Markets on Thursday ended flat coming off the lows of the day.There was a support for the market at the lower levels indicating some strength against the selling pressure seen earlier in the day.
Government has hinted on Thursday that it will declaring a second stimulus package next week targeting mainly at the export market to lift the employment in the textile industry and other export oriented companies.Package may also support Agricultural sector as the inflation of food articles is still on a rise as all other commodities fall and push the overall inflation down.
MTNL has started India's first 3G service yesterday in Delhi.BSNL will be coming out in mid of January.3G in India is just in a starting phase.Today there will be a guidelines for 3G aution which may happen by end of Jan.Its the next big development in the India Mobile industry.All mobile operators are getting ready for the aution by selling part of there stakes to foreign telcos thereby generating enough funds to finance the aution.With only 2-4 licences available for private operators in each circle it has to be seen till what extent these companies would stretch themselves in the aution.
Telcos have to wait for a long time for the returns to be gererated out of the 3G.With 90% of the indian Mobile operators being the middle and lower middle class it is very unlikely that they would upgrade to 3G.In the intial years 3G would be mainly used only by the corporate sector.The next segment of users might be the younger employed generation.
Friday, December 12, 2008
Thursday, December 11, 2008
Was a big day
It was a very good day on Wednesday for the markets posting a very good gains of 5%.It was only on Wednesday that markets have reacted strongly to the news which came out over weekend.
With US markets ending up marginally up by 1% and Asian markets being slightly negative ,Indian markets might find themselves slightly up as the mood might be still bullish on account of market breaking the key technical levels on Wednesday.With Inflation data to be out today,which may only bring good or very good news.
Auto sector is certainly seems to be very bad with Mahindra shutting down the Logan plant for about 3 months atleast .There have been drastic cut in the prices across all segments in the auto sector but the hopes of demand improving is not looking good.
RBI has officialy declared that growth for India is on slowdown and actual growth might come out lower then what they were expecting it to be.This news has been making rounds but its only now that govt has come out officially.This will effect the foreign inflows to the country.Relatively growth in India is higher when compared to growth Globally.But it has to be seen how FII's would see it.
Public sector banks have started reacting the RBI's move of moving home loans below 20 lakhs to priority sector loans.Banks have started to reduce home loan rates by 2% for home loans below 20 lakhs and 3% for loans below 5 lakhs.This a good news for propective home loan owners as 80% of home loans fall under this category.But still people may find themselves on waiting side as interest rates may further come down in coming 6 months.But the end of the day it is a good news and may push some people to get ahead and purchase.
With US markets ending up marginally up by 1% and Asian markets being slightly negative ,Indian markets might find themselves slightly up as the mood might be still bullish on account of market breaking the key technical levels on Wednesday.With Inflation data to be out today,which may only bring good or very good news.
Auto sector is certainly seems to be very bad with Mahindra shutting down the Logan plant for about 3 months atleast .There have been drastic cut in the prices across all segments in the auto sector but the hopes of demand improving is not looking good.
RBI has officialy declared that growth for India is on slowdown and actual growth might come out lower then what they were expecting it to be.This news has been making rounds but its only now that govt has come out officially.This will effect the foreign inflows to the country.Relatively growth in India is higher when compared to growth Globally.But it has to be seen how FII's would see it.
Public sector banks have started reacting the RBI's move of moving home loans below 20 lakhs to priority sector loans.Banks have started to reduce home loan rates by 2% for home loans below 20 lakhs and 3% for loans below 5 lakhs.This a good news for propective home loan owners as 80% of home loans fall under this category.But still people may find themselves on waiting side as interest rates may further come down in coming 6 months.But the end of the day it is a good news and may push some people to get ahead and purchase.
Tuesday, December 9, 2008
Will the rally go on
Markets have ended positive on Monday in reaction to the Govt's monetary and fiscal action.But markets were off days high indicating some weakness.
There is a impression in the market that the stimulus provided by Govt is not enough to boost the economy.A further cut in CRR and SLR is needed.Which might only be declared once the inflation is seen cooling down.Stimulus declared by India is very nominal considering the $580 billion package by Chinese govt and drastic cuts by European banks.
The excise duty cut is a positive sign for the auto sector,helping the companies to slash prices by 2 to 4%.Cooling down interest rates also adds to the hopes auto sector which is seeing a huge slowdown.
With no major news in line Indian markets can be seen in line with global markets.Going ahead markets would start aligning itself to the results which would start coming out in early Jan.
There is a impression in the market that the stimulus provided by Govt is not enough to boost the economy.A further cut in CRR and SLR is needed.Which might only be declared once the inflation is seen cooling down.Stimulus declared by India is very nominal considering the $580 billion package by Chinese govt and drastic cuts by European banks.
The excise duty cut is a positive sign for the auto sector,helping the companies to slash prices by 2 to 4%.Cooling down interest rates also adds to the hopes auto sector which is seeing a huge slowdown.
With no major news in line Indian markets can be seen in line with global markets.Going ahead markets would start aligning itself to the results which would start coming out in early Jan.
Saturday, December 6, 2008
Will petrol price and CRR cut help
Long awaited petrol price and CRR cut has been declared.But they were expected.Govt has not slashed the rates more than what the market has been expecting.So its almost sure that there may not be a rally on Monday morning reacting to these steps by government.
With inflation already coming down and seen at 8.2% this week,it can cool down to still lower levels once the impact of reduced petrol is felt.That will give flexibility for the government to reduce the interest rates further.With elections in few months ,government would try max to please the public by reducing the petrol prices and interest rates further.
But effects of all these cuts would not be seen immediate.It would take time for CRR cut to be reflected in the banks liquidity and then the business.The exact time frame may not be guessed but it might be around two quarters.Till which we would see all the companies facing tight liquidity problem and hence would end up reporting poor and poorer results for the coming months.
With inflation already coming down and seen at 8.2% this week,it can cool down to still lower levels once the impact of reduced petrol is felt.That will give flexibility for the government to reduce the interest rates further.With elections in few months ,government would try max to please the public by reducing the petrol prices and interest rates further.
But effects of all these cuts would not be seen immediate.It would take time for CRR cut to be reflected in the banks liquidity and then the business.The exact time frame may not be guessed but it might be around two quarters.Till which we would see all the companies facing tight liquidity problem and hence would end up reporting poor and poorer results for the coming months.
Tuesday, October 21, 2008
Sector investing
Sector indicates a group of companies doing similar business. These sectors fall into two categories Cyclical and non-cyclical.
Non-cyclical sectors are the ones which do well irrespective of the prevailing economic condition like the Food ,Health care and daily needs ... . People will not stop using them even if the economy is in downturn.
Cyclical sectors do well when there are favorable conditions for them.Like the real estate sector does well when the interest rates are lower similarly cement and auto sector.As a result earnings of these companies are very good pushing the stock prices up.Hence before investing it is very important for one to consider the economic conditions in which the sector is in.
Following are the Cyclical sectors.
To understand the above graph one needs to know the different phases a economy can be in.
Full Recession -- Interest rates are high , cost of borrowing funds is high as a result no any expansions are planned.Customer spending is low as a result companies produce less goods,more news about layoffs.
Early recovery -- Interest rates start to ease a bit,customer spending slowly picks up as a result companies start increasing the production as a result they need more staff as a result the jobless claims reduce.
Full recovery -- Whole economy is doing great ,interest rates are lower.Customer spending increases a lot as a result companies start the expansion plans.
Early recession -- Inflation has peeked up so the Government increases the interest rate making money tighter to get. Customers find everything costly ,thereby reducing the spending,expansion plans of the companies comes to a halt.
Stock market is always 3 to 6 months ahead of the market.You might find a company declaring great results for the present quarter but you find that the stock price of the company is indeed falling drastically.Reason for this fall is that stock market is considering that though the company has come out with great results the future of the company is not looking great and it forecasts that the company would not come out with great results in coming quarters.
Non-cyclical sectors are the ones which do well irrespective of the prevailing economic condition like the Food ,Health care and daily needs ... . People will not stop using them even if the economy is in downturn.
Cyclical sectors do well when there are favorable conditions for them.Like the real estate sector does well when the interest rates are lower similarly cement and auto sector.As a result earnings of these companies are very good pushing the stock prices up.Hence before investing it is very important for one to consider the economic conditions in which the sector is in.
Following are the Cyclical sectors.
The graph below, courtesy of StockCharts.com , shows these relationships and the order the key sectors respond to the economic cycle. The Stock Market Cycle precedes the Economic Cycle as investors try to anticipate how the market will react to the changes to the economy.
Sector Rotation Model:
To understand the above graph one needs to know the different phases a economy can be in.
Full Recession -- Interest rates are high , cost of borrowing funds is high as a result no any expansions are planned.Customer spending is low as a result companies produce less goods,more news about layoffs.
Early recovery -- Interest rates start to ease a bit,customer spending slowly picks up as a result companies start increasing the production as a result they need more staff as a result the jobless claims reduce.
Full recovery -- Whole economy is doing great ,interest rates are lower.Customer spending increases a lot as a result companies start the expansion plans.
Early recession -- Inflation has peeked up so the Government increases the interest rate making money tighter to get. Customers find everything costly ,thereby reducing the spending,expansion plans of the companies comes to a halt.
Stock market is always 3 to 6 months ahead of the market.You might find a company declaring great results for the present quarter but you find that the stock price of the company is indeed falling drastically.Reason for this fall is that stock market is considering that though the company has come out with great results the future of the company is not looking great and it forecasts that the company would not come out with great results in coming quarters.
Monday, October 13, 2008
Why following a mutual fund portfolio is a bad idea.
Individual investor does not have all the access to the data which mutual funds have.So he might think it is a better idea to follow the portfolio of a mutual fund and there by get returns which are equal or more than the mutual fund returns.
But this strategy has more pitfalls then gains.Lets see what are the reasons for this.
1.Wider diversification.
Mutual funds have a diversified portfolio having around 30 to 50 stocks.Out of which some stocks may do good while others may fail.On average resulting positive returns to the fund.
Individual investor who tries to mimic the portfolio of a mutual fund , may not have the ability to maintain a diversified portfolio,who instead would choose only fewer stocks from the mutual fund portfolio.
To his bad luck if these are the stocks which have not done well ,then investor has to end up taking loses.
2.Incomplete information on portfolio.
Mutual funds shuffle their portfolio and it is not possible to gather information about the when they are changing the portfolio.They might be knowing a insider story and might sell a stock immediately knowing a bad news is in line.
Individual investor might find himself late catching the falling knife.By the time he knows the action taken by the mutual fund ,damage would have been done.
Hence it not a profitable idea always to mimic a portfolio of a mutual fund.Hence an individual investor can use the mutual fund information to find which stocks are hot and not among the mutual funds and can make a investment decision.
But this strategy has more pitfalls then gains.Lets see what are the reasons for this.
1.Wider diversification.
Mutual funds have a diversified portfolio having around 30 to 50 stocks.Out of which some stocks may do good while others may fail.On average resulting positive returns to the fund.
Individual investor who tries to mimic the portfolio of a mutual fund , may not have the ability to maintain a diversified portfolio,who instead would choose only fewer stocks from the mutual fund portfolio.
To his bad luck if these are the stocks which have not done well ,then investor has to end up taking loses.
2.Incomplete information on portfolio.
Mutual funds shuffle their portfolio and it is not possible to gather information about the when they are changing the portfolio.They might be knowing a insider story and might sell a stock immediately knowing a bad news is in line.
Individual investor might find himself late catching the falling knife.By the time he knows the action taken by the mutual fund ,damage would have been done.
Hence it not a profitable idea always to mimic a portfolio of a mutual fund.Hence an individual investor can use the mutual fund information to find which stocks are hot and not among the mutual funds and can make a investment decision.
Sunday, February 17, 2008
Knowledge Matters
Its been long time since I have blogged and things changed a lot in meanwhile.One of them is I slowly started to invest in stock market.As a result of which I have also started to watch cnbc tv like my father did,I also read economic times as if I understand it completely(ofcourse not).Not sure how many days or months this passion is going to be,but I am enjoying it.
First I started to follow the market for few days,I saw a lot of market analysts predicting the power sector is going to show great signs of growth.So I have picked up a stock PowerGrid at 136 investing 3k in it.Why powergrid?,because I heard one my friend saying about that it would do great in long term(First mistake).Without knowing what the company is actually into,what is its turnover,profit,operating margin.The stock started to do good and it went upto 154.I was patting myself for how intelligent I am.Then I picked up one more power stock Ntpc at 255.It also started to move upto 270.There was no stopping for me.I was on top of the world.
I saw a website recommending that BirlaCorporation stock will go up a lot in near future.I looked into the stock compared it with its peers,saw that its at a very low price,so I picked it up.But to my dissapointment stock price fell badly.(Mistake -- I haven't done industry analysis and haven't found out why the stock was quoting lower than its peers).
Then came the big crash of January 2008 whipping the market from 21k levels to 15k level.My portfolio crashed it was 30% down.Then I have invested double the value of my portfolio .Later market recovered to 18k levels at which I booked profit.As of now I am sitting with 10% profit.But there are so many things I have done wrong and so many things I have learnt.
With the experience I had in 2 months , I see two things are important before investing.Fundamental analysis and Technical analysis.
Fundamental analysis this is all about knowing the company.What is its business ,revenue , profit ,competition , market cap.Step wise following are the things one needs to look at.
Technical analysis is all about determining the price movements of the stock based on its past price movements.This would explain why even though the performance of the company does not change day by day but its stock price does.You can find good tutorial on Technical analysis here.
By having a good knowledge in the topics mentioned above one would be able to take wise decisions instead of just following the herd.
Hoping this would be of some help to people who are just 2 months behind me in this new world.Going ahead I would try to post my experience and things I learn in stock market.
First I started to follow the market for few days,I saw a lot of market analysts predicting the power sector is going to show great signs of growth.So I have picked up a stock PowerGrid at 136 investing 3k in it.Why powergrid?,because I heard one my friend saying about that it would do great in long term(First mistake).Without knowing what the company is actually into,what is its turnover,profit,operating margin.The stock started to do good and it went upto 154.I was patting myself for how intelligent I am.Then I picked up one more power stock Ntpc at 255.It also started to move upto 270.There was no stopping for me.I was on top of the world.
I saw a website recommending that BirlaCorporation stock will go up a lot in near future.I looked into the stock compared it with its peers,saw that its at a very low price,so I picked it up.But to my dissapointment stock price fell badly.(Mistake -- I haven't done industry analysis and haven't found out why the stock was quoting lower than its peers).
Then came the big crash of January 2008 whipping the market from 21k levels to 15k level.My portfolio crashed it was 30% down.Then I have invested double the value of my portfolio .Later market recovered to 18k levels at which I booked profit.As of now I am sitting with 10% profit.But there are so many things I have done wrong and so many things I have learnt.
With the experience I had in 2 months , I see two things are important before investing.Fundamental analysis and Technical analysis.
Fundamental analysis this is all about knowing the company.What is its business ,revenue , profit ,competition , market cap.Step wise following are the things one needs to look at.
- The Capitalization of the Company
- Revenue, Profit and Margin Trends
- Competitors and Industries
- Valuation Multiples
- Management and Share Ownership
- Balance Sheet Exam
- Stock Price History
- Stock Options and Dilution Possibilities
- Expectations
- Risks (Further reading can be found here).
Technical analysis is all about determining the price movements of the stock based on its past price movements.This would explain why even though the performance of the company does not change day by day but its stock price does.You can find good tutorial on Technical analysis here.
By having a good knowledge in the topics mentioned above one would be able to take wise decisions instead of just following the herd.
Hoping this would be of some help to people who are just 2 months behind me in this new world.Going ahead I would try to post my experience and things I learn in stock market.
Monday, June 18, 2007
Romeo meets Juliet
Not sure if this is real snap or not and not sure who has taken it . But an awsome pic.
Tuesday, June 12, 2007
Breaking the gap with Google Gears
The most of the applications which were limited to desktop are made available online now.Like google docs. , picasa for playing with images.So what does this mean,do we need to leave all the applications on desktop and starting using the online versions.Well both of them have their own pros and cons.
Desktop Applications
Google Gears is a application where one can offload the data from a website to a local server and work on the data locally and finally the modified data can be uploaded and synched with the actual server data.Google is providing this feature with Google Reader , through which we can download the feeds locally ,read through them.Google claims this feature is very useful when we don't have a reliable internet connection.But I feel this feature can also be used to bridge the gap between the online and desktop version of applications.Lets see how it can be done.
Lets take the example of Excel.Consider online version of Excel is available too.Now using google gears using a single click we should be able to offload the content to a local desktop machine.Considering Excel is installed on local machine.We can play with the content , modify it and when finally done with it,with a single click we should be able to upload the data back to the server.With this we have all the advantages , we were able to locally use the full featured Excel to modify the content,use the online version to take care of sharing and backup issues.
This feature can also be extended to get the complete OS state.If I am using a desktop at my home and my operating system can give me its state information,then I can upload that data to a server.I can go to office and download the server state on office machine and start working from where I stopped at home.
That would be a ideal win considering the disadvantages of present desktop operating systems and the Web operating systems.
Desktop Applications
- More features to manipulate the data
- Easily accessable
- Secure ,only accessable to oneself.
- Easy to share
- Can be viewed and modified from any machine.(Machine independent).
- No issues with backup and data loss.
Google Gears is a application where one can offload the data from a website to a local server and work on the data locally and finally the modified data can be uploaded and synched with the actual server data.Google is providing this feature with Google Reader , through which we can download the feeds locally ,read through them.Google claims this feature is very useful when we don't have a reliable internet connection.But I feel this feature can also be used to bridge the gap between the online and desktop version of applications.Lets see how it can be done.
Lets take the example of Excel.Consider online version of Excel is available too.Now using google gears using a single click we should be able to offload the content to a local desktop machine.Considering Excel is installed on local machine.We can play with the content , modify it and when finally done with it,with a single click we should be able to upload the data back to the server.With this we have all the advantages , we were able to locally use the full featured Excel to modify the content,use the online version to take care of sharing and backup issues.
This feature can also be extended to get the complete OS state.If I am using a desktop at my home and my operating system can give me its state information,then I can upload that data to a server.I can go to office and download the server state on office machine and start working from where I stopped at home.
That would be a ideal win considering the disadvantages of present desktop operating systems and the Web operating systems.
Saturday, June 9, 2007
Art of War
What makes a person more talented while the other a loser,what stops a average person to be a winner these are the questions one encounters in all faces of life.
God is THE BEST architect.No one knows why the world exist.Who created it.Why do we exist in this world.And what is life.we go through the complete cycle of life.Not knowing what is the meaning of its existence.
This is the same state we are in right now.I can't answer any of those above questions,so i go ahead in living my life.The only thing which we are in control of is our life.God creates some as in born champions,some average and some stupid.Its a beautiful balance maintained by God.So if I am stupid ,I ask why is it I am a stupid,why wasn't I a champion.The easy one to blame is God :).
Lets take a scenario.Where a champion , a average and a stupid is given a sword each which are of same quality.Three of them are asked to fight with 3 average persons.The champion wins over his apponent easily while the average may or may not win and the stupid loses it for sure.What made the champion win and stupid loose.All of them were given same swords , all of them were to fight with same level apponents.This is how our life is , when we enter the battelfield called life we all have swords in terms of strengths and we all face the apponents which is world.But at the end of the day some of them are successful and some or not.
So everyone has a sword ,its up to us how to use it.The one who uses it best to his strengths is the champion.So here I redefine the definition of champion , average and a stupid.A champion is a person who improves his strengths in battelfield irrespective of whether he wins or not.A average person is one who just plays to his strengths.A stupid person is one who loses his strengths(even if he wins).
We need to look at our swords (strengths) .Need to identify the sharpest edges and weakest ones.We have to make sure that the sharpest ones remain sharper and we need to concentrate on the weaker edges and improve them one after the other.
In several instances I have been as a stupid and a average person.I am learning atleast to be at average consistantly.
God is THE BEST architect.No one knows why the world exist.Who created it.Why do we exist in this world.And what is life.we go through the complete cycle of life.Not knowing what is the meaning of its existence.
This is the same state we are in right now.I can't answer any of those above questions,so i go ahead in living my life.The only thing which we are in control of is our life.God creates some as in born champions,some average and some stupid.Its a beautiful balance maintained by God.So if I am stupid ,I ask why is it I am a stupid,why wasn't I a champion.The easy one to blame is God :).
Lets take a scenario.Where a champion , a average and a stupid is given a sword each which are of same quality.Three of them are asked to fight with 3 average persons.The champion wins over his apponent easily while the average may or may not win and the stupid loses it for sure.What made the champion win and stupid loose.All of them were given same swords , all of them were to fight with same level apponents.This is how our life is , when we enter the battelfield called life we all have swords in terms of strengths and we all face the apponents which is world.But at the end of the day some of them are successful and some or not.
So everyone has a sword ,its up to us how to use it.The one who uses it best to his strengths is the champion.So here I redefine the definition of champion , average and a stupid.A champion is a person who improves his strengths in battelfield irrespective of whether he wins or not.A average person is one who just plays to his strengths.A stupid person is one who loses his strengths(even if he wins).
We need to look at our swords (strengths) .Need to identify the sharpest edges and weakest ones.We have to make sure that the sharpest ones remain sharper and we need to concentrate on the weaker edges and improve them one after the other.
In several instances I have been as a stupid and a average person.I am learning atleast to be at average consistantly.
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