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This pick was posted on: Friday by MoneyVidya.com member ‘Vicky’. The price of the scrip when this was posted was Rs. 44.5 and the latest price is 49.10 - indicating a gain of over 10%. The timeframe of this pick is 2 years. Vicky has indicated a target price of Rs. 80 and a stop loss of Rs. 20.
Analysis (Verbatim):
I think that as terrorism rises, people are going to become more insecure and paranoid. With the most recent (and ongoing) terror attacks in Mumbai - possibly the worst that India has ever seen - and the relatively poor handling of the same by government agencies / national security forces, people are going to increasingly take security and safety into their own hands.
The other thing that is quite different about these attacks is that they have struck the hearts and minds of the more affluent classes of Mumbai and indeed the rest of India. As a result, I think that Zicom’s ability to sell its security systems, not only to Corporate offices Read the rest of this entry »
While the market has rallied considerably since Diwali, with the Fed cutting rates to 1% and the RBI slashing repo, CRR, and SLR, the Nifty is trading at a PE of 13.76. This is by no means cheap, but considerably below historical PE levels of 17.83.
Monday last week saw the Nifty touching its lowest PE level since Jan 99 at 10.68, with the market closing at 2524. My guess is that ‘around now’ is a great time to invest, but not exactly now. I have a feeling that the 600+ point rally that we’ve seen is just a relief rally, and once participants start profit booking, the over-reaction to the positive measure subside, and as earnings continue to disappoint, we’ll soon be back in the 9000 region. When that happens, make sure you’re ready with your money, and clear on where you want to put it!
The 12-13% Wholesale price index (WPI) inflation in India is usually blamed on two things: higher energy prices and higher crude. If you look at food prices, they’ve only increased by 6.2% this year. Crude has gone up by 16.5% but these prices have not been passed on to consumers as it is being subsidized by government. So where are these 12% plus inflation figures originating from?
The culprit is manufactured goods. Inflation here is running at 10.8% - this despite the fact that industrial growth has slowed. In April, the year on year (yoy) inflation was 6.2%, and in May this fell to 3.8%. This begs the question – why are prices increasing so much if growth is so muted? And if you cannot blame oil or food for rising input costs what can you blame? Read the rest of this entry »
Manmohan Singh prepared a Working Paper for the International Monetary Fund in December 2007, in light of the curbs imposed by the Securities and Exchanges Board of India (SEBI). It clearly explains the history and origins of P-notes and suggested at the time what the impact of the curb may be.
Some history:
Since 1992, when FIIs were allowed to invest in Indian equity markets after the balance of payments crisis, an offshore market for PNs developed as a primary conduit for foreign investors to invest in India.
The origins of such flows stems from the bilateral tax treaty that India has had with Mauritius. The main provision of the 1983 treaty was that no resident of Mauritius would be taxed in India on capital gains arising from the sale of securities in India. The treaty therefore gave capital gains exemption for investments routed via Mauritius. Despite the uniform reduction in capital gains tax arbitrage that existed from the early 1990s through July 2004, it is interesting to note that there has been a rapid growth in the market for PNs in the last three to four years.
In the decade, short term capital gains have been as high as 40% and long term capital gains as high as 20%. However, since July 2004, the tax treatment on short term (security held for less than 1 year) capital gainshave been reduced to 10%, and there are no taxes Read the rest of this entry »
We haven’t heard much (except Bhave telling some investors that SEBI may allow it, read BS article here) about Real Estate Investment Trusts (REITs) since SEBI released the draft guidelines in December last year - but I think that its a very interesting concept and worth a revisit.
Real estate in India has experienced exceptional growth since 2004-05, with some cities even experiencing a more than 50% price rise on a compounded annual basis. While pundits and the common man alike are slightly nervous owing to double digit inflation, rising crude prices, and a stumbling equity market - leading to a cooling of real estate prices in tier 1 cities, residential and commercial real projects in tier 2 and tier 3 cities are holding firm. 8 months have already passed since the equity market crash of January this year, and while many are forecasting a further drop in the markets, others are talking more optimistically about us already having bottomed out, and the interest rate cycle having peaked. This bodes well for the real estate market, and as inflation and interest rates start coming off over the next 6 months (we hope) - this will lead to a resumption of the real estate bull run.
With this backdrop, Indian investors are slated to have access to real estate investment trusts (REITS) as the country is poised to embrace deregulation and further formalization of its booming real estate market.
The move is driven in part by the demand fuelled by domestic players looking to implement ambitious expansion plans. Reits have been introduced in most of Asia’s leading markets (Singapore, HK and Japan) in the last seven years and the introduction of Indian Reits will prevent the profitable Reit business going overseas. Moreover, as property prices in the the US and elsewhere crumble in light of the subprime mess, foreign investors seeking to allocate their capital to real estate will seek to put their funds elsewhere - e.g. developing economies such as India, where although there has been recent turmoil, fundamentals are strong, and this may be a good opportunity to get in at a bargain. Reits would certainly be a mechanism that simplifies investment Read the rest of this entry »
I think that as terrorism rises, people are going to become more insecure and paranoid. With the most recent (and ongoing) terror attacks in Mumbai - possibly the worst that India has ever seen - and the relatively poor handling of the same by government agencies / national security forces, people are going to increasingly take security and safety into their own hands.
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