Hi guys many times I proposed MoM (Month on Month) over YoY (Year on Year) measurement for various things like GDP, Inflation & etc. But now I think, neither I was fully correct nor I was fully wrong. Because after reading Ajay Shah's article I realized that.
Last week I saw Mr. Ajay Shah on CNBC TV, where in he talked about various things like Fiscal Deficit, RBI role in government borrowing & many more. Its a good one, watch it...
Check out this Financial Express editorial about Rupees possibility in big league of currencies...
I read an interesting article by Peterson Institute for International Economics about the present financial crisis.
An article about Inflation/Deflation
Wednesday, July 22, 2009
Sunday, July 19, 2009
In the long run we are all dead: Importance of Profit Booking
Couple of days back, somewhere I read that Dow Jones was @ 7000 in 1997 and in march this year it broke that same level. So over a decade the return on Dow Jones is nothing? That does not mean Dow Jones has not gone beyond 7000 range at all! It went up to 15000 levels in mid 2007 from where this present crisis started and with this Dow Jones also started falling.
For your reference I am providing a graph of DJIA (Dow Jones Industrial Average) Index below...
And if you observe the above graph Dow has touched 1997 levels somewhere in 2003 also.
Not only Dow Jones, but if you take our Indian Stock market, it faced bear market for almost every 4-5 years for different reasons.
If you see the below graph where in I have mentioned 4-5 broad bear markets...
In every bear market, market came down almost 50% of its previous peak respectively each time. For example in 92 due to bear market crashed from 4000 odd points to 2000 points, in 2000, market came down from 5500 odd points to 3000 points & if you take the present crisis here also market came down from 21000 points to 8000, more than 60% here.
This is the story of index & index dependent funds. Now if you consider some high beta stocks which moves erratically on both up as well as down side then think about them with respect to above crashes or bear market situations.
Bottom line:
So here what I am trying to say is at certain times booking profit is very necessary from stock market point of view. And even well known economist John Maynard Keynes also said that only: "In the long run we are all dead".
For your reference I am providing a graph of DJIA (Dow Jones Industrial Average) Index below...
And if you observe the above graph Dow has touched 1997 levels somewhere in 2003 also.
Not only Dow Jones, but if you take our Indian Stock market, it faced bear market for almost every 4-5 years for different reasons.
If you see the below graph where in I have mentioned 4-5 broad bear markets...
In every bear market, market came down almost 50% of its previous peak respectively each time. For example in 92 due to bear market crashed from 4000 odd points to 2000 points, in 2000, market came down from 5500 odd points to 3000 points & if you take the present crisis here also market came down from 21000 points to 8000, more than 60% here.
This is the story of index & index dependent funds. Now if you consider some high beta stocks which moves erratically on both up as well as down side then think about them with respect to above crashes or bear market situations.
Bottom line:
So here what I am trying to say is at certain times booking profit is very necessary from stock market point of view. And even well known economist John Maynard Keynes also said that only: "In the long run we are all dead".
Sunday, July 12, 2009
The Best Stock To Invest/Trade
Most of my friends call me every now and then & ask me which is the best stock to invest/trade (Dont mind guys I am using "invest" and "trade" as exchangeable words even though both are very different in nature). As I said many times, trading is purely individual's perspective for which that person needs to track the market, individual script & etc. And that too trader should be either very systematic or should be ready to hold for long term. Because systematic means you should be ready to accept loss & book the loss or hold it for a time period until it reaches your target. So suggesting trading for very short period of time (say one week or so) that too in this kind of market is very tough. And believe me its not an easy task to be very systematic because I know. And I learnt many lessons from past almost 2 years of trading/investing experiences. So I dont want you people to do the mistakes which I did. Anyway I will write about the "my principles" of trading some other time, today I will write about one script which I have researched from last 2-3 days. This following script is very good for traders as well as long term investors also.
TATA STEEL
(Click on the image for enlargement)
First Technical Analysis as it is my favorite; In May month rally (due to election results) stock reached high of 490. And from that high it is correcting itself with respect broader stock market indexes Sensex & Nifty are also correcting. Presently Tata Steel is trading at round of 76% correction level of its high; which is exactly first level of Fibonacci retracement.
And according to chart (which of course according to my interpretation), stock is at its minor support level of 355 to 360. But I doubt whether this support level is enough to hold because the way market is correcting it is very difficult.
So next Fibonacci retracement is 62% of its peak value which is around 280 levels and exactly at this it has major support. And chart also support this, because if you see the chart, from mid April to mid May stock was trading at that range. So according to Technical Analysis principals the previous resistance become support once stock crosses that resistance level comfortably.
So according to me investors/traders should start taking long position(start buying) from 300-280 levels. And even if this support breaks also there is MAJOR support at the levels of 250-260 which forms 50% retracement from peak. (Even though 50% retracement doesn't come under Fibonacci, chartists consider this as major one because of people sentiment).
Now analyzing the stock (or I can say company fundamentally); the Book value per stock is Rs. 370. Book value is nothing but even if company goes for bankruptcy also, per share holder gets 370 rupees for every share he is holding. That is price to book ratio is 0.96 which is very cheap in overall steel industry.
And if you take the PE ratio is trading at the multiple of 5 almost (exactly @ 4.96) where as steel index is trading at multiple of 8.6, which means for Tata Steel there is scope for price appreciation in near future.
And if you see the quarterly figures of gross sales & net profit it indicates that worst is behind us for this scrip.
And for people like my father who would like to invest for very long term here is comparison of steel industry peers with the Tata steel... Just check the Debt equity, current ratio, ROCE & RONW ratio which covers almost all angle from long term as well as short term perspective Tata Steel stands tall in comparison to its peers.
Bottom line:
And you people may ask steel industry; it is because recovery in any economy starts with Steel & Cement sector. So once recovery starts this is going to be rocking stock. So I recommend to start buying from the level of 300-280 levels & lets hope for the recovery in economy...
Friday, July 10, 2009
Articles
Today I read some good articles about various things.
Guys do you remember once I wrote about Meeting Mr. Vivek Moorthy in IIMB campus. He has an article about Inflation/Deflation in today's mint, which talks about many things like base effect, crude oil price contribution to that, manufacturing sector, WPI & CPI.
In today's ET there an article about Banking Sector Reforms.
In today's business standard there is an editorial which highlights the important benefits of PM's initiation of UID headed by Mr. Nadan Nilekani & an article analyzing the budget with respect to Nifty 50 stock by E&Y.
As you all know that central government is planning (or I can say hoping) to implement the GST.
In rediff there is a good article about all the information you would like to know about GST.
And about wealth improvement there is an article in rediff
Guys do you remember once I wrote about Meeting Mr. Vivek Moorthy in IIMB campus. He has an article about Inflation/Deflation in today's mint, which talks about many things like base effect, crude oil price contribution to that, manufacturing sector, WPI & CPI.
In today's ET there an article about Banking Sector Reforms.
In today's business standard there is an editorial which highlights the important benefits of PM's initiation of UID headed by Mr. Nadan Nilekani & an article analyzing the budget with respect to Nifty 50 stock by E&Y.
As you all know that central government is planning (or I can say hoping) to implement the GST.
In rediff there is a good article about all the information you would like to know about GST.
And about wealth improvement there is an article in rediff
Wednesday, July 8, 2009
Percy Mistry's Article
Guys I wrote about the budget as a POPULIST. That exactly what Mr. Percy Mistry wrote about the Budget in today's Financial Express. Here is the piece of that article:
"Had the late Mrs Gandhi and her father made the right economic and social choices in the 1950s, 60s, and 70s instead of being seduced (owing perhaps to lack of economic nous coupled with an over-opinionated sense of their political wisdom) by the wrong ones (incubated in the failed former USSR), India’s per capita income today might arguably have been $5,000 instead of $980. Poverty would have been eradicated by 1995 rather than by 2040 at the present pace."
"Had the late Mrs Gandhi and her father made the right economic and social choices in the 1950s, 60s, and 70s instead of being seduced (owing perhaps to lack of economic nous coupled with an over-opinionated sense of their political wisdom) by the wrong ones (incubated in the failed former USSR), India’s per capita income today might arguably have been $5,000 instead of $980. Poverty would have been eradicated by 1995 rather than by 2040 at the present pace."
Tuesday, July 7, 2009
Highlights of the Budget
Here is a document which highlights the main points (+ve & -ves) of the budget by analyzing it sector wise like FMCG, Oil, Textile, Finance & etc.
This I got it from Geojit Financial Services Ltd.
This I got it from Geojit Financial Services Ltd.
Monday, July 6, 2009
Budget For Bharat
Yes I call it budget for BHARAT or one word which media uses frequently is "POPULIST" budget. Mr. FM started his speech by saying "A single budget speech cannot solve all the problems" in which he concentrated more towards rural areas, indicating that he would like to have domestic consumption intact which is supporting the country's economy presently.
But market reacted very sharply to this budget by declining nearly 870 points on the Sensex and 260 points on the Nifty. There various reasons for this kind of sharp decline: First is, market was expecting some policy reforms like Divestment/Disinvestment in PSUs, Decontrol in fuel prices, FDI allowances, Financial & education sector reforms & etc. Second is, due to hope, market boosted itself so much in last 2-3 months that there was some correction supposed to happen to stabilise. Third Fiscal Deficit of 6.8% which is again an hurdle to steps towards the FRBM.
At one point of time Sensex breached 14000 levels also. Sectors like Banking(-8%), reality(-7%), Consumer durables (-7%), metals (-6%) & education sector stocks like NIIT Ltd (-17%), Educomp Soln (-13%) hit very badly due to massive selling.
And one more thing I didn't like about this budget is he talked about increasing the spending various sectors' projects, but what is efficiency? As Rajiv Gandhi said only 15 paise reaches for every 1 rupee spent. This may be then but now also conditions not improved so much that we can at least 90 paise reaches for every 1 rupee spent. So what about that, reforms in distribution, reforms governments & etc.
But there are some relieving factors like increase infrastructure spending like NHAI, Indian Railway, giving more flexibility to IIFCL (India Infrastructure Finance Company Limited), more allocation of funds for Accelerated Power Development and Reform Programme (APDRP), extension of loan payment by 6 month for formers who come under loan waiver program, increasing the tax slabs by 15000 & 10000 for senior citezen & men & women respectively, Abolishing Fringe Benefit Tax (FBT) & Commodity Transaction Tax (CTT) & etc.
As Finance Minister said in his speech he has given importance to inclusive growth.
But only thing he would have given some road map for future course of action...
But market reacted very sharply to this budget by declining nearly 870 points on the Sensex and 260 points on the Nifty. There various reasons for this kind of sharp decline: First is, market was expecting some policy reforms like Divestment/Disinvestment in PSUs, Decontrol in fuel prices, FDI allowances, Financial & education sector reforms & etc. Second is, due to hope, market boosted itself so much in last 2-3 months that there was some correction supposed to happen to stabilise. Third Fiscal Deficit of 6.8% which is again an hurdle to steps towards the FRBM.
At one point of time Sensex breached 14000 levels also. Sectors like Banking(-8%), reality(-7%), Consumer durables (-7%), metals (-6%) & education sector stocks like NIIT Ltd (-17%), Educomp Soln (-13%) hit very badly due to massive selling.
And one more thing I didn't like about this budget is he talked about increasing the spending various sectors' projects, but what is efficiency? As Rajiv Gandhi said only 15 paise reaches for every 1 rupee spent. This may be then but now also conditions not improved so much that we can at least 90 paise reaches for every 1 rupee spent. So what about that, reforms in distribution, reforms governments & etc.
But there are some relieving factors like increase infrastructure spending like NHAI, Indian Railway, giving more flexibility to IIFCL (India Infrastructure Finance Company Limited), more allocation of funds for Accelerated Power Development and Reform Programme (APDRP), extension of loan payment by 6 month for formers who come under loan waiver program, increasing the tax slabs by 15000 & 10000 for senior citezen & men & women respectively, Abolishing Fringe Benefit Tax (FBT) & Commodity Transaction Tax (CTT) & etc.
As Finance Minister said in his speech he has given importance to inclusive growth.
But only thing he would have given some road map for future course of action...
Sunday, July 5, 2009
Articles
Tomorrow is the Big B day. Here I am not talking about Mr. Amitabh Bachchan, but I am talking about the UPA2's first annual budget from which lot of expectations are there particularly looking at present economic condition. But I don't know, due to high fiscal deficit & dependency (or coupling effect) of exports on world (in particular US) economy, what Mr. Pranab Mukherjee is able to do!!!
But there are certain expectation from him in the areas of Disinvestment Side (At least in loss making PSUs to start with), education & higher education reforms, pension bill pending, raising FDI stake insurance sector & etc. Again everything depends whether this time they will be able push the reforms through both the houses or not?
Anyway today's my posting is related some articles I got in rediff about budget & tax benefit under 80C extension.
Here is an article which gives basic idea about what is budget, revenue budget, capital budget & fiscal deficit.
Some days back I think I posted an article from Indian Express which talked about the possibility of increasing the exemption limit under the 80C. For that I got one more article for you guys. I think Mr. FM really think about this particularly in this kind economic recession. Since India has massive capacity to consume the goods/services domestically. And that's exactly what an economy needs in the time of crisis, spending from both the ends Governments & Public. Otherwise there is possibility Paradox of Thrift as Mr. Keynes had explained way back in 1930s ["If a population saves more money (that is the marginal propensity to save increases across all income levels), then total revenues for companies will decline. This decrease in economic growth means fewer salary increases and perhaps downsizing. Eventually the population's total savings will have remained the same or even declined because of lower incomes and a weaker economy."]
But there are certain expectation from him in the areas of Disinvestment Side (At least in loss making PSUs to start with), education & higher education reforms, pension bill pending, raising FDI stake insurance sector & etc. Again everything depends whether this time they will be able push the reforms through both the houses or not?
Anyway today's my posting is related some articles I got in rediff about budget & tax benefit under 80C extension.
Here is an article which gives basic idea about what is budget, revenue budget, capital budget & fiscal deficit.
Some days back I think I posted an article from Indian Express which talked about the possibility of increasing the exemption limit under the 80C. For that I got one more article for you guys. I think Mr. FM really think about this particularly in this kind economic recession. Since India has massive capacity to consume the goods/services domestically. And that's exactly what an economy needs in the time of crisis, spending from both the ends Governments & Public. Otherwise there is possibility Paradox of Thrift as Mr. Keynes had explained way back in 1930s ["If a population saves more money (that is the marginal propensity to save increases across all income levels), then total revenues for companies will decline. This decrease in economic growth means fewer salary increases and perhaps downsizing. Eventually the population's total savings will have remained the same or even declined because of lower incomes and a weaker economy."]
Wednesday, July 1, 2009
Support From Friends!!!
Hi guys,
Here are the some message I got from some of my friends for quitting the TCS.
From Auxi...
Hi SI,
Just follow guts..no need to worry...all the best
From Praveen S...
From Gogi,
Congratulations Mutnal ...
Here quitting TCS is not a mistake at all,but the perfect thing you did is you have quit the job which you are not passionate about.
99% among us hate the job which we are working on,but one who dares to quit those jobs is just 1%.Now you are among them...
once again MY HEARTY CONGRATULATIONS...i will definitely try my level best to help you reach your dream job.
From Adi...
Congrats Mutu I really appreciate your brave decision in this present market scenario. You have shown real guts I am proud of you that you have decided to move on to do something that really suits you. Like they say your mind was with Stock market and you never wanted to be tied down. All the best I whole heartedy support your decision.
Regards,
Adi
Thanks guys, for all your encouraging words. I hope I will rise to level which I am hoping from all your best wishes.
Thanks once again...
Here are the some message I got from some of my friends for quitting the TCS.
From Auxi...
Hi SI,
Just follow guts..no need to worry...all the best
From Praveen S...
Hmmmm....I know you from last 3 years you never took any wrong decesion & gave any body wrong advice.... dont worry abt d past now do well in ur interested field ALL THE BEST.
regards
PraveenFrom Gogi,
Congratulations Mutnal ...
Here quitting TCS is not a mistake at all,but the perfect thing you did is you have quit the job which you are not passionate about.
99% among us hate the job which we are working on,but one who dares to quit those jobs is just 1%.Now you are among them...
once again MY HEARTY CONGRATULATIONS...i will definitely try my level best to help you reach your dream job.
From Adi...
Congrats Mutu I really appreciate your brave decision in this present market scenario. You have shown real guts I am proud of you that you have decided to move on to do something that really suits you. Like they say your mind was with Stock market and you never wanted to be tied down. All the best I whole heartedy support your decision.
Regards,
Adi
Thanks guys, for all your encouraging words. I hope I will rise to level which I am hoping from all your best wishes.
Thanks once again...
Subscribe to:
Posts (Atom)