Monday, June 28, 2010

NIFTY 5800-6000 VERY SOON



By the end of the Sunday evening we are all riding on the horse of Monday's speculation about where the Nifty and The BSE sensex will head in this week. Junks of coffee with nonstop phone calls among the close circuit of the brokers and traders community are the routine works of Sunday evenings. We speculate catch fancy expectations of which some gets the clinch where majority end up with a hole in pocket. Nifty is moving around the range of 4900-5300 for the last couple of months followed with certain abnormal hiccups due to the European debts crisis followed with abnormal global imbalances. No predication can be made regarding these hiccups and abnormal days, unless you are gifted with a Magical power to foresee the future.

I am not here to lecture you up or add some magical foresights but in a plain vanilla way Nifty will touch 5800-6000 in Diwali .Shocked, mouth watering and don't believe attitude are the reactions might have been shown by after reading this. The first two are the worst and the last one is the best reaction. Since don't believe will not make you land up in a situation where you pocket gets a hole.

The Nifty have the tendency to catch up 5800-6000 in Diwali due to some running healthy factors. We all know that monsoon have started well in time. Now how we declare that before the government declared it. Very simple if it's raining in your city at this point of time and for the past 2 weeks monsoon has forced you to wear rain coat then monsoon is well in time. Monsoon began in many part of India at its official time of arrival.
Good monsoon gives boots to agriculture. So commodities are going to perform well. Good agriculture will result to increase utility of fertilizers. Healthy production of agriculture will also increase the demand for tractors and agriculture/commercial related vehicles. Irrigation sector stocks also get a huge growth from the healthy monsoon. So the stock and the sectors where you will invest to get good return and which will push the Nifty to 5800 levels are

  • Commodity stocks

  • Fertilizer stocks,

  • Automobiles particularly the ones deals with tractors and commercial vehicles.
Now auto sector demand pushes the demand of steel and auto ancillaries. Banking sector is the biggest winner among all these positives gains and outcomes .Since banking loans picks up due to demand and healthy agriculture growth.
So the final list which come out from the above analysis of healthy monsoon which will place the Nifty in 5800-6000 levels are

  • Steel,

  • Banks

  • Auto ancillaries

  • Commodity stocks

  • Irrigation stocks which includes pipes and irrigation ancillaries,

  • Fertilizer stocks,

  • Automobiles particularly the ones deal with tractors and commercial vehicles.
Now many of my readers will raise the voice that if monsoon fails to boost up the agriculture sector then what will be the portfolio of stocks at that point of time. My prescription will be stay to these sectors mentioned above. Since if monsoon fails to bring cheers to full extent , even the half extent of it will bring 10%-25% growth in the above sectors. It might sound conservative but that's the best way of anticipating speculations. This 10%-25% will bring Nifty around 5700 levels during Diwali. So the portfolio of your stocks for the next 6 months should have stocks from these sectors followed with Cement and infrastructure and realty. Since during monsoon the demand and the growth of these sectors decline and pots monsoon they slowly pick up the growth. These sectors will be in your portfolio but .with less priority ranking as compared to the other mentioned above.

This is not a speculation created on the magical functions. This is called plan in advance and keep your funds ready for picking up stocks. Only request is not to pick up stock at this point of time. Invest when the market will be a mood for short term profit booking. Their is no need of any panic of choosing the stocks at this point of time. The rally in these stock will begin when the government will declare in the month of September that monsoon have been healthy. Those who are holding stocks in these sectors should go for HOLD option and should go for further build up of  stocks of these sectors.Till that time you will get enough time to plan for the super ride of 5800-6000 Nifty in Diwali.

Saturday, June 26, 2010

SAME OLD STORY –NEEDS A NEW LOOK.



Oil prices goes up again and this time it’s the blessings of deregulating the prices. Indian government took a great step to deregulate the oil prices 1st time in the history of Indian economy. I was reading economic times when I found a line over their that new oil prices are perfectly affordable for the consumers. These are said by Oil Secretary S Sundareshan. I don’t know by what means he adds up that the prices hike will be within the reach of the common mass of people .
I beg to remind that India still is under developed and the common mass still have to consume half days food instead of full meal. Strangely the government finance and economic department was raising voices regarding inflation. Non food inflation is hovering around 8.9% and food item inflation in 8%, clubbing together it comes to 16.9%.
India needs to increase its interest rates to control inflation. The same old game each time played by RBI. But does increasing the interest rates will reduce inflation. In plain vanilla terms the reply is no never .Increasing the inflation will not pull down the prices. It will be able to suck out excess of flow of cash or liquidity from the market. But we need to figure out does excess liquidity is the prime reason for inflation hovering around 16.9%.Inflation particular in the food items which is hovering around 8% is not due to excess liquidity. It’s due to poor or low production of crops and vegetables. We need better cultivation and focus on agriculture which we are loosing out. Every one is focusing on urban development and industrialization. We need to keep a track of our old and primitive agriculture which is the back bone of our Indian economic development.
We raise ideas and voices regarding new business schemes and entrepreneurship, but why we fail to raise ideas for agriculture its developments. Each year we look into the sky with our eyes set as microscope to find out when the monsoon will take place and agriculture will get a boost up. Why don’t we develop and implement ideas to remove and eliminate the risk of low rainfall. Why the Indian economy have to face the problems of poor monsoon. If this problem is resolved or reduced then Indian economy will be less dependent on monsoon.

We develop ideas to control and bring development for Indian economy but why not for this big problem of monsoon. Moreover we need a deep focus and block the loop holes of our shifting mindset from agriculture to industrialization .Even if we are doing that we need to keep a tab on export and domestic consumption .Either its is low focus on cultivation or more export than domestic consumption. When we will control and bring solutions to these problems then adequate supply of crops will bring down prices and final the government and RBI will be relaxed to have a comfortable inflation number. Pulling out liquidity from the market and when the global conditions are quite abnormal and not up to a healthy market RBI actions will put pressure on the smooth operation of the economy.

Regarding non food item we need to keep tab on price hikes and abnormal gains. Development and growth are good until it block the longevity of the cycle. If prices goes up then consumption will take a hit since if one set raises the voice that India is now having a low aged professionals and employees and more purchasing parity then savings parity have also increased. Savings at early age increases since the age bracket of the government service might increase by another 2 years to 61 but private sector will witness fast and quick retirement solutions. Working 24 hrs will automatically bring old age much before the nature’s law. So the companies of non food items needs to understand that increasing the profit figures annually will finally come to an end when the prices goes up and consumers stop consuming and shifts to low priced goods. Development should come from all corners but if this type of things happens then it will come from a limited section of society and will lead to a downfall of the economic growth.

Now I come back to my earlier discussion which I have shifted from that is oil prices. It have been said that oil prices will follow the suit of global crude prices. Today global crude prices are hovering around 80$-85$.Prices goes up today as you know. Can any one explain what will be the price when crude will be hovering around 140$ like 2008 June.

Will the ministers and the government and any one this planet will speculate the prices under deregulated market. Voices are raised that oil marketing companies are facing loss. I raise a question does they are really making losses If so how and how that loss is being crept increasing each time. Todays losses increase this price what will be the price hike and the loss when global crude will be 140$.Its my earnest request to all my speculator friends please ‘Quote’ the price. My article might appear as a angry testimony created from the oil price hike, but think from inside and then judge it.

We also need to understand that prices are going up but our salaries are not going up. Each year we will find prices jumps by 50%, but our salaries goes up by 10-15% range across the board. Now please calculate how a person will adjust with jumped prices into his expenses, where earning the same salary. How the government justifies the purchasing parity growth in this present continuous scenario. We need a hike in our tax slabs where the consumer will be left with a greater amount of savings and hence then only we can adjust with the increase of prices. But that’s too less for 50% cumulative growth of products. The government needs to look into the matter in a other way round.

CHINESE 14 AGREEMENTS


US banking and financial companies created the huge debacle sinking hole of Greece and other European nations through its toxic loans provided and shown to the nation as cash lending’s and not real loans which will be required to be paid one fine morning. If we make quick look for how the US banking system created the sinking hole for European countries we find:
• Instruments developed by Goldman Sachs, JPMorgan Chase and a wide range of other banks of US enabled politicians of European nations to mask over the additional borrowing in Greece, Italy and possibly elsewhere beyond means of payment by them in the future.

• These banks provided cash upfront in return for government payments in the future.

• They were never recorded as loans in the books of these European nations.

• These raised the bars of liabilities of these countries and mislead investors and regulators about the depth of a country’s huge liabilities which were beyond the capacity of payment.

• In 2001, just after Greece was admitted to Europe’s monetary union, Goldman helped the government quietly borrow billions, people familiar with the transaction said. That deal was hidden from public view because it was treated as a currency trade rather than a loan. This also helped Athens to meet Europe’s deficit rules while continuing to spend beyond its means.

Now its now well clear to my readers from all other sources of media that US financial and banking system was behind the creator of the devil of huge debt burden for Greece and other economy.
In the same way we have heard that China is under severe strictures of holding a monopolistic business module over the world market. Devalued Yuan, cheap exports, holding 605 of US treasuries makes Chinese economy to face vulnerable strictures.

At the same time I am compelled to say that china does not plays game like US banking and financial systems. We should not forget that the Chinese monopolistic business module helped the world economy to come out of the recession. Moreover these monopolistic business modules have been adopted by china from none other than US economy. But china is now ready and coming up with a new series of business plans which will give new identity to Chinese economy in coming decades. When the world economy was busy throwing criticism and fear of another debt full recession for Greece and other European nations china came out with a clear steering supportive business plans fro these nations.
China has signed deals with Greece and other European nations related to investments. Yes china have took the courage of doing investments in Greece and other European nations around billions of Euros.

China have made deals of 14 agreements with Greece and other European nations. Some of the projects agreed include the building of a series of super-size bulk carrying ships, the building of a big hotel and shopping mall complex in the port of Pireaus, and technology sharing between Greek and Chinese technology and telecommunications companies. A glimpses of the deals signed between the two nations are:

• Cosco, one of the world's largest container terminal operators, will extend its reach with the construction of up to 15 dry bulk carriers in Greece. The company took over cargo management at Pireaus, the eastern Mediterranean's premier dockyard.

• The Chinese construction company BCEGI also signed an accord, thought to be worth €100m (£830m), to develop a hotel and shopping mall complex in Pireaus.

• Other deals include the exchange of know-how between China's Huawei Technologies and the Greek telecoms organization OTE and four agreements signed by food firms to export olive oil to China.

The most strange thing about all these deals are that it has happed in such times when the Greece and European nations are humiliated and criticized for their s economic activities. Chinese government will encourage Chinese businessmen to come to Greece to seek investment opportunities. So summing up all together its well clear that if an economy is having a super power identity it needs to diversify the strengthen to develop the underdeveloped nations. Do you think that US have ever played this ball game when its was a super power economy.

But why china is doing this activity?

China is not only doing this activity just to make gains from abnormal situations of Greece and other European nations but its in real term diversify its business and its economic development plans to other underdeveloped nations too. China’s national pension fund plans to increase overseas investments in stocks and bonds, including securities in Taiwan, to boost returns as global markets recover from the financial crisis.

China is increasing sits investments in Africa too. By 2006, it was $55 billion, and in 2009 it hit $90 billion, making China Africa's single largest trading partner. Infact it have replaced the U.S., which did $86 billion in trade with Africa in 2009.If we look into the depth of the investments being spread by china in Africa we find that:
• Chinese are pumping oil from Sudan to Angola, logging from Liberia to Gabon, mining from Zambia to Ghana and farming from Kenya to Zimbabwe.

• Chinese contractors are building roads from Equatorial Guinea to Ethiopia, dams from the Congo to the Nile, and hospitals and schools, sports stadiums and presidential palaces across the continent. They are also buying

• Acquisitions range from a $5.5 billion stake in South Africa's Standard Bank to a $14 million investment in a mobile-phone company in Somalia.

• Even IMF have raised and acclaimed that he Chinese model for African development has some advantages.

First, it's quick. Loan talks with multilateral agencies take years.

• The Chinese just ask what the government wants, and they don't question or comment or judge. They just execute the demand raised by African government.

• China also works as visibly as it does quickly. It has no tendency of doing business with a prolonged period feature.

• Drive across almost any African country today and you'll find Chinese engineers by the side of the road, sleeves rolled up, and overseeing work crews.

So those who were having the some questions of doubts regarding why china is spreading it up I hope its now well clear to them that apart from political reasons and economic its more of that type where china is showing the qualities of a super power economy. Now its also clear that its not a charity and no nation can do charity. But even doing that for any economy is also not a easy ball a game
China is now is diversify its resources and also spreading up its business developments. Remember one thing one cannot grow alone. You need to grow with others and china is exactly following this steps.

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