Thursday, February 11, 2016

Sensex sinks 800 pts

 Nifty breaks 7000; PSU Bankex down 3% European stocks traded sharply lower today, dragged down by a sell-off in banking and mining stocks, investors digest comments made by US Federal Reserve chair Janet Yellen and what that means for the timetable for interest rate hikes.

Wednesday, February 10, 2016

The bad times continue for Indian markets this year, with Nifty trading at 20-month lows.

Sensex at 20-Month Low But Experts Make Case For Buying Stocks
The bad times continue for Indian markets this year, with Nifty trading at 20-month lows. A global selloff in equities and continued weakness in corporate earnings have been blamed for the slide in domestic stock markets this year.

Experts have not ruled out weakness in markets ahead of the budget, which will be presented on February 29.

How should investors position themselves amid heightened volatility? Sanjay Sinha, founder of Citrus Advisors and former CEO of L&T Mutual Fund, says "it makes sense to position on the bullish side of the market."

Mr Sinha has strong hopes from the budget. "This budget is very significant for the NDA government. On the execution front, the government has made good progress," he said.

"But there is one big pain point in the economy - the banking sector. The government has been proactive with power sector reforms (Uday) and Indradhanush programmes (capital infusion plans). But a little more radical action needs to be taken at this point of time."

"If that is done, the budget could turn out to be a watershed event and if the budget is very positive on the policy front, it could be a trigger for the market," he added.

"If you are very focused on the very short term, given the trade-off between what will happen next week and what will happen after budget, it makes sense to position on the bullish side of the market," Mr Sinha said.

My Sinha does not see a significant correction in Indian stock markets from current levels. "It makes practical sense to accumulate stocks rather than stand on the sidelines," he said.

Technical analysts have also made a case for buying at current levels. According to Anil Manghnani of Modern Shares and Stock Broker, the Nifty has solid support at 7,120, which represents the 50 per cent retracement of the rise that started from 5,119 in August 2013 to 9,119 in March 2015.

Mr Manghnani says that 7,120 is the level from which he would be interested in buying, even if markets head lower.


Tuesday, February 9, 2016

Sensex can slip to 22K

Sensex can slip to 22K, FY16 GDP sliced to 6.8%: Ambit Cap China's slowing economy will take a heavy toll on the Indian economy with high chances of Sensex sliding to 22,000 by year-end, warns Ambit Capital's Saurabh Mukherjea. 

The Indian economy hasn't yet touched its bottom levels, believes Saurabh Mukherjea, chief executive officer, Institutional Equities, Ambit Capital. Ambit has recently cut India's growth forecast from 7 percent to 6.8 percent. In an interview to CNBC-TV18, Mukherjea says India is currently facing a double whammy in the form of weakness in the home territory and uncertainity on China's yuan devaluation and the US Federal Reserve's hiking of interest rates. The weak demand in Indian real estate makes for the trouble the Indian economy may face internally. With extremely low sales, realty is crumbling and it will have massive repercussions.   By this calendar year, realty will see many downgrades. While the companies have started cutting prices in order to boost sales, the banking sector will face the brunt of it in terms of bad assets Hence, Mukherjea advises not taking any speculative bets in the banking space and has lowered the last year-end Sensex target to 28,000 from 33,000. But lower levels of 22,000, he adds, are not inconceivable. "With a high likelihood of the Chinese central bank embarking on a continued  devaluation of the yuan, the Indian stock market stands exposed to: (a) Indian products losing their competitiveness to their Chinese counterparts; and (b)  rising risks to India’s USD 0.5 trillion of foreign currency debt. Such a scenario could be a catalyst for more pullbacks in the Sensex with the trailing P/E multiple likely to drop to 14x (as seen in the Lehman crises), implying a Sensex level of 22,000," states the report. Below is the verbatim transcript of Saurabh Mukherjea's interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18. Latha: Ambit has reduced its gross domestic product (GDP) growth target as well as its yearend that is FY16 end Sensex target from 32,000 to 28,000. Can you take us through your argument first? A: It's a logic that we are highlighting in note. We have two different sets of adverse dynamics at play now. We have got the Chinese economy which is moving in a very divergent direction from the US economy and leaving aside the specifics of when America might hike and when China might devalue the yuan. That is a divergent movement in the two major global economies usually spells bad news for emerging markets. So, that's one big dynamic that we are drawing our clients' attention to. The second aspect back home, closer home. There are several negative dynamics have played, not least a crumbling real estate market alongside and feeble banking system and consistent difficult on the government's part to get reform moving in the parliament. So the combination as a result of us taking a very circumspect view on the domestic investment cycle, domestic capex cycle, we are cutting our GDP growth there from 7 percent for the year end to 6.8 percent largely driven by our very despondent view on the domestic investment cycle, capex cycle and that in turn translates into a more moderated view on the Sensex. So, we are cutting from 32,000 at the yearend to 28,000 whilst highlighting that there is a reasonably high chance, high possibility of the Sensex going down to 22,000. Sonia: What is your advice to your client at this point? Is it to sit on cash for a while until the market stabilises or is there a good buying opportunity at this point itself? A: We have been consistently been able to help our clients make money in the Indian market by focusing on good and clean construct. There are few variants that we see such as the ten baggers portfolio that comes out every January and the good and clean portfolio which comes out every quarter. If I look at the good and clean outperformance over the last three months, it has been quite remarkable. The good and clean portfolio has beaten the index by 440 bps and largely because we are trying to be reasonably underweight cyclical and we are entirely avoiding speculative plays on the industrial cycle, on the investment cycle and our point of view to the client is focus on well run companies, market leading franchise, strong cash flows, strong balance sheets and if you do that you will have a reasonably good experience of what looks to be a difficult year ahead for the Indian economy and for the Indian market but I do not think there is any scope to do as has speculative bets on either banks or the industrial sector or construction or real estate. One has to be very careful about stock selection; what is it decidedly difficult market. Latha: When the real estate market starts selling in bulk as we believe some papers are saying, is not that a sign of troughing out. Is this possibly one of the worst quarters and would second half begin to see green shoots? A: My reckoning is that next calendar year we will see much sharper downward movements in real estate prices which will result in more volumes in the real estate market. Currently in top ten cities, residential real estate transaction volumes are probably at the lowest for a decade. There is hardly any movement in residential real estate transaction volume at the moment. The price cuts are beginning to happen that will accelerate next year and that will result in better movements in volumes. The problem is that the banking sector will be at the receiving end of those pricing cut. As per Reserve Bank of India (RBI) data, 15 percent of system loans are in the real estate sector and that is the next big sector. The banks will have to reckon with in terms of loan loss issues there. As it is credit off tick is barely 8-9 percent and there is a good chance that that will even slowdown further next year which spells up in the macro side. So yes, we are hopefully moving towards the climax of the economy and the real estate sector troughing out but I do not think they have reach the bottom of economic growth curve yet, we will see few more bleak quarters on GDP growth, on the investment cycle and that is what we are highlighting to the clients. Wait for the drop. There is a good chance that the drop is coming on us both in terms of GDP growth and the stock market and that drop will turn much more emphatically positive on buying into the Indian market. So for now 'good and clean' remains very much the Ambit philosophy of not investing in India. Sonia: Coming to the good and clean companies. In your top high quality buys you have names like Lupin, IndusInd Bank, Bata India, Power Grid Corporation. Do you see further value in these stocks despite the fact that many of them have run up a whole lot? A: The note that we are discussing here, there are ten market leading franchises and distinguishing factors all of these market leading franchises is strong financial statements, good governance. So Power Grid , Coal India   , Lupin   and HCL Technologies   , Bata , PI Industries   , Union Bank of India   , IndusInd Bank   , these sorts of names very much passes the muster for us. If one is to invest in this sort of economy, in those sort of market. I think that's the degree of quality we would want in these stocks. However, what we are trying to avoid is any sort of speculative investment, trying to fish for the bottom or hoping for a sudden recovery in the market. So, the philosophy is to look for a market leader like Coal India or Power Grid almost quasi monopoly type businesses and in the shoe sector but Bata is a similar play. In all of this we are avoiding macro risk; we are not taking big calls on macroeconomic pick up. We are focusing on buying high quality names with reasonable valuations. Latha: Every hypothesis has its falsification caveats. What might falsify your call? A: If we see an unexpected pickup in Chinese economy - that will make the American and the Chinese economies move in sync and a lot of the global risk that we are seeing could get mitigated. At the moment our thinking remains that the Fed will hike at some stage in calendar 2015, don't know whether in September but it certainly looks to be in some stage in calendar 2015 given the strength in the American economy and China looks to be the inverse of that but if those two economies move in sync then a lot of the problems are mitigated and back home if we see decisive government action, my reckoning is goods and services tax (GST) should see the light of the day sometime soon. There is probably a potential for a rate cut at least bond rate cut from the RBI Governor in the next three-four months. But on the long side we see a decisive upmove in the economic cycle that too could give investors much more hope for good room for bullishness than we currently see.

Sunday, March 25, 2007

Investment Groups in U.S.A

DEFTA Inc U.S.A. Independent Venture Capital,Private Equity

Gilbert Global Equity Capital Asia Ltd U.S.A. Independent Venture Capital,Private Equity

The Camden Group U.S.A. Securities House

New China Management Corp. U.S.A. Independent Venture Capital,Private Equity

PacRim Venture Partners U.S.A. Independent Venture Capital,Private Equity

Softbank Technology Ventures U.S.A. VC Firm
Sycamore Venture U.S.A. VC/ Private Equity