rs 69000 cr. The loss in a single month have been between 20 to 70 pc even for the leading corporates some of which by the way posted the best ever quarterly profits. The Nifty and Sensex lost 33 pc in Oct 08 series.

Unitech has arranged to sell 60 pc stake in its wireless business arm to Telenor through further issue of capital for Rs 6120 crs and will see debt of Rs 1900 cr paid back by the subsidiary.

US Fed is likely to cut rate by 50 bps and probably will follow up with another 50 bps later.

BoJ would consider cutting rate in its next Friday meeting.

China has cut rates by 27 bps on both ie deposits and advances.

SBI says it is receiving Rs 1000 crs a day as deposits for last 10 days.

Auto loan growth is 6 pc against 12 pc last year.

The European markets are trading higher but DAX is an exception.

HariOm,
Krsna Khandelwal

BIRDINFO Stock Rx – A prescription for stock market

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Market Matrix – Right level for Nifty is somewhere between 4100 and 4500

October 28, 2008

Friends,

Wish you all a very very happy Diwali and growth of what you invest in today’s ‘Moorat Hours’ at bourses.

The world’s indices are trying to regain a new respective real parity in terms of strengths they have with foreseeable future in sight, all in the aftermath of, US created and largely confined to US, financial crisis (partnered by those smaller economies of the west which sought expansion in overly internationalised economy of US). The rest of the world is also facing problems but more account of the loss of benefit that they were drawing form US markets and less on account of financial break-down. They are having to sigh more just in sympathy as they do not want to be seen drawing comfort out of the US and western losses. While their comfort is related to that only and is an ugly fact. The crude is an essential item to ensure continued growth of emerging market economies particularly India and China. These countries have all other advantages but less of oil. The most important advantage is large local market (more perfectly developed in India than in China). The requirement of a big unified market brought the European nations together who in fact don’t see eye to eye, in the most matters.

If deeply analyse, it turns out that in the near future times the China which integrated its economy with US in a large measure, will face some grave crisis. It may be that nothing comes out in terms of doctored statistics but the Shanghai Index is telling it all. The DOW is confused and goes up and down in an directionless manner as if there are some things known to few but unknown to the most. Those who are in the know may have to correct their view and those who would come to know may have to take fresh view of things. Did it not happen that the facts have taken a whole 12 months and more to come out and get assessed. What would have been discounted much earlier is still bothering and that is the reason I think the whole bundle of facts is yet to unfold. Either way, the US will have to face times of lesser advantage and will have to put up with lesser share of consumption of worlds riches. The high value of dollar is making China richer due to high dollar reserves with it but its edge will be lost, the US will import less and try and develop its real economy with lesser stress on financial industry which is pass-time of rich only. India on the other hand is seeing the turmoil in market because it is more integrated there but none of the severe ill effect any where is felt. The crude price drop is a real shot in arm. The recession will be taken care of by increased govt spending. Our PM confirmed it on Chinese soil saying that what we have done by way of govt spending without revenue is OK by Keynesian remedy in such times. Very much so but his team should make the markets go way up otherwise how else the seed (risk capital) will be raised for the fresh projects.

I have recounted only recently the strengths India carries viz a viz other economies of the world, I would skip it here.

There is a spate of good news, if only good news would start having positive effect. I recounted the possibilities about Nifty and related matters. The SEBI has, in fact in a surprise move, allowed the promoters to keep acquiring in open market up to five percent equity in one year till it reaches the 75 pc ceiling. This will not even trigger a public offer requirement. A reasonable announcement in good time. SEBI is initiating a probe into markets’ odd behaviour on 24th and 27th Oct. Power Minister said that global slump would not affect capacity creation of around 90000 MW by end of eleventh plan. A lay out of Rs 10 lac crs will be required and debt /equity ratio will be 70:30.

Porsche has bought nearly all free-stocks of VW and the stock vaulted up by 98 pc. Honda has upped production of fuel efficient cars. Electrolux AB has beaten estimated profit figures. FED chief may push overnight rate to zero (when borrowers have trouble and the lenders have danger of loosing capital, what better alternative can be found than making interest zero). US house prices are lower by twenty pc from peak and foreclosures are growing. This is not a very bad thing to happen unless accompanied by some other oblique arrangements between the involved entities. In any case the end to trouble shouldn’t be far. There are signs of thawing out in banking sphere. The rates paid by banks for borrowing are only half of what the most intense moments of panic saw them offer. The rescue package has been put to practice, banks have had money flowing it to US.

Those who follow this site would recall me having said in Oct 07 that the then Nifty level was wrong at 5500 and should have been at 4100, earlier when it was 1000 in 2002 I had estimated its value at 1700. In the same way I have reason to say that the right level for Nifty is somewhere between 4100 and 4500.

I commit myself rather too early but how can you not speak what you see or perceive. Also if you are not from the first ones to give a glimpse in to future, what are you of worth!

The learned should excuse me but my readers are of all ages and of all backgrounds. I have to some times repeat the points, say it in a different manner. Yet more is thrown into my writings because I want to give a piece of old history and record new history.

HariOm,
Krsna Khandelwal

BIRDINFO Stock Rx – A prescription for stock market

Market Matrix – China has shown GDP growth figures of 9 pc for the III qtr

October 21, 2008

Friends,

There is positive outlook around the world. After DOW closed up by over 400 points yesterday, the Asian markets have started to see reason to shed fears.

China has shown GDP growth figures of 9 pc for the III qtr. In fact US recession has more to do with China than with India excepting for the fact that India requires capital flows from there but China has surplus dollar pool and now does not need capital from outside as much as we do. China’s exports to US are major cause of its GDP growth and now it will have to raise domestic consumption which can come only when its leaders are ready for putting incomes in the hands of workers and labour. This can be done only by making the cost of production high and would further make it less competitive in international market place. So, what had to happen is happening. Indian corporates have been under pressure to raise salaries through out the boom period of last four/five years and would be able to contain wage bill this year. If you recall, I had mentioned that the year 2008 will put China under some kind of slow down.

It is good that we have a PM who is an economist too. While I objected to Reddy’s hawkish stance on every occasion when he tightened the supply of money for the fear of inflation going out of hand. My contention was that when the inflation is not due to local factors why put the productive machinery to do with lesser money supply and strangulate it. Luckily, he has been replaced with somebody who listens to govt head , PM has seen to it that the delay does not mar the industry. His timely intervention has done the needed repair to the damage done by Reddy.

Also, now, our PM is stronger PM because the lesser ones have thought it fit not to do anything by speaking absurd thing in this period of turmoil. Do we not see the Paswans and even PCs keeping cool and giving back leadership to PM. Our FM has understanding but likes to tease before he does some thing likable. He has to moderate the impact of STT and service tax which is making India loose business to Singapore like places as far as the security trading goes (Singapore now accounts for 40 pc trade in Nifty futures).

The PM has been so careful as to reassure that further steps would be taken as soon found needed. These words should be music to the ears of trade and industry. The matter is so simple, the money supply has to be at level where there is optimum production, inflation or no inflation. The simplest tactic to keep inflation off is by keeping the govt expenditure limited to revenue earned and let it be met by deficit financing, any attempt beyond this is bound to have ill effects on this side or that.

In my opinion it will be prudent to bring the repo rate down to 7 pc and CRR down to 5 pc and this is not some thing extra-ordinery to do, we had CRR of 4.5 pc and repo rate of 6 pc in the year 2004. The sole factor for the slow down in India will be a defective monetary policy and nothing else. This is needed also because the banks and financial institution have to be provided help that would make them stronger and look stronger too. This is in fact in everybody’s interest after seeing what happened in Western world.

I invite your views through comments columns, its so easy.

HariOm,
Krsna Khandelwal

BIRDINFO Stock Rx – A prescription for stock market

Market Matrix – Hopeful Signs in the markets world over

October 1, 2008

By krsna Khandelwal – A veteran market analyst

Friends,

The DOW closed up nearly 500 points. There is a possibility that the rescue plan is okayed today itself. The world markets are saluting the developments in America. The gloom is giving way to bloom, Indian market which has seen triple bottom formation yesterday,is bound to be seen by the investors a better place than any other place in the world for investment. The FDI in last month has been the maximum. The FM the SEBI Chief have confirmed that there are no regulatory black holes here and RBI has endorsed the capital adequacy of ICICI Bank which was rumoured to have been affected due to American crisis directly. The freight rates are down and would give phillip to international trade and cheap transportation of bulk commodities. India imports in bulk coal and oil and exports in ores and other exportable. Sugar and food now form part of bulk commodities that are exported into and out of India as per the need. The USA is in process of loosing its clout in the economic and financial world while it may have retained its political clout for the time being after USSR demise. The China remains a mysterious state even after its rise in economic field, in financial field it is still in nascent stage. USA wants and has demonstrated that it wants to side with India against China in granting the second status in importance order. This may not have come as an open thing but is seen by the discerning eye. It is also a right thing to happen but India has to ready itself for it.It has to therefore take rapid strides in economic field. I hope the next govt is headed by a person of calibre of Vajpayee or Man Mohan. The small time politicians will remain but the country should have a balanced and non-partisan person as head of govt at least, the head of state here is not so important and may well reflect political remonstration.

I have to write all this for the feel of times while seeing this site recording economic and corporate history with share market in focus.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market

Market Matrix – Nifty lost 135 points

September 29, 2008

By krsna Khandelwal – A veteran market analyst

Friends, 

Our bench mark index Nifty lost 135 points to close the day at 3850. The DOW is trading at 10887 down 255 points at this hour today. In the mean time the bail out package has been okayed but the whole money will not come in a rush but in tranches. This is good in a way otherwise there would have been a rush kind of situation and the ammunition for future would have been missing. This way the speculators will have to watch step.

I may tell you that the problem arose because of the leveraging and parties held to positions in belief that they would get through at some point while others may suffer. All had to suffer because the counter parties were seen to shaky and could not be destabilised for fear of exposure earlier than necessary. The assets became worthless as no body could come forth to buy them up even at bargain prices because liquidity dried up.

The action by the FED and US govt. is in right direction. The common man does not understand the nuances and is afraid to do any thing trying to come to neutral ground. There is no question that liquidity injection would save the day and there after clamour for acquiring equities may ensue as has happened in case of bullion which is way up now than it was a fortnight back roughly +15%. In the mean time a British bank has been taken over by govt.

Our PM is in France and may sign nuke related agreement there. Our people in govt. should be coming forward to clear the atmosphere of uncertainty on a daily basis for the rumour may be spread by the interested parties and public may get mis-guided.

This time the best strategy for any body eyeing the investment in market would be to enter only with two way order ie if he buys stocks of choice he should buy Nifty put (out of money) so that the confidence is not lost. The panic strikes one who walks out without an umbrella while the sky is overcast.

I am sure that the rights and public issues would be now kept on hold so further supply of paper would not be there for some time to come. It will reduce demand for funds in markets. Freight rates are at lowest point for the year. Crude again is under 100 dollar mark. Cement and Steel shares were least affected today and hence it may be said value buying is on. Sugar shares were down in an excessive way and it would sow seeds of eventual big move in this sector. In times of flux I prefer to discuss things thread bare rather than fight shy of speaking what I must.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market