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Wednesday, April 11, 2012

Games played by the Media
I think today most of  you saw the condition of European and US markets. How can the scenario change suddenly within 24 hours? Yes this is the magic of media or/and www. If a fool comes and says, sell Voltas Ltd the audience on the other side will think he should exit the scrip. Today, one such came and said to exit Voltas Ltd, when there are talks of interest rate cut in the next RBI meet, the commodity prices are falling (due to a slowdown a China) and there is better order inflow in the company. Really Strange, isn't it? Moreover, their profitability is linked to investments in the power and other related sectors which off late has been doing well. So, sell for what?
Now coming to the Q3FY12, this is what a brokerage house writes:  The company reported net loss of Rs.1.15 bn after considering Rs.2.8 bn cost over-run on Sidra Medical & Research Centre (Qatar) (valued at Rs.10 bn) (net of tax - the impact is lower at Rs.1.9 bn). The project is 53% complete and is expected to be fully complete by Q1FY13E. Voltas has provided all incurred and expected cost over-runs on the entire project in Q3FY12 itself, however, any further rise in expected costs is likely to negatively impact profitability of ensuing quarters. Also, recognition of claims on above escalations is likely to happen only on acceptance of the same by the customer and near to the completion of the contract. We continue to like Voltas on back of:
(1) net-cash surplus status;
(2) strong balance sheet-relative to peer-set;
(3) improved order book and revenue visibility (post Q3FY12) until FY13E;
(4) high probability of upsides in UCP business from pick-up in demand;
(5) completion of low margin orders (Sidar and Rohini Industrial Electrical) over the next 2 quarters-to result in cleaner start to FY13E;
(6) strong 32% earnings growth in FY13E on favourable base effect. 
We retain our FY13E earnings estimates of Rs.8.7 per share. We reiterate Voltas Ltd as our preferred pick in the ECG sector." 
Now, I do not understand why the analysts consider previous quarter results so sacred while recommending a counter---these are dead data and we need to look forward. Isn't it? Moreover, most of them are tuned according to the market conditions, which means if the market is down show not so good results and vice-versa--most them are accounting gimmicks. When a well known analyst says its target should be Rs.150 and a reputed brokerage house gives a target of Rs.145, this fellow comes from nowhere with poor understanding of the sector/company and gives a sell call on a television channel leading to exit of some of the long term investors out of panic. But I think the markets did not believe him and stock did not break the strong support zone of Rs.115-116. Yes, once we stop believing these fools and morons, the channels would probably stop bringing these so-called analysts who have no accountability, but whose motives are to make money for their own clients at the cost of the investors on the other side of the TV screen/s.
This is what is going on off late: use media to manipulate scrips and the markets. One of my fellow bloggers wrote yesterday, about an analyst friend of mine, who comes to the television channel and recommends a scrip at Rs.55--the scrip rises to Rs.62 only to fall again to Rs.55 when the analyst departs. What is going on in Indian Television Channels in the name of Stock Market games---yes the real games are being played at the cost of hapless investors, which needs to be stopped immediately.
The US markets were falling for no reasons since the last few days, as the media was highlighting only the negative news. These days, the stock markets world wide is more or less, a "Software Exercise". As soon as the Stochastic Turns over-bought, the media swings into action with negative news and vice-versa. A good way to keep the TRPs intact.
The analysts in India and especially the ones in the US are peculiar. When they want to move the markets up, they say, "US is doing reasonably well and the Europe is recovering from the blues and Germany has swung back" and when they want to short Dow, they would say, "Dr.Bernanke is apprehensive of the US growth prospects in Future and there is possibly that Europe is under mild recession and even the Spain is having hick-ups".  These are all synchronized games folks, which I got so used to in more than a decade of my presence in the markets.
Sometimes big-heads like Mr.Stephen Roach (He is a senior executive with Morgan Stanley, the New York-based investment bank) are rolled in some business channels, to give more strength to such lose talks. They would come and probably speak the same hackneyed things, or which everyone knows. But probably, it is because Mr.Roach speaking, so some people might think, whatever he says has to be correct, including punctuation marks. 
And these people know how to use media to the hilt to make money at the expense of you and me.....!! 
Today, in a business channel, Mr. Sudip Bondopadhyay (Banerjee) said, "You know Spain is the 4th largest economy in Europe, it is not Greece and if anything is wrong with it, we might have to suffer".  Well, what is the new in the statement, except killing time? Now what is the tag line which provoked these kinds of puerile statements, "Spanish 10-year yields up to nearly 6 per cent". So, if the bond  yields rise by only 6%, then one economy has to go for toss!! Huh!! Really we have some amusing Television Analyst in India, who proliferate channels these days. Can we recollect what was the bond yields in case of Greece, when the last installment of aid came? What is the ECB for, if they cannot help in such situations?
I wrote yesterday, in this blog: Crude Oil Crashes while Gold rises: Benchmark 10-year US Treasury yields falls below 2% for the first time in over four weeks on Tuesday; German bond yields  comes lower than Japanese yields for the first time since January 1988, according to a Merrill Lynch report. Moreover, India has nothing much to do, with what happens in one two distressed countries in Europe!! We have seen how we performed even in one of the worst conditions, the present situation is much better.....These newspaper reports are just for public consumption and we need to read between the lines.......
As I knew that a section of the US and European media will highlight only the bad conditions and make people like Stephen Roach, say all the unpleasant things over the television. This is the game being played all over the world to manipulate both the main and the Wall Street. If you have noticed when Mr. Roach, spoke, the anchors, listened with rapt attention, as if some high voltage operation is going on somewhere near the camera. Aha!! He said, "You know there is inflation concerns in India and there is a yawning CAD, so I do not think RBI would cut interest rates"--oh come on Mr.Stephen, can you say something new/different, before we get bored with you and switch off the television channels??!! Mr.Roach some simple questions to you, from a person who is in the markets since the last 16-17 years: Does the CAD improve if the crude oil cools down? Did you check the price of Crude when you were making these statements? Will the CAD improve if the recent steps taken by the government regarding GOLD imports are being implemented? Did you read the Finance Bill Mr.Roach? Will the CAD improve, if the FIIs are made to pay some tax (read Capital Gains), on their investments (unless these "thugs" who open shell companies in "Tax Heavens" to make merry with Indian Tax Rules, escape from India fearing persecution) in India? Will CAD improve if government gives export incentives? So, next time when you come to Indian Television, please see that you touch upon the above mentioned points or you do your homework properly, before cutting a sorry figure in front of simple persons like me....Also, when did you last smile in front of Indian cameras? Say Cheese, please!!
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