This UPA has looted the people even in the smallest of things as is evident from number of scams during its term in the past 8 years how can it just keep its corrupt hands off from such a lucrative chance of looting money from oil imports which is a staggering US $ 100 Billion Dollars (Rs.5 Lakhs 50 thousand crores at today’s currency price)?...

Why on earth do the THREE OIL COMPANIES IOC, BPCL, HPCL don’t hedge against currency fluctuations when Oil Company like Reliance do it? Last year the oil companies imported crude to the tune of Rs.4.5 Lakh crores (US $ 100 Billion, considering 1$=Rs.45 which was the price last year) out of which about 80% of the crude is imported by the PSU Oil Companies but they did not hedge against currency risks which is totally baffling. Even small companies in the private sector who do imports or exports business always hedge their currency requirements to control their risks due to wild currency fluctuations and by doing so they are insulated to a great extent from incurring losses in fact if they hedge properly these companies also end up earning crores of rupees in profits. Today we can surely say that the rapid depreciation in the value of the rupee is more to do with dollar buying of the oil companies and not due to the global economic crisis or FIIs pulling out a few billion dollars. Had the three oil companies hedged their positions with regards to crude oil imports the companies and also the people of India would have benefited immensely and the retail oil prices would not have been priced at such high levels....

All sort of down grades, inflation worries and greek worries, But there is a saying in malayalam " ootinu munpee tourch nu purakee" here what will we do. hold or sell?...

around 6%...

Within the space of just 3-4 months, Goldman Sachs has changed their outlook for the Indian economy. This leads one to question (a) whether their economists and research staff are justifying their salaries, (b) whether their outlook is tailored towards the stock market levels. As I see it, the fundamentals of the Indian economy has remained unchanged. I had forecast a Q3 FY12 GDP growth of 6.1% and FY12 growth of 6.6%. This seems to be a reality now. If we are going to exit FY12 with a quarterly growth of around 6 %, I would find it difficult to see how we can do better in FY13. My forecast for FY13 growth is 6%. I would love to be proven wrong....

Post script to my previous post : Can it get more ridiculous ?? Dr. Nair....

Goldman Sachs upgraded Indian stocks to "marketweight" from "underweight" in its latest Asia-Pacific Quarterly Outlook report dated March 22, saying domestic growth will pick up, while stock valuations remain "relatively attractive." Goldman set a March 2013 target of 6,100 for the Nifty index, :http://t.in.com/5oaQ...

GDP will be close to 7%. Greek and other euro problems are over done....

Diesel price untouched is really appreciable one. Otherwise inflation will be skyrocketed to higher positions. But how can one be relieved by reading the word "Diesel price untouched". At any time not only diesel price, but prices of LPG and kerosene might be triggered up. I think the Government is oscillating by considering the pros and cons with respect to its stability. The ultimate more sufferer would be middle class people. The possible remedy is to develop more fuel efficient vehicles. Another needy remedy is to find out alternative for the present conventional fuel. Yes the electric hybrid vehicles will relieve people to some extent. Also green power projects should replace present fuel based power plants. Hence inflation could be minimized....

Yes it is good to accumulate. But what one buys is what matters ultimately....

This was the talk doing the rounds in the market today: the government may offer a quasi-amnesty scheme for people with illegal money abroad, by issuing 10-year rupee-denominated bonds with a low coupon rate (maybe 2-3%). These bonds will be called oil bonds and will be allowed to trade in the secondary market. The ostensible reason for these bonds will be to help the government fund the beleaguered state-owned oil companies through cheap borrowings. At the same time, the move will attract dollars into the country and help the government narrow its burgeoning current account deficit. And since it is not exactly an amnesty scheme, the government can hope to avoid public interest litigations, especially at a time when the judiciary has become pro-active. The advantage for the original owners of these bonds can sell them at a discount, hoping that these bonds would get a discounting similar to 10-year government securities. The discount would roughly work out to the prevailing tax rate in the country, and enable them to convert the rest of the money into white.
What do you think? Should the government consider amnesty for tax evaders at all?
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Well put guest...

After Morgan Stanley and Credit Suisse, it is is Goldman Sach’s turn to join the bandwagon of foreign brokerages lowering their estimates for GDP growth this fiscal.
The only difference is that Goldman appears to be the more conservative of the trio, and expects growth to be above the psychological 6.5% mark.

Excerpts from the Goldman Sachs report authored by Tushar Poddar:

“We are revising our GDP growth forecast for FY13 down to 6.6% from 7.2%. After a sharp pickup in activity in January-February, activity has waned in March-April. Our Current Activity Indicator (CAI), which tracks 15 indicators, suggests that in March, activity has given up some of the gains from the start of the year. While we were circumspect about growth at the start of 2012, and resisted the temptation to be more optimistic on growth with the better-than-expected data in January and February, we have also underestimated the extent of the downturn in March and April activity data. This has been combined with higher food price inflation, policy uncertainty, and contagion from the European periphery. While we were earlier expecting monetary easing to be more substantial and front-loaded, with headline inflation running higher, we now think that path is less likely.”

A couple of days back, C Rangarajan, chairman of Prime Minister’s Economic Advisory Council said that analysts’ estimates were too pessimistic and that growth should be closer to 7%.

What do you think? Will GDP growth for this fiscal be close to 6% or 7%?
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There was some respite for the bulls on Thursday, as shares rallied on what appears to be a mix of bargain buying at lower levels and short covering of positions. Medium term concerns, especially over the falling rupee, widening current account deficit and Greece’s likely exit from the Eurozone, could continue to weigh on sentiment. Valuations are looking attractive, no doubt, but a meaningful upside from these levels still appear some way off. Some patient investors among high networth individuals have started accumulating shares perceived to be quoting below their intrinsic worth.

Saurabh Mukherjea of Ambit on why India is oversold and now is the time to be bullish on Indian equities:

* Sensex trades at a Price/Book value of 2.7 times against 5 year average of 3.3 times. The Sensex was significantly cheaper compared to current levels only in
the year after 9/11 and in the wake of the Lehman crash.

* BSE500 trades at a Price/GDP of 61% against 5 year average of 83%. BSE500 was significantly cheaper only until 2005. Since then, with the exception of the post-Lehman period, the market has never been this cheap relative to underlying national income.

* Sensex trades at a CAPE(cyclically adjusted real P/E) of 15.4 times against 5 year avg of 21.3 times. India has only once traded at lower multiples during post-Lehman months when it hit 12 times.

“Whilst given the scale of the European crisis and given India`s comatose Government, it is easy to be bearish on India, now is almost as good a time as any to buy India. The country will rarely look as attractive on valuations when the world economy perks up and when India`s growth hits its cyclical peak,” Mukherjea says in his report.

What do you think? Is this a good time to start accumulating shares?
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Hi verma, Guess food supplies are already in a mess, and could do without any more populist measures...

Fair point Bengra, but I guess matters have gone beyond a point where window dressing won`t make any difference at all. ...

Many argue that the government should cut duties on petrol to soften the blow of the steep price hike on consumers. So far prices of diesel and LPG--which account for the major share of the subsidy bill--have not been hiked. But industry people say it is just a matter of time: the government has no choice. But it appears doubtful if the government will reduce duties on petrol and diesel as that will dilute its attempts to bridge the fiscal deficit. One, the government will have to forgo revenues through lower taxes, and two, it cannot discourage consumption unless there is a deterrent in the form of high prices. The government’s bigger challenge will be to keep a lid on inflation once fuel prices go up.

What do you think? Should the govt cut duties on retail fuel?

Meanwhile, a note by brokerage house JP Morgan on the impact of petrol price hike on the automobile sector:

“We believe demand for automobiles, which has already been moderating (passenger cars and two-wheelers in particular) will be further affected, given the sharp increase in petrol prices. We believe that any potential increase in diesel prices will affect growth rates for commercial vehicles and SUVs as well.

We believe that the shift towards diesel cars will accelerate further, as the price differential between the two fuels has widened to around 65%. However, this will affect demand for passenger cars (especially at the entry level), given the initial higher capital costs.”
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Shares of state-owned oil and gas companies have been largely unmoved in the last couple of sessions, by announcements on subsidy share and petrol price hike. Ideally, falling crude prices should have triggered a brief rally in shares of state-owned oil marketing companies. But the steep depreciation in the rupee has offset much of the gains that would have accrued from lower crude prices.

An extract from a report by Kotak Securities on why investors are not excited about state-owned oil stocks:

“We view the Government’s subsidy-sharing system as myopic and the treatment of minority shareholders as quite shoddy. The Government will pay Rs 38500 crore as the balance compensation to the downstream companies for FY2012, which may seem generous. However, another Rs 1500 or so would have kept the share of upstream companies of under-recoveries at 38%, similar to FY2011 and 9MFY12 levels. This would have provided some assurance about a method in the madness.”

“Investors have largely given up expecting any favorable resolution of the subsidy problem. A price increase of fuels post the ongoing parliament session (as is hoped by the Street) may provide more comfort on FY2013(Expected) earnings. At the current juncture, we can only hope that the Government manages the subsidy issue such that the net profits of the companies do not decline in FY2013E. We note that the Government had increased the cess on crude oil in March 2012 and thus, a more favorable subsidy-sharing arrangement would be the key to the companies matching or exceeding FY2012E net profits everything else remaining the same.”

What do you think? Will the government be able to resolve the fuel subsidy issue?
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Exactly three years ago, trading was halted for the first time in the history of the Indian stock market, after there were only buyers. The Sensex surged 2100 points as the return of UPA to power with a stronger electoral mandate raised hopes of speedy economic reforms that would help India defy the gloom in the developed world. Three years on, the world is a much different place and India, despite its higher relative growth, is worse off than most other emerging markets. At current levels, the Sensex is barely 11% higher than what it was this day three years ago.
What do you think? Are flawed government policies to be blamed more than the turmoil in the global economy?
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What should an equity investor be doing in this market when it looks as though things can worsen further? Perhaps one can take cues from billionaire investor Rakesh Jhunjhunwala who has been selective buying stocks over the last couple of weeks. He appears to be averaging his cost of acquisition in stocks which he feels are undervalued. Jhunjhunwala has been a buyer in Aptech, Geometric Software and Prime Focus, according to disclosures to the stock exchanges. He may be buying other stocks as well, and perhaps even selling down some others. Equity investors, in general are unable to make up their minds. The good stocks (FMCG, pharma) are not exactly cheap, but the risk-reward ratio is no more attractive. And sectors where stocks are available cheap (infra, cap goods, realty, and to some extent, banking) have some more pain in store for a while. The smartest of investors will admit that nobody can catch the top or bottom of a market. That being the case, an ideal strategy would be to make a list of stocks one always wanted to own, and then systematically keep putting money into it at regular intervals, instead of waiting for a 15,000 Sensex or 4500 Nifty.
What do you think? Is it a good time to start putting money in beaten down sectors like infra and cap goods?
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Loan-against-gold firm Muthoot Finance has reported a strong set of numbers for FY12, with loan book growing 55% to nearly Rs 25,000 crore, revenues almost doubling to Rs 4544 crore and net profit rising 80% to Rs 892 crore. Fourth quarter numbers too appear good on a year-on-year comparison, but the recent tightening of rules for gold finance firms is clearly reflecting in sequential comparison. Quarterly revenues rose 4% sequentially, while net profit fell 6%. The decline in net profit would have been steeper but for a tight control on expenditure. Under the revised RBI rules, loan against gold has been capped at 60% of the value of the jewellery pledged(loan to value or LTV). Also, loans by banks to gold finance companies are no longer eligible for priority sector lending status.
At Tuesday’s closing price of Rs 128.75, the stock is available at a little over five times FY12 earnings. But it is future earnings that the investors are more interested in. And the management’s guidance does not appear too encouraging.
“The operating environment of the company has been substantially redefined on account of the restrictions imposed by Reserve Bank of India in February 2012 on the maximum loan that could be given against the value of the jewels pledged. The company is taking fleet footed steps to sustain growth and profitability in the changing business environment complying with the RBI directives in toto,” M G George Muthoot said in the press release.
Share prices of both Manappuram Finance and Muthoot have been under pressure over the last couple of months, as investors expect margins to be under pressure because of the cap on the loan to value ratio. That is because gold finance firms charge the maximum interest rates when the loan to value is higher, and are known to lend up to 85% of the value of the jewellery. The runaway rise in gold prices seems to have abated for now, and if this trend continues, gold loan companies will feel the pinch. That is because they will have to either shrink their loan book or ask their customers to put up more collateral. The days of juicy margins (around 20% net profit margin) for these companies are long gone, but it will be interesting to see what the market now considers as a new normal for the sector. The current quarter numbers should give some indication about that.
What do you think? Are gold loan companies a good bet at these levels?
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Key indices are flat in morning trade, as concerns over weakening rupee and high inflation loom. Any cheer from easing crude prices has been offset by worries of fresh elections in Greece and a strong possibility that the country may exit the Euro zone. Larsen shares are up 5% to Rs 1219, after the company’s strong fourth quarter numbers (announced yesterday) and better than expected guidance for the current financial year. Goldman Sachs, Nomura and UBS have retained their buy ratings on the stock. Kotak Securities has maintained its add rating on the stock, saying the stock is attractively valued even without factoring the positive guidance. Larsen’s performance has lifted sentiment for the capital goods sector as a whole, with the BSE Capital Goods Index up 2.2%.
What do you think? Are things beginning to look up for the capital goods sector?
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