Monday, July 26, 2010

Will RBI target inflation or growth

Tomorrow is quarterly review of RBI monetary policy & it is expected to target inflation according majority of analysts.

Most analysts are expecting RBI to increase repo as well as reverse repo rate by 25 basis points & keeping CRR unchanged as liquidity is already tight in economy.

Some analysts are expecting repo & reverse repo to be increased by 25 basis points from present 5.5% to 5.75 & 4% to 4.25% maintaining present corridor (difference between repo & reverse repo) of 1.5%.

But Some analysts are expecting interests rate corridor to reduce by increase in repo by 25 basis points & reverse repo by 50 basis points there by reducing corridor to 1.25% from present 1.5%. to reduce the volatility in the interest rate.

If you see the following link

First graph you can see that credit is growing where as deposit growth is constant may be because of lack of increase in interest rates. And if you see the credit deposit ratio it has increased to 70 levels 74 levels which is surely an indication of an increase in interest rate in future.

But is it safe to increase interest rates as already IIP numbers slowing down & its merely double digit & where as inflation is concerned its mainly because food articles & public distribution system. And I think when you expect growth, with growth inflation will come by default (because of wage growth which int run leading to per capita increase leading to more expendable income) , so we should learn to live with it.

Thursday, July 15, 2010

Najeeb's comment

Najeeb IBA said...

i dont see any chance for incerse the sugar price in short to medium term,unless the deregulation of sugar sector price is allowed by the government


My response...

Ya are right. Sugar price always move in cyclical pattern. 3-4 quarters bullish & 1-2 quarters bearish. Already sugar corrected from last one quarter & I think it will continue for one more quarter. But if you see the estimates of sugar productivity including Brazil which is the leading sugar exporting country, will be less than average productivity. And according recent news, even major exporting countries are importing the sugar. And coming to India, I feel this time expected rain itself is less than last year. And being from agricultural family I know that, this time there will be definitely shortage/less productivity in sugarcane as we are already facing the heat rain god's anger!

Leave all this, Even though sugar prices have fallen from last 2-3 months & where as if you see the Sugar stocks have given the 30% - 40% return in last 2 months.

That you may call it as technical bounce also, as we call Dead Cat Bounce Back! But I don't think technical bounce will be of that much magnitude (30%-40%). So I think its good time accumulate sugar stocks.

And keep reading & keep commenting...

Sunday, July 11, 2010

Market Update With Some Scrips To Invest




Will market touch this years new high or not? This is every person thinking in Dalal Street & which is very difficult to answer also!

If you see the above chart you can very easily make following repeated patterns

1. Two months bull run
2. One month bear correction

For example Aug 2009 rally ended in Oct 2009 & correction till Nov 2009 and this pattern is repeated again in November as fresh rally started in November and ended in mid Jan 2010 and correction till mid Feb.

Again fresh bottom in Feb 2010 and one more rally till April & leading one more correction till May end.

So from last one year we are making news higher highs & lower lows which is very good sign.

But Nifty is going to face stiff resistance @5400/5420 & if it able to cross that level it can touch 5480 /5500. From that level we can say that fresh breakout in trend patterns.

Now coming to some individual stocks...

Tech Mahindra

It touched rock solid bottom in recent free fall from 1100 level to 600 levels & has consolidated around 720 levels. So its safe to initiate the long call for long term investor for first target of 900 & if it crosses that level 1000 levels which is almost 40% return from present level

Aban offshore

Aban is one stock which will surely give multi bagger return only if you are in right side @ right time. I am saying because if you see below chart


if you purchase it at 15oo level in Jan or 1600 levels in December, till now you would have faced 50% erosion in capital or notional loss. It has fallen like a never ending bottom from that level & it has history like that. Moves up rapidly giving multiplier returns & falls more faster than that for any bad news. Because I have seen it moving from from sub 200 level to 1600 level in one year time.

Now coming present it has fallen because one of it rig has sunk & made a consolidated bottom around 600 levels & going up from that level. I will tell you again it will touch 1200 & 1600 so be smart to catch it right time & right level.

Sugar stocks like Bajaj Hindustan, Renuks & etc.

Because of international & domestic sugar price fall all sugar stocks corrected more than 50% from their recent highs in January. I feel they all made bottom & consolidated. So long term players can bet up on Bajaj Hindustan & Shree Renuka for at least 50% returns.