October 28, 2008

JBFIND @ 39 (271008) gets 690 pancha-tattva points and is to be considered after next qly.

ARVINDMILL @ 14 (271008) gets 927 pancha-tattva points and buy this regularly and partially book profits on surges.

BANKBARODA @ 226 gets 1105 pancha-tattva points and buy it for medium term.

APARINDS @ 88 (271008) gets 817 pancha-tattva points and consider it after next qly.

BHUSHANSTL @ 542 (271008) gets 1201 pancha-tattva points buy it but be careful with stop loss.

BIRDINFO Stock Rx – A prescription for stock market


October 28, 2008

GSFC @ 70 (271008) gets 1085 pancha-tattva points and should be bought in good measure for long term.

MRPL @ 33 (271008) gets 926 pancha-tattva points and buy it in a restricted way.

GLENMARK @ 258 (271008) gets 998 pancha-tattva points and buy this in a restricted way.

SUNPHARMA @ 1176 (271008) gets 1053 pancha-tattva points and qualifies for investment.

THERMAX @ 276 gets (271008) 884 pancha-tattva points is to be bought on declines.

BIRDINFO Stock Rx – A prescription for stock market


October 28, 2008

SBIN @ 1052(271008) gets 1044 pancha-tattva points and it should be bought for long term and kept till there is any consequitive drop in profits in three quarters.

TATACOMM @ 354 (271008) gets 750 pancha-tattva points and consider it for buying after the next quarterly result.

ICICIBANK @ 316 (271008) gets 949 pancha-tattva points and should be bought in small quantities over time for long term.

BIRDINFO Stock Rx – A prescription for stock market

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

October 28, 2008


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.

Krsna Khandelwal

BIRDINFO Stock Rx – A prescription for stock market

Market Theory – Interesting facts about Nifty

October 26, 2008


Please note the following interesting facts about Nifty (since Jan 1999) without yourself going in to turning huge data yourself:

-Nifty PE was lowest at 10.86 on 09/05/03 and at the same time it had P/BV ratio of 2.02 and the Dividend Yield of 3.18%.

-Nifty had the highest PE of 28.29 on 08/01/08 while P/BV then stood at 6.55 (this is highest since Jan 1999) and D/Yld at 0.82 (this is lowest since Jan ‘99)

-Nifty had the lowest P/BV of 1.92 on 21/09/01 while its PE was 12.30 and D/Yld at 1.75 %.

-Nifty has 10.99 PE , 2.17 P/BV, and 2.18% D/Yld on 24/10/08 when it stood at 2582 points.

Now what may be observed in these figures, if the Nifty stays at present level:

-if the earnigs progress the PE will breach its lowest point and this is making new history.

-if the earnings remain the same, the P/BV ratio will keep improving making it move towards breaching the historical low of 1.92 P/BV, again adding new chapter to history.

-if the dividend pay-outs improve due to stoppage of expansion plans of companies in view of lower demand (ie recession), the D/Yld will improve to breach the historical high of 3.18%.

-if the companies post lower earnings the PE will go up but it has room for going up as the historical high has been 28.29 but the P/BV will still improve making it breach its lowest point 0f 1.92 which is again creating new historical point.

-if we consider the D/Yld in light of real rate of returns, it is positive while real rate of return on 10 year Govt paper would be negative (interest @ 7.5% minus rate of inflation of 11.04% ie minus 2.54%). This will be the post tax return against taxable interest returns.

-if the interest rates are reduced further, as is a possibility too, the difference in return shown above will be still more.

-if inflation remains the assets (other than cash and receivables minus debt) will keep improving besides the already existing revaluation surplus which does not reflect in figures of balance sheets.

-if the companies raise further capital at current prices, the P/BV ratio will still improve and the additional cash will either lower interest out go or will improve capacities. In both cases the PE will go further down.

-if the companies decide to use the cash generated for the buy back of shares the floating stock will diminish and will put upward pressure on prices.

-if these conditions continue the promoters can only increase their holding by open market purchase as the preferential allotment will not be liked due to high average price for last six months. This will also make the absorption of floating stock.

-if the low stock prices continue there may be attempts of hostile take over of weaker companies, even otherwise the weaker players may be bought out and their outstanding stocks extinguished.

-if the profitability gets diminished the cash-flows of the companies will have lower impact because the tax payment would first bear the impact.

-if the markets do not improve there would be lesser number of IPOs and demand pressure on investible rupee will be lower which will find way in to secondary market.

-the ratio of holding by the retail investor is at a low point compared to last year, those who booked profits in the bull run will come back to acquire shares.

-those who missed bus in the last many years bull run will try their hand out this time.

-all asset prices are going down so there will be less aversion to equity investing at a safe point.

-no capital gain tax on long term holding will invite new investors who would not like to book profits mid way ie before one year holding period.

There are many more ponderables but above are enough for today’s food for thought.

It is not surprising therefore that the analysts are being asked for the list of stocks worth buying. The lay investors do not understand much but at least understand that when 80% of value has already gone, the rest twenty percent may not go entirely. This is sort of thumb rule for them.

Krsna Khandelwal

BIRDINFO Stock Rx – A prescription for stock market