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Thursday, April 14, 2011

Market Rising: Liquidity, Short Term Interest Rates (secret behind market moves)

Markets have made a swift move upward..
Change in Fundamentals?
FII Investments?
NO .. I dont think so.. The secret is "Short term interest rates (Liquidity)"

Just look at the MIBOR (Mumbai Inter Bank Offer Rates) and look at Index movement.
April 2011 3 Month MIBOR Avg (6 days data) :9.055%
March 2011 3 Month MIBOR Avg (22 days data) : 10.16%
Feb 2011 3 Month MIBOR Avg ( 19 days date): 9.48%
Jan 2011 3 Month MIBOR Avg (20 days data): 9.10%
Dec 2010 3 Months MIBOR Avg (22 days data): 8.74%
Nov 2010 3Months MIBOR Avg (20 days data): 8.03%
Oct 2010 3Months MIBOR Avg (21 days data): 7.65%

Conclusion: Liquidity is the medium on which stock prices runs.. drop in liquidity will be reflected by rise in  short term  interest rates.. and fall in stock prices. 
Short term interest rates are leading indicators .. ie 
- Rise in short term interest rates will be followed by a drop in stock price.
- Fall in short term interest rates will be followed by an increase in stock prices

FII Investments.. pulling out or pumping in will directly affect availability of short term credit. So short term interest rates are the catch all indicator of market sentiments..

MIBOR Rates are available here (Link)


Kalpesh said...


Sharing you gues u must have seen still ....thanks

What'sUp Prahalad said...


Thanks for the update.. yes I got it..
a good link is you tube videos on Jayant agro where you can also see management interview and recommendations by other analyst..


=happy investing

Kalpesh said...

thnx a lot man

km said...

Dear Prahalad,

Nile is on Rs.197 with PE of 8+. Is it good time to sell above 225 ? Whats the fair value in your opinion.

I have just 250 stocks at Rs.108 each. Thank you for identifying such a jem.


What'sUp Prahalad said...


NILE fair value is 1 times sales..
which is pretty far off.. (300Cr Current market cap: 59Cr)

I think you can easily get 100Cr market cap for NILE

GMM Paufaulder plans to sell its stake in NILE so we should see higher prices..

with just 2211 shareholders I think NILE is heavily under owned..

=happy investing

km said...

Thanks Prahalad for your valuable inputs.


jerril said...


wat'z ur opinion on buying these stocks at current market price?

1. UB Holdings

2. Uflex

3. Polyplex

4. Jupiter Bio Science

5. Sybly

Thankz & Regards

What'sUp Prahalad said...


UB Holding.. No too much debt .. Mr Mallya is good to hear and see.. not so good to own their business..

restructuring is the "normal" way forward for UB Group.. so Avoid.

Uflex, polyplex is avoid as they are petro dependent

Jupiter bioscience : is also a sell as its into clear distribution phase..

Textile again is not so important area which is highly competetive..

So avoid all the mentioned stocks..

: look at GAEL, jayant agro, SKM Egg, Pitti, Tata comm, NHPC

Strictly long term..

=happy investing