Hi Udayan,
While I appreciate your intention of assuaging the feelings of the Indian Investors whose fingers have been badly burnt, I do not agree with the content of your post.
What 'mistake' did people who are long term investors make who were holding stocks with less than 10 PE or in some cases stocks with even less than 5 PE? You would be right in saying that those who were chasing overpriced and over-hyped stocks like RNRL, RPL, Ispat, Essar Oil, Reliance Energy etc. were overcome by their greed and that's why they had to pay for their 'sins'. It is completely understandable if you were admonishing people who were in such stocks for their 'mistake'.
But what mistake did a person who was holding a JK LAKSHMI CEMENT LTD., for example, make?
*That stock was trading at a PE of 3.7 at the price of 172 just one week ago. It was available at 109 today and the PE shrunk to 2.4!!
*The company has a confirmed annualized EPS of 47 for FY2007-2008.
*It has been posting spectacular results for the last six quarters in a row.
*Capacity enhancement from 3.5 million tonnes to 5 million tonnes on schedule.
*Captive Power Plant of 36 MW fully stabilized. Annualized savings of approx. Rs.30 crores.
*High cost debts of Rs. 325 crores replaced.
*Interim dividend of 10%. Record date is 30th Jan, 2008.
The point I'm making here, dear Udayan, is that NOT EVERYBODY WHO WAS INVESTED IN THE INDIAN STOCK MARKET MADE A 'MISTAKE'. IT WAS A SYSTEMIC FAILURE. People were FORCED to sell even their good stocks by their brokers. Why did this forced selling take place? What exactly was wrong with the system of Margin Calls which led to this bloodbath?
Instead of just writing off the Indian Investors' intelligence as a 'mistake', you should use your good offices to find out the REAL CULPRITS BEHIND THIS BLOODBATH. To me, this bloodbath reeks of a scam, which should be investigated.
No cheers!
Superstar
Tuesday, January 22, 2008
Udayan's post on Moneycontrol titled: Lessons to be learnt from Jan 2008
Posted by: Udayan Mukherjee on ( 22-Jan-08 14:43 )
The thing about life is that one makes mistakes. Many mistakes were made in the second half of 2007 and those sins have to be washed away by blood, such is the way of financial markets. Some participants will go down under and never be able to get back to the market again but most will survive. The pain will linger for many months, maybe years but lessons have to be learnt. Every such debacle has lessons for us and the sooner we forget them the more we suffer.
The first lesson is not to let stock price performance become the sole reason for buying, a mistake which was made in abundance in the last 3 months. What couldn't be explained by fundamentals was credited to liquidity. The present lost all relevance as people chose to focus on the distant future, perhaps simply because the present could never justify those ticker prices; only a hazy dream of the future could. Traders and investors had no time for fundamental analysts, in many cases they were labelled "cribbing fools". Chartists became the most celebrated tribe on the street as only they could see and predict the one way run to glory for many of the hot stocks even as fundamental watchers cringed at valuations....till the music stopped. Don't get me wrong, charts do work in trending markets but once stock prices veer away completely from fundamental value, people need to get careful. But they never are. Now that the blinkers are off, people should ask themselves why stocks like RNRL, Ispat, RPL, Essar oil and Nagarjuna fertilisers have lost 50-70% of their value. It is simply because their stock prices had snapped all connection with underlying business fundamentals, earnings and value. Their stock prices became the only reasons for buying them which works for a while but not forever.
The other big lesson, one which should have been driven in earlier in May 2006, is the danger of overextending oneself in the futures market. The lure of stock futures is easy to understand. Put in some margin, take a big exposure on a fast moving stock, make a killing when prices shoot up. Repeat exercise. Just that people forgot that prices may also come down and at a pace which noone can even imagine, maybe their friendly stockbrokers forgot to tell them that part of the story. The result : unbridled speculation that ran into lakhs of crores, excesses that we are paying for today. Even this fall will not cure investors of their love for futures speculation but if at least some amount of caution is injected it would have been a worthwhile learning. Futures are not toys for amateurs, they are time bombs in the hands of inexpert and inexperienced traders, it's only a matter of when the fuse runs out.
The other learning which I hope will play out in the future, as it has in the past, is that it pays to be brave in times of panic such as these. If I was allowed to invest myself , which I am not, I would have no hesitation in deploying serious money into the market today, knowing fully well that prices may fall more tomorrow. And I would be standing there tomorrow to buy more of the same, till my money ran out. India is going to be a terrific stock market story for many years to come, even an intermediate bearish patch cannot shake that conviction of mine. At best, one will have to wait a bit for the returns to follow. That's alright. You are happy to put money in a bank FD and then wait for one full year to collect that measly 8%, aren't you? Then why does the stock market need to give you 20% every month? In the last one year, I haven't seen so many good stocks trade at such mouth watering levels. Forget trading, avoid the duds which were fuelled up by operators, just go out and buy those bluechips. They will deliver, even if there is a global market meltdown for a while, and if you are a bit patient you will be rewarded. But do remember January 2008, as history will repeat itself again in the future. Just that our memories tend to be too short and our greed too much.
NOTE: This column was written at 2pm, even as the markets were trading.
-Udayan Mukherjee, Executive Editor, TV18
The thing about life is that one makes mistakes. Many mistakes were made in the second half of 2007 and those sins have to be washed away by blood, such is the way of financial markets. Some participants will go down under and never be able to get back to the market again but most will survive. The pain will linger for many months, maybe years but lessons have to be learnt. Every such debacle has lessons for us and the sooner we forget them the more we suffer.
The first lesson is not to let stock price performance become the sole reason for buying, a mistake which was made in abundance in the last 3 months. What couldn't be explained by fundamentals was credited to liquidity. The present lost all relevance as people chose to focus on the distant future, perhaps simply because the present could never justify those ticker prices; only a hazy dream of the future could. Traders and investors had no time for fundamental analysts, in many cases they were labelled "cribbing fools". Chartists became the most celebrated tribe on the street as only they could see and predict the one way run to glory for many of the hot stocks even as fundamental watchers cringed at valuations....till the music stopped. Don't get me wrong, charts do work in trending markets but once stock prices veer away completely from fundamental value, people need to get careful. But they never are. Now that the blinkers are off, people should ask themselves why stocks like RNRL, Ispat, RPL, Essar oil and Nagarjuna fertilisers have lost 50-70% of their value. It is simply because their stock prices had snapped all connection with underlying business fundamentals, earnings and value. Their stock prices became the only reasons for buying them which works for a while but not forever.
The other big lesson, one which should have been driven in earlier in May 2006, is the danger of overextending oneself in the futures market. The lure of stock futures is easy to understand. Put in some margin, take a big exposure on a fast moving stock, make a killing when prices shoot up. Repeat exercise. Just that people forgot that prices may also come down and at a pace which noone can even imagine, maybe their friendly stockbrokers forgot to tell them that part of the story. The result : unbridled speculation that ran into lakhs of crores, excesses that we are paying for today. Even this fall will not cure investors of their love for futures speculation but if at least some amount of caution is injected it would have been a worthwhile learning. Futures are not toys for amateurs, they are time bombs in the hands of inexpert and inexperienced traders, it's only a matter of when the fuse runs out.
The other learning which I hope will play out in the future, as it has in the past, is that it pays to be brave in times of panic such as these. If I was allowed to invest myself , which I am not, I would have no hesitation in deploying serious money into the market today, knowing fully well that prices may fall more tomorrow. And I would be standing there tomorrow to buy more of the same, till my money ran out. India is going to be a terrific stock market story for many years to come, even an intermediate bearish patch cannot shake that conviction of mine. At best, one will have to wait a bit for the returns to follow. That's alright. You are happy to put money in a bank FD and then wait for one full year to collect that measly 8%, aren't you? Then why does the stock market need to give you 20% every month? In the last one year, I haven't seen so many good stocks trade at such mouth watering levels. Forget trading, avoid the duds which were fuelled up by operators, just go out and buy those bluechips. They will deliver, even if there is a global market meltdown for a while, and if you are a bit patient you will be rewarded. But do remember January 2008, as history will repeat itself again in the future. Just that our memories tend to be too short and our greed too much.
NOTE: This column was written at 2pm, even as the markets were trading.
-Udayan Mukherjee, Executive Editor, TV18
Monday, January 21, 2008
Blood on the Street
5450 came on the Nifty and went. 5150 came and went. Even 5000 came and went. It was a day of high drama when stocks fell left, right and centre. Almost a knockout punch was levelled by the basket selling which came in today afternoon. According to information available, today's panic selling happened because of Margin calls. The exchanges called for margins and the brokers had to sell their leveraged positions forcibly to avoid having their terminals shut down.
In a sense, it is good that most of the poison has been spewn out of the system in one day ( I hope so). The faster this correction gets over, the faster we'll be back on our feet.
What a day! No cheers!
In a sense, it is good that most of the poison has been spewn out of the system in one day ( I hope so). The faster this correction gets over, the faster we'll be back on our feet.
What a day! No cheers!
Sunday, January 20, 2008
Guest Tips Here : Part II
Hi friends,
Starting a new thread for Guest Tips here as the old one was full to the brim and the page was taking a long time to load. Use this new thread to post your tips and queries. I will try to answer as many as possible, whenever I can. But you people can answer each other also, if you can. If you are addressing your question to me then please restrict your queries to a maximum of TWO Stocks at a time.
Cheers!
Starting a new thread for Guest Tips here as the old one was full to the brim and the page was taking a long time to load. Use this new thread to post your tips and queries. I will try to answer as many as possible, whenever I can. But you people can answer each other also, if you can. If you are addressing your question to me then please restrict your queries to a maximum of TWO Stocks at a time.
Cheers!
Friday, January 18, 2008
CURRENT MARKET OUTLOOK
As you all know that the global stock markets are very weak right now and there are recessionary fears in the United States. The stock markets the world over are falling like nine pins. Only the Indian and Chinese Stock markets have so far withstood the storm relatively well. Simply because of the high economic growth these two countries enjoy. But every year, there are at least two occasions when the markets correct severely across the board. I had predicted about a correction in the overall market around the end of January on my website in my New Year Blog but it has happened two weeks earlier than I expected.
This correction is giving us and opportunity to cherry pick good value stocks at cheap prices. You can also use this correction to exit pure momentum stocks and get into high quality stocks which you always wanted to own but could not afford to because of their high prices. This is a good time to churn your portfolio and move from low quality stocks to high quality stocks. So keep an eye on the new picks I've given here and pick them up on dips.
There are two possible scenarios in the overall market:
A) That we are almost near the end of tunnel and markets should start recovering from next week itself.
B) This is the start of a bigger correction in the overall markets and things may get worse before they get better. Remember what happened in May 2006 and March 2007. Every year this happens that the markets have to go through one or two deep corrections. This may be the first big correction this year. The levels to be watched on the Nifty are 5850, if we close below that then next support is at 5700, if we breach that also then there is a possibility of the Nifty going to even 5500 or 5450.
I am hoping that scenario A plays out and not scenario B. Long term, India is still in a bull market and will make higher tops on the indices. It is just that we should be prepared to face a few road blocks on the way.
Cheers!
This correction is giving us and opportunity to cherry pick good value stocks at cheap prices. You can also use this correction to exit pure momentum stocks and get into high quality stocks which you always wanted to own but could not afford to because of their high prices. This is a good time to churn your portfolio and move from low quality stocks to high quality stocks. So keep an eye on the new picks I've given here and pick them up on dips.
There are two possible scenarios in the overall market:
A) That we are almost near the end of tunnel and markets should start recovering from next week itself.
B) This is the start of a bigger correction in the overall markets and things may get worse before they get better. Remember what happened in May 2006 and March 2007. Every year this happens that the markets have to go through one or two deep corrections. This may be the first big correction this year. The levels to be watched on the Nifty are 5850, if we close below that then next support is at 5700, if we breach that also then there is a possibility of the Nifty going to even 5500 or 5450.
I am hoping that scenario A plays out and not scenario B. Long term, India is still in a bull market and will make higher tops on the indices. It is just that we should be prepared to face a few road blocks on the way.
Cheers!
Wednesday, January 16, 2008
JK LAKSHMI CEMENT LIMITED : MULTIBAGGER
JK LAKSHMI CEMENT LIMITED has been posting stellar results for the last five quarters in a row. The nine months Cash EPS till December, 2007 stands at 43.21 as against 27.57 for the same period previous year. At current price of 171, this stock is trading at a PE of a mere 3.6!!! The fair value of this stock should be three times the current market price at least. Long term investors can look forward to targets of 500 plus in the next one year. The company has also declared an interim dividend of 10% and record date for that is 30th Jan, 2008. If ever there was an undervalued share in the stock market, this is the one. Must Buy.
HOT STOCK : GODREJ INDUSTRIES
GODREJ INDUSTRIES stands to gain immensely from the recent repeal of Urban Land Ceiling Act of Maharashtra. It holds a large piece of land in Vikhroli, a central suburb of Mumbai which it can now develop. After development, the rental income alone could be over 100 crores annually. According to sources, the company is holding 82.88% stake of Godrej Properties P. Ltd. which is holding 51% of Godrej Realty P. Ltd. and 100% of Godrej Waterside Properties P. Ltd. These companies are developing an IT Park at Kolkatta and a Residential Project at Thane. There is also a buzz in the market that Godrej Poperties will be coming out with a public issue soon. This and the company's foray into real estate in a big way will result in huge value unlocking for Godrej Industries.
At the time of writing this, the stock was trading at the lows of 359.40. It can turn out to be a Multibagger investment for long term investors.
Cheers!
At the time of writing this, the stock was trading at the lows of 359.40. It can turn out to be a Multibagger investment for long term investors.
Cheers!
Monday, January 14, 2008
Watchlist of Potential Winners
Hi friends,
The current lull in the market and the ongoing correction in the mid-small caps will give rise to buying opportunities in several stocks which can be potential Winners. You could keep them in your watchlist and buy them on dips. Apart from my favorites CYBERMATE INFOTEK and JAYASWAL NECO, here are some more names which can be potential multibaggers in the long run:
1. Jay Ushin Ltd.
2. Jay Bharat Maruti Ltd.
3. South Asian Petrochem Ltd.
4. Aurobindo Pharma.
5. Unichem Labs
6. Agro Dutch
7. Su-raj Diamonds
8. Alps Industries
9. FCS Software
10.Shri Lakshmi Cotsyn
11.Suven Pharma
12.IKF technologies
13.Spicejet
14.Shakti Metdor
Cheers!
The current lull in the market and the ongoing correction in the mid-small caps will give rise to buying opportunities in several stocks which can be potential Winners. You could keep them in your watchlist and buy them on dips. Apart from my favorites CYBERMATE INFOTEK and JAYASWAL NECO, here are some more names which can be potential multibaggers in the long run:
1. Jay Ushin Ltd.
2. Jay Bharat Maruti Ltd.
3. South Asian Petrochem Ltd.
4. Aurobindo Pharma.
5. Unichem Labs
6. Agro Dutch
7. Su-raj Diamonds
8. Alps Industries
9. FCS Software
10.Shri Lakshmi Cotsyn
11.Suven Pharma
12.IKF technologies
13.Spicejet
14.Shakti Metdor
Cheers!
Thursday, January 10, 2008
How to cope with the current market mayhem
Hi friends,
I am inundated with your queries! But before I start answering them individually, I thought I would write a general note on what you people might be going through with the current sudden downward move of the overall market. First advice to you is : DO NOT PANIC!
The times we live in demand from us that we should be able to think on our feet and take quick decisions. But the decisions we take must be well considered and should not be impulsive. DO NOT ACT IN PANIC. There has been a great run in the small and midcap universe in the last one month or so without a break. So it is but natural that profit booking has to come in at some point. And in raging bull market like ours, corrections will always be swift and sudden.
Look at the bright side of these corrections. These corrections show you which are the stocks which are showing strength even when the market sentiment turns weak. They separate the wheat from the chaff. I would say that this is a good time for you to get out of weak stocks which were running purely on momentum and get into strong stocks which are backed by solid fundamentals. For example, if you were holding junk stocks with no EPS figures to talk about, then sell them and enter LOW PE stocks like Cybermate Infotek, Jayaswal Neco etc. in the small cap section, Aurobindo Pharma in the large caps, Unichem Labs in the midcaps. These are only a few examples of stocks you can buy in the current overall market weakness, there can be many more such stocks out there which will turn out to be big winners in the medium to long term.
I hope you get my drift.
I am inundated with your queries! But before I start answering them individually, I thought I would write a general note on what you people might be going through with the current sudden downward move of the overall market. First advice to you is : DO NOT PANIC!
The times we live in demand from us that we should be able to think on our feet and take quick decisions. But the decisions we take must be well considered and should not be impulsive. DO NOT ACT IN PANIC. There has been a great run in the small and midcap universe in the last one month or so without a break. So it is but natural that profit booking has to come in at some point. And in raging bull market like ours, corrections will always be swift and sudden.
Look at the bright side of these corrections. These corrections show you which are the stocks which are showing strength even when the market sentiment turns weak. They separate the wheat from the chaff. I would say that this is a good time for you to get out of weak stocks which were running purely on momentum and get into strong stocks which are backed by solid fundamentals. For example, if you were holding junk stocks with no EPS figures to talk about, then sell them and enter LOW PE stocks like Cybermate Infotek, Jayaswal Neco etc. in the small cap section, Aurobindo Pharma in the large caps, Unichem Labs in the midcaps. These are only a few examples of stocks you can buy in the current overall market weakness, there can be many more such stocks out there which will turn out to be big winners in the medium to long term.
I hope you get my drift.
Wednesday, January 2, 2008
Guest Tips Here
Hi friends,
As I've always believed in the power of team-work and collective wisdom, I'm introducing this thread which is open to all the visitors to this site. I have always tried to incorporate good suggestions into my site. So all of you are welcome to post your latest stock tips here and discuss them amongst you.
To just give a few pointers to those of you who are new in the stock markets, here are a few factors which make stocks go up. A stock may go up if one or more of the following factors hold true for it:
1) If it is fundamentally sound and posting good profits consistently and if it has a low PE as compared to its peers.
2) If it is technically on the verge of an upward breakout or is in a confirmed uptrend. Learn to read the technical charts to be able to predict price movements effectively.
3) If there is some Corporate Action coming up in a stock like a bonus or a stock split or a merger/demerger, for example.
4) If the stock is in news and if some big operators/fund houses/brokerages have taken position in it.
5) A combination of all the above factors will make a stock simply irresistible and then one should not hesitate to go ahead and buy.
Happy blogging and Cheers!
PS: A link for posting tips for guests was provided earlier also (see the link GUEST STOCK TIPS on the right side of the main page), but very few people are using it. Some of the tips posted there by guests have also risen very sharply over the last few months. Instead of scattering your tips all over this site, it is much better to centralize all guest stock tips at one place for more convenience.
As I've always believed in the power of team-work and collective wisdom, I'm introducing this thread which is open to all the visitors to this site. I have always tried to incorporate good suggestions into my site. So all of you are welcome to post your latest stock tips here and discuss them amongst you.
To just give a few pointers to those of you who are new in the stock markets, here are a few factors which make stocks go up. A stock may go up if one or more of the following factors hold true for it:
1) If it is fundamentally sound and posting good profits consistently and if it has a low PE as compared to its peers.
2) If it is technically on the verge of an upward breakout or is in a confirmed uptrend. Learn to read the technical charts to be able to predict price movements effectively.
3) If there is some Corporate Action coming up in a stock like a bonus or a stock split or a merger/demerger, for example.
4) If the stock is in news and if some big operators/fund houses/brokerages have taken position in it.
5) A combination of all the above factors will make a stock simply irresistible and then one should not hesitate to go ahead and buy.
Happy blogging and Cheers!
PS: A link for posting tips for guests was provided earlier also (see the link GUEST STOCK TIPS on the right side of the main page), but very few people are using it. Some of the tips posted there by guests have also risen very sharply over the last few months. Instead of scattering your tips all over this site, it is much better to centralize all guest stock tips at one place for more convenience.
Tuesday, January 1, 2008
Happy New Year
Wish all of you a very Happy & Prosperous New Year. While the star sector of 2007 was the Power & Energy sector. The sectors which I think will perform well in 2008 will be IT, Telecom, Pharma, Agri and select Metals & Mining along with select Energy stocks. The markets are likely to go higher before they go down. We might see a tearing bull rally in January. Corrections may come either around the end of January or around the end of April. But an end of the year target of 25000 on the Sensex is what I expect from this year. While the indices may give moderate returns, there will be plenty of action in the mid and small caps in the coming year.
Hope everyone prospers in this New Year.
Cheers!
Hope everyone prospers in this New Year.
Cheers!
Subscribe to:
Posts (Atom)
