Interesting Reading Material

Guys I am back in NAMMA BANGALORE from hot & humid BOMBAY(or MUMBAI)...

I read some interesting article...

Mr. Prime Minister Dr. Manmohan Singh's speech @ G20 meeting at Pittsburgh, where he brought very critical issues like world GDP rate, fall in the per capita income, stimulus & its timing of exit, export promotion & issue of protectionism...

In yesterday's STOI there was an article from Mr. Swaminathan Aiyar about Indian Car Exports (18% growth) beating China's (60% fall). He has analyzed beautifully, just have a look at it...

As we all know September 15th was first anniversary of Lehman Bro collapse. So at that I thought posting some article on that, but somehow I couldn't. So article related that are...

Guys you may remember, last year in October I wrote an article about Securitization Vs Money Supply/Credit Creation. Where in I talked about the how securitization is multiplying the credit creation. Exactly after one year, that is now in September I read same material with little bit more information in Indian Express. Check it and compare with mine...

IIMA professor Javant Varma has written about Lessons to be learned from Lehman Bro. in Financial Express....

I read a research paper by Koji Kobayashi, senior economist on "TRILEMMA OF INTERNATIONAL FINANCIAL SYSTEM IN INDIA" which covers various issues. Its very good & explained very well so that everybody can understand. And also covered the almost all whatever happened during these 2 years crisis. Interested people should read it infact I say should save it...

Going to Bombay due to some office work

Guys, due to some urgent office work, I will not be able to post any article/blog till this weekend or may be next weekend as we are not sure when the issue will be resolved.

So till then,

keep reading...

Handsome returns for good trader/investor

Today I was doing some very basic research on some stocks since one of friend wanted some information. So after doing that I thought of posting that material for the benefit of my readers. Here I have not gone deep into any technical or fundamental analysis & written in very layman language which can be read very easily, unlike some technical charts/fundas of fundamental analysis. Here I tried to concentrate on taking stocks from different sectors like IT, Bank, Export, Engineering, Sugar & etc & analyzed their lows, highs, comparison of returns with index(sensex), news flow due to which so much fluctuation in price happened &etc.

Here my motto of posting this material is nothing how a smart investor or trader can make some handsome money if he/she tracks the market & related news flow & etc.

As I said earlier, this material is very very basic, interested people can take this information can do the further research...

1. Tata Steel:

CMP: 518
PE: 9x
Book Value: 340
Touched low of 180 levels in March which is 1/2 of the book value.
Touched high of 950 levels in Jan 2007.
From March to Sep 180 to 530 levels i.e. 200% return as compared to 100% Index increment
Steel sales & prices in India & UK(Corus) started picking up as economy started recovery.

2. Aban offshore:

Company is into oil extracting from middle of the sea specifically.
Touched all time high of 5600 levels in Nov 2007
PE: 22x
Due to collapse in oil price from $ 147 to $ 40 levels & heavy debt asset ratio, price of the share collapsed from 5600 levels to 200 odd levels in March i.e below book value of 240 levels. Formed support at levels at 350-400 odd levels. From these 200 odd levels to 1600 presently due to some news on Debt restructuring & getting new contracts of 4 rigs in South Africa & 1 rig in Iraq. i.e. 700% returns in 6 months as compared to 100% returns on Index.

3. Shree Renuka Sugars:

CMP:200
Book value:35
PE ratio: 60x (Indication of growth expectation rather than too much higly priced)
One of the best managed sugar factory in the country by IIM passed out Mr. Narendra Marakumbi with great expansion plans.
Touched low of 45 levels in Nov 2008, as incremented to present 200 levels on some news like Sugar prices hitting 30 years high & probable less production in the Sugar Cane this year. i.e. 300% return in almost one year. Net profit more doubled from March quarter 33 cr to 70 cr in Jun 2009.


4. Sasken Comm. Tech:

CMP: 162
Book Value: 155
PE ratio: 16x
In March : Below 50.
Within 6 months : 200% returns.


5. Rajesh Exports:

Bangalore based company & India's largest gold & diamond exporting company.
CMP: 75
PE ratio:27x
In March: Sub 25 levels
In August: 40 levels
Zoomed to 40 levels to 75 levels on the news of gold hitting Rs. 1600 per 10 gms as recovery & inflation threat started & also festive seasons like Diwali, Dasara & etc. i.e. almost 100% returns in 20-25 days.


6. Patel Eng:

CMP: 487
PE:17x
Book value: 160 levels
In March: Touched 100 levels.
i.e. 400% return in 6 months


7. Axis Bank:

CMP: 910 odd levels
Book value: 280 levels
PE ratio: 16x
In march: 300 odd lvels. i.e 200% returns in 6 months.

Intersting articles...

Today I read SWAMINOMICS IN STOI, which talks about how India has passed this financial crisis & he has compared this crisis with the Asian Currency crisis & 1991 crisis. Good article to read...

Yesterday I read in mint the analysis of IIP numbers for the month of July, which released on Friday. Hopes of recovery getting stronger...

There is an interesting EDITORIAL in B.L. about near term future course of action from central banker, i.e. RBI.

New Composition of WPI...

Interesting article on UPA's 100 days completion...

Gogi's Comment

Naveeen Bhaiiiiiiiiiiiiii.....

Great article....Keep it up

Thumba dhnyavadagalu

Auxi's Comment

Hi SI....


How r u man? It's really a gud article and all our karnataka bros should see this...send it to all of ur frnds & ask them to pass it to their frnds...

gud work...Take care....


Regards,

Auxi

Does Karnataka Government Lacks Vision/Willingness

Yes, you read correctly only. Couple of days when I was reading the mint paper I got an article. That article was about "how the different cities of different states are contributing to country". So there was the survey based on the market size of different cities. Here is the snap of that article...


You can see that Bangalore is at number 4th position in market size and rest of the south Indian cities are following in the ranking.

But if see that snap carefully, from Tamil Nadu, there are 7 cities, Andhra Pradesh - 4 cities & even Kerala - 2 cities are in top 50 list of the country. This means in all these states not only one city is contributing, but all other cities from different locations in their respective states are contributing. Where as in Karnataka Bangalore is the only city in top 50 ranking. What about the rest of the cities like Mysore, Mangalore, Hubli, Belgaum, Gulbarga & etc which have very good potential to grow.

And if you look at the picture more carefully, you can see that each subsequent ranking cities with their respective states are contributing at least half of what its higher ranking city is contributing. For example in Tamil Nadu, Chennai's market size is Rs. 30586 crore & next Tamil Nadu city, i.e. Coimbatore's market size is Rs. 15056 crore and is same for Andhra Pradesh also, Hyderabad's - Rs. 20860 crore & next ranked city A.P. Rangareddy's - Rs. 10037 crore. But what about Karnataka, here Bangalore's market size is Rs. 41008 crore & next Mangalore might be less than Rs. 4000 crore since its not there in top 50.

This means there is a clear cut message that regional imbalance is much more in Karnataka as compared to other southern states. What might be the reasons for this? May be rapid growth of IT in Bangalore or Lack of vision/willingness of politicians towards the other regions of the state. According to me both are the reasons for this. But same condition applies to A.P. also where Hyderabad is one more Silicon city but other cities are also developed simultaneously.

Even if you keep aside the regional imbalance issue, does Bangalore is in position to develop further or in other words does Bangalore has infrastructure to support this kind market size. Think of Bangalore traffic, roads, flyovers & metro. When I think the metro, I think of Famous Kannada Actor Shankar Nag who thought of metro for Bangalore before 90s i.e. before his accidental death. That's the kind of vision Government needs to have for infrastructure, but Government has now taken the initiative for the metro after 20 years of Mr. Nag's vision.

From last 3-4 years I have discussed with many friends that "Government simultaneously needs to give priority Tier1 & Tier2 cities". Its not only applicable to Karnataka but to all the states & countries. Authorities needs to think of saturation level of major cities & subsequent preparation for other cities.

One may argue that companies dont like to go to other cities than the capital cities of the states. That again depends on State Government's willingness to persuade the companies by giving some facility like subsidized current, water, land & etc offer in other cities. In these "other cities" governemnt can encourage SMEs(Small & Medium Enterprises) to increase the employment & reduce over-dependency on agriculture.


Keep reading...

Does Increasing Interest Rates Curb The Present Inflation

Some people might be feeling that, recently I have posted too much of Technical Analysis. But Candle Stick analysis is like that can’t stop in between.

Now coming to today's topic, "Does Increasing Interest Rates Curb The Inflation Rate", there will be many questions on headline of the topic itself! Like…

1. Is there inflation in India?
2. If NO, why retail prices(Sugar, Grains & Cereals) are so high?
3. If YES, then why WPI is not showing it? And what RBI & as well as Government are doing about it?
4. Does RBI is in position to increase the Interest rates in present condition of recession? & etc...

If you go by WPI headline inflation numbers India is in Deflation! Since June 2009 WPI numbers are in negative, due to reasons like "BASE EFFECT". But does really prices of various commodities like food grains, manufacturing items or for that matter oil are low or in other words is there any contraction in demand? Neither is true in India's case! Yes Food grains like cereals price doubled within this negative range of WPI, i.e. 2-3 months. And oil prices are also almost same whereas International Oil Price crashed from $147 to sub $70 levels. And manufacturing sector products are picking up their respective prices example recently Steel Companies increased their prices. So where is the Deflation? Only in numbers! As I wrote many times BASE EFFECT is causing this mismatch & that is expected to fade away from coming months October & November. But is this BASE EFFECT does not cause any more problems in future? No, it will come into picture in next year when WPI compares with this negative range. So obviously it will be very high & that too it will be accompanied with the recovery in the economy with elastic in demand. So is there any solution for this problem, yes there is. First they need to change components & their respective weightages in WPI series & it should be changing every now then depending upon change in economy, per capita income & etc. Second they need to adjust the Inflation numbers seasonally on which much work is going on in NIPEP & DEA. And I think there should be some coordination while comparing to previous years' numbers so that some type of comparative analysis is done by taking previous month as well as previous year.

So does RBI increase the interest rates to control the Inflation or Interest Rate policies are growth oriented? Because many sectors like Textile & other export oriented industries are badly hit due to this recession. Many experts believe that interest rates have hit the bottom. That means no more easy money? According RBI deputy governor Interest rates will be same till March 2010. And there are various school of thoughts are going on whether the recovery will be V shaped or W shaped or U shaped?

And even if RBI increases the interest rates also does it control the prices? I dont think so, because I believe this increase in price is due to mismatch in Demand-Supply & not because excessive money chasing few goods. In addition to that this year drought is spoiling game much more. And rest of the commodities depend upon the international price movements like oil, sugar & etc. So what is the solution for this situation? I think there is no shortcut in this matter. There should overall revolution in PDS [Public Distribution System] using some new technology like UID, should increase the efficiency of the agricultural productions, less dependency on rainwater & etc.

Technical Analysis - IIII

Neutral Pattern

1. Doji

This line implies indecision. The security opened and closed at the same price. These lines can appear in several different patterns. Double Doji lines (two adjacent doji lines) imply that a forceful move will follow a breakout from the current indecision.


2. Spinning tops

These are neutral lines. They occur when the distance between the high and low, and the distance between the open and close, are relatively small


3. Harami ("pregnant" in English).
This pattern indicates a decrease in momentum. It occurs when a line with a small body falls within the area of a larger body. In this example, a bullish (empty) line with a long body is followed by a weak bearish (filled-in) line. This implies a decrease in the bullish momentum


Reversal Patterns

1.Dragon-fly doji

This line also signifies a turning point. It occurs when the open and close are the same, and the low is significantly lower than the open, high, and closing prices.


2. Gravestone doji

This line also signifies a turning point. It occurs when the open, close, and low are the same, and the high is significantly higher than the open, low, and closing prices


3. Star

Stars indicate reversals. A star is a line with a small real body that occurs after a line with a much larger real body, where the real bodies do not overlap. The shadows may overlap.



4. Doji star

A star indicates a reversal and a doji indicates indecision. Thus, this pattern usually indicates a reversal following an indecisive period. You should wait for a confirmation (e.g., as in the evening star illustration) before trading a doji star.