I quit the TCS for persuit of happiness

Yes!
Couple of days back I resigned from TCS as I am more interested towards STOCK MARKET & wants to make a career in that.
Time will only tell whether my decision of quitting TCS was a good move or not???

Swaminathan's Article in STOI

There is a very good article STOI by Mr. Swaminathan about how Cigarettes & Beedis can contribute to the revenue of the country. Particularly smoking people must read this article...

Inflation in Negative!

Finally as everybody expected, Indian Headline Inflation measured by WPI method is in negative. For the week ended June 6th Inflation came as -1.6% as compared to 0.13% of week ended for May 30th.

Guys you might observe that in my heading I havent mentioned it as Deflation! Even though inflation is in negative region, its not because of economical conditions like less demand or too much contraction in the money supply, but it is due to HIGH BASE EFFECT. About which I have mentioned times in my previous postings.

India is facing this negative number in Inflation after a gap 3 decades, that is from 1975-76. At that time the lowest Inflation India faced is -11.3%. For this there were reasons...

1. High base effect due to triple or quadrupling of oil prices from sub levels of $ 20 to $ 60 within a very short time. And again sudden fall of 60% from its top levels of $ 100 per barrel.
2. Political drama of emergency during that period

Now also inflation is in negative because of higher oil prices in last year. Many time I have written how we are failing to measure future values of Inflation or its impact or containing it due to WEEKLY MEASUREMENT OF WPI. And once I have written uses of measuring the inflation month wise. In similar manner, my favorite blogger, Mr. Ajay Shah is of the opinion....

"Indian economy had been in a deflationary environment for the last eight months and that inflation needed to be calculated on a month-on-month basis and not on the yearly average, as is the practice.

It (calculating inflation on a month-on-month basis) gives you a picture of what’s going on in the economy. When you do that, all the way from August 2008 onwards, the WPI inflation has been in negative territory month after month,

RBI needed to stop using the year-on-year benchmark to calculate WPI in order to arrive at a better understanding of inflation, which would help it take better decision as regards to monetary policy. What is going wrong with monetary policy in India is: when times are good, we end up having low rates because policy is focused on preventing rupee appreciation and flooding the market with liquidity. When times are bad, we don’t cut rates adequately to reflect the change in conditions, so I do think that we need to go towards lower rates."

Auxi's Comments

Hi SI,

Actually I was thinking abt buying stocks but i was not clear abt how to start this...ur recent post helped me...thanks....


regards

Auxi....

How to start trading/investing in market

This is the one question most of my friends ask me. I thought of writing about it long back, but I dont know somehow I forgot that. Now Kuki has reminded me by asking.

I am starting from very basic things like Demat account, Depository & etc.

Now if anybody wants to trade in Indian Stock Market, that person should have Demat account. Demat means dematerialisation that means conversion of paper form of stock to electronic form of stock. Now for Demat one needs to have following documents...
1. PAN card,
2. Bank Account (For online demat account person needs to have ebanking enabled account and for offline demat account, normal bank account. In online, account-holder himself place the order by loging in and where as ofline demat account, account-holder needs to call the broker or go to brokerage office ask the broker to place the order.),
3. Id proof,
4. Photographs,
5. Address Proof,

Now coming to Depository Participant or DP, person needs to open his Demat account only with those brokerages which have depository facility. But now in Indian Stock Market, almost all brokers have DP in NSDL or CSDL or both. In simple meaning, DP is like a bank where you can store your shares. So while opening the Demat account you need to open DP also. So you can open your Demat account with any broker like GEOJIT, ICICI DIRECT, SHAREKHAN, INDIA INFOLINE & etc. Before opening the Demat account important thing to check is their Brokerage charges to for intraday and delivery as wel as online and offline accounts.

Now about trading is the one thing where each individual's ideas, scripts or holding periods vary. So I should not tell you people to trade/invest in in particular stocks in a particular manner. But if anybody ask me how I started trading & how I am doing now, then I can say something like this...

I started trading when I started MBA course. Initially my college seniors & Navigators(The Finance Club) helped me a lot because trading or stock market was purely new thing to me as I was from engineering background. One more thing that helped me is MARKET ITSELF! Yes really, because later parts of 2007 saw strong rally of bull run which helped to learn lot things like CIRCUIT BREAKER STOCKS (which were my favorite stocks at that point time), high growth stocks & etc. Then in my summers I did Technical Analysis which is helping me a lot in trading now a days in volatile market also. Initially I started with One Demat account, but presently I am maintaining 4 Demat accounts...

And coming to my strategies, I do my own analysis about stocks which are moving in certain pattern. Many people say dont listen to TALKING HEADS of news channels like CNBC, NDTV Profit & etc. I say "listen to them but do your own analysis on their scripts". And then decide whether to go for it or not. If yes then decide when to enter the script and when to exit the script. And believe me "MARKET IS ALWAYS RIGHT". Why I am saying this is because instead of cracking our heads on WHY market(or individual script) is moving like this or that, go for WHAT NEXT?

So as I always say What is more important than the Why in market for traders!
I do take help some websites like...

money.rediff.com(Good for beginners, now it is improved a lot with lot of information)
moneycontrol.com
icharts.in ( for technical analysis)
bloomberg.com (for world market trends)

For any further queries you can always come back to me...

Prime Minister's Speech To Lok & Rajya Sabha

Guys in yesterday's posting I pointed out the issue saving & spending economy. And Mr. Prime Minister while addressing Lok Sabha & Rajya Sabha members, he pointed these issues. Here are sample of his speeches...

In the last five years, our economy has grown at an average rate of 8.6 per cent. In the first four years, the average was close to nine per cent. Then came the international slowdown and our growth rate was affected. This year, it seems, that under the impact of the global economic crisis, our economy will be growing still at a fast rate, not at nine per cent but at seven per cent. As I see our challenge, it is to raise the growth rate in the next two three years, back to nine per cent per annum. It is not easy when the international climate is so unfavourable, when exports are seriously affected, when capital inflows are also affected, but I still believe that we have the capacity, on our own, to work for a growth rate of eight to nine per cent in spite of the global slowdown. Why do I say this? When I look at India's savings and investment figures, as per the latest figures that I see, the savings rate in our country is about 35 per cent. And with that sort of domestic savings rate, even with a small amount of international capital flowing in, with about 37 per cent of investment being sustained by domestic savings and reasonable capital inflows, it should be possible to sustain a growth rate of about eight to nine percent, and that is the challenge that we have to face as a Government, because our commitment to social development can become a reality; Our ability to put more resources into the social sector, whether it is food security, whether it is energy security, education security, health security all this is dependent on our ability to grow and grow faster.

I recognise that our fiscal system is under strain. The fiscal deficit has increased but I do believe that in the short run, even then we have manoeuvrability to spend more resource on our flagship programmes. I sincerely believe that Hon. Finance Minister, when he presents his Budget, will unfold the Government’s strategy in this regard.

But as I said, we cannot spend our way into prosperity. In the present situation there is considerable scope to increase public expenditure, particularly on infrastructure projects and that would not lead to inflation, that would only add to our development growth potential and I reckon that is the right way to deal with international slow down that has affected many countries in the world.

For full speeches click below...

Lok Sabha Speech

Rajya Sabha Speech

Govt Wants Domestic Consumption Intact

In coming budget Mr. F.M. is planning increase the deductible amount under 80 C from 1 lakh to 1.5 lakh.

As you all know Indian growth story is mainly affected by export segment and its dependent manufacturing sector. For which government cant do much on increasing the international demand! And if you compare the urban areas consumption pattern has decreased due to job losses/unsecured future/salary cuts with rural areas. This financial crisis which is originated in US spread all over has not much affected the rural consumption pattern.

Now government is planning to increase the amount of long term investment and tax slabs. From both these moves, there are both advantages and disadvantgaes which can affect the country's economy. First if you look at the country's fiscal deficit which is standing at around 3 lakh crores which is 6% of total GDP may widen because of these moves due to exchquer to to tax government is collecting from these routes. And at the same time government must be consider the possibility another speculative bubble in various sectors like stock market, real estate and etc due to excessive pumping of the money. And the question of Inflation particularly CPI!!!

Now coming to advantages as I said domestic consumption will be intact, infact increase. From increase in 80 C tax deductible amount government is pushing for long term investment. Which amount in turn can be used for various development activities like infrastructures, government schemes like NREGS & etc. And one more basic fundamental reason for this crisis is US is "SPENDING ECONOMY NOT SAVING ECONOMY". And from this move governmet wants stress on the savings also!

And if government goes for tax slab increase then that is obviously lead to more consuption in an economy which is very good in present condition. So lets see!!!

Is Worst Over For India???

Last Saturday, I wrote on the same topic, right???

So I am continuing from that point, if you see the below table you can notice the improvements in the hiring patterns.


See the Textile, Gems & Jewellary and IT-BPO sector hiring pattern which shows the possibility of improvement in the export. And overall also there is change from -0.64 to +0.68 in direct workers part & from -0.3.53 to Zero from 3rd to 4th quarter of 2008-09.

And according Business line article...

Copper, which is used in the construction, electrical and telecommunications industries, has tended to lead any recovery in prices. From its lows in December 2008 to current levels of $4,960 a tonne on the London Metal Exchange, copper has seen price gains of 80 per cent. Chinese imports since March have been about 400,000 tonnes more than the normal stocking levels. This has been a key supportive factor for copper prices.

And according Tata Steel spokesperson...

Volume surged by 18 per cent to 4.69 lakh tonnes in May on the back of robust demand from auto and construction sectors, in the corresponding month last year, the company's sales stood at 3.97 lakh tonnes. The sale of long products, mainly used in construction industry, increased by 34 per cent while that of flat items, used by auto and consumer durable sectors, increased by nine per cent, over the year-ago period.

The company claimed that one of its steel melting shops in Jamshedpur achieved best-ever May production at 2.18 lakh tonnes. Also, a merchant mill recorded best-ever May production of 30,710 tonnes over 28,505 tonnes the same period last year.

And according to Swaminathan's article in STOI,

In April, foreign institution investors (FIIs) poured $1.3 billion into Indian equities. They poured another $1.87 billion in the first half of May - before the election result. For May as a whole, the inflow was $4.14 billion, or a billion a week.

This is part of a global phenomenon. Since April, $20 billion has flooded into all emerging markets. The Sensex is up 50% in 2009. But Russia is also up 63%, China 57%, Brazil 60%, and Argentina 45%. So, the dollar flood is not India-specific: it is part of a global rush into all emerging markets, especially the BRICs (Brazil, Russia, India and China).

With fear lifting, global billions are moving out of safe havens into growth havens. Risk premiums on all financial asset were sky-high in March but have now fallen sharply. So, global billions are moving into junk bonds, corporate debt, commodities, and emerging markets too. Idle money waiting to be invested adds up to at least $2 trillion, maybe much more. If just $100 billion of this goes into emerging markets, that will fuel huge stock market booms.

Sceptics say this is another bubble in the making, unjustified by current profits or any change in India's economic fundamentals. Now, foreign direct investment in factories is certainly better than FII inflows into stock markets. But the flood of $1 billion per week is not just speculative froth, it is actually improving our economic fundamentals.

Earlier, the economy was hit by a negative feedback loop. That is, stress in banks reduced credit to industries, which then suffered falling profits and loan defaults. These in turn worsened the balance sheets of banks, which then lent even less to industry, in a vicious downward spiral.

The new flood of $1 billion a week is changing the negative feedback loop into a positive one. Suddenly real estate companies that were almost insolvent and could not attract either loans or equity have been able to place almost $2 billion with qualified institutional investors.

If shady real estate companies can attract money, anybody can. Suddenly access to finance has become easier and cheaper. Improved finance means improved profits in industries, which means fewer loan defaults. This in turn means better balance sheets for banks, which will be able to lend more to industries, in a virtuous upward cycle.

Thus, a positive feedback loop is replacing the negative one. The bad news is that exporters will be hit by the appreciation of the rupee caused by the dollar flood. The dollar has gone from Rs 52.06 on March 20 to Rs 46.84 on June 4. Still, the positive feedback loop should lift India's GDP growth to 6-7% in 2009-10, up from earlier estimates of 5-6%. That is a substantial gain, though not revolutionary.

Importance of Reforms In Higher Education

Recently I read two articles in Indian Express by Shekhar Gupta & Ila Patnaik. Both the articles put forward some magnificent facts & figures...

Some of the facts & figures from Shekhar Gupta's articles are...

In his first innings as a politician, Dr Manmohan Singh liberated our economy. In his second, as prime minister, he brought about a paradigm shift in not only our foreign policy, but also our entire worldview. In each case, he persisted with change at great risk to his neck, and reputation. So what will be the change in his third stint in public office? Or, rather, what should he? Our guess, and wish, is that he now does to our higher education what he did to our economy and foreign policy in 1991 and 2008, respectively.

Various estimates put just the cost on Indian parents of educating their children abroad between $5 billion and $6 billion per year. This is an entirely one-way trade, as very few foreign students come to study in India, and some of those who wish to, like researchers, even Fulbright scholars, are given hell by our Orwellian (or you could coin an Indian equivalent, Arjunian, Murlimanoharian) HRD establishment.

India is now the kidney disease capital of the world. Yet, do you know how many nephrology MDs our medical colleges produce in a year? It is only 70. Neurology does worse, with 63, cardiology a little better with 88 and oncology, the specialisation to treat cancers, only 15. And we hope to earn foreign exchange from medical tourism! In each of these specialisations, India could absorb, and needs, at least 10 times as many per year. Can you imagine a country of 110 crores producing just 7332 MDs per year? America produces 16,000 and little UK 4200.

Some of the facts & figures from Ila Patnaik's articles are...

The best universities in India, those that we are particularly proud of, are not well rated by international standards. The Times of London’s Higher Education Supplement ranks universities around the world. In 2008, their data showed IIT Delhi at rank 154 and IIT Bombay at rank 174 globally. No other university in India made this top 200 list. By way of comparison, China has universities at ranks 50, 56, 113, 141, 143 and 144. In other words, China has six universities which are superior to IIT Delhi and IIT Bombay.

And for more details read the full articles....