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Thursday, December 09, 2010

Buy!!: Stock Market Fall.. Where are we heading.

Market is correcting .. and its Crunch time..
The question is what should be our strategy? If you have cash in the bank (Hey u're the smart guy around!!)
For the rest of the folks.. its time to prune the garden..

- Look at your short term gains..
- Look at your short term losses..
- Give a good hard look at your list of investments and select which are your best bets..
- Prune your loss making "So and So" investments
- Increase your investments in your best bets which are available cheap..
- If you have long term capital gains take them as they are tax free and reinvest in your "Best Bets"

Indian economic indicators are:

As we can see the M3 growth is slowing down but still a healthy 16.2% Inflation is still pretty high and that is a cause of worry.. which could be the reason for decrease in M3 growth. But Growth is strong and even Exports is picking up. Are we going to see higher interest rates? I don't think so.. here's why?


As you can see India has one of the highest interest rates in the world.. Hungary,  South Africa and Pakistan are the only countries with higher interest rates..  Any increase in interest rates is going to increase flow of capital into India .. So I guess what the RBI is trying to do is..
-  Reduce Banks risk taking abilities by asking them to increase their deposit rates and maintaining borrowing rates at the current levels.. reducing their spreads.(sell Bank stocks and other speculative industries like Housing)

This Spread tightening by Banks will help the India economy to have stable interest rates but reduce speculative activities (such as hoarding of commodities and maybe also speculative stock market investments) 

All this is good governance.. but with a decrease in money flow FII get to enter into the fastest growing economy at lower price points.. (stock prices..) 

Conclusion: This is a good time to get in as the India growth story is nowhere close to an end.. Look at China with interest rate of 3.99% ..(Image India with 3.99 % interest rate) Indian economy is doing just fine and will continue to do so..  As mentioned above buy what you are certain/confident about. My Personal favorites are 

=Happy Investing

12 comments:

Anonymous said...

Dear Whats Up, GAEL promoters have again started buying in this market carnage. They have again bouth 25000 shares on 8th and 9th Dec. So, I think the final targets for GAEL in the next two years will be huge as the promoters are still cornering the stocks. Thanks for bringing this stock in to limelight.

Anonymous said...

Sorry for the spelling mistake in the above post.

What'sUp Prahalad said...

Anonymous:

Thanks for bringing to my notice.. in all the excitement I guess I did not keep track of these developments..

This is indeed great news..

By the way 2 marks cut for spelling mistake ;-)) [[You must be joking!! this is not an English literature course!!]]
=================
Shilpa Gupta: 5000 shares on Dec 8,2010 @ 34.59 per share cost: 1,72,987.63
=================
Cheers

=happy investing

Raja said...

Hi Prahalad,

Thanks for your posts. I have been keeping track of these 2 stocks for some time now with small starter positions. And added good numbers at around 32(GAEL) and 92(Jayant) levels.
Will look forward to add more if the prices fall further.
Liked your line "If you have cash in the bank (Hey u're the smart guy around!!)"
I have been working on that part :)

Regards
Raja

What'sUp Prahalad said...

Raja:

The secret to wealth is:
- Live within your means
- Accumulate "Assets" which will appreciate in value.

I guess you are well on your way to be a very rich person.. congratulations!!

Psst: Jayant Agro is below 92 right now!! good price to buy..

=happy investing
www.whatsup-indianstockideas.blogspot.com

Mahesh said...

Prahalad sir,

Where you got that wonder full indicators..please provide the link..would be grateful :)

What'sUp Prahalad said...

Mahesh:

One of them is a paid site the other link is here:

http://www.tradingeconomics.com/World-Economy/Bonds.aspx

You can get India specific data also in trading economics

There are Govt sites which can provide you India specific data (most likely free ..)

=happy investing
whatsup-indianstockideas.blogspot.com

Raja said...

Very true Sir!! and thanks for your good wishes.

Have you ever looked at Parekh aluminex ?
It has corrected over 50% in this carnage.

Will be good to get your view if this interests you.

Regards
Raja

What'sUp Prahalad said...

Raja:

Parekh is fairly valued.. specially due to heavy debt in its books.

the other thing is to look for basic necessities.. and that is why my preference for Agro based industries.. (Gujarat Ambuja Exports and Jayant Agro organics)

I expect oil prices to spook consumption and hence its better to stick to basic necessities..

=happy investing
whatsup-indianstockideas.blogspot.com

Mahesh said...

Prahalad sir,

Thank you so much. Link has lots of data.

May i know which is that paid site.

Regards,
Mahesh

Anonymous said...

Mr. Prahalad,

Could you throw some light on Keltech Energies Ltd (BSE: 506528)

What'sUp Prahalad said...

Anonymous:

Keltech looks good.. but there is distribution.. taking place.. which means selling big time..

the stock has fallen below 500 day moving avg ie 198.30..

Also the number of shareholders are increasing which is a clear indicator that selling has started..
CMP: 167.10
MArket Cap: 16.71Cr
Debt:6.51
Reserves:17.28Cr
Sales TTM: 103.58Cr
Gross Profit(TTM): 6.47Cr
Net Profit (TTM):3.52Cr
Divident: Rs 2.5

March 2010 sales: 120Cr, Net Profit: 5.9Cr

- Net profit has dropped almost by half!!
- No of shareholders Sept 2010: 3362, Sept 2009: 2866

Conclusion: we need to wait and watch and look for accumulation to take place.. (reduction in shareholders..) also some buying can be done at current levels..only small amounts..

=happy investing
whatsup-indianstockideas.blogspot.com