Wednesday, April 27, 2011

Sell off expected in Rate sensitives.

Reality sector looks more weak! Mkts may remain range bound or could see a dip from here. It looks a bit overheated keeping the currrent scenario where credit becomes expensive (19300)

The silverlinning is a good kharif crop creating a surplus among farmers. Concern remains on monsoon and higher crude prices.

Buy Jain Irrigation , Camson Biotec on declines!
Kaveri seeds looks nice from these levels , along with Rallis India
Buy Monsanto as a large cap in this space....Low risk low return!

Keep an Eye on NESCO for a completely undervalue property business :)

Tuesday, February 9, 2010

A small cap Risky Pick

Buy Alumeco India Extrusions (CMP: 12.5)

Saturday, October 31, 2009

We are almost entering in another Recession Phase

Looking at the scenario, I dont feel that this recovery from the recession may last. However if Stimulus packages dry upp we may se lower consumer demand globally. We can see another small dip in this slump which may continue in Mid 2010 all the way upto late 2011.India will still outperform.

As of now, its better not to bet on growth and discount equity on a higher end. For economies like India moderate growth between 5-7 percent can be expected. As said earlier 5.8% is what we could expect. Liquidity could be some concern in the next few quarters although not as grave as earlier.

Thursday, October 29, 2009

Be Careful!!

We are quite high levels.....and Growth targets for next year are much lower from expected. I see the GDP forecast between 5.6-5.8% but not more than 6.2%. Consumer demand seems however been picking up.Hence its safer to move into automobile and Consumer goods especially the later.
Markets could plummet if the results are below expectations.

To look at atleast 20% safe upside. I recommend the following

Glaxo (2000+)
Nestle (10% more++++)
and P and G ( CMP: 1422 ;should touch its high of 1650+)
these stocks have very litlle downside even if the markets fall.

Marico, Dabur and Enami are also good but I would bet on MNCs. Marico is better in Indian FMCGs if you looking a growth in the next 4-5 years.

Nirma, will grow slow owing to undeperforming marketing strategy, but some investment is recommended here. Although MNCs should be given more concentration.

Hindustan lever (HUL) would be a lagger in this space being an MNC. Co

Kindly note that these stocks are not only buffers but at the same time will lead the rally in case the Sensex goes to 20k and Nifty to 6k as the pure factors driving this will be Indias consumer demand.

Even at higher levels a hold is recommended in these stocks

As I have always said..try exiting Reliance stocks of both the Reliance groups.They will underperform.

Auto story will also be driven by huge consumer demands in comming heres. Hero Honda, Tata motors and Maruti remain good picks. :)

Friday, June 27, 2008

A blog after a really longtime......

But it took me long to assimilate and indeed sorry for the delay..
I don’t know where to start, how to start but I will make an attempt. It was January where the same markets were booming and now each day I see stocks at throwaway prices. Are the indeed so cheap? What's the difference in the same markets from Jan to June.............that it has corrected nearly 30% from the tops...
Small caps have lost nearly 50-70% some even reduced to 1/4th of their market cap (or price). How and why did this take place?

It all starts so.... A fresh year starts in January all parameters were under control...easy available of liquidity, companies all set for their capex expansions plan, credit at cheap (if not cheap at least at moderate) rates , Inflation (around 3.5%) well under control and hence the economy was all set to grow from there. In addition markets boom in January as well generally. January brought all new hopes to FIIs , retail investors, companies and even to the Indian economy.

But the world is dynamic. Inflation crept up as crude which was expensive went more expensive i.e. from 95 to 135$ a barrel up nearly 35%. Crude had already rallied last year from $70 levels to $100+ and the rally continued. Crude took energy prices up as well as other commodities creating a huge problem for not you or me but everyone. US suffered from the rise but emerging economies suffered much more as emerging economies (Indian and China) were the place driving the demand story for crude. Supplies were almost constant. Discovery new fields were on a decline as per the trend. Short Term crude prices are projected at $150/ barrel some say even $200 barrels. On the other side of the coin we have people stating $60/barrel. My idea on this is....the price is high as the demand has increased. Demand cannot come down very quickly as shifting to alternative energy sources immediately is not so easy. Moreover, Growth continues so Short term demand seems robust, keeping short term inflation robust. The only way to fight inflation is to increase interest rates (REPO ,CRR, PLR and so on). But that may hinder growth as credit will become expensive in the short term for consumers as well as companies eyeing their capex plans.

As Growth might slow down, definitely not too much , we see the demand to lower, thus in turn bringing stability by stabilizing the demand supply curve. Production may also increase as promised by some of the OPEC countries. Inspite of this, from these levels crude looks bullish. I am definitely bearish keeping the long-term perspective wherein non-conventional sources and renewable sources called crude alternatives may come into play. But it is not as easy as I said.

To cut a long story short, I will have a cyclical representation.

(need to show a diagram)

Crude is all ok, but what does it imply to our economy? Lets take an eg…The reality sector is hit hard so hard that even the top favorites are at below IPO price. The scenario needs to be understood carefully. The prices of raw materials will increase due to inflation. Development needs credit which will be difficult to find as lower no of capital investors due to slower growth. Moreover if credit obtained it will be quite expensive creating high interest costs. This will make the company suffer on margins. Moreover consumer demand will slow down which may be investor driven or end consumer driven. End consumers may find difficult to buy property at high interest rates or EMIs. This will also mean that funds may be blocked in developed and undeveloped land creating in a slight competitiveness, decreasing property prices. Decreased property prices will also decrease investor morale as well as hit company margins. It may continue till inflation rises and interest rates are hiked until an equilibrium all parameters are obtained.

This is not to end up with all but the interest on credit and capex plans of all companies from engg to Consumer durable (CD), capital goods (CG) , infrastructure , power and banks as well. In fact, bank margins may decrease due to high interest rates. Lending of credit will be also on a decline. All types of capex plans signify growth. Any hindrance in it means a slower growth. The question is how slower? And the answer is how much inflation………..and to reduce it, is a the rate hike in interest enough.

So we go round the bush and end on inflation. How can single commodity crude drive inflation? Energy is a must, for life to sustain and increase in energy demand is imp for growth to sustain. Crude is not just energy but its byproducts have an array of organic compounds that generate a dye to turpentine (industrial solvents) to water proofing agents and even drugs. It affects every individual directly or indirectly. Every individual travels or buys goods that use logistics. Nothing grows in a city where I live called Mumbai. So it affects me a lot indeed.
Hence is crude is a lot to an industry and an individual but not only energy. Moreover rise in crude promotes rise in various cereals and foodgrains used for generation of ethanol via fermentation. Ethanol is a crude substitute. Thus foodgrains are at a shortage as they are used for energy purposes. In addition crude drives the energy basket increasing prices of coal, cooking gas, etc. It also drives gold and precious metals along and sometimes even base metals (copper, zinc, aluminum, lead ,tin) sometimes. Hence in one way it drives inflation.

Another large concern is political instability in India as well as US due to elections. In short too many negatives and too less or none positives.

So…..What can one do in the scenario…

India and China will have to grow and there is no doubt. Population will rise consumption story will continue flourishing it as a better domestic economy. Global problems may subside, like crude which is globally affected we import it so we import inflation. Land has to become less and infrastructure is a prime need in infrastructure ruined country. Its like India has to grow …so infrastructure has to…
So if valuations are low one can look at long term. Global problems need time to get stabilized so do political problems need time. We import inflation as we import crude and rise in crude is a global mega-problem. The apt saying describes the recent fall “ Sell in MAY and go AWAY”. But after every may is a January which makes markets boom.

The markets are demanding. Two things obviously, your money and your patience (time). So wait and watch and don’t loose it!!!!! (‘it’ means money as well as patience)

-Govinda Ahuja.

Thursday, May 22, 2008

NMDC puts upp a good show...

after bonus today inspite of heavy selling we saw NMDC moving uppp 4%
all i know 510 now (ex bonus 1500,15k ex bonus ex split,,,)
All people having holding can obiously hold retain...
gremach infra....mmoving upppp 161 on it.. agin longterm higfh risk high return...will check its progress and come back soon..

New pick Cerebra Info looks goood nice reults...small cap space
Cals refinireies too looks good (These are not my picks but i appreciate them)

Kalpana recommmded at 105 moves upto 130 (22% gains).
Praj from 145 to now 200.............will continue trhe rally until crude will rally
It comes under renewableenergy sector which contains...Suzlon , praj as well as Webel Solar power SE all will move in case crude touches 150$ a barel. We are all set to see a 150.
Along with it it will carry all refineries like cairn, reliance (not active now) and exploration like aban(was upp today a buy was given for longtem in earluier blogs.......) and HOEC (hind oil explo company)

Bartronics looks to slow down...profit booking partly recooomended..long term prospect still look good after this rise.....

Sterlite technlogies hold as well as GTl infra both are lions in telecom space....

Monday, May 12, 2008

Some small cap Ideas

Small caps ahave always been rsiky in tumbling markets...

Some a few that seem goood.
Kalpana Inds(CMP 105).........nice company a P/E at abt 5. A pretty decent P-BV and growth tooo...excellent product line.
Visesh Info...good in It space along with Cerebra Integrated Technologies.
Already people who lifescience were caught in a midcap Camson 90 odd
has bounced back to 120-130 levels
accumate all the above for a a risky high return play..

Among the largecaps....
Jindal Saw....
Bad results.
But this is a time toi accumalte it...
current levels looks expensive as per forward earnnings.
Can buy on markets crash at around 500