Smart Investing..

The IPO of Adani Power , promoted by the owners of Mundra Port & SEZ, opens today on June 28 and plans to mop up to Rs 3,016 crore from the primary market. This is the second biggest in country's history after Reliance Power. Basic Details of the IPO: Books Open 28th July 2009, Tuesday Books Close 31st July 2009, Friday Price Band Rs.90 - Rs.100. Lot Size 65 x multiples of 65 Equity Shares Issue Size Primary offering of 301,652,031Equity shares (~13.8% of post issue capital) Employee Reservation 8,000,000 Equity Shares Net Issue Size 293,652,031 Equity Shares (~13.5% of post issue capital) QIB Book 60% of the Net issue size - at least 176,191,219 shares Retail Book 30% of Net issue size - not less than 88,095,609 shares HNI Book 10% of Net issue size - not less than 29,365,203 shares Book Running lead managers DSP ML, JM Financial, Enam, IDFC SSKI, Kotak, Morgan Stanley, I-Sec, SBI Caps The rough date of listing is around August 20 th 2009. As I write this blog artic...

Indian stocks may extend their “impressive run,” helping the Bombay Stock Exchange Sensitive Index climb to 15,000 by June 2010, Macquarie Group Ltd. said. The economy may “bottom out” in the second half of 2009, aided by the government’s fiscal and monetary policies, Macquarie analysts led by Seshadri Sen wrote in a report today. Read more of the articles here: http://www.bloomberg.com/apps/news?pid=20601091&sid=ahsyvlFT6ifA&refer=india Source: Bloomberg.com

The Reserve Bank of India (RBI) cut its key lending rate for the sixth time in 7 months on Tuesday and pushed commercial banks to follow suit to bolster growth which has taken a bigger-than expected hit from the global downturn. Some Important Highlights Repo rate cut by 25 bps to 4.75%. Reverse repo rate cut by 25 bps to 3.25%. Bank rate and CRR (Cash Reserve Ratio) remains at 6% and 5% respectively. Banks asked to review BPLR system & make credit pricing more transparent   Payment of interest on savings bank account on a daily product basis, wef April 1, 2010 . Settlement of OTC trade on corporate bonds Buy-back of FCCBs (Foreign Currency Convertible Bonds) out of internal accruals, subject to certain discounts, upto USD 100 mln permitted to corporates. Loan against NRI deposit increased from INR 20 lac to INR 1-crore . Interest rate futures to be launched shortly for 10-year paper . STRIPS (separate trading for registered interest and principal of securities) to be launched ...

Election time has come and investors are today clueless whether to enter or stay away from investing into a ny asset class. In fact this time unlike analyst expectations, I feel either the Congress or the BJP will lead formation of the government with their own respective coalitions but it’s ideal to wait till declaration of results to take any action on direct equity front. Other asset classes / investment vehicles can though be looked at. Since last two weeks Indian market has seen a rally of sort. The Indian benchmark index SENSEX, climbed 38 percent since falling to its lowest level this year on March 9. The present rally might not be very much sustainable and there can be a downturn in the short term. I feel the markets have moved up from around 8500  level to 11k levels very fast without much change in the fundamentals. This probably happened because of positive sentiments globally that much pain is over and the return of the risk appetite to eme rging markets. This can also be...

First of all I would like to thank you all who liked my earlier post on real estate trends ( Real estate prices in India face slowdown ) It’s true that most of the things captured in that blog post five months back has either happened or is happening. Also check my July 2007 blog post Market meltdown on US concerns and the cautions mentioned to all the investors about the upcoming market mayhem. Hope you would like the below blog post too. After a small break I thought of adding a blog post as I felt this is the time when we should understand what’s happening with the markets & what should be our investment strategy at this time. The actual market mayhem started with the collapse of one of the US banks in Aug-Sep 2008. This collapse brought in fear in lending between institutions and bank. The low lending (at a higher rate) or say no lending at all brought in the credit crisis. The credit crisis coupled with Sub-Prime losses triggered closures of various institutions and ...

In this blog post I would like to share the views of one of the investment banks on the present market scenario. After almost three years of bull run in Indian markets we have entered a pocket of introspection. Key stock indices now trade along with most global markets, at levels that last prevailed in September ’07, before the US Fed commenced its rate easing cycle. Overall market capitalization is down by 27%, in calendar ’08 and stands at levels last seen in September ’07. Key factors affecting Indian markets can be classified as Global environment – uncertainty continues to unfold The unfolding economic malaise in the US has been well articulated in various fora with the principal concerns surrounding the likelihood and the depth of an economic recession, the stagflationary environment seeming to emerge there and the ability of policy makers to engineer a smooth and swift recovery in such an environment. The sharp fall in the USD over the last few days against most major currencies...

In August 2007 I had come up with an article titled “I guess it’s just the beginning for the sub prime”, this was also the time we had asked all our clients to slowly come out of equity markets in a staggered way. This was the time that we felt that SENSEX was trading at a 2009 PE multiple of close to 28 times and there has to be a correction for market to remain healthy in the long term. We were just waiting for a spark in the market and we found one in the sub Prime and credit crises mess in US markets. In December we had come up with an article titled “Emerging markets will power the world economy in 2008 so lets invest” which truly showed the power and our belief in the emerging markets. We feel that however bad the recession in the US, Em’s will perform due to the strong fundamentals and developing internal growth. Yes the short-term volatility due to lot of bad news coming from the US will make the markets range bound & in short term we also expect  SENSEX  to be trading bet...

This is a question lot of investors have in their mind after the fall we had seen in Indian markets. Sensex itself has fallen from 21000 level to now around 17500. In India, we will only see 22-24% earnings growth in FY08 and 15-16% in FY09. The first half of the year will be pretty volatile and the market might even see the lows of 14k on the sensex. Second half should be good and I expect the market to be rage bound and it might touch the highs of 21 K. What we should observe here is that 21 K is the earlier high and market might not move beyond that. All markets world wide had a great rally last 1-2yrs but if we go deep into details on each market we would understand the reality.For example, S& P had gone down by 20%, but it hadn’t gone up all that much,whereas the emerging markets are essentially way overboard and way over their long-term trend lines. So I think that in many cases, some of the emerging markets could still drop about 30-40% from the present levels. In precious m...

BRIC economies of Brazil, Russia, India & China will represent the major growth in world economy. China tops in actual returns for 2007 with the Shanghai Composite Index returning around 80% followed by Indonesian Composite Index with 52% and India’s Sensex with 45%. Concerns on valuations remain in China and some analyst expects Chinese markets to correct as the valuations seem to be very much stretched. On the other hand in India the valuations are justified by higher earnings growth and strong fundamentals. India also looks attractive to lot of analyst as the domestic demand is increasing and their reliance on US is decreasing. Indian economy is less susceptible to the happenings in the world economy & has increased the trade among other developing nations and with Europe. S&P believes the bull market in EM equities has further to run and the EM equities should represent a core, long-term holding in U.S. investor portfolios which will make sure that the local EM market...

This year we saw the first muhurat trading in the last seven years with a negative market breadth. Its more to do with the international market outlook due to the losses and write offs made by banks, financial institutions, broking and asset management companies there and the view that more such write offs are bound to happen. I had come up with an article on Sub prime in my blog in August 07 where I had a view that it’s just the beginning of the sub prime mess. (Check it out here.. I guess it’s just the beginning for the Sub prime crash & Market meltdown on US concerns ) The coming week we will find our markets in more red due to high oil prices, worries on rupee and dollar and the worry on more sub prime write off to happen in the US. U.S. stocks are poised for more weakness next week, after a complete wash out of the hopes that technology shares might pull the market out of the sub prime mess. Concern about credit problems is spreading throughout the economy take for example w...

Most of the investor community is worried about the market at this level. Some say we have grown very fast, some say FII’s might pull out, some say usually at this time of the year there comes a big correction and there are some who feels the political uncertainty might cause a big correction. But do we really have to worry about this market?? The fear in the market is not knowing where you are investing. If you know that you are investing in the world’s fastest growing economy with a GDP expectation of more than 9%, an economy which is a part of the emerging markets which is an asset class in itself and where the risk apetite of global investors is increasing. Emerging markets receive 10% of the global allocation and represents 30% of global economy and 15% of global profits. So a market like India looks attractive in the long term to lot of investors whatever the level is. There is also lot of concern regarding Hedge fund operators in India. Investors are of the opinion that they mig...

In February 2007 I had come up with an article Buy..Buy ..Buy... where I had asked lot of my clients to invest. Remember that was the time when markets were close to 12000 levels on Sensex. There was panic in the market as there was expectation that the market will go down to 8K levels soon. Most of my clients are still holding the asset class and have reaped the benefits. All my focus had been on long term investing and why we should not be worried about the market level especially when we are investing in an economy like India. Indian finance minister expects India will be growing around 10% on GDP with corporate returns to be in the range of 28% + with more appreciation in the rupee and more flow from Europe, USA & Asia. So doesn’t it makes sense to be in invested in India now? Ask any investment guru and he will say lets look long term. But what is long term??? Ideally its 3+ years. I was telling one of my customers today that some of the hedge fund operators in Europe have mad...

Let’s try to understand what happened in our markets from an average investor’s perspective. If you ask an average investor he would say India as a market was trading at a very high premium till recently and in this kind of scenario everything is dependent on liquidity coming in. That’s right but if we try to understand the psychology of the investors we will find that domestic investors are bit pessimistic about investing at high level while the FIIs or foreign players are not. FII’s pumped in money as they became more confident in the India growth story. Everything was going smoothly and then we heard new words like Credit concerns, Sub prime, yen carry trade, rupee appreciation, yen appreciation etc etc and guess what, though we might not know what all these words mean but still it’s a concern to us so lets not take risk, forget the growth story for some time and lets sell off. Isn’t it what happened in our markets? Who lost?? The average investor err...average trader lost. If he w...

The main factors that affected the Indian market this week: In India ECB (External Commercial Borrowings) are capped by the RBI. Any ECB of more than $20 million cannot be remitted to India and has to be kept in foreign currency abroad. This has mainly been done to control the appreciation in the rupee. Ideally the $20 Million is not a very big amount to control the rising rupee but yes it might be a factor for it to slow down a bit. Thats the reason why we had a spike in IT stock prises as they will get the benefit of less appreciation in rupee. Three of the funds of BNP Pariba is being suspended from operations due to a potential crisis in the sub prime lending in the US. Read Article http://kaimalsway.blogspot.com/2007/08/i-guess-its-just-begining-for-subprime.html for more details. Central banks in Europe, Asia and North America have pumped in money to control the situation in the financial markets. The total money pumped in is estimated to be around $300 billion. This is mainly ...

Sub prime lending i.e. lending to not so credit worthy clients at a premium has again taken a toll on the world markets with European markets going down followed by our own SENSEX as three of the hedge funds of BNP Pariba has been suspended from redemptions. In my last post I was contemplating that more of the hedge funds might collapse which might take a toll on international as well as our market. Indian markets are a part of the emerging markets, which in the total international asset allocation sense are considered risky. Due to this any problem in the international market will attract a sell off here. Fed, which had come up with its policy review on Tuesday, where it has kept all the key rates unchanged, should ideally have understood the graveness of the subprime and had acted upon it. Most of the US markets which opened in the evening our time today is down. Tomorrow it’s a Friday and with all the credit concerns and the subprime our markets might be a bit extra volatile. All sa...

Hi Had been a bit held up with lot of traveling this side so was out of blogging since few days. Today am keenly observing and tracking the volatile situations across the globe. Markets across the globe took a beating today due to concerns of housing and credit tightening which can slowdown the US economy, as there will be less money/ liquidity for the economy to grow. When this concerns is on US economy, which holds more than 30% of the world GDP, then it’s a concern. US are the biggest market and since we are in a global village the happenings in the US market affect us. The US housing and credit concerns might spread to the other economies too. This concern makes the traders, stockbroker’s world wide to jitter and sell off to be safe. The sell offs include US, Europe and Asian markets, which took a cue via heavy selling on Wall Street. Japan's Nikkei 225 index ended the morning session down more than 2.3%, to 17,291.23, share indexes in Taiwan, South Korea and Singapore all decl...