THE FUTURE IS GOOD....ONLY........

The earlier postings suggested from my end to 4500 level, now this article illustrates the possible bottom available to markets to float.

Moneycontrol » News » Markets » Expert & FII Outlook

Nifty's immediate downside may be at 4400-4600:Sampriti Cap

The immediate downside for Nifty would probably be 4,400 to 4,600 levels, but it might not necessarily be the final bottom, feels Sandeep Shah, chief executive officer of Sampriti Capital.

When volatility index (VIX) is very high, market tends to see very sharp movements. "We would see 30% corrections," he told CNBC-TV18 in an interview. If you see the 2003-2007 bull market, the 30% correction happened two-three times, driven by global problems. This time, we not only have global problems, but we also have local problems, he said.

A lot of milestones have to be tracked, which will tell whether we are in the final bottom or not. One of that would be the sovereign debt crisis solved, he mentioned.

If the market goes 10%, midcaps should correct 20-30% and even 40% sometimes, Shah pointed out. For example, for a-10 lakh portfolio, one should have hedged the Nifty by selling 30 or 40 lakh, he explained. This bear market is almost a year old now and the bull market corrections don’t last for a year.

This week, gold collapsed which has been the ultimate sign of the risk aversion for the whole world. The Europeans said last week and yesterday that they can’t rule out a Greek default and gold fell.

According to Shah, the situation now had many similarities as well as differences compared it to the 2008 situation. The VIX is the price that one has to pay for options compared to their intrinsic value. In the last phase, after Lehman collapsed, the VIX went above 36 for the first time and even crossed 60. Now, the VIX is once again is above 36.

After the Lehman collapsed, all asset classes like equities and commodities sold-off, which included the base and precious metals like gold. The same situation has been occurring even now, Shah feels. The Europeans have been the biggest suppliers of credit to the emerging markets, but now don’t want to give money to them. Similarly, nobody wants to give money to the Europeans.

Dollar is considered to be the most preferred and convenient for of asset overseas. So, everybody has been holding up their dollars which is why the dollar index is going up. The dollar index has gone up from 73 to 77 levels. In the past, the dollar index went up to 84 levels. Comparatively, this 77 levels rally has been fairly smallish so far, he added.

Here is the edited transcript of his interview.

Q: How do you position yourself now? Would you take a market call or view? Would you buy some stocks and wait for it to work if Nifty gets to 4,600 levels? Would you hide in debt right now and won’t get into stocks? A lot of people have a binary kind of an approach to stock markets now because they don't have a staggered approach. What do you tell this crowd to do today?

A: One has to have needs to ask themselves whether they are a pure long-term investor or trader or nimble and now much pain can they take? Every time the market corrected, we have seen a 10% to 15% bounce backs.

If you had some of the consumption stocks in the bull market, then you made a lot of money. If we get to 4,400-4,600 levels this time, I would still be cautious. I would look to buy defensives only if they have corrected and not otherwise.

On Thursday, the high beta and defensives sold off because there was panic as the rupee rolled like all emerging market currencies. A lot of FIIs wanted to book profits. If it was one of the safest stocks in the market like a Petronet LNG, which has corrected about 15%, it's bounced back.

A trader or investor, willing to take a bit of pain and is able to buy if stocks go lower, should put in a bit of your cash, not more than 50% or maybe 1/3rd. The bounce backs will happen. There would be positive views every time when there will be no bad news and the market will bounce back.

Q: How do you approach these bounce backs? Every now and then you will see pessimism and then a 500 point Nifty rally. If you were lucky enough to buy around 4,700 levels and got to 5,100 levels, our bought stocks went up 10% 12%. Would you sell them and wait for another big decline to come?

A: In that case, sell at least 50% of your holding. In a 10% bounce back, some stocks might have gone up just 4-5%, but a lot of stocks went up 20-30%. If you are willing to buy at lower levels, be willing to trade a little bit of your portfolio and sell a portion of it at higher levels.

If you bought the right stock, there are chances that it might not come down again. It's still worth taking a risk for because there will be opportunities to buy. Markets always say that we will get opportunities. If 2008 happened, 2011 is happening.

Q: What would you suggest the people who have been in fixed incomes like FD, bond fund, FMP, gold ETFs and physical gold for the last one year, trying to stay away from the stock market? What should they do with those asset classes at this point in time?

A: Gold is the most difficult and complex asset because it goes up for all kinds of reasons. It's not like a stock with an EPS or PE. The cost of production of gold is between USD 400-600, but the price could be anything. There is absolutely no correlation with the cost of mining of gold.

As far as gold is concerned, it could correct especially as the world is hoarding up dollars. Bond prices continue to rise, so money has been headed there. As far as gold is concerned, if you have some definitely trade, otherwise hang onto your gold. If it corrects another 20%, you might want to add back to some gold as well because probably we have not seen the worst.

When you know there is a big default and markets freeze all over the world, its time to get rid of your gold and jump into equities. As far as debt is concerned, it is a little easier as you want to reduce a bit of your holdings in debt on every correction.

If you don't have liquid savings, then you may want to sell some of your debt or get rid of your FDs, and start putting some money in equities in a slow basis. Every time, you see a 10% correction, put at least 30%.

CRUDE STORY

THE COMMODITY SELLOFF ESPECIALLY IN GOLD AND SILVER MAKE MANY TO RUN TEARS. THE SURPRISE IS THE NATURE OF THE MARKET AND WILL SURPRISE AGAIN AND EVERY TIME THE TABLE WILL TURN.....


A review of historical oil prices shows that oil displays wide price swings when markets suffer from scarcity or oversupply. The price cycle of crude oil ranges from a small duration to several years.

Major Events: Historical Oil Prices

From 1948 to 1970, oil prices remained stable at around $3 per barrel. A major development was the formation of OPEC in 1960; consisting of Iraq, Iran, Saudi Arabia, Kuwait and Venezuela.

·         Oil Crisis (1973-1978)

Oil prices quadrupled from $3 in 1972 to $12 in the later half of 1974. This was triggered by the Yom Kippur War, when Israel was attacked by Egypt and Syria. The US and some other Western countries supported Israel. Infuriated Arab nations imposed an embargo on these countries by curtailing oil production by 5 million barrels per day. The control on oil prices shifted from the US to the OPEC nations during the ‘Arab Oil Embargo.’

·         Oil Crisis (1979-1980)

In 1979, the Iranian revolution sent oil prices soaring. The country’s oil production plummeted drastically to 2.5 million barrels a day. The 1980 Iraqi invasion worsened the situation. The combined production of both the countries reduced to just one million barrels per day (from 6.5 million barrels in 1978). This lowered theglobal oil production by 10% and oil prices rocketed to $35 per barrel.

·         Oil Glut (1980-1986)

The energy crises of the 1970s slowed down the economic activity across the industrial nations. This resulted in oil conservation and overproduction, pulling down consumption and prices of crude oil drastically. The import of oil by the US reduced from 46.5% in 1977 to 28% in 1982-1983. Oil prices which had peaked to $35 in 1980 fell to $10 within six years.

·         Oil Spike (2003-2008)

Inflation-adjusted oil prices post-Gulf War remained below $25. However, oil prices began escalating in 2003 due to:

·         Dwindling petroleum reserves and ‘peak oil’ concerns,

·         Tensions in the Middle-East and

·         Oil-price speculation.

Oil price crossed $30 in 2003 and reached $60 in August 2005. Oil price reached a historic high of $147.30 in July, 2008 amidst global economic recession.

An analysis of historical oil prices exhibits that oil price determination is no longer solely dependant on the OPEC countries.

THANKS TO ECONOMY WATCH

FORGET 5000 !!!!!!

sunday, september 18, 2011

The No Growth-Inflation…..

..........The Reliance has good base at Rs 810-15 level but likely to test 767-73 level. The ONGC may float above 263 level. The Infy move from 52 week low level is now protected for now. The scrip may stay above 2285 level, TCS above 1014 and Wipro above 330-332 level. The best out performing stock in Nifty is M&M. The scrip likely to stay above 775 level even due to RBIs’rate hike impact. The HLL, the driver of FMCG has formed a base at 221-23 level. The markets take a sharp rise once the stock hits that level. During this week, markets will touch 5200 level or likely to cross. The Nifty has to stay above 4960 level.   

THE BLOOD BATH : The markets took a heavy beating sigle day fall after a long  time by the bears. The slaughter affect might have left the technical analysts amazed. We can predict the happening but the timing is crucial and critical. In my Sunday posting clearly mentioned the level. The bottom support will be at 4870-60 level for now .In case the Europe team doesn’t come with a solid proposal then the markets will trade below 4500 level. The RIL issue will spoil our markets growth for now. The tech team will save the index but Govt has to come out with encouraging policy decisions.At this juncture 2G scam is drawing and dragging all renowned name for good coverage.This will put road block on the rise. The Indian economy doing well is a fact but finds limited buyers in the market.

In case the policy decisions not favour or attacting the FII inflow to markets may drift lower and lower. Then the Nifty staying above 5000 is a gone case.At this juncture it is too early to announce like that but the circumstance are encouraging.

EMOTIONS RULE?????

I completely agree with Raamdevji that the market conditions are such that the investment shall find a through research on equities.
The equity markets rise across board on very few occations where the "new investor flock-SCAPE GOAT TEAM" join the stream at the fag end of the rise to grab quick bucks, get trapped and sell only when 10 or 20% value is left. The fact that the effordability of retail investor in a bull market last stage is at the mercy of the " fly by night" operator scrips which get 20% upper ceilings for consequent days. These stocks are widely talked or make the head lines. Then the common man/retail investor rise loans and invest for higher returns or take PF loans for investment get themselves burn to the gread. this rule is no exception to any investor who carry the emotional jumps to grab the opportunity despite the fact that he doesn't deserve the basic right to invest.
Now the basic right is nothing to do with other righths but hte capacity to hold for at least 5-7 years and having same surplus amount in the next year also.
Unless one undestands the basic principles of equity investment, people tend to loose and blame the market. The market is wise and balanced to every investor.
While investing in stocks, as a matter fact EMOTIONS RULE our decisions rather than a study. So persons ruled by emotions get drowned in the whirl wind stroms of market gyrations and book loss irrespective of the holding size, whether it be in day trading or in regular longterm investment.
Any way the rule is sipmle: BUY LOW AND SELL HIGH, rest is you judgement.
-------------------Very Good article
Bet on equity, but pick the right ones

EmailPrint..Our Special Correspondent, On Monday 19 September 2011, 2:52 AM
Mumbai, Sept. 18: Equities are in the doghouse right now ' and that's the best time to go stock picking, reckons Raamdeo Agrawal, managing director of Motilal Oswal Securities Ltd, which is one of the largest broking firms in the country.
Agrawal has an abiding faith in Indian equities, which he firmly believes will be one of the best-performing asset classes over the next 10-15 years.
But investors need to make the right bets when they go bottom fishing. Agrawal believes that investors should focus on specific companies rather than sectors even though several verticals have looked very attractive in the current meltdown in the markets.
"The current market is safe for investing. But the real pay-off will come from your ability to pick the right bunch of mispriced bets. Even though several sectors look interesting, it's all about picking the stocks of the right companies. The retail investor must bring his own competency to figure out how much a company will make in the next five or seven years and whether he is paying a price higher than that or significantly lower than that. That's the way I look at it," says Agrawal who along with his other colleagues have identified a checklist of 47 parameters on the basis of which Motilal Oswal picks its best bets.
Agrawal's comments come at a time the stock markets have shown volatility with key indices rising or buckling in response to a blizzard of local and international cues.
Since the start of this calendar year, the BSE Sensex has plummeted nearly 18 per cent from 20500 levels.
According to Agrawal, one outcome of this fall and the recent volatility is that the character of market and investing has changed with investors now more focused on index movements even as they have withdrawn from the equity markets.
"Earlier, it was more of an investing market where investors did not bother much about index movements. But now the whole talk is about where global markets or local markets are headed. Investing is not about markets, but finding businesses or companies who can make a lot of money and buying a small piece of it," he said, thereby indicating that investors should think long-term.
Agrawal adds that Indian equities will remain one of the best-performing asset classes over the next decade, and the arguments are far more compelling now that the markets have corrected sharply from their highs. "The lower the market goes, the better for investors," he avers.
This comes even as price-wise the markets have entered an "under-valuation zone". The price to earnings ratio (P/E) for the Sensex has eased from a multiple of 26 to 27 to a multiple of under 14 at present.
"The long-term average PE (for Sensex) has been 14.5. So, we have now entered a historical under-valuation zone and we have breached the average PE multiple. But are we close to the bottom? I cannot say that. However, if it tumbles to a PE multiple 10, we will have reached an absolute bottom," he said.
Investors have been spooked by the slump and are clinging to the sidelines, waiting for the storm to blow over. They are afraid to make a mistake and suffer big losses. But Agrawal believes that it is okay for an investor to make an occasional mistake in stock picking.
"In investing, you have to learn to pardon yourself for committing mistakes. Please do commit mistakes; an individual who commits more mistakes eventually becomes a sane investor," he said.
THANKS TO YAHOO & TELEGRAPH

Decoupled for now!!!!!

This article ratifies the views expressed in my previous
article. I mentioned the India strenth amidst of global
turmoil.The markets are weak but we are something
special. This is a clear India advantage.
----------------
Asia PE funds say region has decoupled from West

tweet0EmailPrint..Topics:StocksEconomy and
PolicyMutual Funds.On Tuesday 20 September 2011,
1:50 PM
By Stephen Aldred and Elzio Barreto
HONG KONG (Reuters) - Rising buyouts between
China and Japan, abundant leveraged debt in the
region and the depth of China's markets mean Asia-
Pacific private equity will continue to outperform the
Western model, leading Asia fund managers said on
Tuesday.
China, the world's second-largest economy, Indonesia
and India were expected to lead returns in the next
three years for private equity investors in the region,
buoyed by booming consumer demand, according to
a survey of fund managers at the SuperReturn forum
in Hong Kong.
China has been delivering returns for private equity of
25 percent to 30 percent the past years and should
experience similar growth in the next two to three
years, said John Zhao, chief executive of China's
Hony Capital.
"Asia is clearly decoupling from Western markets,
even in the private equity sector, and I for one am very
optimistic about the returns you're going to get out of
Asia," said Michael Kim, partner at Seoul-based MBK
Partners.
The greatest threat to private equity investing in the
region came from the wall of capital entering Asia
looking for opportunities, which could pressure returns
in coming years, the survey showed.
Still, despite the abundance of capital available for
investments in China and a slowdown in economic
growth in cities such as Beijing and Shanghai,
investment opportunities remained abundant in the
country's booming hinterlands, Zhao added.
"What we're very comfortable with is that we don't do
bad deals. The only question is how good the deal is,"
said Zhao. "China is restructuring, so if this sector is
not working, another sector will pop up."
Thanks to Yahoo

US-VISITS

THE HIGH PROFILE VISITS CAN STOP THE FALL?????????

19 Sep, 2011, 04.50PM IST, PTI
Pranab Mukherjee to seek US investments in infrastructure space
WASHINGTON/NEW DELHI: Led by Finance Minister Pranab Mukherjee, and his three Cabinet colleagues, India will make an aggressive pitch to US industrialists to invest in the country's
infrastructure sector.
Mukherjee, who will be on a five-day visit to US from September 21, will address the 8th Annual India Investment Forum Meeting.
The theme of his address will be India's continuing growth story, a finance ministry statement said.
Mukherjee is expected to ask the US corporate to invest majorly in India's infrastructure sector, which needs more than a USD 1 trillion over the next five years.
Commerce and Industry Minister Anand Sharma, Power Minister Sushil Kumar Shinde and Renewable Energy Minister Farooq Abdullah, accompanying the Finance Minister, will also
address the forum.
Besides, Karnataka Chief Minister D V Sadananda Gowda, accompanying the ministers, will seek investments for the state.
Tata group Chairman Ratan Tata, Reliance Industries Ltd Chairman Mukesh Ambani, SBI Chairman Pratip Chaudhuri, ICICI Bank CEO & MD Chanda Kochhar, Bharti Enterprises Chairman
Sunil Mittal, HDFC Ltd Chairman Deepak Parekh and Apollo Hospitals MD Preetha Reddy will represent the corporate sector at the forum.
The US CEOs who are likely to participate include Indra Nooyi (Pepsico), Vikram Pandit (Citi Bank), Dave Cote (Honeywell), Jamie Dimon (J P M Chase) and Ellen Kullman (DuPont).
The Meeting would also discuss the effects of increasing inflows of foreign investment into Indian markets, said Ranjana Khanna, deputy secretary general, FICCI USA.
Mukherjee, along with his counterparts from Brazil, China, Russia and South Africa, would discuss policy responses and explore the manner in which BRICS could coordinate in addressing
the evolving economic and financial situation in the various countries of the world.
The meeting will also discuss the reports which were commissioned by India on the role that BRICS could play in the global economy.
Prime Minister Manmohan Singh is also visiting US this week to participate in the United Nations General Assembly (UNGA) session. He will be making an appearance at the UN General
Assembly after a gap of three years.
THANKS TO ET


IT IS VERY LIKELY THTA THE STOCK SPECIFIC ACTION WILL RESUME FRO SOME TIME.

The No Growth-Inflation…..

The markets are on its up spring despite of the regular worries doomed by the inflation. The RBI once again increased the repo rate and reverse repo rate by 25 bps. The markets accepted and discounted the hike, continued its upward consolidated journey. The bottom building at 4900 is quite evident. The smart move from Govt not to sell ONGC at through away price put the bears on alert and the scrip regained its 275-280 level with much easy due to short covering and squeezing of bears at wrong foot.

The Obama is also trying to gain confidence of common man in US that his govt. is pro poor by putting Buffet Tax. The crave for power makes all gimmicks that can be made in the Wall Street or in the politics is common. The experts are expecting that the inflation can take a South ward move only after Jan-12 and that could be true that the markets may take a positive turn with pre-budget rally also. The view is long but evident. The “Euro” existence is now reeling the markets. The Greece default is on the cards. The markets are also not able to accept the fact that they can take a bet on the future of the European nations debt default. So the markets are “traversing of Zigzag path” is the order of the day. The connectivity with global markets with Asian markets is not fully integrated but the after shock waves are existing. The local issues are now driving the markets in Asian markets rather than the US and Europe issues.

The Reliance has good base at Rs 810-15 level but likely to test 767-73 level. The ONGC may float above 263 level. The Infy move from 52 week low level is now protected for now. The scrip may stay above 2285 level, TCS above 1014 and Wipro above 330-332 level. The best out performing stock in Nifty is M&M. The scrip likely to stay above 775 level even due to RBIs’rate hike impact. The HLL, the driver of FMCG has formed a base at 221-23 level. The markets take a sharp rise once the stock hits that level. During this week, markets will touch 5200 level or likely to cross. The Nifty has to stay above 4960 level.

How web entrepreneurs made money, thanks to Google

At 27, Amit Agarwal grew restless. A techie working in Bangalore, he wanted to live with his family in Agra. But what about the monthly pay cheque? Idea: a tech blog that will help him get freelance assignments. So in 2004, labnol.blogspot.com was born. 

The first post was the review of a new printer he had bought. And soon he was fielding questions from people who had the printer or any other gadgets. 

Agarwal didn't know it then but the blog would become his full-time profession. Seven years later, he is still writing the blog (now labnol.org), and no longer looking for freelancing. The blog with 4.5 million page views per month has him clocking in 14-hour workdays. The only difference: he works from home. "Back then, I didn't think or know that a blog could be my source of income," he confesses. His source of revenue: GoogleAdSense, the Google service that places contextual ads on blogs. The blog and Google stay his chief source of income, with 75% of the revenue coming from it. 

With little to no capital required, taking your business to the web is clearly the way forward. But decoding the web is not that easy. As yet another tech blogger, 27-yearold Amit Bhawani, found out. Starting as a personal blogger (amitbhawani.com now techadvices.com), the MBA graduate from Hyderabadhas 300 domain names registered under his companyDigital World Solutions with 40 sites and blogs operational, covering technology, health, education and automobiles. 

Bhawani started blogging as a 22-year-old in 2006 and soon realised that it's the only business where there's an assured 100% year-on-year growth. Last year he made Rs 1.2 crore from his blog with 70% of the revenue coming from Google AdSense.

THANKS TO ET.

TROUBLE FOR NOW ????

The markets across the globe took a severe beating. But in the last week our markets could bounce from 4700 level to 5100 level. The fall can be considered is from 5700 level. The DAX which is struggling to hold on the gains it made on the previous day. The same is the case with DOW and Nasdaq. This phenomenon is particular to these days but not to the history. The last one month scenario is not at all a consideration when we are talking about the LONG-TERM growth.

All the markets except the Nikkie are in positive zone despite of the turmoil’s they under went. The strength in the markets are not shaken by the Europe and US problems. The markets are apprehensive time and again about the recovery or growth prospects but they are not in bear grip. The bears are exhibiting their strength time and again when ever the opportunities arise. Their strength is well recognized in some sectors where the future is bleak. The Nifty is also traversing in similar lines as discussed above.

The third world countries of yester years are now the hub of growth opportunities, more safety heaven than the EU and US. The activity of patronage may exist for some time, until that inflection point, the FDI will get attracted in countries like India. The current situation in developing nations is the rising inflation which is eating away the growth made. To maintain a balance, attract more stable investments, the RBI and the Govt. are tying to take measures, may take some time. The food inflation now in double digit is causing concern for the govt. in power as they have to satisfy the common man. The aaum audmi khushi will offer KURSI.

The markets in India will get more support from FII as their exposure is increasing quarter on quarter. The mid caps will have good future after two years of consolidation. The telecom sector will see a better future than the turbulent one that exists amidst of spectrum allocation issues. The ADAG group stocks are the real barometer for the markets direction. The Reliance foray into broad band is so silent that the market is not able to digest. The LTE will see better future in India as the usage potential is more due to demographic advantage. The UID will boost the Governance patronage that propels the whole system.

The growth assurance can be taken from the studies conducted and targets set from BMW and Mercedes plans. The studies show that margins may fall by close to 6% due to tight liquidity in the system. These are contradictory to each other but in the time span on a longer scale both are correct. The policy changes at the Banking licenses to private sector will unleash a new area of banking and FII investment will follow. The same is the case with Insurance sector and retail. The huge investment opportunity for FIIs, those floods as inflow of funds into these sectors, waiting for more than two years.

The markets are now in the phase of consolidation. The bounce back of Reliance from 712 level to 812 odd level is a good sign for the bulls to celebrate. The sector rotation will take place in the next two to three months. The bargain hunter placed their bets in the market. The retail investors may take expose in October after analyzing the September results. The direction will be decided in November. The Nifty for now may face resistance at the current highs may slide to 4930-4887 levels and will resume the current uptrend. The ONGC FPO plan shall not become a show stopper.

THANKS TO ET FOR PROVIDING SUCH AN INTERESTING AND MUST READ ARTICLE.

Equity investment is an art as well as a science

Equity investment is an art as well as a science. The selection of an underlying is an art and selecting the right strategy to participate is a science. Clients often ask us: 'How do I participate in equities? Markets are near all-time high. Should I invest now or wait for the markets to correct? There is a lot of uncertainty in the markets', etc. 

My reply to them is that equity markets are always going to be uncertain, that there will always be volatility. But that is why equities give higher returns than other asset classes. Play smartly and take the benefit of volatility. 

The objective of every investor is to buy low and sell high or invest more when the markets are low and invest less when the markets are high. This often sounds simple but in reality it is practically impossible to time the market. To achieve the above objectives, I suggest the 'value averaging strategy', as it smartly plays out in different market conditions. 

Let us first understand what value averaging is. It was developed by former Harvard University professor Michael E Edleson. The value averaging investment plan is a powerful investment concept that provides considerable safety from market volatility, discipline and reasonable guarantee of returns. It is an averaging technique where the portfolio's balance increases in a defined way irrespective of the market movement. 

In a value averaging investment plan, the amount invested each month is not fixed, but varies with the fluctuations of the market. Investors have a target portfolio value that they desire over a certain period of time. With each passing month, the plan adjusts the next month's contribution as per the relative gain or fall of the portfolio value from the target portfolio value. When the market declines, the investor contributes more and when the market goes up, the investor contributes less. This way the anticipated return remains more or less constant for the investor. 

To check the superiority of this logic, we back-tested the value averaging concept in three different market cycles, ie, a falling market, a flat market and a rising market. We have considered a three-year analysis for each market cycle. We assumed 15% as the target return from equity and set the formula accordingly. Let's evaluate the investment results in different strategies: 

During the global crisis of 2008: For our analysis, we took the data for Nifty from December 31, 2007, when the Nifty was 6138. It fell all the way to 2524 on October 28, 2008 and come back to 6134 on December 31, 2010. So, there was in effect no returns from Nifty for three years. In the same time period, the value averaging concept (VAP) in Nifty generated an internal rate of return (IRR) of 25.34%, compared with the 0% CAGR return from a lump sum investment in Nifty and IRR of 23.86% from investments through a systematic investment plan (SIP). 

Falling market analysis (tech meltdown): For our analysis, we took data from January 31, 2000, when the Nifty was 1546 and fell all the way to 1041 as on January 31, 2003. Nifty lost 32% in the above period. If anybody would have employed the value averaging strategy for investment, the returns would have been -4.24% IRR as compared with -6.69% IRR through SIP and -12.33% CAGR in case of lump-sum investment.

Rising Market analysis (dream bull run): For our analysis, we took data from December 31, 2004, when the Nifty was 2008, to December 31, 2007, when it touched 6138, generating 195% absolute return, ie, 43.43% CAGR. But with the value averaging strategy (VAP), the IRR would have been 52.48%, and for SIP strategy, the IRR would have been 50.89%. In a constant rising market, the absolute returns from lump sum would look better. 

Conclusion: Value averaging as an investment strategy is superior to the systematic investment strategy as it combines the benefits of relative valuation due to market movements and a disciplined investment approach for averaging. In the current state of directionless market it makes sense to apply this investment strategy for allocation in equities. Just be patient and give more time to your investments. 

(The author is Group CEO, Alchemy).

LOOMING RECESSION

We have been talking about the impending slow down in India and the lack of strength of recovery in US coupled with the turbulence being generated in EU nation right from the Mar-Apr-11. The non stop rise of rate hikes continued and the RBI is willing to sacrifice the growth .That time published that the State Assembly Election in the 5 states are holding and we expected some policy decisions that can prop the Index but not the economic growth. 

Now Thanks to ET covered in detail.

22 AUG, 2011, 10.10AM IST, 

Global economy is dangerously close to recession

Concerns over the wavering US economy and Eurozone debt crisis has put world markets in turmoil and most of them witnessed massive sell-offs in the past week. Excerpts from a Morgan Stanley research report dated 17 August 2011. 

Recent economic events in the US and Europe have been disappointing. Europe's insufficient response to the sovereign crisis and the events around lifting the US debt ceiling have negatively impacted the financial markets and substantially eroded business and consumer confidence. In the first half of 2011, US GDP grew by an annual average rate of less than 1%, which shows brittleness of the US recovery in the face of external shocks (oil, Japan earthquake) despite ongoing fiscal stimulus. 

On the other hand, Europe's past rate hikes, the sovereign crisis and the fiscal policy tightening will take a toll on its growth. The euro area GDP is likely to stagnate later this year and in early 2012. Because of such developments, Morgan Stanley has reduced its global growth forecasts to 3.9% from 4.2% for 2011 and from 4.5% to 3.8% for 2012. The report also lists the outlook for various regions. 

United States: The growth expectations are downgraded because of expected slower pace of income and spending growth. Also, there are concerns regarding the willingness of businesses to hire and invest. 

Euro area: The GDP growth estimates are reduced by a full percentage point for this year and the next year owing to softening domestic demand in the core countries. This could affect the euro area as a whole, slowdown in global trade momentum marked by deceleration in manufacturing indicators, difficulties faced by banks in accessing term funding at reasonable rates and likelihood of increased funding costs that could impact investment projects. 

United Kingdom: UK will follow a pattern of weak (but positive) growth. Its export led recovery is likely to be hit due to global slowdown. Also, lack of spare capacity and pressure from global inflation will make 2012 another uncomfortable year for the Bank of England. 

Japan: Morgan Stanley has reduced the country's economic prospects due to weakening global economy, a delay in post-quake reconstruction activities and tighter electricity demand-supply conditions over the medium-to-long term. The main downside risks are deflation, concerns regarding fiscal resources and higher taxes. 

Australia: There are growing signs of weakness across the non-mining related sectors due to restrictive monetary and fiscal policy and adverse wealth effects as house prices are falling. Also, consumer sentiment has deteriorated significantly in recent months, which could raise the prospects of higher unemployment. 

Asia (ex-Japan): The report has reduced the GDP growth estimates for the region to 7.6% in 2011 and 7.3% in 2012, from 7.7% and 7.8%, respectively. The region is likely to decelerate due to a significant slowdown in the developed world growth. 

According to the report, countries which are more externally oriented, such as Korea, Singapore, Malaysia, Taiwan and Thailand, will see a greater adjustment in their growth outlook compared with the economies with higher dependence on domestic demand, such as China, India and Indonesia. 

WE ARE BUILDING THE GROWTH & SAFETY.....

Emerging markets can drive global recovery

2 Hours ago
The emerging market economies will remain key to global recovery and will continue to display the resilience they exhibited during the global meltdown……ET covered

'India can lend stability to world'

BS Reporter / New Delhi August 30, 2011, 0:19 IST

Finance minister says sustained high growth requires nimble, transparent, coordinated responses, allowing non-state actors to shoulder much more….. BS covered today.

In my previous article posted we discussed the same and the opinion being circled among others mind also

PEOPLE WIN but not markets!!!!

The US sovereign debt might have got rerated on the grounds of slowing economy.  The cues from the Fed Chairman Ben Bernake are crucial for markets across the globe at this juncture. The QE-3, Quantitative Easing may prop up the sagging economy and may correct it in due course of time. The extra funding from Govt may give opportunity to US industrial houses to generate employment opportunities there by spending more to propel the recovery in economy. 

In this current scenario the foreign brokerage firms are putting India on watch, down grading the the SENSEX targets. The CLSA has down graded from 19,500 to 18,200 and Morgan Stanly has brought down the target from 22,750 to 18,850 for 2011. These firms have down graded India due to the global linkages and dependence that has increased from 2008 to current situation. The share prices likely to get de-rated depending on the emerging global scenario.

“There is a good reason to hope that the crisis is over in two to three years’ time”, European Financial stability Facility (EFSF) Chief Klaus Regling quoted while mentioning about the need for collaborative cooperative effort needed among the member countries to support for reforms and sorting their budgets. So the severity is sustained for next 6-9 months for sure. The markets across the globe will find only technical bounce rather than rallies in equities. The Switzerland banks are trimming their teams so banking professionals close to 10,000 will get their pink slips. The Euro zone crisis will have short-term impact on the markets across the globe but the de-coupling will emerge especially in India may be from pre budget rally in Feb-2012. The Europe and US debt crisis gets solution by fiscal stimulus is the remedy for foreign markets and policy liberalization is for our markets.

A positive note on inflation is from Goldman Sachs which predicts that the inflation may recede to 6% by March of 2012. The RBI has used 11 times rate hikes since Mar-10, to curb inflation but the petrol price hike coupled with product input cost rise on global front spiraled the inflation above 9%. The capital inflows to emerging markets like India will increase as the search for growth and safety intensifies.So we can expect trend reversal of rate cuts to boost the economy. The short week likely to close on positive news from the US and the Nifty may close above 4850 level and may wait for US president Obama announcement on 5^th which is may the main reason for Bernanke non committal at Jackson Hole, Wyoming.

The DOW and S&P of US are going to be listed from Monday on the NSE. In order to encourage participation, NSE is offering no transaction charges till 29 of Feb-2012.

ANNA HAZARE UNITED ALL: Anna Hazare who united Indian middle class who got severely being affected but scattered, to raise voice against ever talked and less addressed deep rooted corruption issue. Anna made the over whelming crowd at Ramaleela maidan to cheer on the achievements by forcing the central government to accept the JAN LOKPAL discussed in parliament. He ended fasting on13^th day, asking people to become ANNA by following and leading spotless character and sacrifice to fellow being. The media helped to highlight the issue and the common man voices were aired. The 74 yr old dedicated Gandhian follower maintained fasting for 12 days. He says next agenda is ready for electoral reforms agitation. His fight would be for “Right to Recall” and “Right to Reject”. The good beginning shall bear fruitful results.

Steve Jobs resigned: In any body’s life disease is curable but the death is not. The despair put’s immense pressure on the mind, when it becomes incurable leading to death. The Apple chief Steve Job, who built an empire against all odds, succumbing to such pressure, finds joy in living with incurable pancreas disease. He is a visionary, traversed India for enlightenment in Uttarakhand but could cleanse his soul found the strength to establish Apple Inc. with his friend Steve Woznaik, also a college dropout like him. Both sold their beloved goods and could gather $ 1300 dollars to kick-start the company in a garage. His skills and vision shaped “Mac” computer but Apple Inc became super rich with the success of it’s incredible products like iPod, iPhone and iPad that changed the mobile world, now under the leadership of Tim Cook, the then COO of Apple. He built an empire bigger than many countries reserve, with 100 billion dollar business growing at scorching pace, now the new management to take it forward to nest level. 

Critical times… troubled waters…

The growth in our economy is not contracted but we are making it to grow slow to control spiraling inflation. The growth will have no significance unless the inflation is controlled. The Nifty is now adjusting to the future earnings. The world economy especially the EU is cracking like in 2008. The world over growth now has become a big challenge as the developed nations like US are at negative growth coupled with high un-employment, low productivity are at stagflation stage.

In this emerging scenario the export dependant, driven countries will depend on their local markets for sales that creates a situation of glut will will create and aggravate economic problems where in the production cuts will become the order of the day. The classic examples of de-rating will happen on most developed sovereign nations. The markets will react to a situation to grind it lower to lower level. In India, the Govt. is grappling with many issues related to corruption and governance. The last 3-6 months the policy measures for triggering the markets are at bay.

Now our situation is forcing us to think twice, whether to continue our tight monitoring policy or encourage the economy to open for growth. The production cuts are happening in auto mobile and now in stainless steel. The iron ore production has reduced that forced steel companies production cuts. The coal shortage due to floods in coal mine areas in Australia spiraled in cost but the India situation is not seriously effected with Coal India support. The Jharkhand pollution control Board has given notices to Coal India for closure of Mines due to environmental issues. The situation may create another shortage problem to power and steel industries. The ripple effect will have cascading effect that can derail the growth estimates. The next five year plans starts from 2012 to grow above 9% will become a big challenge that topple and crumble the foundations made so far.

The Nifty has exhibited great support at 5200 level was not easily broken but three time support has built retail investor participation but not left anything special. The situation now has changed gradually to touch a level of 4700. The fall from the reasonable bullish zone above 5850-5800 to 4700 is more than 1000 points. The Reliance, DLF, Tata motors, Tatasteel, Hindalco, STER, Sesa Goa ICICI, AXIS and SBI lost their shape and attractiveness. The deformed stocks will get a healthy look only when the Nifty crosses 5100. Now the news flow is against for blue-chips. The standouts will have very bright future along with these stocks. The midcaps will out perform only after one year or so. The fancy look is not available and the growth driven rose picture is not saleable in these market conditions.

The technical bounce back shall be used to off load the positions as they are not going to yield any significant results. The risk reward ratio for these stocks looks attractive on the face of it but the multi-baggers will emerge only after 2-3 years that to on selected counters. The world economy is a concern for now but the emerging markets will out-perform in the years to come.

Rakesh Jhunjhunwala

26 AUG, 2011, 03.49AM IST, AHONA GHOSH,ET BUREAU 

Rakesh Jhunjhunwala: The fire of investing in stocks is still in me. I eat, sleep and live markets

An investor with the Midas touch, lover of the king-size life, a relatively recent family man, and now a budding philanthropist. ET attempts to unravel the multilayered world of Rakesh Jhunjhunwala 

July 5, 2010: Rakesh Jhunjhunwala (RJ) is celebrating his 50th birthday in Mauritius at the InterContinental hotel. He's flown in along with 250 friends who will partake of the festivities over three days. The birthday boy has also brought along 12 of his cooks to prepare special Marwari dishes for his guests; a part of the hotel has been cordoned off for this purpose. 

On the guest list, which includes some of Dalal Street's and India Inc's biggest movers and shakers, is Hiren Ved, a director and chief investment officer at the RJ-owned Alchemy Capital. Ved, who has known RJ for 17 years and fondly refers to him as bhaiya, still has one vivid image of the revelries etched in his mind, RJ on the dance floor. 

"He was dancing his heart out with this shirt tails out, least bothered what others thought of him," chuckles Ved. That's the credo India's first investor to make a billion dollars from the stock market, that's how much Forbes had estimated his net worth in 2008, swears by. And at 51, RJ still has the time and energy to work hard and party harder. 

"If we were partying in Hong Kong till 6 in the morning or gambling till 3 in the morning, he would be fully awake and on his screen tracking the Indian markets, which would open at 6.30 am Hong Kong time. The rest of us could barely keep our eyes open," recounts Ramesh Damani, a member of the Bombay Stock Exchange who has known RJ for the past 25 years. 

If RJ can do that, it's because he's still an investor with fire in the belly, sifting through a heap of stocks for tomorrow's multi-baggers. "I still eat, sleep and live markets," says the investor who was christened India's Warren Buffet for his penchant for, and success with, value investing. Sitting in his plush 15th floor office in South Mumbai's commercial hub Nariman Point, RJ's eyes light up when discussing stocks. 

A diamond ring sparkles on a finger of his right hand as he flicks the ash of an India Kings cigarette into a large marble ashtray. "Success is measured quantitatively by everyone including myself. Money matters but I enjoy the process more, and have never used unfair means to make wealth," says RJ. 

Markets are still at the core and the good life a natural corollary, but of late, RJ has widened his universe to include two ingredients, one that most people consider a given; and the other that most folks don't consider at all. 

OTHERS IN THE PICTURE 

Let's start with the first element: 

Family. In June 2004, after 17 years of marriage, RJ and his wife had their first child, daughter Nishtha who is eight years old now. Two-and-a-half years ago they had twin sons. "The greatest joy in life is having a child. I adjust to their timings now; they can't adjust to mine," says the proud father. 

The even newer constituent of RJ's life is perhaps more unlikely, the man who believes that greed is good also believes giving is good. Recently, he announced in a public forum his intention to pledge a fourth of his wealth by 2020, which he hopes will amount to a billion dollars, to charity. "Money is an outcome and not the purpose... As of now it is just a pledge. I have not given away the money but by God's grace I am sure it will happen," he says, adding he also wants to be involved in deciding the causes into which the money goes and in monitoring its deployment. 

A die-hard investor, lover of the good life, a relatively late family man, and now a wannabe philanthropist, is RJ for real, or is this just a well crafted image-building exercise? After all, as his detractors point out, and there are a few of them, RJ is just trying to mirror Buffett. After being put on the same pedestal as the Oracle of Omaha on the investing front, he wants to attain the same status with his philanthropic efforts. 

AN OPEN BOOK 

Others point out to some visible, if arguably superficial, contradictions in the man: his love of the tipple and everything else that goes with it don't quite sit well with his projection as a family man and as an enthusiastic philanthropist. 

To be sure, it's easy to be sceptical about RJ with all his inconsistencies. Yet, here's a man who has never attempted to hush up his lifestyle. "My biggest insecurity right now is my health. I eat at odd times, drink like a fish and smoke like a chimney. I need to change my habits. I want to live long not just for the kids but for myself," says the man who started taking yoga classes six months ago. 

Such transparency spans across his personal life to the professional. "When he bought Titan, the benchmark of his portfolio, he shared his ideas with friends. Unlike other traders who buy stocks secretly, he has always been transparent," says Damani. Today, RJ can look out of his duplex apartment in upscale Malabar Hill in South Mumbai and take in the sweeping view of the Queen's Necklace with a Cuban cigar in one hand and a scotch tumbler in the other. But he didn't get all this on a platter. 

The day this writer visits his home, she gets to see a totally different side to a man retail investors consider a god. The children are running around in the sprawling living room, a nanny is pandering to their needs, and at the other side of the room a barrage of hired help is busy dusting, polishing and sweeping the house. 

That's a typical Sunday morning at the Jhunjhunwala household. As RJ bids his yoga teacher farewell in the second living room, he sits back in his chair and starts describing his earlier days. He got married in 1987 and for the next two years, had his back to the wall. The luxury RJ enjoys today was a distant dream then. "The markets were bearish, there was no activity. I had no income and people would advise me to seek another career," says RJ as he dips a garlic toast into a cup of milk, his breakfast. 

BREATHING WORK 

In a short film made on RJ for his 50th birthday celebrations, longtime friend and investor Radhakrishnan Damani recollects their earlier days when they would spend hours discussing the market till the wee hours of the morning. 

One day, they were sitting on the streets of Nariman Point till 3 am when a police car drove past and ordered them to go home. "I went home, but Rakesh went to Delhi Darbar for biryani and came back to my house at 5 am with the day's newspapers to continue our discussion," grins Damani. 

In his heyday, RJ was known to put in 16-18 hours tracking and talking stocks. These days he has slowed down, although not by much. "Especially after his kids were born, he is making a lot of effort to spend time with his family and is looking after his health," says Ved. Shankar Sharma, cofounder of First Global, says: "I keep telling him to lose weight, forget about the markets, and that health is more important." Sharma and RJ have been involved in some spectacular faceoffs, but that's only because of their contrasting styles of investing, the former thinks macro and RJ's approach is bottom-up. Otherwise, they're perfectly comfortable meeting over a drink. 

"Rakesh always tells me that people will be surprised to find us sitting together," says Sharma. Perhaps with age both Sharma and RJ are more open to accepting each other's opinions, even if they are as forceful as they were in the past. As Ramesh Damani says: "He has reached a happy stage and has nothing to prove any more." 

Such a stage in life allows for room for new-found indulgences. Recently RJ bought eight racehorses, stallions and fillies in a three-way partnership with two businessmen. RJ is a 50% owner and says he spent around Rs 75 lakh on this purchase. Then, he has also forayed into Bollywood by teaming up with adman-turned-filmmaker R Balki to make a movie titled 'Hinglish English.' The film is about an Indian who goes to the US and learns English there. RJ is financing the project, he isn't saying how much he is sinking into it, that stars Sridevi and features Amitabh Bachchan in a small role. 

A NEW DIMENSION 

Beyond such treats, however, key events in RJ's life have triggered actions of more consequence. After his daughter was born, RJ had this dream of starting an orphanage. A year ago he did just that. He opened an orphanage in Panvel on the outskirts of Mumbai and has 80 children, between five and eight, enrolled. Over the next two years, he wants to increase the count to 384. His brother Rajesh, who is also a CA like RJ, manages the orphanage. 

"I have enrolled them in English-medium convent schools and local Marathi schools. I will further the education of those who are academically inclined, and those who are not, I will put into vocational training," says RJ, who spends Rs 3,500 per month on a child. "I spend 25% of my dividend income on charity," he adds. RJ is a firm believer in the virtuous cycle of greed and giving: "Making wealth and giving are two sides of the same coin. You can't give it unless you make it." He still wants to create wealth, perhaps now even from overseas. 

"I want to replicate in global markets what I have done in India," says RJ. "(For that) I need to build a team which I am trying to do now." But even such global ambitions may have to make way on the priority list for his children. Wife Rekha says that since their arrival, she has seen a 75% improvement in his behaviour. 

"(Earlier) he never had any set time to come home. Often he wouldn't come home till well past midnight," she says. These days, she adds, RJ rushes home from work by 7.30 pm to help Nishtha with her homework. Rekha also points out that the man famous for his erratic temper has calmed down over the years. 

RJ jokes: "During our 24 years of marriage I must have shouted 7,500 times at her and she has only once." Yet, some things just don't change. Rekha says sometimes she is embarrassed by her husband as he can never keep anything to himself. "There are many times when I don't tell him things because he doesn't think before speaking and you never know when he will say what," she says. But then again, RJ wouldn't be RJ without his individuality, his quirks, his forceful opinions, his sharp mind, and his unpredictability. 

THANKS TO ET