Diwali 2011

Its that part of the year when we look at how our investments are doing. Anyone who has been following the stock market will know that its pretty bad. Well lets look at the numbers for the recommended stocks

There are 28 stocks and the return from the day of investment is 4.9% ie an investment of Rs 10,000 in each of the 28 share would be worth 2,92,223.74. Profit is 12,223.74. Dividends have not been considered. If it wasn't for Venky's we would be in negative territory.  

Looking back at the stock prices my understanding is:

- Interest rate spike is one of the key reasons for the market downturn.

- Global liquidity squeeze is "on" which is restricting investment flows.

- Fear is directing investment rather than rational decisions.

There are multiple ways to look at the current market scenario. My belief still is that "Peak oil" is the prime underlying theme. Further extrapolation of "Peak oil" is high inflation (due to rising energy costs for transportation, energy, fertiliser) I also see "Growth falling" at worldwide basis. 

Growth would specifically impact discretionary items. Also if you see the trend of "Carbon footprint" "Eco-Conscience" the trend is moving toward minimalism.

Though there are 27 recommended stocks in the blog .. my personal investment is heavily geared towards my "Best Buy's" Jayant Agro Organics, Gujarat Ambuja Exports, Tata Communication and NHPC. These 4 cover 90% of my investment funds and all are somewhat linked to the "Peak Oil" theory.

Jayant Agro Organics:  Jayant as we have discussed time and again is one of the largest listed Castor oil and castor oil derivatives manufacturer in India. Castor is a replacement for crude in the chemical industry and is "The Green Chemical"

Gujarat Ambuja Exports: It is a play on the consumption story of India. GAEL is also a very fundamentally sound agro processing major. The management is committed and GAEL with time we should see the market acknowledge its sound fundamentals.

Tata Communications: Not much discussed in the blog but Tata Communications has quietly setup the largest network of submarine cables and connection endpoints in the world. This basically ensures that customers get a better deal signing up with Tata communications for their network needs than any other company. With Peak oil "Travel" is going to be more and more virtual. Whether you use "Tata Telepresence" or just plain simple "Video conferencing" you will be touched by "Tata communications"

NHPC: National Hydro Power Corporation is the largest "Hydro power" corporation in India and all set to maintain the status for time to come. Electrical energy with "Natural Water Cycle" as the source of energy is definitely very very attractive.

My suggestion to investors is.. This is as good a time as any to take a good look at which stocks to sell and which stocks to buy. Markets will rise considering the huge pile of cash lying around.. not all stocks will do well stock picking is highly recommended. Avoid Auto, Airlines and discretionary stuff. I would also recommend that the "Best Buy" stocks must be considered for investment.