Tuesday, February 20, 2007

Markets are getting jerky

Stock markets seem to be very nervous ahead of the budgets.. there is the lurking fear of the FM introducing/extending some market unfriendly measure - even a nominal increase in STT or short term capital gains tax can act as a dampener on the sentiment. The markets at this point in time don't have a major reason to go up. Results have been upto expectation and as the old adage goes "the only way when you are the top is to go down". Any analysis will show the indexes holding at this level is just because of the 4 heavyweights -Infy, Reliance, Bharti and Reliance. Most of the other stock movements have become non events. Mid caps as usual get hammered even in the smallest of corrections. The index might correct 5 % but they will be down anywhere between 15% to 30%.

It seems prudent to be in cash and partly dilute and en cash any major gains. In case of any major correction the Nifty can go down to 3600. Which is a good 10% from the current levels - which doesn't seem entirely un-plausible having seen 10% index dips during last year's steep correction.

Monday, February 19, 2007

Global acqusitions

I am no great financial analyst to comment on the recent spate of global take overs by Indian companies of Global giants ( Namley Tata-Corus, Hindalco - Novelis ) and even the small buyouts by a whole host other listed entities but couple of things surely come to mind is first the acquisitions have happened when asset prices are at the highest be it stocks, reality and even bond yields so there is an element of speculative bubble built into the acquisition price. In case of Tata Corus which went through the auction the price was definitely higher than what Ratan Tata would have liked to pay. Secondly most of the acquisitions are 100% cash( stock swaps are impossible ) being mostly funded through debt - with the interest rates rising there is bound to be pressure on the acquirers to justify the prize catches to the shareholders and lenders. With the asset expansion cycle in its fifth year there is bounds to be doubts on how long the rally going to last. A lot of these acquisitions are of companies in various commodities which definitely have their business cycles and again most of the are going through their peaks ( though the take on each case can be different)

Contrast this with how LN Mittal built his empire - acquiring companies down in the dumps and at very cheap valuations which gave him the leverage years later to mount a takeover of Arcelor which was still cheaper than corus plus it was not 100% cash deal as the other Indian deals. Where does this leave us ? Only hope that the synergies as the managements have doled out come faster and they dont get bogged down by integration pains.

Incidentally today's pink papers carry couple of stories in detail.

Economic times - Investors guide
Business - Standard - Smart Investor

Wednesday, February 14, 2007

MGF a hidden reality play or a hoax ?

There is a lot of news about the EMAAR- MGF reality joint venture. It is supposed to get the largest FDI in the sector and a lot of PE funding. Actually the joint venture partners are the owners of a finance company called Motor general finance ( MGF ) listed on both NSE and BSE. The balance sheet is just as bland as their hire purchase and leasing business. The JV is expected to come out with a 700 crore public issue and they are one of the major players in punjab. The pointed to be noted is who holds the shares in this company. The details are not forthcoming and the promoters seem to have conveniently blanked out the equity holdings page in the MGF finance website.

The problem with the stock is that its either on the uppper circuit or lower and there is no justification to buy the stock purely based on the existing business. The dope is that some informed circles are into this stock from a large industrial house. Take your pick

Thursday, February 08, 2007

Ind-swift babies

Both the Ind-swift companies Indswift limited and Indswift labs have given a good break out with volumes. One of them is in the T group - dont know the reason but priced around 38 -which can be bought at that price where as Indswift labs is priced around 82- should be bought around 75 when a reaction comes in. The results have been lacklustre though they are very small priced pharma companies.

Innerworth

Anybody who has invested or planning to invest in the financial markets should go this website innerworth - which deals with the market psychology. The tag line itself is "Mind over markets ". The daily articles which you can subscribe are profound though sometime may be tailored to the US markets - have a lot of sense as how an individual is and can be influenced in making the right decisions. The daily newsletter has a kind of case study and a cartoon to soothe those frayed nerves of a typical trader.

The quality of content is really good and its easy to relate based on the experiences one has had in the financial markets.

A stock which actually powers !

Neyveli lignite has given a very decent break out today - though the fundamentals may not have a compelling case at these valuations. The break out suggest very good momentum ahead and with the tamil nadu govt having a good bargaining power with the central government - some thing may surely be cooking. I think bottom fishing can be done @ 62 . It has come out of a very narrow range over the last couple of months. The volume action is just about okay.

Wednesday, February 07, 2007

Who will power the country

A whole lot of stuff has been written about the power reforms in the country and how a lot of the whole value chain will benefit and create shareholder value both in the short term and over the long term. Most of the large caps in power generation equipment including ABB, BHEL , Siemens and to some extent L& T and crompton are already reaping the benefits . Transformer companies , tranmission equipment providers , cable manufacturers and also the power generating companies are on multiyear highs. There is a lot of potential for smaller well managed companies to come to party with the ultramega power projects taking off and the rationalisation of the electricity act 2003 expected - I feel there will be a lot left on the plate for them to make a difference.

Two under dogs which can be significant outperformers and I feel should be accumulated ...

Kirloskar electric @ 85
Jyoti limited @ 110

Tuesday, February 06, 2007

Here I go again !

Markets are going higher by the day. For a lot of us the feeling of left out can be self destructing if particularly be any kind of investor in the markets. Its always difficult to make money in the markets what ever the level of Index and more difficult when it touches an altime high every day. Here you will find some investment ideas though not necessarily backed by any justification as they come from various sources and as a matter of prudence any decision that is taken is at your own peril. Lets see how often the money to me made can be spotted.

Keep coming back for more ..