I have been writing after a long time… Good to write after intermittent timeframe then on a regular basis without any significant updates. :-)
I wanted to write about my Diwali vacations in my home town, my learning from this visit and how Ireland’s economy debacle is quite similar to a potential brewing problem within India. Strange, but true… read this further.
I was spending a full week in the town almost after 3 years so got an opportunity and lots of free time to meet many friends, relatives, everyone… My hometown is famous for all tasty Indian snacks and everyone there gives a nice treat to someone who is in the town. They won’t take you to any tourist place/ museum/ historical places etc. but to typical Indian food bazaars/ food-malls during such visits. But this time a different experience was waiting for me.
Everyone I met there, and with no exception, has not talked about me/my well being as much as they talked about the hot property in and around the city. They have talked about how the rates have gone up in last 3 years, which are the hot places to visit. In fact, it was to this extent that I made visits to at least 3 such ‘hot property’ destinations in the city which have already gone up by 4-5 times in last 3 years, and some cases more than that, and still people were talking about more appreciations for such locations. It was not limited to this extent but when I was using public transport to commute/ while I was at a paan-shop, I found that people there also were talking about property/ land/ flat etc… This was craziness…
The city is a trading place and has two main industrial belts near the city where all the leading companies are present. It is also fast emerging as an education hub with the presence of IIT, IIM and hundreds of colleges which are offering engineering and management qualification to anyone who is willing to grab that. The result is a big boom in the services associated with such market. The people are very industries and have captured this education market opportunity with open hands and now the city has many hostels (from 5-start facilities to road side place)/restaurants/ food-mess etc running in and around the city.
When I met people in the city, I found that they are busy in acquiring plots, vacant land, houses, flats everything more than they need or they have the capacity to hold or buy. The problem is huge appreciation in prices and people’s expectations for further crazy appreciation in a city which is limited to education hub and 2 industrial belts.
But is this the story confined to my home town only? Is it not prevalent across the India – almost the same story only the situations are marginally changed here & there. You visit anywhere in the country, a small city to a metro, it is the same. I have taken the example of my home town since I wanted to write about the craziness for property in India for sometime but wanted to avoid getting myself biased. After visiting my home town, I have got this confirmation that we are now brewing the problem.
It gives me a jittery feeling, especially when I read that the problems in Ireland (a small European country which is heading for bankruptcy) is due to such property bubble. We have seen earlier how US has got entangled with sub prime. We are also hearing the same property bubble getting built up in China. When I quote such examples, people have easy way of telling me that US was different, India is different and Indian market is more demand driven and not investor driven, the banks are not landing easy money to people etc. But if that’s not the case then how come people are acquiring so fast and so easily esp. more than what they need? If it bursts then what will happen? US is saved because they can afford such mistakes, possibly Ireland can afford with the help of European Union but who will come for our rescue? The answer is simple… no one. I see this as a potential problem but many may differ. My heart says that it should not lead to a problem but my mind disagrees. Let’s see who wins. Till then goodbye.
As always you are most welcome to share your thoughts/opinions/criticism/praise etc…:-)
The discussion and analysis include: stocks, equity market, economy, international markets, gold-silver, real estate, currency movement, crude, anything…
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Thursday, November 18, 2010
Wednesday, July 7, 2010
How to analyze the fundamentals of a company (with 3 sample case studies)
Cases: MIC, Prakash Industries and Asahi India Glass with a comment on overall market direction
Hi,
I have analyzed all the three companies from long term perspective with an objective to understand the inherent strength in the financial positions of these companies. I have not looked at the business prospects and any relevant news items or future plans/industry outlook while analyzing these stocks. These factors may also affect investment decision. However, having said this, the primary factor is margin of safety and if the Principal is protected then only one should be comfortable.
I have also pasted my views from a recently written article on the overall market direction.
Trust this is of help. Please feel free to share your views.
Happy investing...
===========MIC Electronics===========
It's presently trading at 40 levels. The 52 wk high and low of this stock are Rs 60 and 30 respectively. It's somewhere in between.
The PE is 6.45 and Dividend yield is 1.03%. The face value is Rs 2. The debt is Rs 69Cr compared to equity + reserves of Rs 329Cr which is a good sign. The working capital /Current Assets: Current Liabilities position is very comfortable.
In last 6 years, though there was a variation in the revenue growth rate, the revenue has been increasing and there was not a single drop. Also the net profit has been showing a similar trend (except in one year where it was marginally lower than the previous year). These two factors are very positive about this company. The company has been paying dividend and in last 3 years has paid 20% dividend. The book value is Rs 29.
The promoters’ holding is 32.59% and has come down marginally from 32.63% earlier. This is not a significant number but if it's a trend then it could be an area of concern. This may require a further analysis. The public is holding 53.49%. The Return on Invested Capital (ROIC) has been impressive and always been in double digit. The cash flow situation for FY09 was negative due to investment activities undertaken by the company.
This company is on my radar and I would recommend this company near its book value i.e. Rs 28-30 levels. So wait and watch.
===========Prakash Industries===========
It's trading near 177 and has seen a year high and low of Rs 243.95 and 99.50. The current PE is 8.24. The dividend yield is zero.
The revenue is Rs 1566Cr and profit is Rs 266Cr. The profits and revenue are not showing any consistency and there were drops in between. The debt burden is not significantly high and working capital position is also comfortable. The book value is Rs 74. The company has never paid any dividends and I am not comfortable with this at all.
Last but not the least; the promoters’ holding is at 51.79% compared to 54.28 a year ago. This is a significant drop and not at all comfortable.
I would not recommend this stock.
===========Asahi India Glass===========
It's trading at 72 level. It is trading near its year high of Rs 79.25 (52 wk low is Rs 42.70).
The working capital position is good and comfortable. But it has very high debt of Rs 1617.30 cr compared with equity + reserve base of Rs 201.98 Cr. The company has incurred a loss of Rs 40 cr in FY09 on revenue of Rs 1300 cr. However, the company has turned in green with a profit of Rs 1.23 cr on a revenue of Rs 1287 cr. The book value till FY09 was Rs 12.63. The company was paying dividend till 2 years ago and paid a dividend of 65, 65, 250 & 225%. The current dividend of last two years is 0 and the face value is Rs 1.
The promoters’ holding is 55.21% which is increased by .02% in last 12 months (not a very significant number). Considering all these factors, I would not like to put my money in this stock. The price is appreciated and does not offer margin of safety. I am not comfortable.
===========Overall market outlook===========
I have recently written a article on this subject where I looked at 3 parameters of the BSE Sensex - the Current PE Ratio, Price to Book Value and Dividend Yield %. The present P:E Ratio is 19.96, Price to Book Value is 3.56 and Dividend Yield is 1.15%. These parameters definitely do not indicate that the market is the normal zone. But these parameters are also not indicating excessively overheated situation; however, it’s close to that. It other words markets are almost fully priced. If market goes down then it would simply offer an attractive investment opportunity.
You may like to read the complete article: http://dharmawat.blogspot.com/2010/06/is-sensex-heading-for-moon-give-me-tips.html
===========IMPORTANT DISCLAIMER===========
Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective. The information contained herein is based on analysis and up on sources that I consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.
======================================
Happy investing...
Cheers,
Niteen S Dharmawat
Hi,
I have analyzed all the three companies from long term perspective with an objective to understand the inherent strength in the financial positions of these companies. I have not looked at the business prospects and any relevant news items or future plans/industry outlook while analyzing these stocks. These factors may also affect investment decision. However, having said this, the primary factor is margin of safety and if the Principal is protected then only one should be comfortable.
I have also pasted my views from a recently written article on the overall market direction.
Trust this is of help. Please feel free to share your views.
Happy investing...
===========MIC Electronics===========
It's presently trading at 40 levels. The 52 wk high and low of this stock are Rs 60 and 30 respectively. It's somewhere in between.
The PE is 6.45 and Dividend yield is 1.03%. The face value is Rs 2. The debt is Rs 69Cr compared to equity + reserves of Rs 329Cr which is a good sign. The working capital /Current Assets: Current Liabilities position is very comfortable.
In last 6 years, though there was a variation in the revenue growth rate, the revenue has been increasing and there was not a single drop. Also the net profit has been showing a similar trend (except in one year where it was marginally lower than the previous year). These two factors are very positive about this company. The company has been paying dividend and in last 3 years has paid 20% dividend. The book value is Rs 29.
The promoters’ holding is 32.59% and has come down marginally from 32.63% earlier. This is not a significant number but if it's a trend then it could be an area of concern. This may require a further analysis. The public is holding 53.49%. The Return on Invested Capital (ROIC) has been impressive and always been in double digit. The cash flow situation for FY09 was negative due to investment activities undertaken by the company.
This company is on my radar and I would recommend this company near its book value i.e. Rs 28-30 levels. So wait and watch.
===========Prakash Industries===========
It's trading near 177 and has seen a year high and low of Rs 243.95 and 99.50. The current PE is 8.24. The dividend yield is zero.
The revenue is Rs 1566Cr and profit is Rs 266Cr. The profits and revenue are not showing any consistency and there were drops in between. The debt burden is not significantly high and working capital position is also comfortable. The book value is Rs 74. The company has never paid any dividends and I am not comfortable with this at all.
Last but not the least; the promoters’ holding is at 51.79% compared to 54.28 a year ago. This is a significant drop and not at all comfortable.
I would not recommend this stock.
===========Asahi India Glass===========
It's trading at 72 level. It is trading near its year high of Rs 79.25 (52 wk low is Rs 42.70).
The working capital position is good and comfortable. But it has very high debt of Rs 1617.30 cr compared with equity + reserve base of Rs 201.98 Cr. The company has incurred a loss of Rs 40 cr in FY09 on revenue of Rs 1300 cr. However, the company has turned in green with a profit of Rs 1.23 cr on a revenue of Rs 1287 cr. The book value till FY09 was Rs 12.63. The company was paying dividend till 2 years ago and paid a dividend of 65, 65, 250 & 225%. The current dividend of last two years is 0 and the face value is Rs 1.
The promoters’ holding is 55.21% which is increased by .02% in last 12 months (not a very significant number). Considering all these factors, I would not like to put my money in this stock. The price is appreciated and does not offer margin of safety. I am not comfortable.
===========Overall market outlook===========
I have recently written a article on this subject where I looked at 3 parameters of the BSE Sensex - the Current PE Ratio, Price to Book Value and Dividend Yield %. The present P:E Ratio is 19.96, Price to Book Value is 3.56 and Dividend Yield is 1.15%. These parameters definitely do not indicate that the market is the normal zone. But these parameters are also not indicating excessively overheated situation; however, it’s close to that. It other words markets are almost fully priced. If market goes down then it would simply offer an attractive investment opportunity.
You may like to read the complete article: http://dharmawat.blogspot.com/2010/06/is-sensex-heading-for-moon-give-me-tips.html
===========IMPORTANT DISCLAIMER===========
Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective. The information contained herein is based on analysis and up on sources that I consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.
======================================
Happy investing...
Cheers,
Niteen S Dharmawat
Wednesday, June 23, 2010
Is Sensex heading for moon & give me tips…
I hate to answer this question. But this is the most often (2nd) asked question to me. Will the Sensex move up further?
My answer to this is whether Sensex goes up or down; one should invest all the times with a long term horizon of at least 5 years. One should not try to time the market rather one should analyze the stocks, identify margin of safety in the stocks and put in the money. If margin of safety is built in the stock then even if market goes down with a prolonged downward journey then also it will not impact the investment. It’s bound to bounce back and you would naturally be earning dividend incomes.
However, after saying this much also I still get the same question asked again. So this time I decided to analyze the market to answer if it’s fully valued, overvalued or undervalued.
I looked at 3 parameters of the BSE Sensex - the Current PE Ratio, Price to Book Value and Dividend Yield %. The present P:E Ratio is 19.96, Price to Book Value is 3.56 and Dividend Yield is 1.15%. These parameters definitely do not indicate that the market is the normal zone. But these parameters are also not indicating excessively overheated situation; however, it’s close to that. It other words markets are almost fully priced. If market goes down then it would simply offer an attractive investment opportunity.
The market has a tendency to be extremely euphoric at times and fearful at other. Because of this not even Brahma can predict where the market will be heading in next 6 months (forget about tomorrow). However, one can definitely & safely predict, including me, that the market will go up in next 5 years’ period. So if we can identify stocks which are undervalued then that’s the best way to protect our investment even if the market takes a prolong downturn journey.
This leads to the most often (1st) asked question to me. What are those stocks where I can put my money?
I hate even more to answer this question. Because it means asking for tips and tips take you to pits. Howsoever I hate this; I have to still answer this question. Which are the stocks in which I should invest my money in?
The answer is to understand the inherent value of the company and then take investment decisions. How to identify the inherent/intrinsic value? I have recently taken up two sessions on this topic where we discussed more than 10 parameters to qualify an investment opportunity. These are the same set of parameters described by masters, Benjamin Graham and Phil Fisher, in their books. These parameters cover various aspects of the company including strength in the balance sheet, governance, future growth prospects, profits and losses, and margin of safety and help you protect your investment in all the times. These parameters are simplified version of investment analysis where analyzing these parameters does not require one to be a rocket scientist but just a 5th grader with an understanding of internet & highly disciplined approach. The data is also available in the public domain free of cost and it does not require more than 2 hours a week to analyze the stocks. So why to ask for tips, make your tips now available to others.
Happy investing.
Share your thoughts.
Cheers,
Niteen S Dharmawat
http://dharmawat.blogspot.com/
IMPORTANT DISCLAIMER: Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective. The information contained herein is based on analysis and up on sources that I consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.
My answer to this is whether Sensex goes up or down; one should invest all the times with a long term horizon of at least 5 years. One should not try to time the market rather one should analyze the stocks, identify margin of safety in the stocks and put in the money. If margin of safety is built in the stock then even if market goes down with a prolonged downward journey then also it will not impact the investment. It’s bound to bounce back and you would naturally be earning dividend incomes.
However, after saying this much also I still get the same question asked again. So this time I decided to analyze the market to answer if it’s fully valued, overvalued or undervalued.
I looked at 3 parameters of the BSE Sensex - the Current PE Ratio, Price to Book Value and Dividend Yield %. The present P:E Ratio is 19.96, Price to Book Value is 3.56 and Dividend Yield is 1.15%. These parameters definitely do not indicate that the market is the normal zone. But these parameters are also not indicating excessively overheated situation; however, it’s close to that. It other words markets are almost fully priced. If market goes down then it would simply offer an attractive investment opportunity.
The market has a tendency to be extremely euphoric at times and fearful at other. Because of this not even Brahma can predict where the market will be heading in next 6 months (forget about tomorrow). However, one can definitely & safely predict, including me, that the market will go up in next 5 years’ period. So if we can identify stocks which are undervalued then that’s the best way to protect our investment even if the market takes a prolong downturn journey.
This leads to the most often (1st) asked question to me. What are those stocks where I can put my money?
I hate even more to answer this question. Because it means asking for tips and tips take you to pits. Howsoever I hate this; I have to still answer this question. Which are the stocks in which I should invest my money in?
The answer is to understand the inherent value of the company and then take investment decisions. How to identify the inherent/intrinsic value? I have recently taken up two sessions on this topic where we discussed more than 10 parameters to qualify an investment opportunity. These are the same set of parameters described by masters, Benjamin Graham and Phil Fisher, in their books. These parameters cover various aspects of the company including strength in the balance sheet, governance, future growth prospects, profits and losses, and margin of safety and help you protect your investment in all the times. These parameters are simplified version of investment analysis where analyzing these parameters does not require one to be a rocket scientist but just a 5th grader with an understanding of internet & highly disciplined approach. The data is also available in the public domain free of cost and it does not require more than 2 hours a week to analyze the stocks. So why to ask for tips, make your tips now available to others.
Happy investing.
Share your thoughts.
Cheers,
Niteen S Dharmawat
http://dharmawat.blogspot.com/
IMPORTANT DISCLAIMER: Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective. The information contained herein is based on analysis and up on sources that I consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.
Investment in stock market… without losing sleep, happiness and money…
Swami Vivekanand while defining Poison said excessive of everything is poisonous. This rule is equally applicable to the stock market.
The investment in stocks in based on the principle of fear and greed. The common-man always finds him at the center-stage of this pendulum. He is either too fearful to selloff everything at loss or too greedy to keep everything near his chest and suddenly finds himself in an uncomfortable situation.
I have been myself an investor for more than 14 years in stocks. I have seen all the types of days and have my share of mistakes where I have lost and earned good amount of money. I have even traded on the floor of the stock market in those old days when the computer based trading system was unheard of.
First of all let’s understand the difference between investment and speculation. Investment is made for specified time duration with very clear objectives after careful analysis of the stocks. On the other hand speculation is based on the whims and fancies of the individuals and sometimes based on the advice of the so called gurus of the stock market.
I am sorry to say but almost 90% of the common investors fall in the second category. They had never been smart enough to do the analysis of those stocks in which they are putting their money. They loose the money faster then they loose their pants. We have witnessed three very prominent scandals in last 15 years. These are named as Harshad Mehta, CR Bhansali and Ketan Parkeh scandals. In all these three scandals it was only the common man who burnt his fingers because of his excessive fear and greed.
When we buy vegetable we tend to bargain with that poor vegetable vendor for a sum as small as Rs 2 but when it comes to stocks we forget everything. Why? It’s nothing but an example of excessive greed and the same is equally true when we are to sell the stocks in the market.
So how should we protect our interest in the market? First of all never invest for shorter duration and always invest in the quality stocks when they are offering attractive valuations. What does an attractive valuation mean? It simply means that we will not invest in a stock or industry which is much hyped and already seen a rally. Like in IT stocks in year 2000-01 or in Retail and Real Estate before the crash of 2008 started.
If I have invested in the stocks after making all the relevant analysis based on the study of the books of the company I will not sell just because the stock has seen a short term loss.
If someone bought 100 shares of a company in 1992’s IPO at an investment of Rs 9500 today it’s worth in crores. You may like to know the name of the company. It’s Infosys but how many of the common investors have been able to locate this? Alas I do not know a single of them… But I know many of them who have invested in penny stocks and lost their pants.
So friends have lots of patience, less of greed and fear and smart understanding to get the best out of stock market.
Happy investing….
Please feel free to share your views/thoughts...
Cheers,
Niteen S Dharmawat
The investment in stocks in based on the principle of fear and greed. The common-man always finds him at the center-stage of this pendulum. He is either too fearful to selloff everything at loss or too greedy to keep everything near his chest and suddenly finds himself in an uncomfortable situation.
I have been myself an investor for more than 14 years in stocks. I have seen all the types of days and have my share of mistakes where I have lost and earned good amount of money. I have even traded on the floor of the stock market in those old days when the computer based trading system was unheard of.
First of all let’s understand the difference between investment and speculation. Investment is made for specified time duration with very clear objectives after careful analysis of the stocks. On the other hand speculation is based on the whims and fancies of the individuals and sometimes based on the advice of the so called gurus of the stock market.
I am sorry to say but almost 90% of the common investors fall in the second category. They had never been smart enough to do the analysis of those stocks in which they are putting their money. They loose the money faster then they loose their pants. We have witnessed three very prominent scandals in last 15 years. These are named as Harshad Mehta, CR Bhansali and Ketan Parkeh scandals. In all these three scandals it was only the common man who burnt his fingers because of his excessive fear and greed.
When we buy vegetable we tend to bargain with that poor vegetable vendor for a sum as small as Rs 2 but when it comes to stocks we forget everything. Why? It’s nothing but an example of excessive greed and the same is equally true when we are to sell the stocks in the market.
So how should we protect our interest in the market? First of all never invest for shorter duration and always invest in the quality stocks when they are offering attractive valuations. What does an attractive valuation mean? It simply means that we will not invest in a stock or industry which is much hyped and already seen a rally. Like in IT stocks in year 2000-01 or in Retail and Real Estate before the crash of 2008 started.
If I have invested in the stocks after making all the relevant analysis based on the study of the books of the company I will not sell just because the stock has seen a short term loss.
If someone bought 100 shares of a company in 1992’s IPO at an investment of Rs 9500 today it’s worth in crores. You may like to know the name of the company. It’s Infosys but how many of the common investors have been able to locate this? Alas I do not know a single of them… But I know many of them who have invested in penny stocks and lost their pants.
So friends have lots of patience, less of greed and fear and smart understanding to get the best out of stock market.
Happy investing….
Please feel free to share your views/thoughts...
Cheers,
Niteen S Dharmawat
Tuesday, October 20, 2009
Dollar-Rupee (and crude) equation - new posting
Hi,
I was not active on my blog for a long time, due to some personal and professional reasons. However, I was, with my best abilities, replying to all the mails/calls I was receiving on stocks/economy/market.
One such conversation that was going on with Mr. Patel (name changed to protect the identity). This was started on July 28, 09 (actually it had a link with my earlier postings on gold, silver and rupee etc. but the latest conversation which is posted below was started in July 28, 2009).
I am reproducing this conversation for the benefit of everyone. Here, I was talking about the equation of Dollar-Rupee and crude. How it is going to change the direction of dollar which I had been anticipating for a long time.
Hope you will enjoy and get benefitted from thsi. As always, please keep sharing your views.
Happy investing.
Cheers,
Niteen S Dharmawat
http://dharmawat.blogspot.com/
IMPORTANT DISCLAIMER: Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective. The information contained herein is based on analysis and up on sources that I consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.
=================================================
Reply |Niteen S Dharmawat to Mr. Patel
Oct 20, 2009 10:33 AM (1 hour ago)
The equation of dollar and rupee is clear where some variables come into the play. The equation is dictated by a simple rule of economics taught in the very first year to MBAs and to anyone pursuing studies in economics. The rule is of demand v/s supply. Whenever we have an excess demand compared to supply the price gets appreciated and vice-a-versa. Here in dollar's case the dollar was printed in excess by the US government to support economy in general and various bailout packages in particular. But this excess supply of the dollar was initially consumed by the high price of crude. So we had a demand for the dollar to buy the crude oil.
But eventually crude came down to the levels of 30-40's and is now stabilizing around 70. The short time spurt in the crude helped in controlling the downward journey of dollar (who knows this might have been a conspiracy of the US government to help dollar, I wrote an article on this subject on my blog a long time ago).
But now dollar is again meeting the same fate and sliding as anticipated. So what will happen now? The price of crude is going to be deciding factor. Whatever one may say (about import/export), ultimately the crude bill is the largest import payment for any government (except oil exporting nations). So this will lead to a demand of dollar to buy crude at an astronomical prices. It is definitely going to happen else dollar may leave in peace forever and we may see some alternative currency emerging and ruling the world (though some people are talking about it but I see a very very bleak possibility of that). Dollar will find it's bottom again to consume all/most of the excess liquid available in the market thru' high crude price.
p.s.: I could not update my blog as yet. May be some the replies to/conversations with you may become a part of the blog now. :-)
Cheers,
Niteen S Dharmawat
http://dharmawat.blogspot.com/
IMPORTANT DISCLAIMER: Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective. The information contained herein is based on analysis and up on sources that I consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.
=================================================
Reply |Mr. Patel to Niteen S Dharmawat
Oct 20 8:45 AM (3 hours ago)
So, Niteen, are you saying that we are going to see the Rupee strengthen with the $ tumbling against Rupee? $ has been tumbling for a while against many currencies here, and if it also does the same against the Rupee then the exports from India to US will become more expensive. This is good for US, but not good for Indian companies. Are you saying that this will happen due to the GDP growth of India, the demand for the Rupee and the FII investments into India?
You blog is still not updated.....Must be busy!
Mr. Patel
=================================================
Reply Niteen S Dharmawat to |Mr. Patel
Oct 15
Just thought to drop this mail to you... the dollar downward journey is start...
Niteen S Dharmawat
http://dharmawat.blogspot.com/
IMPORTANT DISCLAIMER: Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective. The information contained herein is based on analysis and up on sources that I consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.
=================================================
Reply |Mr. Patel to Niteen S Dharmawat
Aug 31
Thanks Niteen.
I got your earlier reply also, but was wondering why you have not updated the blog.....Now I know.
Appreciate it much.
Mr. Patel
=================================================
Reply from Niteen S Dharmawat to Mr. Patel
Aug 31
Hi,
Due to some personal reasons I was really busy all these months... and may continue for next few months. So was unable to update my blog.
But I replied to you mail on Dollar-Rupee & investment in gold on July 28. I am not sure if you have received the same. I am pasting the same below FYI. Trust this helps.
Let me know if you have any more questions.
-------------------------------------------------------
Dollar is stabilizing at these levels of 48-49 but it has a high risk of slipping up to 45. The union government is not allowing this to happen due to obvious reasons of risk of job losses (export earning will come under enormous pressure as returns from export will be less attractive which will put pressure on bottomline of many export oriented companies including IT companies). But still it has a high risk to slip up to 45. The interest rates may get hardened after couple of months in India. Many have already written about the reason which is primarily high government spending and debt.
Gold and Silver is always good hedge and should be kept at 10% of the portfolio. Both should be bought from levels which are 10-20% lower from current levels.
Happy investing.
-------------------------------------------------------
Cheers,
Niteen S Dharmawat
http://dharmawat.blogspot.com/
IMPORTANT DISCLAIMER: Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective. The information contained herein is based on analysis and up on sources that I consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.
=================================================
from Mr. Patel
Aug 25, 2009
No updates on your Blog page.....You must be busy.
What do you think about Gold and $?
Thanks.
Mr. Patel
I was not active on my blog for a long time, due to some personal and professional reasons. However, I was, with my best abilities, replying to all the mails/calls I was receiving on stocks/economy/market.
One such conversation that was going on with Mr. Patel (name changed to protect the identity). This was started on July 28, 09 (actually it had a link with my earlier postings on gold, silver and rupee etc. but the latest conversation which is posted below was started in July 28, 2009).
I am reproducing this conversation for the benefit of everyone. Here, I was talking about the equation of Dollar-Rupee and crude. How it is going to change the direction of dollar which I had been anticipating for a long time.
Hope you will enjoy and get benefitted from thsi. As always, please keep sharing your views.
Happy investing.
Cheers,
Niteen S Dharmawat
http://dharmawat.blogspot.com/
IMPORTANT DISCLAIMER: Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective. The information contained herein is based on analysis and up on sources that I consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.
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Reply |Niteen S Dharmawat to Mr. Patel
Oct 20, 2009 10:33 AM (1 hour ago)
The equation of dollar and rupee is clear where some variables come into the play. The equation is dictated by a simple rule of economics taught in the very first year to MBAs and to anyone pursuing studies in economics. The rule is of demand v/s supply. Whenever we have an excess demand compared to supply the price gets appreciated and vice-a-versa. Here in dollar's case the dollar was printed in excess by the US government to support economy in general and various bailout packages in particular. But this excess supply of the dollar was initially consumed by the high price of crude. So we had a demand for the dollar to buy the crude oil.
But eventually crude came down to the levels of 30-40's and is now stabilizing around 70. The short time spurt in the crude helped in controlling the downward journey of dollar (who knows this might have been a conspiracy of the US government to help dollar, I wrote an article on this subject on my blog a long time ago).
But now dollar is again meeting the same fate and sliding as anticipated. So what will happen now? The price of crude is going to be deciding factor. Whatever one may say (about import/export), ultimately the crude bill is the largest import payment for any government (except oil exporting nations). So this will lead to a demand of dollar to buy crude at an astronomical prices. It is definitely going to happen else dollar may leave in peace forever and we may see some alternative currency emerging and ruling the world (though some people are talking about it but I see a very very bleak possibility of that). Dollar will find it's bottom again to consume all/most of the excess liquid available in the market thru' high crude price.
p.s.: I could not update my blog as yet. May be some the replies to/conversations with you may become a part of the blog now. :-)
Cheers,
Niteen S Dharmawat
http://dharmawat.blogspot.com/
IMPORTANT DISCLAIMER: Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective. The information contained herein is based on analysis and up on sources that I consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.
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Reply |Mr. Patel to Niteen S Dharmawat
Oct 20 8:45 AM (3 hours ago)
So, Niteen, are you saying that we are going to see the Rupee strengthen with the $ tumbling against Rupee? $ has been tumbling for a while against many currencies here, and if it also does the same against the Rupee then the exports from India to US will become more expensive. This is good for US, but not good for Indian companies. Are you saying that this will happen due to the GDP growth of India, the demand for the Rupee and the FII investments into India?
You blog is still not updated.....Must be busy!
Mr. Patel
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Reply Niteen S Dharmawat to |Mr. Patel
Oct 15
Just thought to drop this mail to you... the dollar downward journey is start...
Niteen S Dharmawat
http://dharmawat.blogspot.com/
IMPORTANT DISCLAIMER: Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective. The information contained herein is based on analysis and up on sources that I consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.
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Reply |Mr. Patel to Niteen S Dharmawat
Aug 31
Thanks Niteen.
I got your earlier reply also, but was wondering why you have not updated the blog.....Now I know.
Appreciate it much.
Mr. Patel
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Reply from Niteen S Dharmawat to Mr. Patel
Aug 31
Hi,
Due to some personal reasons I was really busy all these months... and may continue for next few months. So was unable to update my blog.
But I replied to you mail on Dollar-Rupee & investment in gold on July 28. I am not sure if you have received the same. I am pasting the same below FYI. Trust this helps.
Let me know if you have any more questions.
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Dollar is stabilizing at these levels of 48-49 but it has a high risk of slipping up to 45. The union government is not allowing this to happen due to obvious reasons of risk of job losses (export earning will come under enormous pressure as returns from export will be less attractive which will put pressure on bottomline of many export oriented companies including IT companies). But still it has a high risk to slip up to 45. The interest rates may get hardened after couple of months in India. Many have already written about the reason which is primarily high government spending and debt.
Gold and Silver is always good hedge and should be kept at 10% of the portfolio. Both should be bought from levels which are 10-20% lower from current levels.
Happy investing.
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Cheers,
Niteen S Dharmawat
http://dharmawat.blogspot.com/
IMPORTANT DISCLAIMER: Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective. The information contained herein is based on analysis and up on sources that I consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.
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from Mr. Patel
Aug 25, 2009
No updates on your Blog page.....You must be busy.
What do you think about Gold and $?
Thanks.
Mr. Patel
Tuesday, May 19, 2009
Re: Spanish flu - The Great Depression of 1929 - Bird flu - Financial turmoil of 2008
I don't know, how many of you would really recall my posting 'Spanish flu - The Great Depression of 1929 - Bird flu - Financial turmoil of 2008' of Oct 16, 2008. I have stated in that article that the world will be out of financial turmoil within 6-9 months. There were people who were skeptical about the thought, but today when we see the world (economic situation world-wide, stock market, commodities etc.) then it appears to be much better in terms of stability than what it was that time. Today people are most optimistic about the turnaround and in fact many 'so called' specialists are stating that the downturn is over.
Now, will this euphoria, created by the shock waves of UPA victory, last for long and what should be the strategy to deal in this time?
If you find that the stocks that you are holding have appreciated by 60% or more in last 3 days then please exit and book profit as you may find them at lower levels one the rationality prevails.
In the coming 6 months time, market may see a level of around 15000-16000. I wound not like to repeat what has already been stated on many business channels, widely published in pink papers or logical about the comfortable situation of the present government. This is very much expected and known. If the government does not take right & quick decisions then it is a problem. The government has already announced the distribution of several soaps earlier and this will haunt them if they do not control the fiscal deficit. So the government will have no option but to go for disinvestment and sale-off all the nonstrategic/loss making entities. Faster and righteous are better, is the mantra.
My next pick will be the stocks from the agriculture sector (including companies in horticulture, floriculture, irrigation, fertilizers, dairy, farming, manufacturers of products used in agriculture etc.). When Mr. Manmohan Singh became the Finance Minister in 1991-92 and had an open hand, he went ahead and opened the world of manufacturing and services sector to globalize our economy. It made our manufacturing and services sector amongst the best in the world. Now he is in the similar situation where he has got an open hand with an amazing numbers, he will make it sure that outdated, loss making, uncompetitive agriculture system takes a complete face lift. Keep a close eye on the agriculture sector; this is the next big thing in India in next 5 years.
Cheers,
Niteen S Dharmawat
http://dharmawat.blogspot.com/
IMPORTANT DISCLAIMER: Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective. The information contained herein is based on analysis and up on sources that we consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.
From: Niteen S Dharmawat
Date: Thu, Oct 16, 2008
Subject: Spanish flu - The Great Depression of 1929 - Bird flu - Financial turmoil of 2008
I would like to quote here one very unusual example which does not have any direct relation with economy/stock market. But still gives a convincing reply to why and how the world will come out of the financial trouble it is facing today.
The example is of Spanish flu which hit the world sometime in 1918. This influenza pandemic spread to nearly every part of the world. It was caused by an unusually severe and deadly Influenza A virus strain of subtype H1N1. Historical and epidemiological data are inadequate to identify the geographic origin of the virus. Many of its victims were healthy young adults, in contrast to most influenza outbreaks which predominantly affect juvenile, elderly, or otherwise weakened patients. The Spanish flu lasted from March 1918 to June 1920, spreading even to the Arctic and remote Pacific islands. It is estimated that anywhere from 20 to 100 million people were killed worldwide, or the approximate equivalent of one third of the population of Europe, more than double the number killed in World War I. So in short it was a very grave situation which took life of 20-100 million people between 1918-20.
We had another unprecedented turmoil that hit the world in 1929. It's better known as The Great Depression. It was a worldwide economic downturn starting in most places in 1929 and ending at different times in the 1930s or early 1940s for different countries. It was the largest and most important economic depression in modern history, and is used in the 21st century as a benchmark in how far the world's economy can fall. The Great Depression originated in the United States; historians most often use as a starting date the stock market crash on October 29, 1929, known as Black Tuesday. The depression had devastating effects both in the developed and developing world. International trade was deeply affected, as were personal incomes, tax revenues, prices, and profits. Cities all around the world were hit hard, especially those dependent on heavy industry. Construction was virtually halted in many countries. Farming and rural areas suffered as crop prices fell by 40 to 60 percent. Facing plummeting demand with few alternate sources of jobs, areas dependent on primary sector industries such as farming, mining and logging suffered the most.
Now, I have a parallel to Spanish flu. Avian influenza, sometimes Avian flu, and commonly Bird flu refers to "influenza caused by viruses adapted to birds." Recent influenza research into the genes of the Spanish Flu virus shows it to have genes adapted to both birds and humans; with more of its genes from birds than less deadly later pandemic strains. Between year 2003 to 2008, 385 cases of Bird flu were reported in the world which took 243 human lives. It is not even 0.001215% of the total human lives lost by Spanish Flu (here I took total 20 Mn casualties and not higher number of 10 Mn by Spanish Flu). This is even more important considering the fact that genetic analysis of the H5N1 virus (bird flu) shows that influenza pandemic from its genetic offspring can easily be far more lethal than the Spanish Flu pandemic.
So why the number of casualties were far less than Spanish flu? The reason is only one. The world is much better connected than it was in 1918. Today the globally connected economy responds and communicates much faster, better and effectively. The coordinated efforts of various governments, health groups, NGOs, WHO etc have helped to successfully face this challenge posed by Bird flu.
In the similar way, the world is in a much better position to face the unprecedented financial situation today than it was in 1929. I believe that the world market is going to come out of this situation within 6-9 months period with the coordinated efforts of all the governments world over. The media is going to blow things out of proportion and a panic like situation is going to get created which will benefit only those who control their nerves.
These were my two pence worth. You may share your thoughts/opinion directly on the blog or write to me at niteen.dharmawat@gmail.com
Cheers,
Niteen S Dharmawat
http://dharmawat.blogspot.com/
IMPORTANT DISCLAIMER: Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective. The information contained herein is based on analysis and up on sources that we consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.
Now, will this euphoria, created by the shock waves of UPA victory, last for long and what should be the strategy to deal in this time?
If you find that the stocks that you are holding have appreciated by 60% or more in last 3 days then please exit and book profit as you may find them at lower levels one the rationality prevails.
In the coming 6 months time, market may see a level of around 15000-16000. I wound not like to repeat what has already been stated on many business channels, widely published in pink papers or logical about the comfortable situation of the present government. This is very much expected and known. If the government does not take right & quick decisions then it is a problem. The government has already announced the distribution of several soaps earlier and this will haunt them if they do not control the fiscal deficit. So the government will have no option but to go for disinvestment and sale-off all the nonstrategic/loss making entities. Faster and righteous are better, is the mantra.
My next pick will be the stocks from the agriculture sector (including companies in horticulture, floriculture, irrigation, fertilizers, dairy, farming, manufacturers of products used in agriculture etc.). When Mr. Manmohan Singh became the Finance Minister in 1991-92 and had an open hand, he went ahead and opened the world of manufacturing and services sector to globalize our economy. It made our manufacturing and services sector amongst the best in the world. Now he is in the similar situation where he has got an open hand with an amazing numbers, he will make it sure that outdated, loss making, uncompetitive agriculture system takes a complete face lift. Keep a close eye on the agriculture sector; this is the next big thing in India in next 5 years.
Cheers,
Niteen S Dharmawat
http://dharmawat.blogspot.com/
IMPORTANT DISCLAIMER: Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective. The information contained herein is based on analysis and up on sources that we consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.
From: Niteen S Dharmawat
Date: Thu, Oct 16, 2008
Subject: Spanish flu - The Great Depression of 1929 - Bird flu - Financial turmoil of 2008
I would like to quote here one very unusual example which does not have any direct relation with economy/stock market. But still gives a convincing reply to why and how the world will come out of the financial trouble it is facing today.
The example is of Spanish flu which hit the world sometime in 1918. This influenza pandemic spread to nearly every part of the world. It was caused by an unusually severe and deadly Influenza A virus strain of subtype H1N1. Historical and epidemiological data are inadequate to identify the geographic origin of the virus. Many of its victims were healthy young adults, in contrast to most influenza outbreaks which predominantly affect juvenile, elderly, or otherwise weakened patients. The Spanish flu lasted from March 1918 to June 1920, spreading even to the Arctic and remote Pacific islands. It is estimated that anywhere from 20 to 100 million people were killed worldwide, or the approximate equivalent of one third of the population of Europe, more than double the number killed in World War I. So in short it was a very grave situation which took life of 20-100 million people between 1918-20.
We had another unprecedented turmoil that hit the world in 1929. It's better known as The Great Depression. It was a worldwide economic downturn starting in most places in 1929 and ending at different times in the 1930s or early 1940s for different countries. It was the largest and most important economic depression in modern history, and is used in the 21st century as a benchmark in how far the world's economy can fall. The Great Depression originated in the United States; historians most often use as a starting date the stock market crash on October 29, 1929, known as Black Tuesday. The depression had devastating effects both in the developed and developing world. International trade was deeply affected, as were personal incomes, tax revenues, prices, and profits. Cities all around the world were hit hard, especially those dependent on heavy industry. Construction was virtually halted in many countries. Farming and rural areas suffered as crop prices fell by 40 to 60 percent. Facing plummeting demand with few alternate sources of jobs, areas dependent on primary sector industries such as farming, mining and logging suffered the most.
Now, I have a parallel to Spanish flu. Avian influenza, sometimes Avian flu, and commonly Bird flu refers to "influenza caused by viruses adapted to birds." Recent influenza research into the genes of the Spanish Flu virus shows it to have genes adapted to both birds and humans; with more of its genes from birds than less deadly later pandemic strains. Between year 2003 to 2008, 385 cases of Bird flu were reported in the world which took 243 human lives. It is not even 0.001215% of the total human lives lost by Spanish Flu (here I took total 20 Mn casualties and not higher number of 10 Mn by Spanish Flu). This is even more important considering the fact that genetic analysis of the H5N1 virus (bird flu) shows that influenza pandemic from its genetic offspring can easily be far more lethal than the Spanish Flu pandemic.
So why the number of casualties were far less than Spanish flu? The reason is only one. The world is much better connected than it was in 1918. Today the globally connected economy responds and communicates much faster, better and effectively. The coordinated efforts of various governments, health groups, NGOs, WHO etc have helped to successfully face this challenge posed by Bird flu.
In the similar way, the world is in a much better position to face the unprecedented financial situation today than it was in 1929. I believe that the world market is going to come out of this situation within 6-9 months period with the coordinated efforts of all the governments world over. The media is going to blow things out of proportion and a panic like situation is going to get created which will benefit only those who control their nerves.
These were my two pence worth. You may share your thoughts/opinion directly on the blog or write to me at niteen.dharmawat@gmail.com
Cheers,
Niteen S Dharmawat
http://dharmawat.blogspot.com/
IMPORTANT DISCLAIMER: Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective. The information contained herein is based on analysis and up on sources that we consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.
Friday, January 30, 2009
Dollar-Gold-Silver: what's lying ahead? - Updates
I wrote a long time ago, a long time because I am writing almost after 3 months and this is really long term for many who invest on a day-to-day or minute to minute basis.
I have written in my last posting on Nov 4, 2008 that Gold and Silver will give very good results in the coming time.Gold was trading near 12300 levels that time and now on MCX, February contract of gold is above Rs 14,400 and has given a cool 68% return. Silver was trading near 17500 and now it's near 19500 and has given an appreciation of 46%.
Regarding inflation, I had mentioned that if the crude does not dance below 80 then we might have problem of Inflation. Since crude is now below $45 on a constant basis we do not have to worry for inflation for next couple of months unless something fundamentally changes.
Happy investing...
Cheers,
Niteen S Dharmawat
http://dharmawat.blogspot.com/
IMPORTANT DISCLAIMER: Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective. The information contained herein is based on analysis and up on sources that I consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.
I have written in my last posting on Nov 4, 2008 that Gold and Silver will give very good results in the coming time.Gold was trading near 12300 levels that time and now on MCX, February contract of gold is above Rs 14,400 and has given a cool 68% return. Silver was trading near 17500 and now it's near 19500 and has given an appreciation of 46%.
Regarding inflation, I had mentioned that if the crude does not dance below 80 then we might have problem of Inflation. Since crude is now below $45 on a constant basis we do not have to worry for inflation for next couple of months unless something fundamentally changes.
Happy investing...
Cheers,
Niteen S Dharmawat
http://dharmawat.blogspot.com/
IMPORTANT DISCLAIMER: Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective. The information contained herein is based on analysis and up on sources that I consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.
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