20 Oct 10 Indian Economic Growth & Weakness of Developed Nations

Two years ago, during a brief window of time in October 2008, there were a few days when the sudden and unexpected explosion of the Sub-Prime Mortgage Crisis was so intense that many leading economists and experts questioned whether the entire modern financial system may collapse.  Banks rely on the ability to borrow funds from each other in order to finance day-to-day operations, but after the failure of Lehman Brothers, the interbank credit market froze up.

Banks are not the only business institutions that rely on credit in order to sustain daily cash flow levels, and when the interbank credit market froze in October 2008, businesses around the world nearly failed.  In fact, if the credit markets had not loosened a little, chances are strong that, indeed, the entire global financial system would have failed.

Central Banks were fully aware of the lack of liquidity and lending in the interbank market, so it joined forces with the European Central Bank, Bank of England, and other major Central Banks around the world, and they all slashed short-term interest rate targets to all-time historical lows.  In fact, the United States interest rate has remained at 0% to 0.25%.  This incredibly low yield did not turn-off investors; moreover, capital flows into the U.S. dollar actually occurred at unprecedented rates, and a huge bull market in the U.S. dollar developed during the latter half of 2008 and the first quarter of 2009.

How Long Can Investors Earn No Money?

Due to extremely low interest rates, there is little incentive for an investor to leave funds in the United States right now.  Currently, economic conditions in the U.S. have deteriorated materially, and the economic recovery is slightly faltering.  Although a double-dip recession is possible in the U.S. and other states, but that is not the most likely scenario.  The most likely scenario is that the United States will enter into a multi-year period of very slow economic growth.  Deflation will most likely remain a threat.

Therefore, investors have no incentive to hold U.S. dollars.  The Federal Reserve has made its dovish stance concerning the U.S. recovery very clear, and accommodative monetary conditions will not be tightened until well into 2011, and there is currently a strong chance that another round of quantitative easing will be introduced in the U.S., which will cause the dollar to fall further and investors to become increasingly hesitant concerning capital flows in the U.S. economy.  Thus, if investors cannot earn yield in the U.S., where should they look?  One definite answer is India.

Indian growth over the last decade has been exceptional, and it is only expected top continue into the future.  Massive advancements in national infrastructure and technology are helping to aid an actual transformation in India.  This economic transformation of India has already drawn countless investors in search of strong growth  to the table.

Reasons to Invest in India

It is clear that developed nations are heading for a multi-year period of very slow economic growth and currency volatility in the forex market.  At the same time, developing nations such as India, China, and Brazil are all moving forward at incredible rates.  All three countries are posting GDP figures close to 10%, and most economists believe these high rates of economic growth will continue for years to come.  Each year that the developed world struggles while China, India, and Brazil advance is another year that emerging markets such as China, close the gap of economic power.

The Indian stock market reached a 2 ½ year high around 20,000 and second quarter GDP figure came out at 8.8%.  This level of growth is not only expected to continue and be sustained, but some economists believe that GDP could actually increase to about 10% by 2013-2015.  As India continues to allow deregulation and free market principles to operate, the economy should continue growing.  Two companies that should see strong growth over the mid and long-term:

• Tata Motors – As India’s economy continues to grow, domestic demand is heating up as Indians are buying cars, houses, clothes, and other basic lifestyle upgrades.  Tata motors is India’s largest automaker and should see long-term growth.
• HDFC Bank – The banking industry in India is gaining strong footing and is definitely bullish long-term; however, there may be some volatility in the near-term.  The Indian Central Bank has raised interest rates again in September in an attempt to curb inflation, and these interest rate hikes may continue.  This will weigh in the near-term on bank profitability as credit market tighten and demand for loans decreases, but it should be a temporary setback.

Economic growth in India is here to stay.  Incredibly strong infrastructure is combining with domestic demand and strong foreign capital flows to create a healthy state of economic growth that should continue for years to come. A Forex trading demo account can help you learn to how trade the dollar versus the Indian rupee.

22 Dec 08 How long will the Recession Last?

Before we start debating on when this economic recession is likely to end, we need to understand that historically an economic recession follows a period of 6 to 10 years of economic boom. Economic recessions usually last anywhere between 1 to 3 years. Keeping this in mind, it seems likely that we are only in the early stages yet and hence we can expect at least 6 to 12 more months of economic recession in India. Though, it is impossible to accurately estimate when the current recession in India will come to an end, certain indicators are likely to indicate the end of the recession a month or two before it happens. The main indicator to look for would be the performance of the US economy. History stands testimony to the fact that, during a global economic recession, economic superpowers such as the US and the UK are likely to come out of the recession at least a quarter or two before developing countries such as India and China do.

18 Oct 08 Good Time to Buy?

The kind of fall that the Indian stock markets have witnessed over the past few months has been unprecedented. I’m sure that there are a lot of investors at the moment wondering if this is the right time to start buying quality stocks. In my opinion, it is better to wait until the market bottoms out completely, which in my opinion will happen around December. As they say, never catch a falling knife. I think the stock markets around the world are nearing the bottom and individual stocks have already started bottoming out. Hence those investing on a long term perspective can start buying small quantities of shares in blue chip companies which are available in pretty good valuations at the moment.

28 Aug 08 Liver enzymes

Liver is one of the most important organs in our body. The main enzymes produced by the liver are Transaminases and Cholestatic Liver Enzymes. Generally high level of any of these enzymes continuously for a long period of time indicates an illness. If the Transaminases is found in higher proportions then it could be viral hepatitis, heart failure, genetic liver disease etc. Sometimes even strenuous exercise can cause this.

On the other hand higher levels of Cholestatic Liver Enzymes could indicate alcoholic liver disease, gall stones, liver tumors, drug induced liver disease and so on. Consuming excessive alcohol is very harmful to the liver. It causes enzyme imbalance in addition to spoiling the liver. So the overall health of the person starts deteriorating. That is why doctors advise alcohol avoidance in case of liver or heart problems.

Taking an enzyme supplement like Medizym will definitely be helpful to people having such problems. In general it is a very good habit to have healthy eating habits. Reducing alcohol intake and avoiding smoking can go a long way in keeping you healthy. As it is said prevention is always better than cure as the cure comes in only after suffering the disease for some time.

15 Jul 08 Sensex Down in the dumps – Crashes below 13000

The Indian stock markets continued their downtrend signalling the end to the short relief rally witnessed last week. SENSEX hit the 52 week low and crashed by about 5% to fall below the 13000 level. Though these levels seem very cheap, its better to stay away from the market till the sentiments improve. As they sa, never try to catch a falling kniwfe. Wait and buy once the market enters the oversold zone.

23 Jun 08 Inflation at a 13 year high

The inflation numbers which were released last friday served as the final nail in the coffin, for the Indian stock markets. With Inflation jumping by about 2% to over 11%, the markets are going in only one direction - DOWN. The markets crashed by over 4% as soon as the inflation numbers were out on Friday. There doesn’t seem to be any respite for investors since the market today seems to have picked up the downfall from where it stopped on Friday. As of 12 Noon, both the nifty and the senxex are down by about 2%. More updates will follow as the bloodbath seems to continue on dalal street.

07 May 08 Joy Alukkas Traders IPO

Joy Alukkas Traders which is the Indian arm of Multinational Jwellery retailer JoyAlukkas will be coming out with an IPO in the near future. In a press release made by Joy Alukkas Traders (India) Limited earlier this week, the Chairman of the company Mr. Joy Alukkas said that the size of the IPO was likely to be about Rs. 400 crores. More details about the Joy Alukkas Traders IPO will be posted here soon.

23 Jan 08 ACME TelePower IPO gets CRISIL IPO Grade

ACME TelePower IPO has managed to get a CRISIL IPO grade 5. This comes as a suprise since the highly successful future capital IPO as well as Reliance Power IPO did not manage to get such high IPO grades. What CRISIL IPO grade 5 implies is that ACME TelePower Limited is fundamentally much stronger than most of the listed companies. I don’t remember any CRISIL Grade 5 IPO hitting the markets in the recent past. Looks like ACME TelePower IPO will get an excellent response from investors. ACME TelePower IPO Subscription details as well as information on ACME TelePower IPO Allotment chances will be updated here.

23 Dec 07 Manaksia IPO Allotment : Manaksia IPO Allotment Details

Manaksia IPO Allotment for retail investors looks attractive. Retail investor category in the Manaksia IPO has managed a subscription of only 5 times. Hence all investors who have applied in the retail category for more than 5 lots will get a firm allotment in Manaksia IPO. Manaksia IPO is expected to have a very good listing since the QIB category has seen a good subscription. Manaksia IPO Allotment Status will be updated here when its is announced by the company. For Manaksia IPO Allotment Details, do check this space often. Allotment Status of Manaksia IPO is expected to be published in the second week of Jan 2008. Manaksia IPO is likely to have a mid-Jan Listing on the Indian stock markets.

11 Dec 07 Precision Pipes IPO : Precision Pipes and Profiles IPO Dates

Precision Pipes IPO Subscription Dates have been fixed by the company. Precision Pipes and Profiles IPO will open for subscription on December 17, 2007. The IPO will close for subscription on December 20, 2007. Precision Pipes IPO price band has been fixed between Rs. 140 and Rs. 150 per share. Precision Pipes and Profiles Company Limited will raise about 75 crores through the IPO. As per the DRHP, Precision Pipes and Profiles Company Limited will use the proceeds of the IPO to part fund the setting up of 2 new manufacturing plants. The first plant will be used for manufacturing auto components. The other plant will be used for manufacturing electrical outlet system products. Post IPO the shares of Precision Pipes and Profiles Company Limited will be listed on the NSE. Precision Pipes IPO Subscription details and Precision Pipes IPO Allotment details will be updated here frequently.

30 Nov 07 Reliance Power bags Krishnapatnam ultra mega power project

There is some good news for investors looking to invest in the Reliance Power IPO. Reliance Power has bagged the Krishnapatnam ultra mega power project and this is likely to make the Reliance Power IPO more attractive to investors. Reliance Power’s bid of Rs. 2.33 per unit was by far the lowest in the auction and hence Reliance Power Limited would be awarded the contract for the Krishnapatnam ultra mega power project, as per sources in the Power Ministry. Apart from the Krishnapatnam ultra mega power project, Reliance Power has also bagged the Sasan and Mundra mega power projects.

19 Oct 07 Indian Premier League (IPL) T20 (20-20) Cricket Teams to be listed on stock exchanges

In a few months time, the Indian stock markets are likely to receive lots of attention, with the high profile listing of various Indian Premier League (IPL) T20 (20-20) Cricket Teams. Unlike regular cricket matches, in the Indian Premier League, Cricket Teams will not be sponsored by companies, but rather owned by them. This is a very interesting concepet where all the stakeholders incluing cricketers, companies, fans, BCCI, investors etc are all set to benefit. The biggest winners will be cricket players since their earnings are likely to soar. Fans are also excited sine the T20 format is much more interesting than the regular ODI format. I was just wondering the fanfare which will ensue when some of these teams get listed on the Indian stock exchanges. How will their IPO’s be greated. What valuations will these teams command? How will valuation for these cricket teams be done? I guess time will answer these questions. This is going to get very exciting if this proposal to list the cricket teams in the stock exchanges, takes effect in reality without much hurdles.

18 Oct 07 P-Notes – Participatory Notes or Panic Notes?

After the market turmoil that it caused, it is appropriate that the term P-Notes, which is an abbrevation for Participatory Notes, be renamed as Panic Notes. Participatory Notes have caused so much Panic even though no drastic action was taken by SEBI yesterday against P-Notes. After all, P-Notes have not been banned by SEBI. P-Notes, which are offshore derivative instruments issued by FII’s or FII sub accounts which are registered with SEBI, have certain inherent benefits attached with them. The primary benefit of using P-Note is that, the entity or organisation using P-Note need not get registered with SEBI. The only necessity for using a PNote is that the entity should be registered with the registrar of companies or an equivalent body / organisation in the country of its orgin. The second advantage of using Participatory Notes lies in the tax front. Presently, the tax authorities can open the files of FII’s even after a period of 5 years after the date on which the actual transaction took place and penalise them. However, in the case of P-Notes, this is not possible. Also, registering as an FII is a tedious and time consuming process. Getting approval is very tough. Hence many foreign institutions take the PNote route to invest in India. The only argument going in favour of the Government and SEBI in particular, in regulating P-Notes is that it can potentially prove to be a serious threat to the country, both politically and economically. For ex: terrorists are said to be using Participatory Notes to pump in money into India to profit from the strong bull run that Indian stock markets are witnessing. The money thus made is likely to be used for financing terrorist activities. Since the origin of the investments is unknown, if P-Notes are used, it is difficult to trace who is investing and how much is being invested. Another reason for SEBI and the finance ministry to come down heavily on Participatory Notes is because SEBI suspects that certain institutions use the Participatory Notes way to artificially rig the share prices. The Indian stock market is likely to be extremely volatile until the dust settles on the Participatory Notes a.k.a Panic Notes issue.

12 Oct 07 Mastek Buyback Offer Price fixed

Mastek today informed the stock exchanges that the board of Mastek has approved the share buyback of Mastek shares at a price of upto Rs. 750 per share by purchasing in the open market. Mastek has set aside Rs. 65 crore for the buyback offer. A buyback offer is a way of promoters or management of a company telling the market that they feel that the share prices of the company are grossly undervalued. Management of Mastek, by fixing the open offer price at Rs. 750 which is way above the current market price of Mastek, are telling the market that the right valuation of Mastek is close to Rs. 750 and definitely not the Rs. 350-400 levels at which Mastek is presntly trading at.

08 Oct 07 Indian Stock Market tumbles as Sonia Gandhi indicates mid term elections

The Indian Stock Market (Both Sensex and Nifty) was down by over 2.5% today on fears of mid term elections. Sonia Gandhi came out with a strongly worded statement today saying that the congress was ready to face elections. Sonia Gandhi also criticised those opposing the nuclear deal by calling them enemies of development and peace. Looks like there are volatile times ahead for the Indian Stock Market, as they start to dance to the tunes of statements made by political leaders.