Struggle to make money from stocks

The Indian stock market is getting very badly caught up in the global problems. If you look at the overall trends that affect the market, rising inflation and increasing commodity prices (especially foodstuffs and crude oil) were the critical factors that were affecting the economy. Those seem to be slowly on the way down now, with crude temporarily falling below the $100 mark, and the rise in the commodity market slowly coming to an end. These are all good signs for the economy.
However, when the US economy sustains problems, these cause problems for everybody. The rapid decline of some of the largest financial corporations such as Lehman Brothers, Merrill Lynch and AIG have both a direct and indirect effect. They have cross investments in many Indian companies, and can be trusted to sell these as soon as they can. In addition, they are a harbringer of a long term problem in the economy, and leave people with a bad feeling, something that translates into a bad sentiment.
Overall, I know people who are slowly gaining small shares in the market, but at the same time, they are also worried, since even investments bought a few weeks back have fallen. The textbook approach is to keep on making small investments into fundamentally sound companies such as Airtel, Reliance, Tata, and for a risky touch, into some companies that have fallen very badly; they are the ones who are expected to rise within a few months of a recovery and can promise high returns (but I repeat again, this is risky).

Labels: Equity, Future, India, Inflation, Oil, Stock, US

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The market is right now in a zone where people with courage (and a hint of bravery / foolishness) in their blood will go all out to try and invest in. There are many contradictions galore right now - most books mention that periods of slump are the best timings for buying good scripts (and even for buying volatile scripts that have heavily declined in value). So the current time should be a very good time for buying such scripts. At the same time, there are many problematic signs still there on the horizon - crude oil is currently low, but it takes a bit of geo-political tension to get it high again; inflation rate has gone down slightly but is still over 12%, and the RBI will still continue with its growth-throttling mechanisms; on the political economy front, the Government has still not come out with the proposed new economic reforms law; overall, the current horizon still has a lot of grey clouds.
The positive thing is that company results are still coming out good and the expected drastic drop in profits has not yet happened. Many individual sectors such as auto, airlines, stock broking, etc have suffered, and stocks in those areas are still to take a lot of pain. However, the overall scenario is looking slightly better.
Time to resume active buying ? A tough call. The market is supposed to be an active reflection of the situation 6 months into the future, and by then, things would have improved; so the advice remains to be buying slowly into fundamental companies, and think about investing small amounts into the more volatile companies (if you want to play the risk game).

Labels: Equity, Future, India, Inflation, Stock

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For the past couple of weeks, we have seen the market rise from the lows of mid-12,000 that were seen a short time ago, and the Sensex has been above the 15,000 mark for some time now. This has not been because there has been an improvement in the economic situation over the last few weeks; the inflation rate is beyond 12%, something that will scare most governments to death. Instead, the stock market seems to be doing better primarily because of 2 reasons:
- Results have not been so bad and the advance tax collections seem to remain good
- Oil has been coming down for some time now, and is now 30 dollars below its all time high of $148
However, these remain bad times for the market. It is very difficult to predict as to how long the situation will remain like this. There are regular reports in the newspaper now about the bad situation of many sectors such as automobile, airlines, financial sectors (because of loans reducing), realty, and so on. At such times, it is difficult to stick your neck out and make a prediction that things will get better (and you should be skeptical of anybody who does make such claims without proper reasoning).
So what does one person do in such a situation ? The best possible approach is to continue to make small investments in companies such as Reliance, Airtel, L & T, HLL, Infosys, and other such companies that have good management, sound fundamentals, and the ability to ride out bad phases that the economy goes through.

Labels: Equity, Future, India, Inflation, Oil, Stock

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This has been a very strange month for the stock market and for the country as a whole. From the beginning of the month, the country has been debating the pros and cons of the nuclear deal (quite frankly, this deal would not have seen this controversy if the Left parties had not opposed it). With the Prime Minister finally standing firm and the Congress High Command standing right behind him, the month saw a lot of political tension. Amar Singh ran circles around the Left parties, and eventually the long running support of the Left was withdrawn to be reduced to a cobbled up support by the SP and many smaller such parties.
The stock market behaved along with these dips and rises. The market went up and down whenever it seemed like the Government was in a better position, and went down when the Government's position seemed to be doing down. Finally, when it seemed like the Government has the numbers, the market gave it a big thumbs-up. With the Left gone from its commanding position of choking the reforms process, and a reforms-friendly SP in (and the BJP being a supported of reforms), big money reforms seemed to be indicated.
Then the bomb blasts, and a measure by the RBI to bring down the inflation led to a further increase in interest rates. The economic outlook remains uncertain, so any buys need to be in safe and fundamental stocks such as Reliance, ITC, Infosys, ICICI, etc. No big money investment, but something like a regular SIP should be great.

Labels: Equity, Future, India, Inflation, Stock

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I am writing this blog on a more infrequent basis, given that the market is really not doing anything great nowadays ? With the continued climb in the price of oil above $140 per barrel, and inflation crossing the 12%, there is a massive onslaught on the equity market, with almost confirmed speculation that the fast rise in the realty market over the past few years has come to an end; that real estate deals are down, and that many smaller players are having a harder time.
I am still holding on, given that I believe in 2 things:
1. All my education years wherever I have studied either finance or economics (and specifically the equity market), there has always been one standard logic. When the time is down, when people are not buying, then this is time to buy. I still believe in that, and so prefer to look out for some great scripts that are available at pretty reduced rates now (such as Reliance, Infosys, ICICI Bank, Tata group, etc)
2. Secondly, over a long term, equity market has always given the best results, and this crash has been happening for a period of 6 months so far. Previous crashes and downturns have gone on sometimes for much longer periods, but there has eventually been a recovery.
At the same time, I will not deny that the situation remains painful. Timing the bottom of the market in this situation is very hard (you buy a script, and then it can fall much further); and the participation of retails investors, FII's and domestic FI's are all very low.
So, I keep on watching and monitoring. What do you people think ? What is the future like in the short term and long term ?

Labels: Equity, Future, India, Inflation, Oil, Stock

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The inflation figures that come in nowadays must be as scary for the industrial sector as it must be for the common people and the Government. If inflation remains high, then the Government, afraid of adverse political reactions, will try to curb money supply leading to a higher credit squeeze, something that has the effect of throttling industry. These measures do not lead to much benefit, since the rise of prices of commodities (and specifically oil) are global supply issues, not something that the Government can control from inside India.
So why does industry get scared ? Decrease in liquidity in the economy reduces purchasing overall, and combined with a credit squeeze, industrial growth starts to slip. However, a rapid pace of industrial growth is the only way for India to grow, and for more people to move away from poverty; so in that sense, the Government is willing to sacrifice growth and reduction in poverty for political measures that will indicate that it is desperately trying to cut prices. In such a economy, sectors that are dependent on commodities such as steel, oil, etc suffer the maximum. So steel sector is somewhat in a hole, and so are engineering and construction companies that reply on high working capital, low margins, and in many cases, cannot easily pass on raw material costs increases.
What can you do at this time ? Keep a watch out for sectors that continue to get impacted - steel, auto, brokerages and financial sector, realty, etc. The decrease in the value of the Rupee means that textiles, IT, etc are in a slightly better position. Shares that I am currently tracking:
1. TRF
2. Elecon Engineering
3. Walchandnagar
4. Reliance

Labels: Equity, Future, India, Inflation, Liquidity, Stock

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The market just is not moving, leading to a lot of disillusionment among investors. Brokerage firms report that individual retail investing is going down, FII participation is down, and it's only the Mutual Funds that are still steady (they have to keep on trying, else how will they be able to get money pouring into their coffers). The macro-economic situation remains bad (and that is probably the reason why the market has refused to take off), with high inflation not coming under control, and the Government trying severe monetary measures including a credit squeeze to try to tackle this inflation (however, this squeeze is stifling the ability of industry to get funds). Further, with the loss in Karnataka, the government is trying to do what it can to retain a positive political picture, and that also means that the massive under-recoveries by the oil companies is not getting passed onto consumers.
The short to medium term remains gloomy, and most investors are sitting it out - the losses remains from the crash, and the market sometimes shows signs of climbing, and then drops again (which is exactly what has happened in the last 2 weeks). In addition, many sectors are hurting because of low consumer demand, with the auto sector coming under significant pressure. However, as always, there has to be a silver lining. The Rupee has dropped below the Rs. 42 mark (considering that it was at the Rs. 38 mark, this is a major drop in the value of the Rupee), and this should help some sectors such as the IT sector and the textile sector to somewhat improve margins. As always, evaluate companies that are fundamentally good and in a sector that is not likely to tank, and see whether you can get bargains (one good way is to read the articles in magazines such as Dalal Steet, Business India and Business Today - there are some good analysis of companies that are carried out in these magazines and should help in an improvement in understanding).
What are some of the stocks that I am tracking:
1. Sharyan (a brokerage)
2. The ever faithful Reliance (not Reliance Power)
3. Starting to evaluate IT sector stocks such as Infosys, Wipro
4. There are pharma companies that could be a good bet for the future, so looking at this sector
5. Engineering companies such as JMC Projects, Walchandnagar

Labels: Equity, Future, India, Inflation, Liquidity, Stock

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For quite some time now, I have been watching the market without actively trading; primarily because I had some tax issues. Further, I was not at all sure about which way the market is going to head, and some of my natural optimism had reduced. However, the shares that I continue to hold remain with me, since I am convinced about their long term fundamentals, both for the individual shares and the sector in which they are.
We are hearing a lot of news about some severe problems in the realty market, what with property prices apparently falling in many cities across India, especially in areas that were away from the center of the city and which had seen an exponential rise in prices earlier. So, am carefully watching this sector and evaluating further progress.
There are many bad news currently in the market; the Government is going through the jitters because of inflation and the inability to do anything about this inflation; further, the credit squeeze that has been employed to control inflation is causing industry to slow down. This is apparent in the current rate of growth of Industrial Production, which is the lowest for some years now. It is difficult for the Government to reconcile high inflation as well as a slowing industrial production - it seems incapable of doing anything much about it in the short term.
As a result, my tracking is happening now for fundamentally safe companies such as Reliance, Bharti, companies from the Birla Group, as well as some finance companies such as ICICI, and surprise, IndiaBulls. The tech sector remains on a watch, although with some fall of the rupee, it may get better for them.

Labels: Equity, Future, India, Inflation, Stock

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The market continue to remain range-bound with an immense amount of volatility, jumping up and down in alternate patterns. Sentiment remains bad; there are signs that the bottom may be approaching, but news remains bad. The over-whelming factor driving the market is sentiment, and that remains mostly negative. It is now the 4th month of the year, and the carnage started in the first month, so things have been bad for some time now. Of course, all the doom-sayers have crawled out of the places where they were hiding, and if you believe all the bad things that you hear, then you would totally exit the market.
However, there is plenty of bad news, that affects sentiment. The US is in a recession, and there is no sign yet that the recession could get lifted soon. In India, the Government is almost foundering in its attempt to save its political ass. It has not done anything significant to increase agricultural production, and hence is being forced into threatening decades old repressive measures to reduce prices.
Inflation is forcing an extension of the credit squeeze that is suffocating the industry and causing a lowering of overall growth; exporters are being squeezed so that enough is available domestically. Nothing right now seems to be going right for the Government, with all dividend from the dream political give-all budget having vanished.
However, all literature on equity advices to buy fundamentally sound companies, especially when they are down, so this is a good time to do small investments into companies such as Reliance, ITC, SBI, Infosys, etc.

Labels: Equity, Future, India, Inflation, Stock

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So today the market did a up and down climb, and was negative for some time today, but eventually closed up by 164 points. This is reversing the trend of the past few days where the market would go up in the morning but would decline due to profit booking. The index is still below 15700, and unless it can give a conclusive jerk and break the 16,000 barrier, there will be a lot of talk about downturn in the market.
The sub-prime crisis in the US market apparently still has to run its course, with persistent marker rumours about the financial impact on US firms still to be fully out (given that some of the financial transactions and holdings are very complex). A lot of people are waiting for the US Federal Reserve to make their important meeting statement about whether there will be any change in interest rates.
The Indian economy still appears to be a on a roll although the sharp rise in credit interest rates in order to squeeze inflation appears to be having an effect on industrial growth, and the Government and RBI may soon have to decide to lower interest rates in order to spur growth. But, the overall picture on the Indian market still remains positive, and that is the way that my investment horizon currently is.
Stocks that I am actively tracking:
1. Bartronics (this has risen a fair amount, but good potential) - Rs. 277
2. Hindustan Constructions - Rs. 135
3. JMC Projects - Rs. 340
4. KLG Systel - Rs. 526
5. Praj Industries - Rs. 215
6. Supreme Industries - Rs. 225
7. Tractors India Limited - Rs. 325

Labels: Equity, Future, India, Inflation, Stock

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Is there hope for the stock market right now? There are signs that with inflation down, things may seem to be better on the credit squeeze. The credit squeeze caused money to become more expensive, and if inflation remains down for some more time, we will stop hearing all the comments about the 'aam admi' hurting, and industries will get easier credit for their expansion plans. This is the chief way to get higher growth, and one should mostly ignore the left parties.
The Government seems to be making an effort to get some pension funds into the equity market (even under some tight controls), and if they manage to get past the obstacle of the left parties, there will be a lot more funds coming into the market.
At the same time, the Finance Minister is dropping hints about the floating of more PSU's into the equity market, but unless the PSU's are given more functional autonomy, it really would not benefit them too much. PSU's have been trailing private sector companies in growth of their share prices, and this is primarily because they take their policies from the government, and government policies are not dictated only on the basis of economic considerations.
Some stocks that I am currently tracking:
1. Ashiana Housing: Rs. 190
2. Reliance Capital: Rs 1088
3. Praj Industries: Rs. 489
4. JMC Projects: Rs. 255

Labels: Equity, India, Inflation, Pension, Stock

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Been some time that I wrote about the Indian stock market, got somewhat busy. This was also the time when the DLF issue came and went. The price is near the high end of the range, Rs. 525. The sensex has been upto its usual tricks during this period, moving up and down. Today was a good day, with the market jumping up by 170 points. However, it is still some time away from the historic high of the sensex of 14,700 points, achieved a few months back.
Overall, how do things look ? On the inflation level, things are somewhat better now, but still have not hit RBI's comfort level, so the danger of a credit squeeze has not yet gone away. The Prime Minister and Finance Minister keep on making noises about reform, but the left promises to dispose of whatever these 2 propose, so things will remain fluid in terms of reform.
One major problems remains the tendency of the government to assume some things about what will hit the 'aam admi' (the common man). Hence, the Government wants to protect small retailers by proposing a cap on big retailers such as Reliance. This is crazy, and smacks of a license raaj kind of system. Similarly, the Government absolutely refuses to come out with a SEZ policy that can be stated as complete; due to pressures, whether from industry or otherwise, they keep on changing their policies.
Stocks that I am currently tracking:
1. Infosys Tech: Rs. 2000
2. Revathi: Rs. 797
3. Yes bank: Rs. 160
4. Torrent Cable: Rs. 167
5. IFCI: Rs. 50

Labels: Equity, India, Inflation, SEZ, Stock

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Uttar Pradesh elections have come and gone, and a major winner introduced. Mayawati managed to stitch together a grand coalition of forward castes, backward castes and Muslims, and blew away everybody else. Uttar Pradesh is the largest popuplated state in the country, and any administration that can spur economic development in the state would be good for the country as a whole.
Seems like inflation is on the spur of coming down marginally, and that could mean that the RBI will stop squeezing credit growth in the economy. It is necessary to combat inflation, but hurts a lot of people and companies, including people who believed in the booming economy and bought houses taking advantage of cheap loans. Such people are feeling the pinch of increase in their interest rates, and could do with moving to a as-previous low interest regime.
Stocks that I am currently tracking:
1. United Drilling: Rs. 23.15
2. IFCI - Rs. 47.20
3. Reliance Industries - Rs. 1593
4. Yes Bank - Rs. 154
5. Supreme Industries - Rs. 225

Labels: Equity, India, Inflation, Stock

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The sensex still seems to be somewhat on the upswing. However, I keep on reading more doomsday stories in the papers and magazines about how things may be just on the edge of falling, and how this will be the last good quarter for corporate results. Why so ? Well, dollars are pouring into India at an incredible rate, pushing up inflation. The RBI cannot buy these excess dollars since that will release more rupees into the local economy (pushing up money supply and hence inflation), and hence has to sit by and watch while the dollar gets hammered down. It is already way down, reaching the likes of 41-42 rather than the 45 level it used to be some time back. This level in turn makes exports more difficult since exports get costlier. Equally, earnings in fixed dollars (for IT sector as well as others) fetches less rupees, and hence export earnings are down.
I have no doubt that this will make an impact. However, India has also a local booming market with its own consumption pattern and demand, and that remains unaffected to some extent by these changes. So, companies will adjust to these changes. Many exporters may start importing more raw materials if they start to get cheaper.
As the UP election gets over, the Government seems to be displaying a reformist tend again, with some corrections spoken after the budget, related to cement prices and to FBT for ESOP's. Plus, under pressure from corporates, the Government may amend the SEZ policy to again allow the state to atleast procure 10% of the land requirement. This is a good step.
Stocks that I am currently tracking:
1. Allianz Securities: Rs. 56
2. Ashiana Housing: Rs. 181
3. Adhunik Metaliks: Rs. 48
4. Era Constructions: Rs. 394
5. JMC Projects: Rs. 231

Labels: Equity, India, Inflation, SEZ, Stock

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