Making money when markets go nowhere


Chidu as FM: 5 Implications for the Stock Market

As Chidambaram starts his innings as FM, it would be interesting to speculate on what actions he would take and how it would impact specific stocks and sectors.

His policy actions will be crucial in the runup to the general elections in 2014 and if he does a good job, he may even be a contender for the position of PM post 2014

So here is my take on his actions and implications for the stock market:

1.He will focus on raising revenues via spectrum sale.Most telcos are already bleeding, these auctions will increase their debt burden further.Negative for telcos like Bharti etc

2.He will kickstart the disinvestment process by selling stakes in state owned enterprises such as SAIL,NMDC,Coal India,MMTC.If past history is any indicator, expect these stocks to underperform the market.

3.He will push for RBI to cut rates.Positive for NBFCs and private banks

4.He will announce interest waivers for farmers and weaker sections of society.Negative for PSU banks.

5.He will target business groups aligned with opposing political parties.Negative for Adani,Torrent,Aurobindo Pharma etc



What was that again?

Speaking on television this morning, UK Prime Minister Cameron said he had scrapped the two-hour target for schools to spend on sports because some youngsters ended up spending two hours performing Indian dance instead of playing sport.

He said: “The trouble we have had with targets up to now, which was two hours a week, is that a lot of schools were meeting that by doing things like Indian dance or whatever, that you and I probably wouldn’t think of as sport, so there’s a danger of thinking all you need is money and a target.If that was the solution we would have solved the problem by now”.


Linkfest:August 10, 2012

Wishing all readers a Happy Krishna Janmashtami.

Here is today’s linkfest:

Bharti Airtel sinks to six year low (ET)

Deccan:Chronicle of a flawed diversification model (Firstpost)

Bribes:Sr SEBI staff under Govt scanner (FE)

The replacement heuristic (LeighDrogen)

Money market funds can lose money, just not your money (Dealbreaker)

This is what sector rotation looks like (Investingwithoptions)

One of David Rosenberg’s call has been working brilliantly (BusinessInsider)


Sellside Research

What are they smoking?

When foreign brokerage houses entered India, many investors felt that finally they would get an opportunity to have world class research reports. But the experience has been a painful one.

On June 29, 2011, Nomura Securites came out with a buy call on KS Oils with a target of Rs.45.KS Oils was trading around Rs.22 then.So the price target was a whopping 100% above the then prevailing price.Subsequently, the scandal about KS Oils broke and now it is trading at around Rs. 5 per share !

Now, you have the good people of Macquarie have put an Outperform rating on DLF with a price target of Rs.250. DLF is known for its opaque accounting practices and poor corporate governance issues.Veritas in it’s detailed report has put a price value of Rs.100 on the stock.What is interesting is that Macquarie had slammed HDFC for its accounting practices, but at the same time has given a clean chit to DLF for the same.

Can DLF hit 250 in the short term?Sure, in the Indian stock markets, anything is possible.But is it the kind of stock that one expects a reputed brokerage house to recommend for “investing”?Hell, no !!

Makes one wonder, what are these analysts smoking?