Archive for the 'Warren Buffet' Category

Market Matrix as on 11 Feb 2008

February 11, 2008

By krsna Khandelwal – A veteran market

Friends,

SEBI is considering reduction in disclosure requirements for the listed companies at the time of debt issuance so that the debt issues are done with ease and without too much time leg. Since banks are not reducing spreads why should not the most efficient platforms of stock exchanges be made use of for bringing the lenders and borrowers together and give the nation’s economy a boost, while not letting the portion of capital pie fall out of hands of savers and users of capital.

Indian MFs have maintained the quantum of AUM(Assets Under Management) in Jan ‘08 even though the Nifty suffered 16% fall. Of the 32 fund houses , 14 posted an increase in AUM in Jan ‘08 . Despite fall in January MFs bought Rs 7 K crs worth of equity, MFs had bought only Rs 3 K crs worth of equities in Dec ‘07. This speaks of the high savings rate in India and that too in hands of younger people largely who have no aversion to equity investment. The following is the table giving AUM of 5 top MFs:

Reliance Rs 77200 crs

ICICIPRU Rs 64100 crs

UTI Rs 52700 crs

HDFC Rs 43800 crs

Birla Sunlife Rs 36000 crs

IPOs are being called off due to slack response. Its is a pity that the IPOs are not being offered at prices attractive enough. The promoter greed is at its worse. There was a time when CCI (Controller of Capital Issues) used to fix premiums in a fashion where intrinsic value used to be much more but it used to be OK with CCI to give OK for the par issues and some tricky issuers used to cheat public of their money by being successful in raising money for dubious purposes. There has be a balanced approach and the merchant banker have a duty to discharge here.

Sixth Pay Commission may hike basic salaries of the Govt. Servants by over 150%. Basic pay for the Section Officer would rise to Rs 20000/month from Rs 8000/month. I think that the new salaries including allowances, will make govt. staffers more honest. They would have no room to complain about not making two ends meet comfortably. India therefore is about to enter an era where the corruption is less rampant.

SBI Rights issue is to open on 18th Feb ‘08. Govt. holds about 60% of SBI equity capital and would invest about Rs 10 K crs in acquiring right shares. My advice to SBI shareholders is to sell the share on ex-right basis without thinking twice.

It is once again that the Steel and Mines Minister has asked the steel companies to keep the steel prices low. It is pity that the same minister hasn’t done a thing to see the new capacity being brought at a better speed. I don’t understand when the ministers would understand their duties in right way.

UK’s growth rates has dwindled to 0.5% , a two year low.

Economists estimate US economy to grow just at 0.5% during Jan-Mar ‘08 quarter. Some say US economy is on the cusp of recession.

Warren Buffet sees ‘poetic justice’ for bankers who designed and sold complex investment instruments that have gone sore and have made the banks themselves suffer a lot.

Inflation has inched up to 4.11% , a high for 6 months.

Govt. unreserved 79 item from the list of Small Scale Sector exclusive domain and only 35 items remain there. This is step in right direction. There are areas where small scale survives better and in other areas it is not cost efficient. The natural market forces act and keep overall industrial competitiveness of India alive , if only the RBI Chief looks at the economy’s needs from the angle of an entrepreneur and reduces interest rates. It is a pity that the people in the business and industry have no say in the making of monetary policy as a bureaucrat may never understand the imperatives of finance policy. There concern gets over with control of inflation which the govt. itself usually is not serious about.

Auto component industry has lowered the export target for 07-08 to Rs 14460 crs against earlier estimate of Rs 15172 crs due to strong rupee and lower custom duties. I am sure the auto component industry would do better in coming years due mainly to the low cost manufacturing base in India, only the govt. has to make the capital available at the international interest rates and bring the long overdue labour reforms.

‘NANO’ may have to be priced higher by Tats eventually but it has put a cap on other category car prices for years to come. Nobody would dare keep the price gap higher and risk loosing market.

Automobile Industry declined to 829569 units in Jan ‘08 from 89844 units in Jan ‘07. It was passenger car segment that kept the tempo up and it grew to 113899 unit in Jan ‘08 (104501 units in Jan ‘07).

Scooters account for 20% of total two-wheeler sales in India.

Nifty closed the week on 8th Jan ‘08 at 5120 points.

India now officially claims to be member of $ one trillion economy club of the world, it is fact no small achievement for India.

Southern chain of stores ‘Subhiksha’ is to raise Rs 500 crs through IPO shortly.

George Soros has acquired 3% of Reliance Entertainment, a wholly owned company of Anil Ambani. He spent $100 million for this much stake in the company.

America’s $20 bn generic market is awaiting entry by Indian players . Some of the largest selling drugs in US are going off patent shortly.

Interest rate differential has been responsible for giving a philip to Indian markets when it kept coming down during 2002 tp 2007 from a peak difference of 5% in 2002 to a low of under 1% at a point in 2007. Now it has gone back to 4% in a sudden move and has unnerved the markets. This co relationship may easily be seen. People think that the capital will flow to India but since the cheaper interest would open doors of more investment in US why would the capital move in to India and be at risk of exchange parity changing for disadvantage. Secondly , if the cheap capital flows in to India the established companies may have face competition from newly created capacities at lesser capital costs. For the time being the interest differential has opened doors for the sharp shooting business houses to have free lunches which is being ensured by the RBI by keeping the rupee value under leash. The 90 day rate here is 7.2% while in US it is under 2%. Would not the schemers take advantage , it is hardly understandable why the RBI Chief is keeping this artificial pocket of making money thriving. Is there sinister connection somewhere, only time will tell.

Mumbai’s Nariman Point has 2 million sq ft of office space while Bandra-Kurla has 12 million sq ft of office space. On top of it there is going to be additional office spaces coming up in Mumbai’ suburbs. This additional office space would be no less than 10 million sq ft and would come up in an year’s time. I have a feeling that the rentals for office space in Mumbai would be far lower than prevailing rates.

Tata Chemicals has acquired US based soda ash company for $ one billion. Tata Chem would become second largest manufacturer in its line of business behind only the FMC Chemicals of US. As told to you many times earlier Tatas theme remains to housed more out of India than in side India. Seems Tatas have fear of Indian politicians who have since independence given sleepless nights to the Tatas. Indira once had threatened the senior Tata with her sword of nationalisation on some pretext or the other and the brave men still did not bow to her wishes. Naturally when the govt. today has made the exiting of capital possible for the business house why would they not secure their future. If need be they may bring back the capital as foreign owned which would at least be treated in a better way.

GDP growth at 9.6% in 06-07 has been the highest in 18 years . This translates in to Rs 1700/- additional per capita income which now stands at 22552/-.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market

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Warren Buffet and Mr. Market

April 18, 2007

By krsna Khandelwal – A veteran market analyst

Friends,

The following piece by Warren Buffet conveys a lot and is very meaningful, please read it thoroughly and more than one time . It will give an exact idea as what to think of markets which keeps people in awe of itself. It is in fact a monster , if you manage to have control over it rather it controlling your emotions, wisdom and nerve, it will provide you with riches otherwise it makes many lose their shirt and for some lose their pants. Please therefore pay attention:

“Mr. Market has another endearing characterstic. He does not mind being ignored. If his quotation is uninteresting to you today , he will be back with a new one tomorrow. Transaction are strictly at your option.”

“Mr. Market is there to serve you, not to guide you. It is his pocketbook , not his wisdom that you will find useful. If he shows up some in a particularly foolish mood, you are free either to ignore him or take advantage of him, but it will be disastrous if you fall under his influence. Indeed if you are not certain that you understand and can value business far better than Mr. Market , you don’t belong to the game.”

Gentlemen, here is where the Panch Tattva Teknik arms you with profound understanding about the companies strength uninfluenced by markets tantrums and readies you to take advantage when Mr. Market behaves drunkenly.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market

Panch Tattva: Update: HIMCHLFUT,ITC at CMP on 23 Mar 2007

March 26, 2007

By krsna Khandelwal – A Stock Market Vedic Theory proponent

Friends,

Please note the Panch Tattva updated points for Himachal Futuristic and ITC against closing prices on the 23 Mar 07 :

HIMACHLFUT @22/- gets 984 points and may be bought and retained till the next quarterly.

ITC @144/- gets 1014 points and should be bought and retained till next quarterly also please do not care for the stop loss especially in this case.

The following are the words of Warren Buffet and are worth paying attention to:

‘Great investment opportunities come around when excellent companies are surrounded by unusual circumstances that cause the stock to be misappraised.’

The good cement companies are the case in point and therefore please continuously look for getting in to cement scrips.

The week gone by has been good as it has seen the leading indices appreciating by about 7%.Banking stocks and FMCG stocks as also the PSU stocks and the Oil stocks have largely contributed to it.In fact the whole spectrum has been on way up during the past week. The rupee appreciated and a dollar is worth about 43.58 INR.The world indices have also been uppish during the past week. It is all for not to say that the investors may remain complacent, on the contrary they should be alert and weed out the wrong stocks belonging to sectors under pressure. Two-Wheeler sector is one such sector.

Hari Om

BIRDINFO Stock Rx – A Vedic Prescription for stock market

Warren Buffet and Panch Tattva Formula

February 17, 2007

By krsna Khandelwal – A Stock Market Vedic Theory proponent

Friends,

The Investment Guru of all times Mr. Warren Buffet said like this:

“To invest successfully, you need not understand beta, efficient markets, modern portfolio theory, option pricing or emerging markets. You may, in fact, be better off knowing nothing of these. That, of course, is not the prevailing view at most business schools, whose finance curriculum tends to be dominated by such subjects. In our view, though, investment students need only two well-taught courses – How to Value a Business, and How to Think About Market Prices.”

I have although wondered myself as how the different ratios like PE,P/BV,CARG,BETA,OP Ratio,NP Ratio,Interest Cover Ratio and then the theories in vogue, and the technical study (chartists’ conclusions) may ever be made sense by an individual or even by an organisation.

I had been put questions about the future of stocks and the markets every now and then by my clients and friends and other acquaintances as they considered me studying the markets keenly. I used to give them the answers according the emotion at play in my mind and get going.Some how it seemed to me that what I was doing was not right although it may have satisfied a large number as the study did give a background to take care of the pitfalls but conviction was missing to some extent if not entirely.

This set me on a course to find a formula which would be able to encompass every available fact and figure concerning the stock and the the then prevailing economic environment and including the foreseeable possibilities. Not only this I had to take care of giving the right weightage to all the matters taken in to consideration. It took almost twelve years of continuous study and improvement and practical application and an off hand remark of my brother Mr.Sharad Kumar , an engineer by training , to make me arrive at the final Panch Tattva formula or system of stock price assessment suitable for up to the next quarterly result by company which would then have to be updated.The Panch Tattva formula in essence gives the value of business alongwith right price discovery.

This is a matter of satisfaction that the formula has worked very well and has been empirically tested for the needed length of time to make it a very reliable tool. I do not have means to get in touch with the great Warren Buffet , otherwise I would be pleased to have his opinion about the worthiness of the formula, for he is the person who says that a very high academic qualification is not required to invest in market but a commonsense approach with understanding the value of business and its price in market place is enough to invest. This simple but effective formula worked out against the concrete data is therefore worthy to pass any test that may be required for it to pass.

Hari Om

BIRDINFO Stock Rx – A Vedic Prescription for stock market