Monday we could see some rally in the Indian markets. This week the most exiting thing will be the Railway Budjet and the Financial Budjet(Is there some thing related to the leap year budjet, I mean any of the superstitions). The news of the Bonus shares in the ratio of 3:5 for the RPL counter will sure light it up. Also given that US markets ended quite well on Friday shall boast the markets. Also look out for Centurain bank of Punjab(Although it is a news now and not a rumor)
For Monday 5184 on the nifty could be a serous resistance followed by 5200 and then 5241. Overall we should still remember that we still have one gap left around 14500 to be filled. So I think in this market whatever be the euphoria just go short on very high you see touching the trendline.
Past week we so a huge rally in the commodity space. Platinnium led all of them. Looking at all of this I belive the rally in Gold and silver will still continue in the next week too. The data comming from US is quite dissappointing as we all know. This week quite a crucial set of number are awaited esp the Housing numbers. If the bad numbers continue we could well see Euro/Dollar ratio passing 1.5000.This all encourages my view and we could all see a new high being made in the coming week
Now if we are talking about Gold the immediate target looks to be around $968-$972. This is the first targret that we could come across this week at the same time this will pose a serious resistance. The next target if it corsses the $976-980 wil be $1005 while the ultimate for the current wave be around $1026. So if some one wants to go short , if someone sees the $970 mark for the first time he can go short on an intraday basis. And I think if U short around this level you should be in the money in hours.
Silver as in the past will outperform Gold when it enters the fifth wave. The target on silver on the upper side would be around $18.50 and $18.80. Technically we could see some correction in silver,but there is always a chace that gold will pull silver with it. At the same time we should always remember Silver can burn your hands worst than the gasoline.
All the comments are most welcomed. I have mentioned my personal view on the commodity sector
World Economy and Indian Markets
The price of gold will soon make a new high(Although I will sell if I see $938 in next couple of days on intraday basis) People around the globe are running towards precious metals. Platinium makes a new record daily. Silver is outperforming gold. This all could be the economic indicators that we are overlooking. The overall economic scenario around the world looks fragile.Is it too late too talk about this now? What will happen next? what about the India growth story?
The Indian growth story is very much intact I would say but, the world growth tale(fable) doesn't looks so great. So we thought that the subprime crisis gave us the bad times. Hello! this could just be the start. The losses till date reported have come from the sell side firms only which could be around say $400 billion ++. But what about those players who are on the buy side. what about those who have bought these structured products (credit derivatives). They are yet to show up. Even in India it was reported that few banks would have been carrying these items in there portfolio(reported by NDTV profit). Is it over? Not yet. As the grapevine goes we are into the corrective wave of the five way Indian bull market(Elliott wave theory) and not to mention the gap the charts showing gap at around 14500 on the sensex(Indian Index).
What I want to bring to the notice is that there will be some trigger which could take the world markets for the surprise (Dont forget commodity market is also rallying esp. Precious and base metals). So this all need to correct. This happened in 2006 may when all the markets corrected. This time the trigger could be anything inflation, more losses could come out, could be budjet or it could even be Kosovo-Serbia clash.
Some how all this is not fitting right. People should invest keeping all this in mind and be catious. Technically everything needs a correction. We just need to identify are we with the trend or with the correction of that trend.
Any views are most Welcomed
Pay commission, Inflation and the Interest rates...Good, Bad and Ugly
4 comments Posted by BishopGuy at 9:36 AMPay commission, Inflation and the Interest rates...Good, Bad and Ugly
Yes it is true we may have not thought about or talked as what these three could do together. Many people still dont get what pay commission can do the economy specially one like India. Just to highlight---
What is a Pay Commission?
It is an administrative system/mechanism that the Government of India set up in 1956 to determine the salaries of government employees.The First Pay Commission was established in 1956, and since then, every decade has seen the birth of a commission that decides the wages of government employees for a particular time-frame.
'The Fifth Pay Commission (set up in 1994) recommendations resulted in a Rs 530 billion payout by the government. The next (sixth) pay commission would effectively wind up Indian sovereignty.'-- Arun Shourie, former Union minister for divestment, statistics and programme implementation
It is an administrative system/mechanism that the Government of India set up in 1956 to determine the salaries of government employees.The First Pay Commission was established in 1956, and since then, every decade has seen the birth of a commission that decides the wages of government employees for a particular time-frame.
'The Fifth Pay Commission (set up in 1994) recommendations resulted in a Rs 530 billion payout by the government. The next (sixth) pay commission would effectively wind up Indian sovereignty.'-- Arun Shourie, former Union minister for divestment, statistics and programme implementation
The sixth pay commission is knocking the door as it has been a long time (Probably by April the report will be submitted) Before elections are held could it be implemented? (Also keep in mind the kind of expenditure it will be during the election for the center and 9 states due this year). Now keep in mind it is being speculated that salary of an employee who is earning Rs 30,ooo fixed after the pay commision will be Rs 80,000.(Still less compared to the kind of salaries corporates give). So where will all this money go ? Yep! This is what will lead to good disposable cash in the hands of goverment eployees that they will spend ...Leading to Inflation ?
Now globally as we see the softning interest rates and more such to come the pressure on RBI to cut the same is rising. and now if we have interest rate cut to add to that Inflationary pressure from the spending which will go up eventualy the economic outlook looks shaky. (Don't worry I hope people in RBI are still working...they sure are as there will be hike from them too).
So what we can do.. Buy Gold (Sure buy at $700/ounce..hope we get that price) Or will the rupee still apreciate to cut the Inflation (Less chance as the cause of inflation post pay commission is different)...Or should we just go long on the FMCG and the White goods Shares (More spending more profit for these companies).
Lets see what is in store for us in future.
Any comments on this topic are most welcomed..
Nifty---19/02/2008---TuesdayWell as anticipated and posted in my earlier post (Monday outlook) Nifty took the 5340+ as resistance and has now stopped making the intraday high of 5348(quite close uh!). Ok so as mentioned the short position today would have minted money in tones today on the nifty future. Even the Rpower bonus share news and the talk that the iron ore prices will increase by 60% could not help the markets.
So now where do we go from here ? But offcourse down. As 5340-50 is now acting as a good resistance there is little chance of any upside. So I think tommorow ie on tuesday Nifty will not give any much movement on either side but if the markets is in the bad mood we can see the level of 5332 and then 5187 and even upto 5160 if the market remains bearish.(During times like these you can even see extremes that you never calculated) Although the chances of significant upside are less but still 5317 and 5334 will be major resistance for tommorow. The upside cannot be completely ruled out as the technical charts are suggesting esp the MACD. Even then as mentioned earlier 5340-5360 will be a major hurdle in this week
Go short you should be in the moeny soon
Disclaimer : The analysis done and the opinion expressed is my personal view, for just info purpose.
Disclaimer : The analysis done and the opinion expressed is my personal view, for just info purpose.
Be the Edge spread Knowledge
Nifty Fifty --- 18-02-2008----Monday
Both the Indian Indices had a very good run last week. Sensex gaining well above 600 points, while Nifty is around 5300 now. But the outlook for medium term remains bearish. In my view the current wave is a corrrective rally and we will soon be looking at new low.
As as there is no possibility of making new highs, what should we do? Ans- Without a doubt go short and you will be in the money. Hence we are watching for 5340+ on Nifty. Boy! if you see this number tomorrow sell a lot of nifty future and no matter what (even if the Warren Buffet starts buying) you will take home handsome cash. Before rising ro this level nifty made a high of 5220 and then sliped into the red and then the current high. 5340-5360 is a major resistance and it should come down from there.
Offcourse have a stoploss of 5410 as this will be the ultimate point for this corrective rally.
Any comments are most welcomed. Knowledge should ever grow.
V-Guard Industries IPO.
Trying to create some excitment again in the Indian primary market is the V-Guard IPO (I hope it is not caught off guard). People who would have invested in Reliance Power would have sure learnt there leasons of not forgeting the fundamentals. Some time you can just jump into the trend when the euphoria is high but you should never forget to buy a return ticket or else the fine to be paid can be huge.
About The Company
Now V-Guard is a Kerala based companie. It manufactures and markets voltage stabilisers under the brand name, V-Guard. The product basket includes various other electrical istrument from UPS to Solar water heater, and Cables. The company is said to be well established in south India and now looking aggresively towards the north. So to cater to rising demand, a second building-cable manufacturing plant is to be set up at Kashipur in Uttaranchal. It will have a capacity of 2,00,000 coils a month of standard length of 90 metres. Moreover, a low-tension cable manufacturing plant and an enameling plant, with a processing capacity of 100 tonnes, is to be put up at Coimbatore, where the existing building-cable unit is located. Development-cum-pilot plants are to be built at Coimbatore (for pumps) and in Himachal Pradesh (for fans and water heaters). Service and distribution centers are to be put up at strategic locations in India. All the projects are to be commissioned by December 2008. An initial public offer (IPO) will partially fund these expansion plans. Also the point to be kept in mind is V-Guard brand enjoys strong recall and credibility, specially in south India. But the same can be its weakness as it is right now concentrated only in that area.
Valuations
The company is offering on block 8 million shares of Rs 10 each in the price band of Rs 80 to Rs 85 per share. The issue will constitute 26.80% of the fully diluted post issue paid up equity share capital of the company. CRISIL has assigned a CRISIL IPO Grade 3/5. Now for V-guard Sales clocked a CAGR of 19% to Rs 222.27 crore in FY 2007 from FY 2003. Pofit after tax posted a CAGR of 29% to Rs 13.50 crore. The reported profit was Rs 18.41 crore in FY 2007,after accounting for an EO income of Rs 4.91 crore on account of profit on sale of investment in two amusement parks at Cochin and Bangalore. The EPS on adjusted net profit excluding EO was Rs 4.5 on post-IPO equity for FY 2007. The five-month annualised EPS for the current year on post-IPO equity works out to Rs 6. On the offer price of Rs 80-Rs 85, the P/E works out 17.8 – 18.9 times FY 2007 earning and 13.3 – 14.1 times latest five-month annualised EPS. Much larger players with much more well known brands like Finolex Cables and Bajaj Electric trade around TTM P/E of 16 times. Numeric Power, leader in UPS, trades at TTM P/E of 11 times.
So it seems that the issue is well priced and hance only long term investors should subscribe given the growth rate it has had till date. Applying for listing gains wont be a risk worth taking given current market scenario.
Website : http://www.vguard.in
Rural Electrification Corporation Ltd. (REC) IPO
Yep its coming, after a long time primary market is going to see some action. And that too form the same power sector. So what is in store for us? The company is going to raise Rs 1640 Crore by issueing 15.61 crore equity shares with a price band of Rs 90 - 105. But will it be the same like Reliance Power? I guess not. Rural electrification is public sector company so the valuations are reasonable. It may have Power grid fan following.
About The Company
REC is one of the leading public financial institutions in Indian power infrastructure, engaged in the financing and promotion of transmission, distribution and generation projects throughout India. The company occupies a unique position within the area of rural electrification of India and it currently administer grants and provide loans as the nodal agency for the RGGVY, which is primarily aimed at the electrification of all villages in India. As a public sector undertaking, it has been accorded `Mini Ratna Grade-I` status by the GoI by virtue of its operational efficiency and financial strength, which affords greater operational freedom and autonomy in decision-making. The company also has long term borrowing rating of AAA by CRISIL. REC was also ranked among the top 10 public sector companies in the past . It has been operating at net interest margin NIM of 3%. The company has NPA's of less than 2%. While the main aim will be to undertake rural electrifiaction, it has also come into urban areas. REC is playing a much larger role. It has developed into a robust agency that provides technological and financial support to all the three sectors: generation, transmission and distribution. REC has atleast got something (Rather than Reliance Power) and making profit.
Valuations
Now to start with REC is a wholly owned Government of India Public Sector Enterprise with a net worth of Rs. 3779 Crore. The issue price band of Rs 90-105 implies a PER of 9.65-11.26X on H1FY08 annualised EPS of Rs 9.32. ( This in my view is absolutely OK compared to other currently in the market even power grid trading at around 20 PE) As the growth of power sector is iminent in the country REC will be a great benificiary. In my view people should apply for the issue.
The article written above is compilation from diffrent sources and my personal opinion.
Subscribe to:
Posts (Atom)
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/gold/t24_au_en_usoz_2.gif)