WINNING STROKE: THINK DIFFERENT:

[See Updates on Punj Lloyd Ltd]

As per expectation, India's headline inflation rate, based on the Wholesale Price Index, is expected to come at 8.45% for the week ended 15th November, lower than 8.90% recorded last week.

The inflation has shrunk faster than all of us expected. We can expect the inflation rate go down below 7.5% by the end of calendar year 2008. A fuel price cut, which is expected after state elections, will bring down inflation significantly. RBI is expected to achieve its target inflation rate of 7% for FY09 comfortably as commodity prices have declined significantly; in the last few months. RBI is expected to take monetary easing actions aggressively ahead, to boost the demand in the Indian economy.

Buy the stocks of Infrastrucure Companies/Sector, which will get the maximum benefits in future; as the government is expected to come up with huge infrastrucutre projects to boost the economy.

Indian Government should now go for Negotiation with the Terrorist...I do not understand why the government is risking the lives of people inside the buildings (hostages), and not going discussion with the terrorists??!! All the ministers of this bogus government should resign now...... and president rule should be imposed in India, immediately. An enquiry should be initiated very fast, to find out if any Minister or any MP is involved in this recent Foreign Terrorist attack in Mumbai (Bombay) or not........This raises strong questions as to how can such large cache of arms enter in India in Broad daylight without the ACTIVE help from the top officials of the government in Power??!! It is the policy of appeasement of certain groups, in the name of Vote Bank, by some political outfits, which is hitting all of us so badly.....or have hit us so badly ealier.

Two points which needs to be highlighted here are:

• The headline inflation rate was 3.35% in the year ago period.
• The all commodities index is seen falling 0.30% in the week to Nov 15 to 234.30 from 235.00 a week ago.

Fantastic GDP growth numbers which came out today, are expected to push the markets higher in the days to come. GDP Growth numbers are not expected to cool below 7% in the next few quarters, due to lot of positive factors waiting on the anvil--to be a little Candid Government will not allow it to fall too much before the elections.

Now the business channels, especially CNBC TV18, is trying to send distorted news that the GDP growth will be dot on 7%, which is not correct, if the statements of the Finance Minister, Mr.P Chidambaram are to be believed. Mr.Chidambaram said, "Indian GDP Growth will be around 7%--8% in FY09 and probably give a bounce to around 9%, in FY10".

These media channels have really become nuisance these days--it is time that the government takes some serious measures to clip their wings, a bit.....

Some more positives for the Today's market other are sent to the PAID GROUPS:

ECONOMY: The government is working on a proposal to subsidise housing loans below Rs 10 lakh by asking banks to give loans to individuals and builders at a lower interest rate for five years. Builders will get this loan only for housing projects that are under construction.

PUNJ LLOYD Ltd has emerged as lowest bidder for construction of Sikkim's first civil airport. One can buy the stock today at Rs.135.5, for a short term target of Rs.150, in the next few days/weeks. Keep a SL of Rs.132, if you doing intra-day.

Punj Lloyd Ltd has entered into an agreement with Citycom Networks Pvt Ltd (Citycom) for sale of:

a) Certain assets of ISP Division of the Company and certain assets of its wholly owned subsidiary Spectra Punjab Ltd.

b) 73.74% shares held by Company (including shares held through wholly owned subsidiary Atna Investment Ltd) in Spectra Net Ltd.

Further Company has entered into an agreement to sell with Citycom for sale of its ISP Division (which include all assets, Liabilities, Contract and licenses etc.). The completion of this transaction awaits regulatory approvals, however, the risks and rewards and operational control of ISP Division has been transferred to Citycom.

Punj Lloyd Ltd came out with Fantastic set of numbers for the September, 2008 quarters, when both its total income and net profits took a quantum jump. The total income of the company for Q2FY09, came out to be Rs.1583.9 Cr as against Rs.1054.62 Cr in the same period previous year.

The Net Profit of the company (Punj Lloyd Ltd) for the September, 2008, came out to be a whooping at Rs.88.05 Cr as against Rs.31.4 Cr in the same period previous year. The EPS of the company for Q2FY09 almost TRIPLED to Rs.2.90 as aginst Rs.1.09 in Q2FY08.

The stock of Punj Lloyd could be heading towards Rs.200, mark in the next few weeks/months.

RURAL ELECTRIFICATION: Asian Development Bank approved loan of up to $225 mln to company for financing transmission and distribution network in the country. The stock could react positively today.

Why FIIs will have to come to India??!!

[Excerpts of what sent earlier to the Paid Groups]

It is now a fact that due to the withdrawal of FII funds, out markets moved southward, in a massive way.

The correlation between FII inflows and the movement of the Sensex is clear crystal. The Rs.2,22,139 crore (around $ 51 billion) that flowed in since 2003 to 2007 propelled the Sensex from around 4,000 levels in 2003 to more than 20,000 in January 2008. The outflows of around Rs.52,612 crore ($ 11.22 billion) since January 2008 have resulted in the Sensex sinking to dismal levels, not seen in the last few couple of years.

Secondly, if we look at the inflows of FIIs into Indian equity markets, it is really a lot of money. It is just $7 billion short of the $58 billion worth of toxic mortgage-backed securities that triggered Lehman downfall.

No doubt, we are still growing, but if the foreign investor is bidding farewell to India it has got more to do with the stress in their financial system than any other fundamental issue. They are fleeing from not only India but from other emerging markets also.

There is a complete aversion towards risk among institutional investors in the US and the UK. The reason is, when they find uncertainty in their home markets, it is their tendency to sell assets in emerging markets to cover risks. According to EPFR Global, (a firm that collates asset allocation data) foreign investors have withdrawn $29.5 billion from emerging stocks and bonds over the past three months.

There are certain other reasons too. If money is flowing back home, it is also because quite simply stocks are getting cheaper there. In addition, the currency gains no longer hold out for the FIIs, as the INR has depreciated from Rs.39.40 in January to Rs.50 per dollar. This means the FIIs now take lesser dollars home. In addition, some of SEBI’s moves to put restrictions on Participatory Notes made the situation more difficult. So a combination of all these factors is behind the FIIs’ “Quit India Movement”.

Now, the moot question is: Will they come back in better times? If we look logically then the answer should be Yes and only Yes.

Whether their comeback happens in a couple of months or in a span of 3-4 quarters is just a matter of conjecture. There are certain reasons the FIIs should come back.

First, unlike developed countries which are facing recession, Indian economy is still growing, albeit not by a whopping 9 per cent, but by at a decent 6.5 per cent. What this suggests is that despite a slowdown in Asian region, our GDP growth will be several notches above the developed economies. Last fortnight, a global report by Morgan Stanley predicted that 100 per cent growth in world GDP will come from emerging markets in 2009.

Then again the question that arises is: why only India, why not China, Brazil or Russia?

The reasons are simple, while China has export-oriented growth and with the US slowdown, the sustainability of Chinese growth is quite questionable. Brazil is a commodity play and with commodities losing sheen, there seems to be no respite for Brazil. Russia is oil-based play and with crude hardly sustaining above $ 55 per barrel level and the slowdown in demand further expected to bring down the oil price, Russia is also facing problem. In contrast, Indian economy is driven by domestic demand and hence India seems to be a better play.

Another reason for the cheer, is the recently relaxed norms for the FII investments where SEBI has opted to do away with the 70:30 ratio of FII investments in equity and debt, respectively. This could give overseas investors more flexibility in taking investment decisions depending on the market situation.

This move, along with the lifting of the curbs on PNs, is expected to lead to more inflows in the long term. Yes, it is true that uncertainty will prevail till the conclusion of the forthcoming general elections, but one should note that whichever government comes to power, it will be pro-reform.

Also, amidst the dark clouds, there are a few silver linings too. Recently, Norway’s $350-billion sovereign wealth fund announced plans to invest $2 billion in India by the end of this year. This is just one example, and once the larger ones enter, others will also follow. So let’s hope for the best.

Coming back to the markets, the volatility will remain for some more time. After several consecutive bad days, we may see a pullback rally in the week ahead. But question which always haunts average investors is the sustainability of that rally.

This kind of volatility is not helping even the seasoned traders....However, I expect the volatility to come down shortly.Cheers!!

See you.....