My Thoughts... For Small investors...

Instead of talking sensex levels, it may be better to look at the growth possibilities in each sector, the implication of the oil prices, the value of rupee, the agricultural yields, the inflation and such. Talking fanciful language like FII, melt-down, credit-crunch, CRR etc.. etc.. are relevant to those big investors who do not invest but trade to take the money from the small investors. When every businessman talks about fear, market mayhem etc.. and still stays in the market and not liquidated his position, there is something that they are not telling you. Invest in the market like you invest in your children`s education. Value returns, money doesn’t. What is gone is gone. Let the small real investors think for themselves and buy or sell the same way they do with any other commodity. The main culprits in this melt down are the brokers turned analysts and their followers because they have been tutored to think on the same lines. They behave like the cine-fans. Result? The stars become rich, not the fans. If the analysts really know why they spending time are doing the researches - they would have already made billions and bought an island of their own!

The world markets are highly bearish and almost all FII are in the withdrawal trend and we may not expect the retail investors to be in a buy mood rather all are panic stricken and not inclined to invest im the present trend.Hence all the retail investors should build confidence and invest in best fundamentally strong stocks and stay invested for a longterm so that we can expect a little stabily and growth in the trend.

America on New Path>>>>

Now Mr. Barack Obama and John McCain along with US financial minister Mr. Henry Paulson are in favor of tightening the operations of banks and financial institutions in USA. Intention behind is if they would have controlled the operations of banks earlier then United states may have saved itself from Sub-Prime and economic slowdown. But in my opinion this fact seems not to be truth… The truth is that actually US government has praised Banks to lend loans to non-creditable customers… 3-4 years back in US there was a slowdown in the production and service sector so FED has praised/ promoted several banks to lend housing loans heavily. At that time FED has cutted interest rates on its housing loans. In effect Banks landed money to cheap customers and they have not returned back money to banks.

If US govt had controlled banks at that time then possibility was that banks may have not faced financial crisis, but SLOWDOWN in US economy has to happen in any case. The reason being that if banks had given less loans that would be resulted in less demand of raw material and hence retardation in domestic growth.

The TRUE FACT is that US govt tried to increase the domestic demands by giving the loans to non-eligible persons.

Now US govt is saying that they will buy out all loans in bond format and will reduce the financial burden on banks, but this is not the solution of the problem. Now citizens of US will born that by paying higher taxes

Now a Million Dollar question: (I bet you can’t find this anywhere else….)

Four Years back why there was drastic slowdown in domestic production and services sector of USA? This praised the banks to lay down loans to those customers who were non-eligible.

The ROOT cause was Cheap Man power and high technology in INDIA and CHINA. Now you must be thinking how it can be. Due to globalization US has transferred its technology to India and China which results in a new economic architecture. Example is outsourcing… now US companies are lacking behind in global competition and to overcome this FED has designed to lend housing loans very easily. The results of that now Banks are paying.

To be continued……..

My Call on buy Gold proved right

Dear Friends, i gave buy call on gold on 12 August on my blog.. that that time it was hovering at aroung 10900... and today it has reached 13745.. a all time high for gold.... a whopping 26% return in this turmoil world financial market......

pls read my august 12 buy call on gold....

Tuesday, August 12, 2008
Next Inning of Gold Rally....... will begin soon…
I am giving a buy call to add gold in your portfolio,
Remember This may be last chance to buy gold………….

CLSA Forecast - Sensex @9500

Dear Friends, i am copying this CLSA report on my blog... this is not my original article, i found it very informative thats why posting it here...


CLSA: Forecast End FY10 Sensex At 9500

With turbulence in global financial markets and potential knock-on impact on economic growth, we estimated bedrock value for top stocks in our universe to determine relative risk-reward for stocks at current share prices.

These estimates build in scenarios of extreme ‘stress’ for key earnings drivers and stock valuations, using historical benchmarks where appropriate.

With RCom, Cairn, ICICI, Bharti, Idea, DLF already near bedrock value, we see favourable risk-reward.

For M&M, ACC, SAIL, Unitech, Tata Motors, however, bedrock value is >35% away.

Global turbulence hurts India as well

q Although the Indian economy is less geared to slowing global growth, we still see a slowdown in GDP growth to 7.3% in FY09 and 6.5% in FY10.

q Given the global credit crunch, selling by FIIs and monetary tightening by the RBI, stocks geared to capital raising for growth are at greater risk.

q With FII holding >40% of market free-float, rising risk aversion will hurt multiples.

Translating the macro to the bedrock case

q Over past quarter, we have cut FY09 Sensex EPS by 10%, FY10 Sensex EPS by 15% to reflect slowdown in consumption, investment and pressures on margins.

q However, the bedrock FY10 Sensex EPS, which assumes a scenario of extreme stress for individual constituents, could still be 36% lower (26% ex-Tata Steel).

q Taking into account bedrock multiples as well (for many cyclicals, trough multiples will, however, be higher), bedrock value for the Sensex works out to 9,500.

q Biggest cuts in EPS could be for Tata Steel, Hindalco and Cairn, while ITC, HUL and NTPC have relative resilience in earnings.

q Note that continued weakness in the rupee will have some offsetting impact, however; a weak rupee boosts EPS for 53% of the earnings basket.

q Likewise, the implied FY09 Sensex P/E of 11.3x at the bedrock value (versus 8.6x in 2003) should be seen in the context of the big rise in ‘embedded value’.

Stocks closest to bedrock value

q Since the bedrock value reflects the worst case - and thus a low probability event – any stock close to bedrock value offers favourable risk-reward.

q Telcos RCom, Idea and Bharti are all within 20% of bedrock value.

q Other stocks close to bedrock values are ICICI (13%), Cairn (14%), DLF (14%), RCom (15%), Reliance Infra. (16%), Tata Power (16%) and Reliance Ind. (20%).

Stocks with some downside to bedrock value

q Commodity stocks, with earnings highly leveraged to prices, are most vulnerable. For ACC, SAIL and Tata Steel, bedrock value is over 35% lower.

q Other large caps where bedrock value is over 35% away are M&M, HDFC Bank, Unitech, Tata Motors and Ranbaxy. Axis, Pantaloon, Dr Reddy are ~35% away.

Dow Jones Target 7200

Today's 508-point plunge brings the Dow closer to our long-standing target of 7,200. But to get there, it still has a long way to fall — over 2,200 points.

And if credit markets continue to shut down the U.S. economy, it's not safe to assume that 7,200 will be the ultimate bottom.

Look. Ever since this credit crisis began 13 months ago, Wall Street has been hoping that Washington could prevent a great fall — that it had the power to pump up, bail out, maneuver, and manipulate.

So as long as those hopes were alive, the stock market held its own ... even as the mortgage market collapsed and even as bank balance sheets imploded.
But now those hopes have been dashed.

What is surprising is that Fed Chairman Bernanke still thinks he's learned the lessons of the 1930s. But here's one of the many lessons he's apparently missed:

Whenever President Hoover Tried to Give A Pep Talk, the Market Crashed Some More

After the Crash of 1929, President Hoover called together a group of the nation's business leaders for a special meeting in Washington. His message to the executives went something like this:
"When you go back home tonight, you're going to do the right thing for our country. You're not going to lay off employees. You're not going to stop hiring. You're going to do everything in your power to keep the economy going."
But instead of following his directive, they did precisely the opposite, taking major steps to reduce their work force. Their reasoning:
"If the President is taking the extraordinary measure of calling us to an emergency meeting in Washington ... if the president is so concerned that he feels compelled to tell us how to run our business ... then that must mean the economy is actually a heck of lot worse than we thought it was."
The same perverse pattern is spreading throughout the financial markets this time. Two prime examples:
On Friday, when the President signed into law the $700 billion bailout package, instead of bolstering confidence, it turned out to be a major blow to confidence.
And today, when the Fed announced it was taking the extremely radical measure of buying corporate commercial paper, instead of reducing pressure on the financial markets, it merely spread the fear.
This is not exactly the recipe for a bottom in the Dow. Quite the contrary, consider any rally — no matter how fleeting — a selling opportunity.

sensex heading towards 11000

Watch out for market mayhem today.... unfortunately our sensex is heading close to 11000 or even can sink to lower levels... stay with cash.....