US stock market and recession

JP Morgan bullish on India, sees appetite for gold waning

bkkasi2002@gmail.com (Kasi Viswanathan) — Wed, 14 Oct 2009 06:15:00 +0000

Courtesy : Moneycontrol

Adrian Mowat, Chief Asian and Emerging Market Equity Strategist, JP Morgan, says low central bank rates don't lead to inflation. "There is a misunderstanding with regard to this word liquidity. Just because there is cash or central banks rates are low does not mean that you get inflation. Inflation occurs when there is an excess demand for goods relative to the ability of the economy to supply those goods. At this point in time, we have got a huge output gap seen in the US, Europe, and Japan." Hence, he feels the inflation fear is overdone.

On emerging markets and currencies:

Mowat sees modest moves in Asian currencies. "You have got very large moves in the Turkish Lira and the South African Rand whereas in Asia we are tending to get much more modest moves in the currency. That's because of this anchoring effect of the renminbi that hasn't changed for 15 months." He added that JP Morgan's asset allocation in emerging markets has been driven by currency markets. "We are underweighting on Asia because of this lack of dollar performance due to the renminbi."

On gold:

Gold, Mowat feels, is not a consistent hedge. "We are in the most beautiful spot for gold. Everything is moving in the right direction today which probably means it has hit its high price. I hear a lot of statements being made about gold that are just not statistically true. It is not a consistent hedge. It is not a store of value when you look at the history of gold versus other assets and versus economic growth.

He expects the appetite for gold diminishing going forward. "I suspect that as the world becomes more normal next year, people's appetite to own an asset that doesn't give them a return and costs them money to own will diminish."

Bullish on India:

According to Mowat, JP Morgan has positions in India, Taiwan, Thailand, and the Philippines. "What you have had is this whole series of recovery trades. So, 12 months ago you had position yourself in India and China as they were recovering and then around March you were buying exporters with the expectation that the developed economy would recover which is pretty much what they have done in the third quarter. Now, we are going into some of the laggard economies such as Central Europe which had a real current account crisis, South Africa which has had a different inflation growth dynamic. So, it has been that type of rotation that we have been putting in place. Within Asia, we have positions in is India and Taiwan and some of the smaller markets such as Thailand and the Philippines."

Daniel McCormack, Equity Strategist, Macquarie Securities, feels China, India, and Indonesia are likely to post the strongest growth. "There are parts in Asia which have practically decoupled. What you want to focus on are the big domestic stories in Asia and there are three ‑ China, India, and Indonesia. These three will give you the strongest growth this year and next year in Asia. From an asset allocation perspective, we are very comfortable in playing with domestic stories in those markets. Growth is scarce globally and we would be comfortable buying things like banks in those markets."

On fund flows:

McCormack says inflows to Asia, especially China have started to slow down. He added that investors are switching from Indonesia to Thailand. "Asia saw a huge amount of inflows from foreign investors in the first half of this year. But when you look at the data, it looks like inflows have started to slow in the last 2-4 months. You have seen some interesting country developments as well. Flows into China have slowed down and you are staring to see some pretty significant outflows from Indonesia which was a star performer in the third quarter. Perhaps people are taking their money out and switching to Thailand."

Interest rates in US set to rise:

Robert Doll, Vice-Chairman and Global CIO-Equities, BlackRock, sees interest rates in the US being hiked in H2 CY10. "The consensus is late next year or 2011. I don't think it will be that late. I think middle of next year or second-half of next year. You know our starting point is not 2 or 3. It is zero. I think some statements will have to be made at some point if the economy needs to recover, albeit modestly like we think."

He foresees an economic problem if interest rates are raised now. "If we raise rates now, we will have an economic problem. We will need a little bit more time and a little more evidence of sustainability of economic recovery but they are going to get started."

India pips China to become fastest growing telecom market

bkkasi2002@gmail.com (Kasi Viswanathan) — Tue, 13 Oct 2009 06:26:00 +0000

Courtesy : PTI News

India has pipped China to become the world's fastest growing market, thanks to the various "innovative" ways such as infrastructure sharing and network management outsourcing adopted by it that has also helped telecom operators keep the service charge low, says a report. Terming India as "world's fastest growing (telecom) market", global rating agency Moody's today said in the past 18 months, "India's net additions of 10 million (subscribers) per month have far outpaced China's monthly rate of increase, now below eight million".

About two years ago, China was having the maximum number of new subscribers on a monthly basis.

"Although emerging markets with relatively low penetration continue to have above-average rates of increase in new subscribers, those numbers tend to be slowing, except in India...," Moody's said in a statement.

The agency pointed out that Indian telecom players are using "innovative means such as outsourcing network management and sharing mobile infrastructure to keep costs low in extending services to under-served rural areas".

Moody's said, mobile operators in India frequently share base stations and partner with other firms or independent cell-tower firms in expanding coverage to under-penetrated rural areas from where much of the growth is coming.

Fortis 9 Crore Rights Issue

bkkasi2002@gmail.com (Kasi Viswanathan) — Fri, 09 Oct 2009 13:29:00 +0000

Hospital chain Fortis Healthcare's rights issue, through which the company intends to raise up to Rs 997 crore, opened today.

Fortis Healthcare will allot two shares for every five equity shares held by existing shareholders on rights basis at a price of Rs 110 a piece.

The company will issue over 9.06 crore shares under the rights offering to its existing shareholders.

The offer closes on October 15, Fortis said in a public announcement today.

The rights issue has been on the anvil since last year but unfavourable market conditions had prevented the company from hitting the market.

The company will use the proceeding from rights issue for funding some of its greenfield projects, besides redemption of preference shares, repayment of short term debt, upgrade existing facilities and part funding for acquisition of 10 hospitals from Wockhardt Hospitals, Fortis had earlier said.

The company has fixed August 20 as the record date for determining the shareholders eligible for the rights offering.

Also, "for every equity share allotted on a rights basis, one detachable warrant will be issued and allotted," the public announcement said.

Malvinder Mohan Singh, Shivinder Mohan Singh and Fortis Healthcare Holdings are the promoters of the company.

On the Bombay Stock Exchange, shares of Fortis Healthcare closed at Rs 106.75, down 0.79%.

Which will blink first

bkkasi2002@gmail.com (Kasi Viswanathan) — Wed, 07 Oct 2009 17:21:00 +0000

Courtesy : Marketwatch

Gold and bonds do not usually go up or down together.

But try telling that to the markets over the last two months.

GLD 102.33, +0.05, +0.05%

TNX 32.09, -0.39, -1.20%

20%

10%

-10%

-20%

Since early August, in fact, gold bullion has risen by around 10% and the Treasury's 10-year yield, which moves inversely with Treasury prices, has fallen by nearly 15%.

These moves are substantial, in other words, and more than just day-to-day noise in the data.

What's going on?

Consider first why gold is so strong, reaching a new all-time high this week. One explanation is that this has been caused by a weaker U.S. dollar on the foreign exchange markets. This is certainly plausible, since the dollar has been very weak lately.

Another plausible explanation for gold's strength is that it is discounting higher inflation in coming months and years. And it is indeed hard to imagine that the trillions of dollars that the world's central banks have injected into the financial system won't eventually have an impact on the inflation rate.

Credible as these explanations are, however, they are hard to square with strength in U.S. Treasury securities. A weaker dollar, of course, puts more pressure on the Federal Reserve to raise rates, which would in turn cause Treasury prices to fall, not rise. The same outcome would presumably result from higher inflation, too.

We reach a similar impasse when we consider why Treasury prices have been so strong. The standard explanation is that they are discounting a weaker-than-expected economy and/or deflation, which will cause rates to stay low. But those are hardly the preconditions of a gold bull market.

Either way you look at it, then, we come to the same conclusion: Recent trends are unsustainable. Something's got to give.

Which will it be?

Several factors are pointing to the bond market as being the more vulnerable right now:

The stock market has also performed well of late, and equities would not thrive if the economy were weaker than expected or if deflation were a bigger-than-expected threat. So, in essence, the stock market is betting that gold is right and bonds are wrong.
Bond market sentiment is at near-record levels of bullishness right now, and (according to contrarians) the consensus is rarely right. ( Read my September 15 column on bond market sentiment.)
Sentiment among gold timers is remarkably restrained, if not outright gloomy, suggesting that there is a strong "wall of worry" for a bull market in gold to continue climbing. ( Read my October 6 column on gold market sentiment.)

The bottom line?

Don't be surprised if the bond market over the next several months is markedly weaker than gold.

Mark Hulbert is the founder of Hulbert Financial Digest in Annandale, Va. He has been tracking the advice of more than 160 financial newsletters since 1980.

Why Blackrock prefers to buy Risk Assets

bkkasi2002@gmail.com (Kasi Viswanathan) — Wed, 07 Oct 2009 16:26:00 +0000

Courtesy : Moneycontrol

The best way to invest right now is to buy risk assets like equities, says Robert Doll, the Vice Chairman and Global CIO – Equities of investment management firm BlackRock.

“Forget the short term. We are in a sweet spot for risk assets. We’ve passed the bottom of the recession and are in a recovery, though it’s slow,” Doll told business network CNBC. “That's the sceptical phase when people just don't believe it. All the policy stimulus, all the cash on the sidelines [are present in the system] and so risk assets — equities, the credit side of fixed income — are likely to outperform cash and treasuries.”

Equity markets around the world saw a freefall starting January 2008 as the financial crisis engulfed the world, crashing by as much as 40% and 70% in various countries — India’s BSE Sensex fell from 21,000 to 8,000 in 15 months time. Since March though, markets have seen a substantial rally worldwide with the Indian market doubling from its low.

“This is a tactical call that says risk assets, equities included, should do better,” Doll said, adding, “We're about to start the third-quarter earnings reports. Our guess is that it's going to be good news.”

Doll added that earnings of companies are expected to improve not just on cost cutting but also because of an increase in revenues.

Doll said that, from a geographic standpoint, BlackRock prefers to buy in emerging markets (EMs) [like India and China] as compared to developed markets.

“Emerging markets tend not to have quality but I might turn around and say thatEMs have higher quality of growth, absence of the stranglehold of debt, strong savings rate and a middle class that's growing rather rapidly — that growth is attractive in a world where it's hard to find.”

Even as capital markets around the world were yet to reach their 2007 highs, Doll said that the direction in terms of policy and response to the crisis was what mattered, “and we would guess it's in an upward trend.”

Market Update from Berman

bkkasi2002@gmail.com (Kasi Viswanathan) — Wed, 07 Oct 2009 04:18:00 +0000

Berman's Market Update October 6th 2009

The close: Aussie rules

Courtesy : David Berman

Stocks scored their second day of solid gains on Tuesday, driven largely by commodity producers after the Reserve Bank of Australia surprised markets with an unexpected rate hike.

The Dow Jones industrial average closed at 9731.25, up 131.50 points, or 1.4 per cent. All 30 stocks ended the day in positive territory – even Boeing Co., which announced that it will take a $1-billion (U.S.) charge in its third quarter results due to delays with its 747-8 freighters.

The broader S&P 500 closed at 1054.72, up 14.26 points, or 1.4 per cent. In Canada, the S&P/TSX composite index closed at 11,247.97, up 145.35 points, or 1.3 per cent.

Australia became the first developed economy to raise rates after central banks around the world slashed their key rates in an effort to stimulate their economies, and the rate hike raised optimism among investors that the global economy is on the mend.

The move sent the U.S. dollar sharply lower against a number of currencies and sent commodity prices higher (most commodities are priced in U.S. dollars). Gold surged to a record high of $1039.70 an ounce, up $21.90. Crude oil rose to $70.88 a barrel, up 47 cents.

Though market gains were widespread, commodity producers were the biggest winners. Among Canadian gold stocks, Yamana Gold Inc. rose 7.6 per cent and Goldcorp Inc. rose 4.8 per cent. Among energy stocks, Suncor Energy Inc. rose 2.7 per cent and EnCana Corp. rose 1.6 per cent.

The U.S. dollar fell about 1 cent against the Canadian dollar, to $1.06. (Looking at it the other way, the Canadian dollar rose to 94.3 cents against the U.S. dollar.)

However, currency strategists at Goldman Sachs signalled that the Canadian dollar might have risen too high next to the greenback. In a note, the strategists reminded clients that they had recommended betting against the U.S. dollar as recently as August, but they now recommend closing that trade with the dollar having reach their target price of $1.06

Potential end of dollar-based oil deals helps gold shine

bkkasi2002@gmail.com (Kasi Viswanathan) — Tue, 06 Oct 2009 13:29:00 +0000

Courtesy : Marketwatch

Growing speculation over the potential end to dollar-based trading in the oil market may be part of the reason gold prices have rallied beyond $1,020 an ounce to stand near their highest level in 18 months.

And the strength was kept even as several top officials, including Saudi central bank chief Muhammad al-Jasser, denied the report.

Gulf Arab states, along with China, Russia, Japan and France, are planning to put an end to dollar-based trading in the oil market, according to an exclusive report published Tuesday in the U.K. by The Independent.

"News on gold's expected future role in oil transactions between these trading partners has sent the price past $1,020," said Peter Spina, chief investment analyst at GoldSeek.com.

'News on gold's expected future role in oil transactions between these trading partners has sent the price past $1,020.'

Peter Spina, GoldSeek.com

In place of the greenback, the nations plan to use a basket of currencies, including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar, the report said.

The Independent said the plans were confirmed by both Gulf Arab and Chinese banking sources in Hong Kong.

Several top Gulf central bankers immediately dismissed the talk, and the vice chairman of China's central bank made no mention of such a move in a speech.

The report is "absolutely bullish," for gold, said Peter Grandich, a metals writer at Agoracom. "I've not see gold's fundamentals this bullish in years."

The December contract for gold, the most-active on the Comex division of the New York Mercantile Exchange, closed Monday with a gain of $13.50, or 1.3%, at $1,017.80 an ounce. By the morning in London, December gold was up $2.80 to $1,020.70.

In mid-September, futures prices had climbed past $1,025 to hit a fresh 18-month high. The record intraday price for a front-month gold contract is $1,033.90, set on March 17, 2008.

Many analysts had attributed the gains Monday to higher demand in the face of more weakness in the U.S. dollar. See Metals Stocks.

But, as Spina pointed out, trading gold and other currencies in exchange for oil would "establish gold as a recognized medium of exchange, returning it a step closer to its role as money on a world trade system."

So the price of gold "should continue to find upward price pressures on this news," he said.

At the same time, "the domination of the U.S. dollar is further removed and really, it has been the pricing of oil in dollars for trade that has given it a huge boost in its demand globally," said Spina.

If the dollar is presently being used to transact oil between these nations, then they must use many billions of dollars to do so, he explained.

"If they will switch away from the U.S. buck, then all that demand disappears, the need for the U.S. dollar diminishes, and its value should reflect this," he said.

At last check, one U.S. dollar bought 88.97 Japanese yen, down from 89.49 yen in late New York Trading Monday. One euro bought $1.4726, up from $1.466.

"Transacting in gold will boost demand [for gold] as the U.S. dollar's role diminishes," said Spina.

All in all, "this news is certainly bullish for gold's prospects for further use in international trade going forward," he said.

Myra P. Saefong is MarketWatch's assistant global markets editor, based in Tokyo.

US needs to tighten Credit - Alan Greenspan

bkkasi2002@gmail.com (Kasi Viswanathan) — Sat, 03 Oct 2009 19:10:00 +0000

Courtesy : Bloomberg UTV

Former Federal Reserve chairman Alan Greenspan said the US will have to both tighten credit and raise taxes as the economy pulls out of the worst recession since the 1930s.

"The presumption that we're going to be able to resolve this without significant increases in taxes is unrealistic," Greenspan, 83, said in an interview with Bloomberg Television.

The budget deficit this year is forecast to widen to $1.6 trillion, boosted in part by President Barack Obama's $787 billion stimulus package. Between 2010 and 2019, deficits will total $7.1 trillion, according to the Congressional Budget Office.

Greenspan also said the Fed will have to withdraw money from the financial system to avoid inflation. The central bank has doubled its balance sheet over the last year to $2.2 trillion as it battled the recession that began in December 2007.

The economy will grow at a 3-4% annual pace in the next six months before slowing in 2010, Greenspan predicted. Growth will be aided by a surge in the stock market and inventory restocking by companies. Share prices are likely to "flatten out, even though earnings are doing very well."

The Standard & Poor's 500 Index has jumped more than 50% from its low for the year on March 9, an ascent that's had a "very positive" impact on the economy, Greenspan added.

Job Cuts

The world's largest economy shrank at a 0.7% annual rate from April through June, the best performance in more than a year. An unexpected decline in a gauge of business activity released yesterday, along with a private report showing employers cut more jobs than forecast, indicate a recovery may be slow to take hold.

Greenspan, who was appointed Fed chairman in 1987 by President Ronald Reagan and served until January 2006, praised the steps has taken by his successor, Ben S. Bernanke, to help pull the economy out of recession.

"The Fed has done a splendid job," he said.

Still, the size of the Fed's balance sheet is "not sustainable" and will eventually have to be reduced to "something just north of $1 trillion," he said.

"My concern is that legislation or other actions on the part of Congress may prevent" the Fed from withdrawing the stimulus, Greenspan said. "Unless we sterilise or unwind the big monetary base we've built up, two, three years out inflation really begins to take hold."

Policy Audits

Representative Ron Paul of Texas, a Republican, is leading an effort in Congress to repeal the central bank's immunity to audits of monetary policy.

Greenspan said that the odds are growing that the US will have to enact some form of consumption tax to help reduce the federal budget deficit.

Obama has pledged to bring down the deficit without raising taxes on middle-income Americans. The CBO estimates that this year's budget shortfall will equal 11.2% of the economy, the most since World War II.

Greenspan said he is "quite impressed" by Obama and called him "a very intelligent man."

"But I don't think he is sufficiently in control of a very serious budget problem," the former Fed chief said. He called Treasury Secretary Timothy Geithner "impressive." The two men worked together when Geithner was president of the New York Fed.

Financial Regulations

Greenspan said that an overhaul of financial regulations is needed. Geithner has proposed the most sweeping changes to the rules governing Wall Street in seven decades, including giving the Fed authority to monitor risk across the financial system while stripping it of its consumer-protection role.

"It's very obvious that a lot of things which were in place in the regulatory area in the markets failed," Greenspan said. "It broke down and it’s got to be fixed."

Bernanke has opposed ceding the central bank's power to regulate the safety of financial products to a new agency. Greenspan, for his part, called such power "peripheral" to the Fed's main role.

He also cautioned against responding to the financial crisis with excessive regulation. While agreeing that the government should have a say on executive compensation in the institutions that are receiving government aid, Greenspan voiced wariness about extending that control to other banks.

"You have to be careful here because this should be a relationship between shareholders, directors and executives," he said.

17 stks that were buzzing last week

bkkasi2002@gmail.com (Kasi Viswanathan) — Sat, 03 Oct 2009 19:00:00 +0000

GSPL

Deven Choksey: Gujarat State Petronet, GSPL is a company which is riding more on the oil and gas boom in this country. They have already laid down in 12 districts the pipeline network in Gujarat and they are expanding it to 25 districts inGujarat. The total amount of capacity would be 40mmscmd from 30mmscmd which would be carried by this company in the next 1½ - 2 years time with Rs 120-150 crore capex. It is providing a growth visibility of 40% in the next 2-3 years. From that perspective I find Gujarat State Petronet can be retained in the portfolio and for short term advantage if one wants to sell one can book profit at Rs 100 level and re-enter at lower levels."

Sudarshan Sukhani: I think GSPL continues to be in an uptrend and that means we should see higher levels as time goes by but the easy money has been made not just in this stock but in most of the stocks. I expect a modest target of Rs 115 for GSPL in the next one year or so but there is going to be volatile movement in between that all investors would have to accept. If at all something goes wrong keep a stop around Rs 70, below that we will know that we are in a big correction. "

Parsvnath Developers

Sudarshan Sukhani: The stock has shown a remarkable chart patterns suggesting that a target of Rs 240 is possible. I am not making any comments on the viability of the targets or the possibility or the workings of the company but the charts tell us that it has broken out of a large consolidation pattern and it is heading up. In case things go wrong and realty is one volatile sector keep a stop which should be around Rs 115 for Parsvnath, but there are higher targets."

IDBI Bank

Deven Choksey: IDBI Bank has seen a good performance. Last quarter the NIMs have stabilized and probably they are showing signs to going to about 2.5 NIMs in coming two quarters and after. The company is already is going to write back Rs 500 crore provision which they have made for the Dabhol project once the project get started. With the higher increase in the deposits the kind of bank would get re-rated. It is quoting at a price to book value of around 1 which would get re-rated to about 1.5 so IDBI Bank would be buy on dips and sell on rise if one wants to trade in this particular counter."

Sudarshan Sukhani: Banks are going to outperform the broad market. Now if there is a correction banks will also correct and among the banks I feel IDBI Bank is an out performer inside that sector. I would expect IDBI to cross its all time highs recorded earlier which was at Rs 180 and move higher which means I am looking at a target beyond Rs 200 for IDBI. This is not going to be easy, there will be volatile movements, corrections ups and downs but the trend is up so investors really need to buy on every dip. Just to ensure that they do not get caught keep a stop around Rs 96 and this stock goes up and I hope IDBI moves up. The stock is a buying opportunity for traders and investors and probably needs to be put in your portfolio.

Dishman Pharma

Deven Choksey: Dishman Pharma basically was driven by Abbott stake over of Solvay and as we know 150% of the turnover of Dishman comes out of Solvay. Solvay was troubled because of the cash crunch and with this particular takeover of Abbott. About 14 APIs would definitely find good amount of market due to Abbott sell which Dishman would be supplying to Solvay so from that perspective I find that Dishman Pharma is definitely sitting on a very high prospects. One negative with a larger debt component but in the next two years time it is sufficient amount of cash transaction taking place even Dishman should get addressed. Maybe time being it is quoting at 10 kind of a PE on FY10 earnings estimates. If one gets it at around a little lower 10% it would be a good buy in the portfolio.”

Sudarshan Sukhani: I like Dr Reddy and Cipla. Dr Reddy has been life time highs and Cipla is on the verge of doing so. Clearly those two stocks remain favourites. Third is Ranbaxy which is recovering from a very sharp bear market. So as far as Dishman Pharma is concerned I think there is significant resistance between Rs 280-330 and that is what the targets are for the stock. Since we are very close to targets either the investors buys on a significant correction and that will come about. Keep a stop of about Rs 190 or shift to the three stocks I have named. Dr Reddy, Cipla and Ranbaxy in any order or all three of them are worth buying on every correction.

Sterlite Industries

Deven Choksey: Sterlite Industries is a story which is now emerging very fast with the power business coming up in the next fold as 100% subsidiary. As we know that 10,000 mega watts power plant will get commissioned in 2012-2013 in a gradual manner. This year they will be having 600 mega watt in subsequently next year around 3,000 mega watt total capacity of operations so if one wants to buy and invest for three years 30% plus kind of a return can be easily expected. Over and above that I think all other metal spaces be it aluminium, copper and zinc in all the three spaces they are expected to grow at around 35-40% in the FY10-11 period. So I think we definitely recommend this stock for investment portfolio with a yearly target of around Rs 925 levels.

Sudarshan Sukhani: My charts are suggesting that most non-ferrous metals are going to face heavy weather from now on. If the market continues its rally then Sterlite won’t actually go in decline but that Rs 800-1100 zone in Sterlite is again strong resistance. The maximum targets for the stock in the next one year or one or a half years as of now appears to be Rs 1100. The investor if he wishes to take advantage of that move 300 point move from current levels is going to require a strong stoploss because things can go wrong and for Sterlite the stop loss is somewhere around Rs 720 so keep a stop and look at the metal non-ferrous sector but it is likely to be an underperformer.”

Parsvnath Developers

Deven Choksey: Parsvnath is a stock which one would have to hold on and accumulate at lower levels once again. More because out of 190 plus million sq feet of land bank that they have, they have commissioned about 80 million sq feet of land bank and that is where I think the company is likely to deliver about 30 million sq feet of land bank in the next two years time. Here the company is talking of growing at about 40-50% in the next 2 years so maybe around Rs 200 levels a short term trader can book some profit but a long term investor can wait for a higher price target in the next 2-3 years.

Mindtree

Deven Choksey: After Mindtree took over the control of Aztec, the company has two main streams in IT services and R&D services in the IT side so I think from that perspective the business model is quite good. The valuation of this company is close to around 13-14 times on a FY10 forward basis. So, from that perspective the company looks quite interestingly placed. Maybe one will have to see how much growth it is bringing in two years time but my recommendation is that those investors who are looking at this company for short term they may take an exit around Rs 750 odd levels and those are holding it for long term they may end up getting around 20% average growth in the next two years."

Sudarshan Sukhani: NIIT appears to have good chart but Mindtree itself has some very good charts which is very surprising after significant rallies Mindtree has again broke out of a consolidation pattern and it is suggesting that it is likely to go to its earlier highs between Rs 800-900. That means there is some money to be made from current prices. Keep a stop somewhere around Rs 520 because a stop loss is necessary to prevent large losses. If a sudden correction starts you do not want to hold stocks when a deep correction is going on. But beyond that Mindtree is one of the outperformers in the midcap IT space and is likely to be so in the near term."

Sesa Goa

Deven Choksey: Sesa Goa completely transformed since Vedanta Group took over, from about 10-12 million production capacity. The company is expanding and this year they should be having a kind of a production around 16-17 million tonne of iron ore and next year it would be around 25 million tonne of iron ore. They are expanding to bring it up to 50 million tonne of iron ore production in 2012-2013 so they are putting in good amount of money about Rs 6000 crore worth of capex for organic as well as inorganic growth is being planned. So, in my view I think the company is available also at a valuation which is quite attractive so from that prospective one can definitely hold on to this company. Since it is a cyclical play any down cycle should be used to accumulate this stock further and stay invested for three years."

Sudarshan Sukhani: Sesa Goa gives an impression of forming a major top. The charts suggest that the stock prices are looking tired. Ten weeks ago it was at Rs 255 now it is at Rs 267. The Nifty has done a lot in this period so my impression is that the volatile movements that we are seeing in this stock it fell down 20% then rallied almost 50% these volatile movements are signs of a large top formation. It has move up 6 times in the last 6 months. So there are trading opportunities in Sesa Goa but I would not advice any investor to enter now. For a trader look to buy, keep a stop at Rs 255 and then you could look at Rs 300 or 300 plus but that is not enough for an investor."

Oil India

Deven Choksey: Oil India is clearly a buy on dips as recommendation. The company is quoting at a discount to ONGC even though I think the size of the company is just 10% of ONGC. The next 2-3 years growth programme is quite stupendous. Rs 4500 crore worth of capex is being executed and that is going to result in to higher oil and gas supply from the Oil India side. I see a continued growth in absence of a major subsidy burden. I see a continued growth coming from Oil India in excess of 30% on the bottomline basis so from that prospective one can buy Oil India at lower levels."

Arvind

Sudarshan Sukhani: I think there is good news on the charts for Arvind. First the worst seems to be over and that saying a lot because Arvind had seen highs of Rs 150 earlier and fell down to Rs 15 but those bad days are probably finished for the stock. We can see a target of Rs 55-60 that means there is a lot of headroom even currently at current prices. There is a stop which is roughly around Rs 30. The stop is wide because the stock has rallied a lot an the stock needs time to catch up. But in either case whether you are in investor or a trader you might like to look at the stock, a buy on dips and you could expect a very significant gain over the next one year."

Bharti Airtel

Sudarshan Sukhani: Bharti was in a very narrow zone for four months so the upside targets are also limited. We are looking at a value of somewhere around Rs 500 at which point we would say okay Bharti has met its targets. But that is about all for Bharti. Beyond that it will move with the broad market."

How To Get More Twitter Followers Using The TOP Twitter Directories

bkkasi2002@gmail.com (Kasi Viswanathan) — Wed, 30 Sep 2009 17:57:00 +0000

How To Get More Twitter Followers Using The TOP Twitter Directories

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Interview with Jim Rogers

bkkasi2002@gmail.com (Kasi Viswanathan) — Wed, 30 Sep 2009 14:49:00 +0000

Maverick investment guru Jim Rogers,

who has a pessimistic view on the state of developed economies and what is being done to counter the recession, is not buying into equity and commodity markets at this stage. Rogers attributed the recent run-up in equity markets to the various stimuli packages released around the world. On commodities, Rogers said he owned base metals and — among precious metals — gold but wouldn’t buy those at current levels, given the recent rally in commodities.

The long-term call on the dollar was that it would be “a disaster,” Rogers said, but added that he was positive on the Japanese yen.

Rogers, who last year shifted base from the US to Singapore, said he was long-term positive on Chinese equities. Among other emerging markets (EMs), Rogerssaid he wouldn’t buy anything in the Russian market, though Brazil, which was a natural resource-rich country, looked better managed now, while the Indian stock market looked expensive due to its recent rally. “Most EMs have been very strong in the past year after the collapse or the fall of 2008, most EMs have gone up a lot. I don’t like to buy anything that has gone up a lot,” he said. “I am very worried about the Western economy, I don’t think that the problems are solved in the West and if you start seeing more problems in the West, it is going to have an effect on most markets around the world as certainly some of the EMs. The EMs, which have a lot of raw materials or commodities, would probably do better than the others but again even they will be affected if we have more problems in the West.”

Here is a verbatim transcript of Jim Rogers’ exclusive interview on CNBC-TV18. Also watch the accompanying video.

Q: It has been a big run for equity markets first and foremost, what have you made of it?

A: The governments around the world are pouring huge amounts of money into the world economy. It has to go somewhere and the easiest, best way for it to go is in the financial markets.

Q: It has also concomitant with a big fall in the dollar and there is a call now for greater weakness in that currency, would you concur?

A: I am not optimistic about the US dollar long-term. In fact, the US dollar long-term is going to be a disaster. However, there are many people in the world right now who are terribly pessimistic about the dollar including me, many people have sold the dollar short, and so it would not surprise me if there were not a big rally. If a rally comes, I plan to sell that rally but I am not selling the dollar down here.

Q: What is your call on the strength that the yen has seen and the kind of a nervousness that most of those export-oriented markets are exhibiting? Where do you see it headed from here?

A: I own the yen so I am very pleased to see the yen going higher. Various things are happening in Tokyo and Japan. They are the second largest creditor nation in the world plus their government has given big incentives for people to bring the yen back into Japan. Billions of yen have been invested outside of Japan and now there is good reason for them to bring it back.

So you have a new government [in Japan], you have incentives to bring the yen back, you have the carry trade unwinding, there are many reasons for the yen to continue to go higher. I own the yen and I hope it does go higher.

Q: What about the base metals, we have seen a lot of volatile moves across most of those base metals, where do you see them headed from here?

A: Base metals have had a huge rally, as you have pointed out. I know I wouldn’t be buying the base metals right now, I do own base metals — I am not selling base metals — but I don’t like to jump on a train, which is moving at a rapid rate. Base metals have gone up a whole lot in the last nine, 10 months. So I am not doing anything except for watching.

Q: You have tracked and watched the Chinese market as well for many years, there is concern on where that market might be headed and why it is lagging the performance of others?

A: I would hardly call it lagging the performance of others. The Chinese market doubled between the fall of last year and August of this year. So it was one of the strongest markets in the world, if not the strongest. It has calmed down in the last month or two but anything that doubles in ten months should slow down and consolidate. Who knows where it is going to go from here but I own Chinese shares, I have not sold any of my Chinese shares because longer-term I am very optimistic about China.

From the emerging and Brazil, Russia, India, China (BRIC) basket, what would be your top pick then right now in terms of markets?

A: I wouldn’t buy any of them. I would never buy the Russian market. The BRIC is some kind of an artificial thing, which some marketing people put together. I would not ever buy the Russian market. I own China. Brazil is a natural resource-based economy and it is being better managed these days and it has been in the past. So Brazil probably has a good future though I don’t own any Brazilian stocks. The Indian stock market has run up a lot in the last year or so. So I don’t think I would buy it either. I am not buying shares anywhere in the world as we speak.

Q: What about gold?

A: I own some gold and I am optimistic about the price of gold but I don’t think I would buy it either. The gold is near its all-time high, I think I would rather buy silver for instance if I had to buy a precious metal. However, I am not buying either at the moment. I certainly would not sell any precious metals — if they go down, I plan to buy more and maybe a lot more.

Q: How is the fund flow situation looking at least for our markets — there is a lot of appetite from foreign investors but in general how is the mood looking across that front?

A: I am not buying any emerging markets (EMs). If I were to buy EMs — I had recently gone to Sri Lanka to look at it as an EM. I have not bought anything there but the Sri Lanka market has been extremely strong in the last year. Most EMs have been very strong in the past year after the collapse or the fall of 2008, mostEMs have gone up a lot. I don’t like to buy anything that has gone up a lot. I am very worried about the Western economy, I don’t think that the problems are solved in the West and if you start seeing more problems in the West, it is going to have an effect on most markets around the world as certainly some of the EMs. The EMs, which have a lot of raw materials or commodities would probably do better than the others but again even they will be affected if we have more problems in the West.

Bharti MTN Deal terminated

bkkasi2002@gmail.com (Kasi Viswanathan) — Wed, 30 Sep 2009 14:45:00 +0000

The much-anticipated deal between India's Bharti and South Africa's MTN that aimed to merge the two telecom giant has failed yet again. The contentious issue of dual listing proved to be the deal breaker, learns CNBC-TV18.

Bharti, in a statement, said, the company has decided to disengage itself from the deal. “We hope the South African government will review its position in the future and allow both the companies an opportunity to re-engage.” The statement further said that the South African government had expressed its inability to accept it in the current form. Also, it stated, Bharti would continue to explore international expansion opportunity and could also re-look at the deal if the SA government changes position.

Betting on the Weaker Buck

bkkasi2002@gmail.com (Kasi Viswanathan) — Sat, 26 Sep 2009 00:52:00 +0000

Courtesy : Laura Mandaro - Market Watch

Foreign stocks, bonds, currencies -- even Coca-Cola -- are plays on weak dollar

Some timely investing strategies attempt to profit from this distaste. Foreign stocks, bonds and currencies, along with commodities, tend to rise when the dollar declines.

An uptick in deal flow probably says more about the credit markets than equities, argues Barrons.com's Bob O'Brien.

Even many true-blue American companies, such as Coca-Cola Co. (KO 52.97, +0.63, +1.20%) , can take advantage of a falling greenback because so much of their sales come from overseas.

All of these assets can get an easy boost from currency translation. When the dollar falls, another currency rises.

Commodities generally gain when the dollar loses because they are priced in dollars. Buyers of these commodities must spend more dollars to own an ounce of gold or a barrel of oil when the greenback is worth less.

And a U.S. company that sells goods in pesos, for example, gets a bonus when it translates those earnings or its share price into dollars.

Dollar daze

These trends have been in place since March. That's when a surge in demand for stocks and currencies in countries seen as coming faster out of recession -- such as Brazil -- triggered a slide in the greenback.

Many analysts say it will be tough for the dollar to rebound much while the Federal Reserve keeps interest rates near zero percent and extends its special cash programs --two conditions that make the dollar attractive as a currency to borrow rather than buy. See related story on dollar carry trade.

DXY 76.81, -0.09, -0.11%

The dollar index (DXY 76.81, -0.09, -0.11%) , which measures the U.S. dollar against a basket of its rivals, has fallen 14% since early March, when it had been trading near three-year highs.

The losses are even steeper against currencies from countries that export a lot of commodities, and which are expected to benefit from a coming wave of infrastructure building.

Since early March, the greenback has lost about 30% against the South African rand, 26% against the Australian dollar and 23% against the Brazilian real.

Meanwhile, emerging markets stocks -- as measured by an exchange-traded fund that tracks the MSCI Emerging Markets index (EEM 38.24, +0.15, +0.39%) -- have surged 81%. Oil futures have doubled from their February lows.

"The market is focused on emerging markets leading the world out of recession now, which is not helping the dollar," said Richard Batty, global investment strategist at Standard Life Investments, which manages about $200 billion in assets.

Here are five ways to take advantage of further drops in the U.S. dollar:

1. Currencies.

Exchange-traded funds from Rydex Investments, WisdomTree Investments, Invesco PowerShares and others provide direct exposure to foreign currencies relative to the U.S. dollar. See related story on currency ETFs.

Interest in currencies has increased over the past year after asset classes that were supposed to perform independently, such as stocks, corporate bonds and real estate, crashed together, said Anthony Welch, a portfolio manager at Sarasota Capital Strategies, a wealth manager in Florida.

With foreign exchange trading, "It's always one currency versus another. There's always something going up," said Welch, who helped start The Currency Fund (FOREX 10.41, 0.00, 0.00%) in May to capitalize on this burgeoning interest.

Other mutual funds focused on currencies include Franklin Templeton Hard Currency Fund (ICPHX 9.63, +0.03, +0.31%) , Merk Hard Currency Fund (MERKX 11.89, 0.00, 0.00%) and Rydex Weakening Dollar 2X Strategy Fund. (RYWDX 20.15, +0.07, +0.35%)

Some timely investing strategies attempt to profit from this distaste. Foreign stocks, bonds and currencies, along with commodities, tend to rise when the dollar declines.

An uptick in deal flow probably says more about the credit markets than equities, argues Barrons.com's Bob O'Brien.

Even many true-blue American companies, such as Coca-Cola Co. (KO 52.97, +0.63, +1.20%) , can take advantage of a falling greenback because so much of their sales come from overseas.

All of these assets can get an easy boost from currency translation. When the dollar falls, another currency rises.

Commodities generally gain when the dollar loses because they are priced in dollars. Buyers of these commodities must spend more dollars to own an ounce of gold or a barrel of oil when the greenback is worth less.

And a U.S. company that sells goods in pesos, for example, gets a bonus when it translates those earnings or its share price into dollars.

2. Global bonds. Corporate and sovereign debt, which retail investors can access through mutual funds, are denominated in currencies that may be rising against the U.S. dollar. Investors have also been benefiting from higher yields on this debt.

For the past five years, global bonds as tracked by the Barclays Capital Global Aggregate bond index returned 6.11% on an annualized basis.

That compares with a 5.03% annualized return for its U.S. counterpart. The S&P 500 (SPX 1,044, -6.40, -0.61%) returned less than 1% per year, annualized, over that time.

Robert Siewert, who oversees some of Philadelphia-based Glenmede Investment and Wealth Management's $17 billion in assets, said he prefers to use mutual funds to spread the risk of a foreign issuer's default and to gain access to local research on the debt. Returns from the three global bond mutual funds Glenmede is using have ranged between 13% to 18% so far this year, Siewert said.

There's wide variety among the strategies fund managers can take in a global bond portfolio: Some focus on government debt; others also buy corporates; some include U.S. debt. This year, emerging market bonds have been a bright spot.

3. Foreign stocks. The weak U.S. dollar has boosted U.S. investors' returns on their overseas investments. It's provided added juice to emerging-markets stocks that are making big gains in their local markets and helped developed markets outside the U.S. outperform the S&P 500. See related story.

The MSCI EAFE index, as of Sept. 24, was up 26% in U.S. dollar terms this year. But in local currencies, the index of developed countries' markets had only risen 18%. The difference came from the fall in the dollar.

4. U.S. multinationals. American companies that generate substantial sales outside of the U.S. are often the choice of stock investors who are leery of overseas investments but want the currency advantage, said Paul Hickey, co-founder of Bespoke Investment Group in Harrison, N.Y.

Earlier this month, his firm looked at the S&P 500 companies that book more than 50% of their revenues outside the U.S. -- a group that tends to do better when the dollar falls.

Among those internationally oriented companies, shares of several had hit new multi-month highs.

These include more obvious international plays, such as General Electric Co. (GE 16.35, -0.02, -0.12%) , 3M Co. (MMM 73.80, -0.30, -0.40%) and Caterpillar, Inc. (CAT 51.13, -0.07, -0.14%) , along with less well-known health and technology providers such as Xilinx Inc. (XLNX 22.65, -0.52, -2.24%) , Waters Corp. (WAT 54.77, -0.32, -0.58%) and Teradyne Inc. (TER 9.15, +0.15, +1.67%) .

APA 91.61, -0.37, -0.40%

Energy firms Halliburton Co. (HAL 26.79, +0.05, +0.19%) and Apache Corp. (APA 91.61, -0.37, -0.40%) have also rallied.

"What you generally get is a lot of technology, industrials and energy companies. What you don't tend to have is consumer discretionary and financials," Hickey said.

But some brand-name U.S. consumer companies, such as H.J. Heinz Co. (HNZ 39.77, +0.05, +0.13%) and Coke, also made Bespoke's list. They both make more than half of their revenues outside the U.S.

5. Commodity-linked stocks and funds. A big part of the recent rally in oil, gold and other commodities is the falling dollar, analysts say.

"The dance between the dollar and commodities is becoming wearisome to watch," wrote Mike O'Rourke, chief markets strategist at New York institutional brokerage BTIG earlier this week.

William Van Keulen, an investment manager at Carnick & Co. in Colorado Springs, Colo., says buying mining stocks such as Southern Peru Copper Corp. (PCU 29.94, -0.27, -0.89%) and commodities is part of a three-pronged strategy designed to benefit from the weaker dollar.

Gold "is a protection against your currency falling," he said.

For all these strategies, it helps to be nimble. The dollar's decline could easily reverse.

A move away from stocks and into some safety assets, such as U.S. Treasurys, actually helped lift the U.S. dollar index for the week. See Currencies.

"The dollar can work under two scenarios: If it's leading the world out of recession or risk aversion remains high," said Standard Life's Batty.

Batty's asset-allocation team looks for the dollar to rebound, in fact, because they expect the U.S. economy, helped by huge monetary and fiscal stimulus, to emerge stronger from recession than Europe and Japan.

"In between," he said, "it's problematic for the dollar -- the market is not sure if the U.S. leading the other developed economies out of recession."

Unscrewing Shareholders

bkkasi2002@gmail.com (Kasi Viswanathan) — Tue, 15 Sep 2009 18:15:00 +0000

Courtesy : Daniel Fisher - Forbes

By throwing out the SEC's settlement with Bank of America, a New York judge raises ugly questions about securities fraud cases.

A federal judge in New York got his dander up about a practice that is routine in courts around the country: making shareholders pay twice for securities fraud.

In a blistering ruling released Monday, U.S. District Judge Jed Rakoff rejected a settlement between Bank of America ( BAC - news - people ) and the Securities and Exchange Commission over $5.8 billion in bonuses it paid to Merrill Lynch employees last year, allegedly without warning shareholders. In that settlement, BofA denied lying to shareholders but agreed to pay the SEC $33 million and to never do it again.

This struck Rakoff as unfair. Why should shareholders hand the government $33 million to settle claims that management hid information from them?

“To have the victims of the violation pay an additional penalty for their own victimization was enough to give the Court pause,” Rakoff wrote in an acid 13-page ruling.

The ironic part is this is exactly what happens in most securities fraud cases. A company’s stock price falls, the class-action lawyers file a complaint, and after months of expensive pretrial jousting, the parties settle with the company’s shareholders picking up the tab. The fact that insurance is often the source of the money doesn’t change things: Insurance companies aren’t charities--they collect those payouts by increasing rates.

The most egregious examples are so-called derivative suits, in which the class-action lawyers sue management, supposedly on behalf of the company itself. Settlements rarely come in the form of cash paid by human managers. They often consist of minor changes in the wording of corporate governance documents or pledges, like Bank of America's promise to the SEC never to do it again. Lawyers justify the settlements--which yield them cash fees--as helping to improve the quality of management.

I agree with the judge that the shareholders should not have to pay twice. The problem is that Ken Lewis was deceived, and when he tried to back out of the deal to buy Merrill-Lynch,

One California law firm, Robbins Umeda, seems to specialize in this sort of litigation. Coincidentally, its targets are sometimes the same companies being sued for shareholder fraud (a different type of claim, made by investors against the company) by another San Diego firm, Coughlin Stoia Geller Rudman & Robbins. (The founder of Coughlin Stoia, William Lerach, is in jail for paying plaintiffs to gain control of securities class-action cases.)

In the Bank of America case, Rakoff ridiculed the idea that the payment of shareholder money to the government would somehow make the bank a better company.
“The notion that Bank of America shareholders, having been lied to blatantly in connection with the multi billion-dollar purchase of a huge, nearly bankrupt company, need to lose another $33 million of their money in order to 'better assess the quality and performance of management’ is absurd,” he said.

Rakoff has taken a jaundiced view of securities class action tactics in the past. In an April hearing, he blasted lawyers for the Iron Workers union over the common practice of “portfolio monitoring,” where plaintiff lawyers install software to watch the holdings of pension funds and tip them to suddenly falling prices that might yield a claim.
Rakoff called the practice “as obvious an instance of conflict of interest as I have ever encountered in my life,” because it gave lawyers ostensibly working for the pension fund an incentive to advise them to sue. When a lawyer noted that the practice is widely used, Rakoff said, “well, I’m being educated.”

“So you think this inherent conflict of interest exists throughout the United States?” he asked. “And what authority can you bring to my attention that says it’s not a blatant, flagrant conflict of interest?”

In the Bank of America ruling, Rakoff noted that normally a civil settlement is “close to unreviewable” because society prefers opponents to settle their disputes out of court. But in this case, Rakoff said, the SEC was asking his court to use its contempt powers to enforce the agreement by BofA to never repeat what it didn’t admit to doing in the first place.

That gave him the opportunity to probe into the terms of the settlement, which was announced the same day the SEC filed suit. Rakoff criticized the government for failing to target individual executives who allegedly hid the agreement to pay Merrill bonuses from shareholders. If, as the SEC said, they were protected because they relied on legal advice, Rakoff asked, why not go after the lawyers?

He also criticized Bank of America for agreeing to pay $33 million to settle a case it said was without merit.

“It is one thing for management to exercise its business judgment to determine how much of its shareholders' money should be used to settle a case brought by former shareholders or third parties,” Rakoff said. “It is quite something else for the very management that is accused of having lied to its shareholders to determine how much of those victims’ money should be used to make the case against the management go away.”

In closing, Rakoff offered both sides a challenge: Try this case, and let the truth emerge. He instructed them to prepare for a trial date of Feb. 1.

Financial Opinions Nosedive

bkkasi2002@gmail.com (Kasi Viswanathan) — Tue, 15 Sep 2009 17:26:00 +0000

Courtesy : Karlyn Bowman - Forbes

Last year this time, the markets nosedived after the Lehman bankruptcy on Sept.14, 2008.
One year later, how has public opinion fared? How do Americans feel about the institutions that have dominated the headlines in our cascading financial crisis? Fortunately for students of public opinion, several survey organizations have been asking identical questions about our confidence in the financial world for decades.

Yahoo! Buzz In 1977, Harris asked about people "in charge of running Wall Street," and 19% of those polled expressed a great deal of confidence. Over 30 years later, in Harris' February 2009 survey, only 4% had that same level of confidence, 33% had "only some," and 57% had "hardly any at all." In terms of high confidence, Wall Street ranked lower this year than any of the other 15 institutions Harris examined--even lower than Congress, which was at 9%, an institution whose ratings are usually low.

In Harris' trend, high confidence in Wall Street declined throughout the 1980s, a downward spiral that began before Oliver Stone's film by that name came out in 1987. The low point for the decade, which was 8%, came in 1989. Whether his sequel, Wall Street 2, which will be released in April 2010, will have any effect remains to be seen. In an interview with TheNew York Times last week, Stone and the film's star, Michael Douglas reported being surprised by the number of people who were attracted to the original film's seductive villain, Gordon Gekko.

Confidence in Wall Street picked up in the halcyon economic times of the late 1990s, in 1999 and again in 2000, and during these years 30% said they had a great deal or quite a lot of confidence in Wall Street.

Another question Harris asks about Wall Street gives bulls and bears support. More people (54%) in 2009 still said Wall Street benefits the country than said it harms it (39%). In 1996, however, when Harris first asked that question, 70% were bullish on Wall Street. 54% is the lowest response in the history of the question.

High confidence in those running "major companies" in Harris' data has declined in the past year, but not as sharply as confidence in Wall Street. Eleven percent have high confidence today. In Gallup's question about "big business" this year, 16% had a great deal or quite a lot of confidence, the lowest level since the question was first asked in 1973. And the gap between high confidence in big and small business was the largest ever in the poll (16% to 67%).

Gallup started asking about confidence in banks in 1978, when 55% of those surveyed said they had a great deal or quite a lot of confidence in them. The savings and loan scandal took a toll, and by 1990, just 36% expressed this level of confidence. Banks recovered some in the 1990s, with 43% expressing a great deal or a lot of confidence by the end of the decade. This year, in two questions asked by Gallup, confidence in banks hit new lows. In Gallup's latest question from June, just 22% expressed a great deal of confidence, down from 32% in the 2008 poll.
Restoring trust in the banking system won't be easy, and it may be a bottom-up process. While only 18% had a great deal or quite a lot of confidence in U.S. financial institutions or banks in Gallup's April poll, 58% had high confidence in their main or primary bank. Only 11% had very little confidence in their own bank, but they planned to stick with them. Fewer than 1 in 10 said that they intended to decrease the amount of money that they had with their bank or planned to switch to another bank in the next three months. Whatever the trajectory of opinion in the next few years, we know that it will, like the markets, have its ups and downs.

Karlyn Bowman, a senior fellow who studies public opinion at the American Enterprise Institute, writes a weekly column for Forbes.

Invested in Gold - Book Profits Now

bkkasi2002@gmail.com (Kasi Viswanathan) — Thu, 10 Sep 2009 12:54:00 +0000

Gold is glittering, and making the most of this gold rally are gold exchange traded funds (ETF), with their asset size jumping four times to Rs 900 crore since 2007. Experts suggest it is time to books profits. CNBC-TV18’s Priyal Guliani reports.

After seeing a lacklustre start, gold ETFs are riding high; between May–July 2009, net inflows in gold ETFs has jumped to Rs 180 crore–the highest that the category has witnessed since its inception in 2007. The asset size too has grown to Rs 900 crore.

Speaking on the reasons for this, Lakshmi Iyer, Head–Fixed Income and Products, Kotak MF, said “People have realized that ETFs as an option to own gold is a winner and also increase in the risk appetite has led to enhanced allocation for hedging."

Gold ETFs have been top performers across all categories since 2008. In the last one-year, the funds have given 35.87% returns. For the two year period, the average category returns have been 30.29%.

However, between March 09 and August 09, gold ETFs have not been able to match the equity returns witnessed during the same period.

Iyer, commenting on the way ahead, said, “Broadly, long-term gold remains bullish. However, in the nearer term there could be profit taking which would bring down levels below USD 1000 an ounce."

However, experts have a word of caution. They say investors should be wary to enter at these high levels equity and gold cannot rise together for a long period. But for those who already have 15–20% of gold in their portfolio, some say this could perhaps be a good time to book pofits.

Top 5 Books for Investors

bkkasi2002@gmail.com (Kasi Viswanathan) — Tue, 08 Sep 2009 18:08:00 +0000

Courtesy : Marv Dumon - Forbes

It's imperative for young adults and professionals to start investing early. One of the main reasons for doing so is to obtain the power of compound interest; by holding long-term investments, one can allow his or her assets to generate more returns. Investing just a few years earlier could translate to tens of thousands, if not hundreds of thousands, of additional funds for your retirement nest egg.

But while it is important to invest early, it is also important to invest wisely. Let's take a look at five classic investing books. They can provide indispensable business and finance insights for young investors - and they're a good read, too!

"Rich Dad, Poor Dad" (2000) by Robert Kiyosaki

This classic is a must-read for young investors. Kiyosaki's view is that the poor and middle class work for money, but the rich work to learn. He stresses the importance of financial literacy, and presents financial independence as the ultimate goal and a way to avoid the rat race of corporate America. The author points out that while accounting is important to learn, it can also be misleading. Banks label a house as an asset for the individual, but because of the required payments to keep it, it can really be a liability in terms of cash flow. Real assets add cash flow to your wallet. Kiyosaki advocates investments that produce periodic cash flow for the investor while providing upside in terms of equity value. Real estate and stocks that provide dividends are viewed favorably. The author advises that America's educational system is designed to keep people working hard for the rest of their lives and that the school system does a poor job of teaching people to create enough wealth so they won't have to work anymore. Kiyosaki also highlights the importance of tax planning. (For more suggested readings, check out 10 Books Every Investor Should Read.)

"The Essays of Warren Buffett: Lessons for Corporate America" (1997) by Warren BuffettIn his essays,

Warren Buffett - widely considered to be modern history's most successful investor - provides his views on a variety of topics important to corporate America and shareholders. Young investors can get a glimpse of the interface between a company's management and its shareholders, as well as the thought processes involved in enhancing a company's enterprise value. Buffett's essays include discussions on corporate governance, finance and investing, alternatives to common stock, common stock, mergers & acquisitions, accounting and valuation, and accounting policy and tax matters. Buffett outlines his basic business principles, and as the steward of Berkshire Hathaway, informs the shareholders of the company that their mutual interests are aligned. He has a philosophy of bringing in talented managers at portfolio companies and leaving them alone. He advocates purchasing shares of businesses at times when these stocks are trading at a discount from their inherent value. He opposes following investing trends. (For more, read Warren Buffett: How He Does It and Warren Buffett: Road To Riches.)

"Beating the Street" (1994) by Peter Lynch

Peter Lynch is one of the most successful stock market investors and hedge fund managers of the 20th century. He started out as an intern at Fidelity Investments in the mid 1960s. Nearly 11 years later, he was tasked to manage the Magellan Fund, which at the time had close to $18 million in assets. By 1990, the fund had grown to a whopping $18 billion in assets with nearly 1,000 stock positions. During this time, the fund boasted average returns of more than 29% per year. "Beating the Street" allows the reader to peek into Lynch's mind and thought processes in terms of deciding whether to buy or sell a stock. Lynch believed that an individual investor could exploit market opportunities better than Wall Street, and encourages investors to invest in what they know. (For more, check out Pick Stocks Like Peter Lynch and Top 5 All-Time Mutual Fund Managers.)

"The Intelligent Investor" (1949) by Benjamin Graham

This book was written in 1949 and has been hailed by Warren Buffett as the best investing book ever written. Benjamin Graham is considered the "father of value investing," a paradigm that advocates the purchase of stocks that appear underpriced relative to their inherent value, which is determined through fundamental analysis. Graham delves into the history of the stock market, and informs the reader on conducting fundamental analysis on a stock. He discusses various ways of managing your portfolio including both a positive and defensive approach. He then compares the stocks of several companies to illustrate his points. (Learn about the man who taught investing to the Oracle of Omaha in The Intelligent Investor: Benjamin Graham.)

"Think and Grow Rich" (1937) by Napoleon Hill"

Think and Grow Rich" was written by Napoleon Hill during the Great Depression and has since sold more than 30 million copies worldwide. Hill conducted extensive research based on his associations with wealthy individuals during his lifetime. At the suggestion of Andrew Carnegie, Hill published 13 principles for success and personal achievement from his observations and research. These include desire, faith, specialized knowledge, organized planning, persistence, and the "sixth sense". Hill also believed in brainstorming with like-minded people, whose efforts can create synergistic energy. This book conveys valuable insights into the psychology of success and abundance, and should be considered a priority read given this age's emphasis on shock-value entertainment and negative news. (We provide some classic and lesser-known titles to add to your collection, read Investing Books It Pays To Read.) The best investors did not emerge overnight, but honed their skills through years of thought, research and practice. Reading these respected tomes will help you begin your journey into investing on the right foot.

by Marv Dumon, (Contact Author Biography)

Marv Dumon serves as a mergers and acquisitions advisor for a middle-market financial services firm specializing in industrial and energy companies. He maintains established relationships with more than 500 mid-market private equity firms. He also serves as a national business and finance columnist for Examiner.com.

Whats propelling US Markets and Indian Markets?

bkkasi2002@gmail.com (Kasi Viswanathan) — Tue, 08 Sep 2009 09:06:00 +0000

Indian Markets are on the verge of creating new highs and stocks that have traded below 30 DMA are now creating new highs - so what is new that is aiding in this move for the markets to post significant highs.

As of now the earnings season has stopped and some are on anvil,IPOs like NHPC, Adani Power have bombed at markets and are quoted right now lower than listing price, the liquidity and the greed to make money are key drivers which are at present driving markets (Not to mention the FII greed too, which has given room for more news in leading dailies and Online forums).

The real market turnaround or the V shaped recovery is not yet arrived , but what we could gather from news and industrial output as well as economy revival is concerned is the world has now really started to give thrust to core sectors like Power, Infra and other key sectors which were not given additional or required thrust
and specifically Agricultural output.

Inflation is again popping up on charts by rise of essential oil prices, food items and with Crude subdued somewhat, the first and foremost task of any economy is to curtail the rising food prices and In India it is gaining huge momentum. Indian top brass needs to crackdown on hoarders, people who create a virtual demand for food items and jack prices at their will need to be punished.

US Markets are also propelled by moderate cuts in stimulus and lesser news on Banks going down / bankruptcy filings. But now the takeover and Merger talks are much and to quote specific Oracle / Sun takeover was significant. Dollar is still not fading in terms of demand as it is being virtually bubbled to trade and like the Chinese Markets are in volatile bubble territory.

We have heard news on IPOs , QIPs, takeovers and now Bharti , telecom giant has also plans to takeover and merge MTN into its fold and create a niche south africa market and plans to generate a bigger revenue is in final stages of talks.

What we need at this moment is we need to look at past, reflect what caused the downfall and what are parameters which is still driving liquidity and how to stem the liquidity should be explored. Swiss money has already been quote back and forth in papers, but can they publish what they have done with the revelation of how much money is being held by individual / corp in swissbanks. Governments are not transparent and the authorities at Corporate/ Markets level need to tighten screws on Madoffs be it in India or USA.

Coming up next is a feature on Market Outlook for December 2009.

BNP Paribas revises Sensex target to 20,100

bkkasi2002@gmail.com (Kasi Viswanathan) — Thu, 20 Aug 2009 17:59:00 +0000

Clive McDonnell, Head of Equity Strategy, BNP Paribas Securities, in an interview with CNBC-TV18 said he had raised his Sensex target to 20,100 and added that he was positive on capital goods, banks and consumer goods. He further said that the Reserve Bank of India (RBI) was unlikely to raise rates anytime soon.

McDonnell said that investors were nervous about the 20% correction in the Chinese market and were also underweight on Korea, Taiwan and India.

Q: What is the region looking like given the recent turbulence in China- are investors appearing a bit nervous or do you think China will hold out?

A: Investors are definitely nervous at the moment; they are quite concerned about this 20% drop that we have seen in China. But what is lending a bit of support to the market today is the so called AH premium - that is the premium of the ‘A’ listed shares trade over their H counterparts listed in Hong Kong, that got down to about 20% today. We did see that just a touch below its long-term average and its certainly lending support to the A share market. I think investors today have taken note of that that the As are up there, they are average in terms of the premium that they normally trade over H, I think that is lending a bit of strength to the other China market today.

Q: Is this increase in volatility indicating anything about risk appetite though, is money starting to pullback?

A: I think the source of the pick in volatility goes back to the dollar and we have seen a little bit of dollar strength come through. Certainly looking at the DXY (Dollar Index) - it has come off its lows that we saw about two weeks ago and that in turn has led investors to wonder if they should be reducing a little bit of beta in portfolios and as a result we are seeing a bit of pick up in volatility but it all depends on where do you think the dollar is going from here.

At BNP we think the dollar is in a phase of structural decline and hence we would see that the weakness in equity markets as being a buying opportunity because we think incrementally the dollar is likely to resume its downward trend that helping in term of flow of funds into Asia including India and that over time will bringing down the volatility in markets. A: Certainly would be not just for India but for other markets that we like such as Korea-Taiwan, we would be a buyer on weakness because we think in terms of the most strategy long-term money there isn’t mentality out there of buying on dips; mainly because of the big underweight investors have in three of the four key markets in Asia.

As we look at investors waiting for Korea, Taiwan and India compared to their benchmark, they are still quite significantly underweight, ofcourse China they continue to be overweight. But those three important markets they remain underweight position so hence we that there mentality is definitely trying to lift exposure on any weakness in those three key markets.
Q: Do you have reason to scale down your 12 month Sensex target from the earlier level of 20,000 odd that you had?A; Actually that represents quite a significant upgrade from where we were previously, so we have raised our index targets yesterday across the board not just in India and we are now looking at 20,000 on the Sensex. I think it’s important to keep in mind what the implied valuation level of that is. On a price to book basis you are looking at about 3 times for the Sensex at our target; market currently trading probably by 2.6 times their price to book. Certainly a punchy number for India but it does go back to a point that we see a further dollar weakness ahead, that leading to an increase in investor risk appetite and given the improved investment climate in India we think India will be able to continue to attract foreign capital in combination with good earnings numbers. Comparison to other countries around the region India and China stand out. Both will come through this global recession with surprising resilience in the EPS numbers. Yes, they have dipped but not as bad as what we are seeing in some of the more cyclical markets like Korea- Taiwan.

Q: So if indeed in the next 12 months if Sensex is to go to 20,000 which would entail a return of 30% plus – what in the index do you think will carry it- what are your biggest over weights?A: Our biggest over weight center on the capital goods space the banks and also the consumer related plays. We think with growth likely to surprise on the upside the banks are the best way to play that in our mind going forward. We don’t see a lot of risk of upside to interest rates. We see similar to most economies across the globe, no negative output gap in place in India. Notwithstanding short-term volatility in prices associated with weaker monsoon. We don’t see RBI rushing to raise rates anytime soon and we think that should be supported with the bank sector helped by the trend of resilience in the consumer.

Q: When you say infrastructure would you include power stories in that as well be it pure power plays or power equipment makers?A: I think the focus would more be on the power equipment makers not just in India but also in China and in Japan and the view being that you are seeing a lot of postponement of investment and I think there is lot of potential given the improved access to liquidity that we are seeing globally for some of those projects to be restarted. If you look at from a valuation point of view, it is the power equipment providers or basically the capital good providers that have lagged a bit in the rally so far.

Adani Power may surge 10-30% over issue price on listing day

bkkasi2002@gmail.com (Kasi Viswanathan) — Wed, 19 Aug 2009 16:52:00 +0000

Source : NSE Guide

Adani Power, whose IPO lit up the country’s primary market space with good response from investor, is expected to surge in the range of 10-30 per cent over its issue price of Rs 100 when the company lists its shares on bourses tomorrow, experts say.

“The pricing of the IPO was good and the issue received overwhelming response. If the movement in the broader market remains favourable, the scrip is likely to gain 10-30 per cent in its debut trade tomorrow,” primary market tracking firm Prime Database CEO Prithvi Haldea told reporters.

Adani Power, which came out with an initial public offer of 24.88 crore shares last month, received bids for over 535 crore shares on offer in the price band of Rs 90-100 a piece.

The company would list 218 crore shares at a issue price of Rs 100 a piece on the bourses tomorrow.

“There is a lot of unsatisfied demand in the market and investors would queue up to buy the shares on the first day,” Haldea noted.

The IPO of electricity generating unit of Adani Enterprises, got subscribed nearly 22 times the shares on offer. The company raised Rs 3,016 crore through the IPO.

“Considering the huge response received in the IPO, the company has fixed the issue price at the higher end of the price band. I do not see any reason why it will not be listed at a premium,” SMC Capitals Equity Head Jagnnadham Thunuguntla said.

Shanghai slips 3.7%; down about 16% from Aug high of 3478

bkkasi2002@gmail.com (Kasi Viswanathan) — Mon, 17 Aug 2009 10:49:00 +0000

Asian markets were trading weak. China's Shanghai Composite fell 3.77% or 114.93 points at 2,932.04. China has corrected nearly 16% from Aug high compared to 1-5% correction seen by other markets. FDI in China fell 35.7% in July; it is the 10th straight month of decline. Metal prices has slumped; Copper and zinc tumbled by the daily limit in Shanghai. The Yunnan Copper, the 3rd biggest producer of the metal fell 7% after posting a 1H loss. Also Zhuzhou Smelter, the biggest producer of refined zinc fell 7%. PetroChina, nation's biggest oil company, was down 4%, set for the lowest in almost three months.

Hong Kong's Hang Seng declined 2.64% or 552.48 points at 20,340.85.
Japan's Nikkei slipped 2.70% or 285.99 points at 10,311.34.
Singapore's Straits Times fell 1.17% or 30.55 points at 2,583.63.
South Korea's Seoul Composite plunged 2.11% or 33.64 points at 1,557.77.
Taiwan's Taiwan Weighted was down 1.48% or 104.49 points at 6,965.02.

By Varinder Bansal, CNBC-TV18

Shanghai down 4.5% today, FDI in china fell 35.7% in July. This has been one of the weakest markets. Last week also China was down nearly down 15%. If you just compare from the August highs compared to all the bucks which are down between 1-4%. Some of the major reason has been that some of the rumors that were going around in the market. Restriction of the borrowing and high spy in the Chinese market via IPO were one of the major concerns.

But what has lead to the fall today in this market is the huge selling pressure which has come from the commodity market. In China copper and zinc which are trading down 5%. LME copper- zinc are down by 2-3% and most of the metal were down between 2-5% last week as well. So we are seeing that most of the metal related stocks in China are down between 5-10%.
Stocks like Yunnan Copper which is the third biggest producer of the metal is down 7%, Zhuzhou Smelter which is the biggest producer of refined zinc in China market is down nearly 7%, PetroChina which is the nation’s biggest oil company is down 4%, so weakness all around the base metal complex in the China market.

The information which you gave, the FDI in China fell 35.7% in the month of July, which is the 10th straight decline in terms of declines. The S&P 500 which is trading above the 1000 mark till now is down only 2% if you just compare from August highs whereas China after fall of today is nearly down 17%. So you can just see the way Chinese market has corrected slowly and steadily but yes concerns are going around there.

BRIC now the growth engine of global economy

bkkasi2002@gmail.com (Kasi Viswanathan) — Fri, 14 Aug 2009 13:47:00 +0000

Courtesy : Moneycontrol

The Brazil, Russia, India, China (BRIC) investment theme continues to remain as strong as ever, believes Allan Conway of Schroders Investment Management. In an interview to CNBC-TV18, Conway said these economies would now be the growth engine of the global economy.

"When we launched the BRIC fund, I told investors: do not worry about short-term volatility, there will be times when markets go down, but the BRIC theme is a theme for your pension fund. You simply put the money in there and over the next five, ten, fifteen years, you will simply make money," he said. "For the foreseeable future, emerging markets will be accounting for 70-75% of global growth and the heart of that growth is the BRIC story. There is still an enormous amount of investment return to be made out of the BRIC theme."

Udayan Mukherjee is saying about the markets

Exclusive interview with Allan Conway on CNBC-TV18.

Q: There has been some confusion about where we are headed with this global markets rally. What is your call, what is happening out there?

A: The rally that we have had so far this year has been extraordinary. But we should remember that we have seen the rally from really oversold levels and whilst we can see many emerging markets are up 50-60% so far this year, many of them are still down 10-15% or more if one looks at the last 12 months. So we were oversold and have had an extraordinary bounceback. But where we are today is still a situation where generally speaking valuations are quite reasonable. We are just starting to finally see visibility of global economic recovery. And as that visibility increases we expect to see equity markets moving into a more sustainable bull market rally. So, whilst in the very near term, it is perfectly possible that we could see some further setback, as we move into the fourth quarter, we expect to see markets come through pretty strongly.

Q: What about the BRIC markets themselves? What kind of liquidity flows do you see into these markets?

A: The BRIC story is phenomenal. As you know that we were the first to launch a BRIC fund and I think we are probably one of the largest BRIC managers today. The reason why emerging markets have come through this crisis so well — which is by the way a big surprise to people — in the past given such a crisis, emerging markets would have suffered even more and what we have seen is that emerging markets generally have come through this crisis in far better shape than the developed economies. And one of the key reasons for that is the BRIC phenomenon. The arrival of these huge populations particularly in China and India having this massive impact, enabling these economies to still show growth despite what is happening in the developed world has really reinforced the whole BRIC decoupling story. And that whole investment theme is as strong as ever. When we launched the BRIC fund, I told investors: do not worry about short-term volatility, there will be times when markets go down, but the BRIC theme is a theme for your pension fund. You simply put the money in there and over the next five, ten, fifteen years, you will simply make money. And even after the setback over the last four-five years, investors have done very well. The BRIC economies are now the engine of growth in the global economy. This year BRICs will account for over 100% of global growth. For the foreseeable future, emerging markets will be accounting for 70-75% of global growth and the heart of that growth is the BRIC story. There is still an enormous amount of investment return to be made out of the BRIC theme.

Q: Having said that, if you look at the fall it has really been India, China, perhaps Hong Kong as a China play leading the fall downwards. What happens now, what exactly is going on at the moment?

A: Yes, the rally that we had starting some months in the spring in March would be termed as having been a bear market rally and it went further and was stronger than we expected. And it was not based on very good fundamentals. So seeing some giveback now is not too surprising and there could be a little bit more weakness over the coming days and weeks. But the key point I think is that as we start to see increased confidence and signs of economic recovery, equity markets generally and particularly emerging markets should then embark on a sustainable bull market rally. The give back over the few days should be surprising. Twice in the last two months we have had 8-10% setbacks, and each time money has come back in. There is a lot of liquidity in the system. A lot of people are still underweight emerging markets generally. So we think the potential for a significant downside from here is limited. And as we approach the fourth we should see the markets rallying again.

Q: What is your view on India itself? We are out of an earnings season. Do you see an increase in earnings visibility? Do you think there is scope for an upgrade in earnings, which might support the underway liquidity rally?

A: India has had a very good crisis as China. The fact that we are looking at 6-6.5% growth in India is terrific at a time when US and Europe is in recession. So, that is very good news. The fiscal situation is not so good as we know, but that has always been the case. On the other hand, the fiscal situation has improved significantly and we hope for further reforms. So the underlying fundamentals broadly in India are pretty good. Not as good as China but nevertheless they are pretty good. The problem with India is once again one of valuations. Here we are again having seen a rise in India and it is now one of the most expensive emerging markets. Now as you point out, earnings growth is strong. Expectations are high there. The consensus is for 30% earnings growth. So the room for further revisions up is going to be limited. And India needs to see this sort of earnings growth to justify the rating that it is on. So we like India in terms of economic fundamentals. We think that the whole situation looks pretty good. But as usual the market is starting to look a little expensive, certainly fully valued. So in our strategy, in our global emerging market fund India is neutral now.

Q: Do you want to sum this up and a couple of investment themes that you are looking at the moment?

A: The themes for India are not massively dissimilar to the theme that one would see in emerging generally. The reason why emerging economies have come through this crisis so well and they have been able to decouple significantly from what has been happening in the developed world are two things: Number one, a significant increase in the importance of domestic demand. This is both in terms of government spending but also corporate spending and also retail or consumer spending. And this rise in domestic demand has been a very important feature of growth in emerging countries generally including India over the recent years. And the other related thing that has changed is the export profile. Today, emerging countries export more to other emerging countries than they do to OECD. Trade between the emerging has become more important. So if one looks at themes, domestic demand is an obvious one, and there are a number of ways that one can get exposure to domestic demand. Banks are obviously a traditional way of getting very good exposure to domestic economy but as do consumer staples and consumer durable plays obviously. And then as we start to move into this global recovery which will be anaemic we believe, it is not going to be a V recovery, it is going to be a U. But then the exporters should start to look a bit better too. But at this stage certainly, domestic related stocks look attractive.