Hot Pick: Balaji Telefilms

NSE CODE : Balajitele BSE CODE : 532382
Balaji Telefilms is a pioneering television content producing company with a presence across Indian general entertainment channels. The 52 week high for the stock was 223 and 52 week low was 31.15. The stock is currently trading near its lows at only 32 at a PE ratio of less than 4. Historically, media companies such as this have traded between PE bands of 15 to 55. The stock had nose dived after their contract with Star Plus came to an end. But now the company has started two new shows, Kitni Mohabbat Hai and Bandini. The company also plans to launch a horror show next month. The stock presents great value at current price and the future looks to be bright.

Cheers!

Hot Pick: Crew B.O.S. Products Limited

Nse Code: CREWBOS Bse Code: 532873

It's been a while since I updated this site. The markets all over the world are re-testing the lows of Oct, 2008. I think this presents an opportunity for investors to cherry pick and build a long term portfolio. Crew B.O.S Products is a profit making, sound company with a 52 week high of 94.40 and low of 16.65, currently available at a mouth-watering price of just around 18. The nine months EPS of the company already stands at 7.99, which means that at current price the share is available at a PE ratio of less than 2. The Promoters have been increasing their stock holding in the company over the last few months and their latest percentage holding in the company stands at 54.13%. The company is in the business of Fashion & Leather accessories and the future is bright for this company.

Cheers!

Panic bottom signals a trend change?

Lehmann Bros. filed for bankruptcy today and the global markets have tumbled. The Indian markets are no exception. The price of crude is now below $ 100, yet our markets have not rallied. The reason for that is the unusually fast depreciation of the Indian Rupee against the US Dollar. The USD has risen from Rs. 40 to Rs. 46 in just a few months. The rise has been very sharp since the day Derivatives trading in Forex was launched in India. So such a sharp move in the USD-Indian Rupee exchange rate was sort of expected on the back of heavy speculation. The rise of the dollar against the rupee has almost nullified the fall in Crude Oil price.

But such bankruptcies in the US financials can actually be good news for the markets, in the sense that all the bad news is finally getting out in the open. Also consider the fact that the bell weather stock of India, Reliance Industries has finally taken a pounding. During the entire bear market phase of 2008, RIL was the last man standing coz it hadn't fallen much as compared to the mid-caps. It was sort of holding the fort above Rs. 2000 levels. But today it has broken down to a low of Rs.1832. To my mind, this is a sure sign that we are finally close to a trend change and the end of the extended bear phase. RIL will soon form its bottom and then usher in a rally for the Diwali-Christmas season. Most of the midcap stocks may have bottomed out already and it makes sense to go out and buy such beaten down value stocks in bulk. I think we are on track for a rally around Diwali which could last upto Christmas. So keep your shopping list ready.

Cheers!

Are we getting ready for Diwali Fireworks?

The first eight months of 2008 have been quite dismal for stock market investors. But with crude oil coming down to $109 levels there is a ray of hope. As explained in one of my earlier blogs, since the beginning of this year, money flowed from the equity markets to Crude and other select commodities like Gold. It seems that the cycle is now turning in favor of the equity markets. If crude goes below $100, the Nifty will climb above 5000 effortlessly. And if it goes below $80, we can expect to see fireworks! FIIs are coming back into the Indian markets and the rate of inflation is likely to peak out (or has already peaked out) soon.

The IPO market is also seeing a revival with Resurgere Mines & Minerals India Ltd doubling on the first day of listing. Another IPO is being listed today which is AUSTRAL COKE & PROJECTS LIMITED. This is a group company of Gremach Infrastructure Equipments & Projects Ltd and a positive listing of Austral Coke today will have a great positive impact on the share price of Gremach Infra also.

Cheers!

Hot Stock Ideas

Ok. The markets have played out exactly like I had previously opined. Crude Oil has come down to $ 120s again and I reckon it could go lower. That can only mean good news for the Indian Stock Market. The political uncertainty is also out of the way with Manmohan Singh's govt. winning the Trust vote. Mars is leaving Saturn on 10th August. Time to buy.

I have been receiving repeated requests about suggesting some stocks for investment now. Here are a few of my Top Picks:

1. GREMACH INFRA (BSE CODE : 532836) - This stock used to be the darling of the markets just six months ago. Having seen highs of over Rs. 500, this share is now trading at a mere Rs. 88. The diluted EPS for FY 2007-2008 was Rs. 23.74, which means this once highly rated Infrastructure stock is trading at a PE of just 3.7. I will buy this stock.

2. GODAWARI POWER & ISPAT LTD (GPIL) : This stock has come out with a stellar performance in the 1st quarter, despite the slowdown in the rest of the market. It posted a diluted EPS of Rs. 13.09 in the June qtr. With an expected annualized EPS of Rs. 55, and cmp of just Rs. 204, this super stock is trading at a PE of a mere 3.7. I will buy this stock.

3. CREW BOS : This stock has a one year high of Rs. 163, and currently available at a throw away price of just Rs. 33. Having posted a diluted EPS of Rs. 2.4, with an annualized EPS of Rs. 10, this stock is trading at a PE of a mere 3.3. I will buy this stock.

Cheers !

Analyze this!

India's economic miracle is certainly not over, it's just started. The complete turnaround in the Stock Market from the euphoria of 21000 to the present gloom of 13000 is the handiwork of a newly bred species called Hedge Funds. These people move fast. Quick money is their mantra. The Futures market is their play area. If I was a Hedge Fund Manager with unlimited resources at my command (resources include huge amounts of money, control over the print and electronic media, financial analysts and politicians across the globe on my pay-roll etc.), this is what I would have done.

Starting at the start of Financial Year 2007-2008, first I would have pumped in money in the emerging stock markets, with a view of cashing out within six-nine months. So after creating a frenzy for stocks in Nov-Dec, 2007 and building up a Crescendo, I cash out at the peak in early January, 2008. But since markets don't fall on their own, I have to orchestrate a fall. I do that by shorting the Nifty in huge quantities. The other smaller players have no choice but to follow suit. It's like playing poker......have you ever played poker? :) The guy with the most chips pretty much decides what happens at the table. Ok, back to the market. So now that I've shorted the Nifty, how do I convince other people to sell their stocks too, so that I can make profits on my shorts? I start circulating pessimistic stories in the media about an ensuing recession. But since just two-three months ago, my people had circulated bullish stories in the media......how do I now do a volte-face? So, my propaganda has to be backed by some change in the fundamentals. And how do I change the fundamentals of any economy? I fiddle with the price of oil, which is the most important factor in any country's economy, specially the emerging markets. So, having made my money in the stock markets, I now start pulling out all my money from there and start buying Crude Oil Futures. So, as I push Crude Oil prices up by my relentless buying, the rising prices of oil play havoc with the economies of most countries and their stock markets come crashing down!

So this was what happened until now. What happens next? Surely, from a price of just $55 two and a half years ago to almost touching $150 now, the actual demand for oil has not tripled in this short span of time. The prices went up due to huge Speculation in the Futures market. So, when prices reach unrealistic levels, they become unsustainable. To my mind, that point would be reached somewhere around $171 levels and and the price of Crude would then crash back to around $110-115 levels. Correspondingly, a surge in the stock markets will then be seen. I think this turning point would be reached some time before the end of July, 2008, which is this month itself or latest by August. So, my guess is that from August onwards, the stock markets would again start going up.

I am actually praying for an early election. An early election would mean that the politicians who have amassed huge wealth in the last four years of power will open their purse strings and start to SPEND. All political parties will start to SPEND their money for electioneering, which will generate lot of employment and business across the country.

Contrary to popular belief that the fall of the UPA Govt. will bring instability and uncertainty, my reading is that a fall of the govt. will actually END the instability and uncertainty which is currently prevailing in the country and specially the stock markets.

Cheers!

Will JK Lakshmi Cement be a takeover target?

As I said in my earlier post, that it is unlikely that I'd have the time to blog regularly or answer individual queries. The stock markets have been trending down since the start of this year and have been pretty depressing on the whole. As some of you know I have other interests like Astrology, Films etc. and have been pursuing those interests. Was in Bangkok couple of weeks ago to attend the IIFA Awards. Watch out for Akshay Kumar's dare-devil act in the show, in the television telecast on Star Plus on the 29th of June.

Coming back to the markets, u may recall that I had named the IT and Pharma sectors as the Outperformers of the market this year, at the start of the year itself. That call has come true. You may also recall my call given on Kohinoor Foods last year when it was trading below Rs. 50 levels. At that time, that stock was available at low single digit PEs. Even during the market crash, Kohinoor Foods was trading at Rs. 120 levels in March, 2008. Today there is news in the papers that Kohinoor Foods has become a hostile take-over target. A Bombay based company Temptation Foods along with Consortium consisting of names such as Morgan Stanley, DSP Merril Lynch among others have acquired nearly 30% of the shares of the company during the last six-seven months. Even after the total market collapse, Kohinoor is trading around Rs. 100 today......a good 100% gain over the price when I gave my buy call on it, in less than a year.

A similar fate may await JK LAKSHMI CEMENT LTD. I feel at PE levels of a mere 2.3 at current price of 89 odd, JK LAKSHMI CEMENT LTD. may become an attractive take-over target for bigger players in the cement sector. The Promoters themselves have increased their stake from 41.52% last year to 45.60% on 31st March, 2008 taking advantage of the weakness in the stock price. I suspect the Promoter share may have gone further up since then. If there is one sector in this beaten down market which deserves a buy currently, then to my mind, it is the Cement sector. My Best picks in this sector are ACC, Ambuja and ofcourse, JK Lakshmi Cement.

About my current market outlook, I feel that the price of Crude Oil is the most important factor in deciding where the markets are headed from here. Then ofcourse, there is the ensuing general elections in the country. I think the price of Crude may go as high as $171 per barrel in the next couple of months before settling down to $115-$120 levels in the medium term.

You may also recall that I had given an explicit Sell call on over-hyped and over-heated stocks like JP Associates, GMR Infra , Punj Lloyd etc. much before the others. Look at how much they've fallen in the last six months. Even the Real Estate stocks have fallen nearly 50% from their highs, and to my mind, they are likely to fall further. While there has been a downward correction to the tune of 50% in the price of Real Estate stocks, Real estate prices on the ground themselves are yet to fall by that percentage. People thinking of buying a residential/commercial property should wait for the next six months to get them at much cheaper prices.

Investors like me would accumulate JK Lakshmi Cement in the current market weakness.

Cheers!