Wednesday, August 22, 2007


India stock update 23 August 2007

The last week and a half have seen a major period of volatility in the stock market. The sub-prime crisis in the US and its impact on major banks, Financial Institutions and Hedge funds had a major impact on liquidity and caused a downfall in sentiment world wide. This crisis showed how most major world markets are connected, primarily through the money invested in these markets. India has a sizeable dependency on Foreign Institutional Investors, and a fair amount of their money is in turn composed by US funds and Hedge funds. When this crisis broke, and sentiment was down, there was also a big pressure on redemption, and to pay out redemption, there was heavy selling in various world markets, including the Indian market.
So, the level of volatility displayed, with the market either showing big up or down jumps caused a big scare in the market. And that is what the market has been doing now for some time, either jumping way up or way down. So, it is tempting to invest say when the market is down, but you can never time the exact down of the market. I am right now holding still, trying to restrain myself, although I am investing a bit in some Mutual Funds such as Franklin Flexicap and SBI Magnum, and looking at shares such as Era Con, Reliance Industries, Walchandnagar, etc that have fallen.

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Sunday, August 12, 2007


India Stock Market Update 12 Sun 2007

What a week. Stocks jumped up and down, but mostly down. With the global fears of the collapse of the sub-prime mortgage market along with the associated impact on financial institutions all over the globe who had funds linked in some way. With more and more complex instruments in the financial market for covering loans and mortgages, a lot more firms are now involved. The first impact was on Bear Sterns that found some of its funds badly hit, and then other institutions started getting hit. And then doom and gloom stories started appearing.
What seems like has happened is that central banks in the US and in Europe have decided to step in order to boost sentiment. There is nothing more important in the financial market than sentiment, since sentiment is what decides whether there is buying or selling. In the Indian market, after the blood-bath, I noticed one thing. Since as an experienced crash hit person, I am now less into risky instruments and more into firms that have good fundamentals. So, even though the crash has hit my shares left right and center, I am still not so badly hit, with many stocks still doing okay, and some of them even going up.
I am trying an experiment, with a gadget to the left that will have some of the shares recommended, at current price along with quantity of 100. As time goes by, I will add more. This will help me to see whether the shares that I list as tracking are actually doing well.
Shares currently tracking:
1. Adhunik Metalics - Rs. 76
2. Bartronics - Rs. 183
3. Era Constructions - Rs. 599
4. Hindustan Constructions - Rs. 127
5. KLG Systel - Rs. 432

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Sunday, August 05, 2007


Indian stock market update 05 August 2007

Normally I don't update within a day of a previous post given that the market will have been closed and there is no change in stock positions over the week; however, I am somewhat worried over what I have read so far in the past 2 days.
Now, for the current rise of the Indian market, there are several reasons, all happening at the same time. India is finally growing, with a good >9 % rate, next only to China; there is a massive amount of money pouring in from FII's who want to get into a good market and this money in turn is also being sourced from some hedge funds; there are more people in the Indian retail market who want to invest, either directly or through Mutual Funds; and even with political warts, scandals, left pressure, the Government is overall shepherding the economy towards more openness and greater role of the private sector.
Having said all that, all of the above factors will be true except for the factor about funds brought in by the FII's. The sub-prime collapse in the US market, which is also impacting funds held by banks and hedge funds due to the inter-connectedness of the complex financial instruments in the US, is likely to suck out the liquidity in the market for some time. People are worried about where this will go to. Now, the movement could be purely localized in the sense that some firms holding sub-prime mortgages in the US market could go under, but overall money flows continue. Or, things could go haywire and with the inter-connectedness of the global markets, the quick upward march of the Indian market would stall or go onto decline. Most people are predicting that Monday will see a further fall in the Indian market due to the decline of the Dow Jones on Friday, in a continued impact of the sub-prime scandal.
Now what do I believe in ? The India growth story is real, but so is the reality of the liquidity driving the market movements. Maybe a time to hold, and if falling, and if willing to take a risk, to buy fundamentally strong companies such as Reliance, Bharti and Pantaloon that have fallen. I am waiting to decide on Infosys, so not targeting that now. But, the basic mandate would be to be careful and not get excited by stocks falling in anticipation of buying more.
A risky area that I am looking at (and have bought some of) is the area of green technologies and carbon credits, so have bought some of Praj Industries, SRF, and Navine Fluorine. All risky buys except for Praj, which is slightly better. I would be looking at more companies that are getting into the green area, since that should be a good growth area in the future.

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Friday, August 03, 2007


Indian stock market update 04 August 2007

What a week. The sensex took its 3rd biggest fall this week, of 615 points; a very scary day. And then it has bounced somewhat back after that. This level of volatility has been seen in the Indian market before, but it still can be very nerve-wracking for the retail investor. Of course, the opposite is that a regular investor is pretty much used to all this and will take such corrections in the stride, in fact equating such corrections with the need to have a regular corrections when the market has been climbing so as to let off steam.
Of course, one thing that can never be said enough is the need to be very careful about tips. Investing in speculative stocks is risky if you are not paying regular attention. Further, if enough profit has been made in a stock and you feel that based on fundamentals, it has reached where you wanted to, take the profit out. Invest it in FD's, MF's, or even for things such as increasing insurance on you. Don't let greed overtake you.
I have a smattering of some stocks that have not get mauled too much in the recent carnage, and this makes me want to buy more of such stocks, these stocks being: Adhunik Metaliks Limited, Ashiana Housing, Hindustan Constructions, Ion Exchange, JMC Projects, KLG Systel, Reliance Petroleum, Walchandnagar Industries.
I am still a believer in the Indian growth story, but need to watch what is happening in global indices. If liquidity comes under strain, the effect will also be on the Indian market.

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