WINNING STROKES: THINK DIFFERENT:

I have earlier talked of a level of 6500 on the Sensex as the worst case scenario, considering a P/E of around 6 (six) while comparing it to the Great Depression in early 20th Century.

My recent reasoning is also based on the fact that many banks today have a shockingly large exposure to leveraged derivatives such as futures, options and even more exotic instruments.

The most dangerous part is that underlying value of assets represented by such financial derivatives at quite a few big banks is greater than the total value of all their deposits. The estimated representative value of all derivatives in the world today is around $90 trillion, over half of which is held by U.S. banks...speculating in leveraged derivatives poses one of the greatest risks to banks that have succumbed to the lure. Leverage almost always causes massive losses eventually because of the psychological stress that owning them induces.

THE QUESTION REMAINS WHETHER ALL THESE FACTORS ARE ALREADY BUILT IN THE CURRENT VALUE OF SENSEX OR NOT!!!

It is because the Stock Markets world-wide discount such happenings well in advance. Those who are investing since a decade should have noted that in the last bear phase of 2000--2003, the Sensex started to move up, the day US attacked the Iraq. Moreover, the Indian Banking industry is pretty safe due to Strict Regulations. Hence India is more or less miles apart from any such catastrophe.

Therefore, the moot question is: Is it so easy to reach that level of 6500 in the Present Circumstances, even though the chances/possibilities, look a little remote (80:20)?? These are to be discussed with the Paid Groups in the Sunday Report.

So what should an average investor do with his/her portfolio at present.....Sell out all the stocks for better valuations ahead or keep holding the scrip in the Portfolio or Average out select counters or go for bottom fishing or.............???

Another thing which has come to my notice, that the media is ripe with rumours that I have turned a bear from a "raging bull" and is up to make a killing by shorting.

Actually even the clients of my PMS do not know what I do with my Individual Portfolio for the Short Term. Like Rakesh Bhai I maintain utmost secrecy in all my account. To make things a bit complex I also do not trade with a Single Brokerage House. Hence at a given point of time no one (including my assistants and family members) never know what scrips I am holding or what is the correct size of my portfolio. Hence I would urge you not to give ears to what the general speculation is there in the markets about my portfolio. Just one thing which I want to point out is that: I have made a killing within a couple of years of any major Crash of the markets. I had earlier mentioned in this blog a number of times that I purchased Alphageo Ltd at Rs.5 (five) in 2003-04, only to sell some of the shares at Rs.350 in 2006 and the remaining in 2007. Similarly, I purchased Aban Llloyd Ltd at Rs.145 during the Iraq--US was and made a killing when the share price of oil companies shot up post war. Same is the case of Selan Exploration Technologies Ltd (bought at Rs.72 in 2006 and sold at Rs.280 in 2008) and many such scrips including my historic buying of Hazoor Media at Rs.7 and Radhe Developers Ltd at Rs.7.5 during the bear phase or when no one was looking at them.

Only remember that stocks generally have a tendency to move up in the future and hence I have seen very few people in my life who have better in good companies like State Bank of India, Infosys Technologies Ltd or Wipro during the lean phase and lost their deposits.

Making money in the stock market does not require too much brain as is made out to be by some Vested Interest Groups---much easier than the Graduate Programmes of any Engineering Branch. As mentioned by the noted analysts, Mr. Siddhartha Chatterjee (of Kolkata) in a number of his programmes on Television [It seems neither NDTV Profit or CNBC TV18 or Zee Business have ever heard his name---it is unfortunate. It shows how the New Delhi or Bombay based News Channels give coverage to the Eastern Part of India. I was also thinking on the same lines when yesterday, I watching a Nonsense talk show on Raj Thakrey, by CNBC TV18, hoisted by Karan Thapar. I think Mr.Tapar has run out of steam as far as his choice of topics are concencerned, when he thought to chose a Cheap Subject on a non-entity named Raj Thakrey. I would only say that, the way some political parties are trying to rake up "Bhoopi Putra issue", is DANGEROUS AND IS A SURE SHOT DOSE TO BREAK OUR COUNTRY INTO PARTS.....My experience in North East attests to my views---India is one and there should not be fanning of any such Dangerous issues which could hit the integrity of India.....What will happen if the same issue is raked up in West Bengal, Hyderabad, Chennai, Bangalore, or Jaipur or...........I liked the comments by the eminent lawyer Kapil Sibal on this issue................]

According to Mr.Chatterjee (CA and CS): Buy when you think the price of a share is less (or consolidates at a price) and sell when the price is above your buy price. Simple isn't it..??!!

The things picked up during distress selling are generally considered to be best bargains. Hence my suggestions would be not to go by any blanket rule but applying ones brain and reasoning for any buying or selling.......

Hence if you believe in the media/market speculation and sell ur holdings at the price of water, you will be responsible for your actions and should never blame me.

Defence is the best form of offence

Defence is the best form of offence. Yes, you are reading it right! With the Indian equity markets on a downhill, investors are left with no other option but to be on the defensive. And why not?

Defensive sector stocks are the safest place to park your funds in these volatile times. The growth prospects appear bright and the consumer discretionary sector has been least impacted by the current slowdown. History is also on its side.

Consumer stocks have always performed better when the times have been uncertain and journey tough. Here’s an insight into why it makes sense to invest in consumer stocks, and how they can help you sail through the rough waters ahead.

RECESSION-PROOF: For the uninitiated, defensive stocks are essentially companies that tend to perform steady under complex economic conditions. The stocks are usually from sectors such as FMCG and healthcare that are considered to be less risky than sectors such as capital goods, banking and automobile.

Elaborates Mukesh Gupta, director of Wealthcare Securities: “These stocks generally belong to diverse sectors and are difficult to define. They can be divided on the basis of products into personal care, processed food and household products. Inherently, these stocks are less volatile, don’t get influenced considerably by short-term market trends and their prices fall less in the event of a downturn.”

Take for instance, the performance of consumer stocks such as Hindustan Unilever, Colgate-Palmolive (India), Nestle India and Sun Pharmaceutical Industries in the last three months. These stocks have all delivered single or double digit three-month returns on the BSE, even as stocks from other sectors are offering negative or little returns during the said period.

Analysts advise that investors should typically increase their exposure to consumer stocks during bear attack, since these stocks tend to underperform during a bull run. Currently, most of the consumer stocks are quoting at one-year lows.

PROMISING PROSPECTS: The numbers are pretty encouraging. The FMCG market has been growing more than 10% growth since 2005 and is expected to grow at a compounded annual growth rate of 10-12 % over the next few years. The penetration of many product categories in the segment is still low, and thus, the growth potential of the FMCG industry looks promising.

“Growth of agricultural income year-on-year ensures bright prospects for penetration into the rural areas as that segment has been by far the least penetrated. With a constant increase in the per capita income over the last five years, the Indian consumer is headed for a better life-style. Since the per capita income in India is much lower than the other developed world, the potential for growth is very high,” feels Gupta.

INVESTMENT HORIZON: According to financial planners, investors should ideally allocate around 20% of their core portfolio in consumer discretionary stocks in current times. The portfolio allocation, however, is subject to change depending on the market dynamics. “Considering the bloodbath has punished sectors across the board, consumer stocks have provided a safe haven for investors in the last few months,” says Anil Advani, head of research, SBICAP Securities.

This is one sector, feel analysts, which will not disappoint in major turbulence. “CNX FMCG index has given an average return of around 18% in the last five years. You can expect a return of 15-18% in this sector.

However, keeping in mind the current scenario, when investing in equity, you should have a minimum investment horizon of three to five years,” says Gupta. The writing is on the wall now — the best offence is a good defence right now.

WINNING STROKES: THINK DIFFERENT:

The Crude Oil is gradually inching my target of $110 per barrel mentioned a couple of months back when most of the analysts who generally proliferates on TV these days, except some were predicting Crude Oil price of $200 per barrel. If you remember, I repeatedly said that the Crude at $145 per barrel, plus is unsustainable and is at a bubble stage; I was totally confident that it would continue to fall once the US driving season comes to an end. I became pretty clear last week, when even after so much bad news, the crude could not cross the resistance at $125 per barrel. Now if the Crude Oil breaks $110 mark then it could swiftly move below $100, triggering a rally in Auto and Real Estate Stocks. The Real Estate/Construction stocks have already started to rally in the anticipation of softer interest rates in the days ahead: Noida Toll Bridge, recommended some weeks back on the Sunday Report hit the buyer freeze. So what to do now with Noida Toll Bridge Ltd???

Vijay Shanti Builders Ltd hit the buyer freeze on last Friday with good volumes, before cooling down a tad below the circuits. The company has order book of more than Rs.1300 Cr. The Present Order Book is more than 60 times its June, 2008 quarter (Q1FY09) earnings. Just look at the share price of Vijay Shanti Builders Ltd when it has more than Rs.1300 Cr order book and Huge Land Bank.

So is the present price of the shares of Vijay Shanti Builders Ltd at Rs.60.5 justified for this hidden Real Estate giant from South India??!! The promoters have long back taken position in the Scrip at Rs.95 per shares which more than 50% plus, the current price of the shares. This actually points out where the price of the scrip could head in the next few months/years.

Purchasing a house/apartment these days has become an essential thing/item in every family and hence its price cannot correct/fall too much from the existing rates, however much some analysts shout from the TOP OF A TREE.

The Land Bank in Metro/Tier-1/Tier-2/Tier-3, cities are shrinking and this is pushing the price of land up which in turn is sky-rocketing the valuation of companies which are holding huge land banks like Vijay Shanti Builders, Dlf Ltd, Unitech Ltd or Lok Housing Ltd:

Another area which needs to be explored is the Green Fuel Space or the Bio Diesel space. World-wide there is a rush to buy the shares of these companies as they are renewal source of Energy and unlike Crude Oil companies these companies will remain till Jatropha/ Pongamania or other oil producing plants can be grown on earth. Some days back I talked with the Research Head of a reputed brokerage house from Kolkata and he asked me to accumulate Southern Online Bio Tech, just on the eve of de-merger and start of the new plant in Vizag. The company could start delivering additional 25% more to the APSRTC within a couple of months.

The price hike in the diesel some months back has generated enough cash in the balance sheet of the company. While the production cost remained almost same, due to bio-sources, the product price suddenly rose due to hike in diesel prices by the Government a couple of months back to keep in tune with the rise in Crude Oil prices. Besides the company is purchasing the seeds of Jatropha/Pongamania to be distribued to the villages form "International Aid" it received.It has also purchased some new machineries with the Money it obtained as "internatinal aid". Now the company could get the lucrative "Carbon Credits" from early next year.The company presented with wonderful set of numbers for the June, 2008 quarter:

Those who are holding my recommended Sabero Organics Ltd since a long time should book at least some profits and keep holding the rest with a SL of Rs.24:

Sunil High Tech Engineers Ltd is looking excellent at the current price of around Rs.203, where it has given a break out---though the trend is yet to be confirmed from other parameters: I will be recommending an Electrical Company in the Sunday Report and a company catering almost to the same field on Tuesday to the Paid Groups: Paid Members will be presented with the Full Order Book Position of Vijay Shanti Builders (Current Projects and Projects in Hand) in the Sunday Report: My recommended Sahyadri Industries Ltd which fell to some abnormal levels is hitting continuous buyer freezes. The stock is expected to hit some more buyer freezes in the days to come: It seems CNBC TV18 will soon become junk channel: Now they have altered the Udayan-Mitali combination by bringing a "Punjabi Kudi" in the "Morning Slot", thinking that she would be able to outperform, another Punjabi, Namrata Brar of NDTV Proft. But if they think so, then they are terribly mistaken, as Ms.Gill is no match for Mitali even in the present form. What has happened to CNBC TV18???!!! It seems soon its TRP will sink to the lowest??

Unless the Indian Business Channels become more careful while choosing analysts, they are expected to find it difficult these days to catch the eye balls, as most of the hard core marketmen have already shifted to the Internet for most of their research:

NDTV Profit Ltd will face a heavy blow and Dr.Roy could be left with junk stocks, if its last pillars, my good friend and versatile/softspoken/very polished, Ashoo Singha, ever smiling/vivacious Namrata Brar and our "modern headmistress" Ms.Shely Chopra leaves it.........However, I am yet to find out who "ate up" our "market guru" Nikunj Dalmia,.........Earlier Times Business "Stomached" two of NDTV's masterpieces, Abhik Barman and Anindo Chakraborty.... Seems some "serious poaching exercise" is going on in the media circles...

TIPS Show Inflation Expectations at Lowest Level in Five Years

By Dakin Campbell

Treasury Inflation Protected Securities show that traders' expectations for inflation over the next decade fell to the lowest in almost five years this week as prices of commodities tumbled.

The gap between yields on TIPS and conventional 10-year notes narrowed after the Federal Reserve signaled that it will keep borrowing costs steady after leaving interest rates unchanged at its Aug. 5 policy meeting. A basket of 19 commodities including oil fell to a four-month low.

``The bottom line is you've seen a significant turn in commodity prices,'' said Thomas Tucci, head of U.S. government bond trading at RBC Capital Markets in New York, the investment- banking arm of Canada's biggest lender. ``Going forward you're more likely to see inflation erode.''

Ten-year TIPS yielded 2.18 percentage points less than similar-maturity notes, the smallest difference since October 2003. The yield gap indicates the annual rate of inflation foreseen over the life of the security.

The yield on the benchmark 10-year Treasury was little changed last week at 3.94 percent, according to BGCantor Market Data. The 4 percent security due in August 2018 traded at 100 15/32. The two-year note's yield increased 1 basis point, or 0.01 percentage point, to 2.50 percent on the week.

Yields on 30-year bonds decreased 3 basis points for the week to 4.52 percent as the securities, more sensitive to inflation than shorter-term debt, outperformed notes.

Consumer Price Report:

Oil fell for the fourth week in five, leading the Reuters/Jefferies CRB Index, a basket of 19 raw materials, to a four-month low. Crude traded on the New York Mercantile Exchange for September delivery fell 8 percent this week to $115.20 a barrel.

The government on Aug. 14 will likely say that consumer prices including food and energy rose 0.4 percent last month, after a 1.1 percent increase in June, according to the median forecast in a Bloomberg News survey of 52 economists. That would be the smallest monthly increase since April.

If ``I am with the Fed right now, I feel pretty good about my statement that we expect inflation to moderate over time,'' Brian Edmonds, head of interest rates at Cantor Fitzgerald LP, said Aug. 5. Cantor is one of 19 primary dealers that trade with the U.S. central bank. Fed policy makers left the benchmark rate for overnight lending between banks unchanged at 2 percent on Aug. 5 for a second straight policy meeting, saying inflation is a significant concern while risks to growth remain. The central bank reduced interest rates by 3.25 percentage points in a series of seven cuts between September and April.

Inflation Bet:

``The Fed is making a bet inflation is going to take care of itself over the next six months,'' E. Craig Coats Jr., co- head of fixed income at Keefe, Bruyette & Woods Inc. in New York, said after the central bank's meeting.

Traders increased bets the Fed won't raise the target rate through the end of the year. They saw a 62 percent chance yesterday that the central bank will hold the rate steady through December, compared with 35 percent odds a week earlier, according to futures contracts on the Chicago Board of Trade.

Auctions of 10- and 30-year Treasuries this week drew better-than-forecast demand, showing investors are still attracted to the safety of U.S. government debt.

The sale of $10 billion in 30-year bonds attracted the most participation in two-and-a-half years from a class of investors that includes foreign central banks. The group, known as indirect bidders, bought 42.9 percent of the auction, the most since February 2006. The sale, the biggest of the maturity since 2006, drew a yield of 4.609 percent, below the 4.662 percent average forecast of nine bond-trading firms surveyed by Bloomberg News.

`Fear and Uncertainty':

``The auction went much better than anyone expected,'' Nils Overdahl, a portfolio manager in Bethesda, Maryland, at New Century Advisors, said on Aug. 7. He helps manage $500 million in assets. ``There's still a great deal of fear and uncertainty in the market. People are happy to hold onto the safety of Treasuries.''

A sale of $17 billion in 10-year notes, the most in five years, drew a yield of 4.075 percent, lower than the 4.101 percent forecast by six bond-trading firms in another Bloomberg survey. Investors bid for 2.61 times the amount offered, the strongest so-called bid-to-cover ratio since September. Speculation eased that the European Central Bank, whose sole mandate is to maintain price stability, will raise interest rates. The ECB held its benchmark rate at 4.25 percent at its policy meeting this week. Its president, Jean-Claude Trichet, said expansion will be ``particularly weak'' in the second and third quarters. [With Inputs from the Internet]

Today's Calls

1. Buy Idea Cellular at Rs.85.45, T: Rs.89-91, SL: Rs..84.60. Idea Cellular to launch payments bank operations in June. The company, that recently received the Reserve Bank of India's final approval to open its payments bank, is in the process of integrating its systems with those of the National Payments Corporation of India and the RBI. Joining the network will allow it to facilitate interbank electronic transactions.

2. Sudarshan Sukhani says in CNBC TV18: "The chart of Tata Motors is horrible", but the share makes an intraday high of Rs.455.70.This only goes to show how only chart based calls are futile. I have been saying this since more than a decade, but Chartists (mostly the software sellers) fails to acknowledge this facet of trading.....😀 Anyway, if the stock manages to close above Rs.458, then we can look for targets of Rs.472-475, in the short term.

3. The worst in the telecom sector seems to be over, as RJio is now Paid. Moreover, UBS had earlier spoken of a much better quarter sequentially from Q1FY18 (June Quarter) onwards. Therefore, start accumulating Telecom stocks in bulk to reap good benefits in the short to medium term. Also the correction on RCom seems to over and one can buy the shares of RCom at Rs.34.50, T: Rs.39-41. There is no need to keep SL as the scrip of RCom is now available at rock bottom price, especially when the optimism in the sector is again returning; after almost 3-quarters of pain.
Meanwhile, there are recent media reports that the mega merger between Reliance Communications (RCom) and Aircel to create the country’s third-largest operator is entering the final phase, with both companies seeking shareholder approval in the coming days.

4. Today, the Asian markets finished mixed as of the most recent closing prices. The Nikkei 225 gained 0.11%, while the Shanghai Composite led the Hang Seng lower. They fell 0.74% and 0.21% respectively. Indians markets are today trading flat, however action is seen on beaten down Counters.

IVRCL Ltd: Channel Break-out Expected

The Infrastructure firm IVRCL Ltd (Rs.14), is selling its Chennai seawater desalination plant and Jalandhar-Amritsar road project as part of its second round of asset sales to trim debt.

IVRCL holds a 75% stake in Chennai Water Desalination Ltd (CWDL), which invested around Rs.600 crore to set up a 100 million litres a day seawater desalination plant in Chennai on a build, own, operate and transfer (BOOT) basis for 25 years.

The other 25% stake is held by Spanish partner Befesa Agua, which brought in the technology to purify sea water and convert it into potable water. IVRCL invested about Rs240 crore as equity, raising the balance money through debt.

Earlier in April, 2013, IVRCL signed an agreement to sell three build, operate, transfer (BOT) road projects in Tamil Nadu to TRIL Roads Pvt. Ltd, a Tata group company, for around Rs.2,200 crore. The projects were: Salem Tollways Ltd, Kumarapalayam Tollways Ltd and IVRCL Chengapalli Tollways Ltd. The sale helped the company free Rs.450-500 crore in cash, and wipe off debt worth Rs.1,100 crore from the balance sheet.

On 5th November, 2013, Mr.SP Tulsian of sptulsian.com told CNBC-TV18 that, "One should really look to the assets like IVRCL Ltd and NCC Ltd where it has the BOT projects. It does not have much debt. It has a order book of Rs.25,000-30,000 crore, but is really serious in monetizing their road projects. Once one has that deal happening that will give them about Rs.1,000 crore plus which will be seen really very positive".

As of 27th September, 2013, IVRCL Ltd has a total order book of Rs.25,000 crore. Of this, it has new orders worth Rs.8,000-9,000 crore.

Small & Micro-cap Stocks: Gold mines to be explored:
[Updated]

Small and micro-cap stocks are low priced scrips which are very less researched and hence are not that popular among the investors/traders. 
Micro-Cap Index, have significantly outperformed both the S&P 500 large cap and Russell 2000 small cap indices over the past five years---herein lies the catch...!!

The stocks in this space might have good management, better future prospects but generallly have  insufficient funds due to which their share is low-priced.
It is a matter of fact that a smaller company tends to grow faster and thus their stock tend to move at faster pace.
Hence always  have this group in your basket if you want to become millionaire very quickly.
It is therefore pertinent to understand that, before underestimating them; keep it in your mind that it might be great opportunity turning your small capital into big amount.

However, small and micro-cap stocks are considered more risky investments due to greater volatility factor. Moreover such stocks might not be so frequently traded on stock exchanges and this make them illiquid many a times.

Micro-cap companies don't generate fat brokerages for brokerage firms, so they rarely enjoy regular research coverage by analysts.
On the other hand it is a disease of some analysts/marketmen to criticise these stocks without checking their fundamentals.
Like in 2001, when the price of Ispat Industries Ltd fell to Rs.1.5, many analysts discarded it on CNBC TV 18. In the same way, when I recommended Radhe Developers Ltd at Rs.7.5, in 2003-04, NDTV Ltd, was up in arms against this scrip.
Similar is the story now with Sanguine Media Services Ltd, an analysts in Zee TV Ltd has already spelt doom for this company without understanding how the company works or what are the future plans of the company. These are some of the things which the investors needs to avoid while watching the business channels, if they want their money to grow on trees.
On the other  hand, these financial/business channels now find no interest to find out what happened to stocks like Kolar Bio Tech, Sree Vasavi Industries Ltd, Alps Infosys Ltd, Cauvery Software Engineering Systems Ltd, Sawaca Communication Ltd, Top Media Entertainment Ltd, etc. where small investors put lot of money.  
Once when I sent strong words against the working of a company (in the telecom and renewable energy space), one of the top brass, said, "Who told you to invest in the shares of our company?"
As if the stock exchanges are meant to offload their junks or create a "Tamasha" of sorts. Financial Media however, find lot of interest in junk news like, "What junior Ambani said to Senior Ambani".
But have not guts to find out why Anil's men are threatening the top bosses of NEPC India Ltd to withdraw their court cases, after NEPC struck a deal to sell their wind farms.....
In a similar case once Mukesh Ambani said, "If people are not happy with the management of Reliance Industries Ltd (though it is a large cap company), they can safely leave this company and buy the shares of some other company."
So, this Mafia culture is present everywhere.....and is not  restricted only to small caps or micro caps.
Business Channels (read NDTV Ltd, Zee TV and CNBC TV18) were running updates after updates on scrips like IFSL Ltd due to obvious reasons, but now.....when most of the institutions have exited (2.18% holding) they find no interest in this once popular scrip during 2003--2005 period. No one knows about their waste management plans and all those "Bullshits" which were so cleverly marketed on these business channels.
So the working of "Media mafia" is another area where the Investors needs to study and keep focus....
THESE ARE SOME OF THE BUSINESS  HAZARDS OF INVESTING IN both SMALL CAPS and Large Caps.

Besides this since, they are not so popular among the masses, it can take more time and effort to analyze a small company than a large one, and fewer published reports means an investor must do more original research.
The result, however, is that micro-cap stocks often don't trade at their full values, creating a price inefficiency from which savvy investors can benefit.

Keeping aside all these factors, a well planned strategy might take you to diamonds hidden inside a coal mine.

When it comes to analyzing a micro-cap company, the approach is the same as for a larger company; only what you emphasize in this analysis will differ.

Like any potential investment, you might start out by assessing the current stock price against its 52-week high/low trading range.

You might glance at valuation ratios, such as the price/earnings multiple or price/book multiple, to see if the stock looks cheap or expensive. Look at the PE and PEG ratio of the stock you and compare it with its peers in the market. A safer way however is to find out the Price/Earnings/Growth (PEG) ratio (PE ratio divided by the projected growth in the next 3-5 years).
You'll probably review the company's financial statements to learn how much net profit is being earned on revenues, how high debt levels are compared to the company's capital base and whether the company is generating cash or burning it.

But before you really enter into the arena ask yourself few more questions:

1. Why are you buying a particular, small/micro-cap stock or what is it that is attracting  you?

2. What is the price at which you must exit the stock?

3. Once decided upon the stock to buy, exercise your mind to know is it really worth buying?

The best strategy to minimize the risk is to plan your exit having decided your expected profits. Do not just pump and dump the stock for reason that it costs you less than other stocks and will reach very high levels one day.

Remember, Small and Micro Caps like Jai Corp Ltd, Matrix Labs Ltd, Lupin Lab Ltd, etc. have made many investors millionaires---you can be one of them, who can say....

 Tit - bits

*D B Realty Ltd (Rs.91)* has taken the support at Rs.87/88 ranges and is moving up. We can again see the targets of Rs.131/135, as the company is selling its Andheri East land parcel at a whooping Rs.480 Cr. Also, if the media reports are to be believed then it is a takeover candidate by *Adani Group*. As per market rumour, they are likely to name it *Adani Reality*.

*A2Z Infra Engineering Ltd (Rs.10)* has tied up with Airtel for installation of telecom infrastructure in India. Accumulate!!

*RTN Power Ltd (Rs.4)* the erstwhile Indiabulls Power, an  A - grade power company, is struck up in a range. It will however break out of the current levels as its fundamentals are improving constantly. It has two sprawling factories in Amravati and Nashik, the former is *profitable*, while the latter is slowly coming out of debts. *You can start to accumulate once it gives a closing above Rs.4.20.*

The *Mukhesh Ambani owned media Behemoth, *TV18 Broadcast Ltd (Rs.37)* is consolidating around the current ranges, before charting the next upmove. The fall in inflation is likely to push up advertisement revenues of the company.

-----------------------------

*Important:* When the market is not in Bull 🐂 phase, the prudent investors should accumulate, beaten down small caps to make windfall gains during the Bull run, which generally comes after every couple of years. 

Moreover, the NDA Government could come up with a *Populist Budget* this year in view of the ensuring *Parliamentary elections*, next year. This may give us the required opportunity to make good gains from our investments.

SMALL AND MID CAP COUNTERS WERE HAMMERED PROBABLY DUE TO THE FEAR OF INCREASE IN THE COST OF FUNDING  &...

Mr. S P Tulsiyan and his statements on Small Caps: An Analysis...

Yesterday, Rakesh Jhunjhunwala's A2Z MAINTENANCE & ENGINEERING SERVICES LTD made 52-week's low, which rang alarm bells in the bear infested Dalal Street.  Many market-men have given explanation to this fact, but one of the most weirdest came from none other than Mr.S P Tulsiyan, a popular investment analyst hopping across business forums and channels, especially CNBC TV18. Many investors have a habit of investing in any share which has the "divine" touch of Mr.Tulsiyan, who apparently has solutions to all your problems in share market, how much Utopian it may be. Therefore, let us examine him, in view of his latest comments on the movements on some small cap counters, which Mr.Tuslsiyan says is due to "Operators moving out of them". But strangely, Mr.Tulsiyan failed to define what he meant by an operator and if the operations carried by operators are legal in the Indian bourses. 

But before that let us focus on his outrageous comments on the small cap counters. This is what he said, to a business channel yesterday,(without giving more convincing reasons for the fall), which precipitated the fall  in the small cap counters, which is most unfortunate. I had a touch time yesterday, speaking with clients who were worried with their investments in this space. Why? Courtesy: Mr.S P Tulsiyan's irresponsible statements on a Television Channel.  
According to him, "I don’t think operators have the strength to pump in more money because they have already exhausted their cash resources. We have seen operators getting tired and since the carnage of US and Europe I don’t think there is any strength left with them, either of the funds or of the market operations. In that event the financials will really be compelling upon them to liquidate and release their payments. So only thing it needs to be seen whether they expose themselves or they try to salvage, there are no chances of any upside. All the traders trying to identify the lower levels in case of the stocks like KS Oil or Karuturi should really avoid taking call on these kinds of stocks".

This is the kind of statements Mr.S P Tulsiyan is famous for, and which go unnoticed when the stock price moves up.

Now before going for a full fledged discussion let me say, if  Mr.Tulsiyan, knew who the operators were then why did he not complain to the specific authorities, giving the proof of the stock price manipulation? Also, on what basis does he say that some stocks are moved by so and so person? A person  having love for some stock does not automatically become an operator. Right? So, what is the basis of such horrendous statements in front of television cameras? Also, if we assume that Mr.Tulsiyan is speaking based on truth, then instead of coming up with such wild allegations against some persons and groups, he should have complained to SEBI or the respective stock exchanges for price rigging in the scrips.Isn't it? If he has not done that, should we believe him? 
Any logical conclusion would say, NO, because Mr.Tulsiyan knows that, in bathroom all are naked, but it is only those, whose walls are transparent, gets noticed. 

Now let me show you how honest is Mr.S P Tulsiyan in his utterings in front of Television Cameras, which many people (investors/traders) take as face value.

Let me now talk of one such stock, named Reliance Industrial Infrastructure Ltd. Reliance Group has always been his "Pet animal" since a long time, though this group has been notorious for all sorts of manipulation both inside the market and outside. 
This stock (Reliance Industrial Infrastructure Ltd) from the Mukesh Ambani pack, suddenly rose from Rs.318 on 2nd April, 2009 to Rs.820 on 9th April, 2009---in three trading sessions it rose by whooping 158%.  

Observing this, one of Mr.S P Tulsiyan's patrons, CNBC TV 18 called him up on 12 or 13 th April, 2009 (don't remember exactly), to give explanation, when he said, "However, it is learnt that RIL is planning to make RIIL as a gas carrier & distribution company. Reliance Gas Transportation Infrastructure Ltd. (RGTIL) is a closely held company of Mukesh Ambani, which had put up 1,400 kms., 48 inches diameter pipeline from Kakinada to Bharuch, capable to transport 120 mmscmd of gas , having set at a project  cost of Rs.15,000 crores. The present paid up equity of RGTIL is at Rs.700.05 crores with face value of Re.1 and are presently held by 6 private limited companies, with each company holding 1166.75 million shares. In addition to this, it has Preference Share Capital of Rs.330 crores, with face value of Rs.10 each. This company is capable to generate revenue of Rs.700 crores, if we presume a transport of 80 mmscmd at US$ 0.13 per mBtu.

Apart from this, RIL has plans to set up gas pipelines in various parts of the country, originating from KG Basin, as also to take up gas distribution for domestic households in over 150 cities, of the country. It is learnt that the Group is contemplating to bring all this pipeline network and business into RIIL, with a view to attain leadership in the sector. This move was also expected in the past, but got deferred due to delay in gas production by RIL from KG Basin. It is learnt that the Group is contemplating to bring all this pipeline network and business into RIIL, with a view to attain leadership in the sector. This move was also expected in the past, but got deferred due to delay in gas production by RIL from KG Basin.

Maybe now, if this gets implemented, RIIL paid up equity, which is now at Rs.15.10 crores may get raised to Rs.100 crores with promoters holding of 90%, which is allowed for an infrastructure company. The whole exercise is aimed with a view to raise US$ 2 Billion for new projects. This will be possible only if RIIL has a mega size of projects coupled with respectable market capitalisation".

"RIIL has a market cap of Rs. 1,240 crores, inspite of recent surge in the share price, which is not befitting to the level of RIL Group. So, if these plans are required to get implemented. RIIL must become a $4 billion company in terms of size of assets and market capitalisation".

"We hope that these expected plans are implemented by the Group this time for RIIL and not to indulge in market operations again"--this time the sword is on perhaps senior Ambani.

But again, around a couple of years later, on Mon, Jun 13, 2011, Mr.S P Tulsiyan states, the following regarding the same scrip, Reliance Industrial Infrastructure, "Reliance Industrial Infrastructure can move to anywhere between Rs.750 to Rs.1,000. The stock of course made 52-week low on 17th August, 2011. 
So should we now conclude that Mr.S P Tulsiyan was the operator in the stock? 
Anyway, let's dive a little deeper and observe his statements on a scrip, listed in Bombay Stock Exchange. Mr.Tulsian told CNBC-TV18, "Reliance Industrial Infrastructure is a company belonging to Reliance Group in which Reliance Industries is directly holding 45.45% stake. This company came into the fold as promoter by Reliance Industries about 5 to 6 years back. Since then there has been the flat performance. This is because the company is owning about 56 kilometer pipeline which transports the crude from Chembur to Patalganga. That is the reason why the company identical top-line and bottom-line with EPS close to Rs.15 every year. This has been lying low with market cap of less than Rs.1,000 crore. There have always been expectations that this company will get activated by Reliance Industries. The value accretion game may start because the company which belongs to Reliance Industries with market cap of less than Rs.1,000 crore cannot remain at those levels. The trigger has really started, we have seen that Reliance Group has acquired 74% in Bharti AXA Life and Bharti AXA General Insurance with 17% having acquired by this company. This company presently has networth of about Rs.200 crore of which about Rs.160 to 170 crore is laying as cash in bank balances with the company.

He further added, "The process of putting in other businesses in the company has started. If insurance may not come in a full fledged way we will see these kinds of new businesses coming into the company. I am quite hopeful as a value creation game by the group. One does not know maybe the similar other projects can come in a smaller way. That is the reason, with EPS of Rs 15 that translates into a PE of 30-35 which the share has been ruling for ages. For years this has been ruling at 30-35 mainly on this hope. The hope of this has started with the 17% stake of Bharti AXA and I hope that this can really be a big trigger for the company. Going forward if somebody can keep a view of about one year share can move to anywhere between Rs 750 to Rs 1,000 I am giving a broader range so that is the trigger."

NOW THE TOTAL SCENARIO HAS CHANGED GIVING WAY TO A NEW CANVAS--TALK OF “RIL is planning to make RIIL as a gas carrier & distribution company” has suddenly vanished from our vision. 

So, these are the kinds of predatory analysts we have on television channels these days. They are always bent on showing themselves as "Holy Cows" while criticizing the others to the lowest common denominator. Therefore, always do your own research and never ever invest in any company, based on the recommendation of these analysts who come up on Television channels and give lectures on buying or selling scrips. 

Anyway, shifting topic I think it is high time the government, should do something, to stem the tide in the small and mid cap counters and Indian Capital Markets in general.

But much of it is due to the reckless rate hikes by the morons in the Reserve Bank of India, who wants to kill the golden goose of India Inc, by starving them of the required cash.

Moreover, how can the small companies go for the ECB route to raise capital?? So, from where will the cheap credit come to the India Inc, for the SMEs....!! Does the government not understand or they are busy making money for themselves, while the Roam is Burning.........??!!

Earlier, the Indian rating agency CRISIL had cautioned that the primary impact of the US downgrade could be felt on the availability and cost of funding, both in domestic and international fronts.

The spike in uncertainty in international markets following a downgrade of US sovereign debt by rating agency, Standard & Poor’s is expected to force Indian companies to put in their foreign fund-raising plans on the back burner or slow down their capexes. Some companies have already done that and some are contemplating on the same. So, the demand pull inflation could increase further, as the RBI bosses goes in for rate hike sprees.

Further, even the borrowing cost might also go up. While the foreign debt had been cheaper than domestic debt (for India Inc), but now with the US treasury papers themselves witnessing a higher rate, the borrowing cost is bound to get expensive in future, as international bonds are linked to US treasuries.

Therefore it is already a bad news for the fund raisers, at a time when domestic credit is unviable or is very expensive; thanks to the RBI's strict monetary tightening, foreign money is now probably, the only recourse. The latter has been at least 5-7% cheaper than domestic debt and the hedging costs have also been low.

But the question is: is it viable for the SMEs to go for the ECB route to raise capital--doubtful, except may be through GRD or ADR...!!

While the same may get evened out in the long run, the short term pain itself could be very taxing for companies, especially in the SME SECTOR, that are heavily dependent on leverage.

What is interesting here is that the notion of "cheap credit" is slowly getting phased out, in an environment of harder rates, both in the domestic and international fronts. This is expected to bring in more rational re-pricing of risks and more optimum allocation of funds in future....

Besides this during any recession (or fear of slowdown), it is the small cap companies who suffer the most than the large caps; which could also be a possible cause for selling in the small cap counters. Calling them operator based manipulation is just a one side of the story or in many cases a misnomer. 

WINNING STROKES: THINK DIFFERENT

Shares of Financial Technologies Ltd (Rs.228.30) surged to Rs.235, intra-day after the company stated that it concluded renegotiation of technology supply agreement with Multi Commodity Exchange of India (MCX). There was a big crash in it's share price after the NSEL scam. The stock, should be crossing Rs.300 in the coming days. In other words, Financial Technologies should come back to focus again after a re-agreement with MCX for technology supply.

IVRCL Ltd (Rs.15.85) was recommended today as a fresh buy at Rs.15-15.50, for a target of Rs.21. The scrip surged to Rs.16.30, intra-day. The company has an order book of  more than Rs.20, 000 crore and it is implementing the CDR package. 
Pipavav Defence and Offshore Eng Ltd today closed flat at Rs.38.40. According to the media reports, the government of India is mulling various options, which include lower bank interest rates, infrastructure status to shipyards, a separate fund and also special subsidy to shipbuilders who source raw material and parts locally. It is a company whose promoter is Nikhil Prataprai Gandhi, a person having very good rapport with Senior Ambani. Moreover, Nikhil Gandhi, chairman, Pipavav Shipyard told CNBC-TV18 at the beginning of this year, that the private ship-builder is in talks with a French company for a strategic stake sale. He says this partnership is primarily aimed to bring in the technological know-how and proprietary knowledge of military hardware into the country. The promoter stake after the deal might come down to 41% from 45% initially. SAAB AB of Sweden has already a stake in Pipavav. SAAB AB and the new partner, if the stake sale goes through, will together own 15 percent in the company, says Gandhi. The company has an order book of around Rs.12, 000 crore and is trading near the 52-week low price of Rs.30.55, hence the downside is limited. Besides, Rakesh Radheshyam Jhunjhunwala and Rekha Rakesh Jhunjhunwala, respectively holds 2.11% and 1.30% stake in the company. Also,  the uncertainty over the fate of subsidy payments for shipbuilders such as Pipavav Defence and Offshore Engineering Co. Ltd, ABG Shipyard Ltd and Bharati Shipyard Ltd could lift soon, with the government looking to extend the payment timeline for a scheme which ended seven years ago.

Gitanjali Gems Ltd (Rs.65.50) which got badly hammered, was recommended today at Rs.65, just a month ahead of Diwali. This is a sure shot recommendation for  a target of Rs.79-80, in the short term. Shares of jewellery makers should rise on expectations of pick up in sales in the festive season. Meanwhile, according to the Business Standard, September 3, 2014:  Amid expectations of a turnaround in global jewellery purchases and a revival in ornament exports, Indian diamond processors participated aggressively in the De Beers’ sightholders contract registration to ensure supply of rough diamonds till 2018. “The basic raw materials remain the same. Exports cannot decline beyond a point. Therefore, raw material surety is required. De Beers processes only 40-42 per cent of the rough diamonds they mine and, hence, Indian processors should take a long-term view,” said Sabyasachi Ray, executive director, GJEPC. Mehul Choksi, managing director of Gitanjali Gems, a De Beers’ sightholder, said the current fall in exports was a seasonal trend. “Exports decline in the July-August period. But so far, this year has been good. We anticipate the economic recovery in the US will yield positive results on jewellery exports,” he said. The US accounts for 38 per cent of global jewellery consumption.

My earlier recommended Genera Agri Ltd today rose by more than 15% and closed at Rs.8.24. The intra-day high for the scrip was Rs.8.48.

The Nifty has closed with a weekly loss of 152 points in the last week. On the other hand, the level of 7850 showed buying interest on Friday, from where the Nifty reversed as was expected. Today, the small cap index was strong since the start. 

DO YOU KNOW?

Regarding Rolta India Ltd, the financial website: www.moneycontrol.com which is a part of the CNBC TV18 Group, said on February 24, 2015: 

"The company's trailing 12-month (TTM) EPS was at Rs.50.68 per share. (Dec, 2014). The stock's price-to-earnings (P/E) ratio was 2.96. The latest book value of the company is Rs.187.83 per share. At current value, the price-to-book value of the company was 0.8. The dividend yield of the company was 1.5 percent".

But the same website now puts the book value as Rs.122.95 on standalone basis, while on consolidated basis it is Rs.72.55. therefore, the question is: how can the book value of a reputed company (Rolta India Ltd is older than Infosys Ltd) change so much in matter of couple of months?

If you remember, in an earlier  occasion too, this website put a misleading book value of an A-group company Rasoya Proteins Ltd. When I pointed out the same here in this blog, they corrected the same. 

Moreover, this website, has a dubious and manipulative platform called Money Control Message board, where even the moderators takes part in the discussion, in the guise of boarders. These administrators of MMB, are often highly biased and delete messages, which goes against their thought processes. Not only that, they may even use slangs and highly objectionable words, when they appear in the MMB, in disguise (with A,B,C name) to take part in discussions; forcing you to react. 

It is an irony that some investors and traders base their trading decisions, pivoted on the inputs placed here---not to mention, though many burn their fingers in the process; but still they do not learn. 

CRAZY MARKET-MEN

Loan Theory to Control Inflation
~~ Suman Mukherjee

Yes, I have given this Crazy Theory of Monetary Tightening as "Loan Theory" to control inflation. In many countries it is used as the last option but in India, this is a common case, especially in times when we have an almost non--functional bureaucracy and an equally dubious government. We Indians become too crazy when the topic zeros in on controlling inflation and "Poor Management". 
Yes poor people will suffer if the price rises but what will happen if there is no one to employ them? What will happen if the price of crops of a farmer comes down and down and down.....as the inflation becomes deflation? What will happen, if the poor have no money to buy, even at low price? In a growing economy there would be some inflation and I feel 7% should be normal, because we do not have a reserve currency like the US have. We are also not a developed country, and hence there will be some infrastructure bottlenecks, leading to inflation. Also, we have a huge population to feed and we have still not adopted modern farming method in full steam, so there is bound to be crop failures and lower yields, leading to the rise in the price of food items. These are some of the stark realities of India. Hence sitting in India, we should stop thinking of 2-3 % inflation as is found in the US or in some developed economies.
If the Industry and businesses collapses, and India resorts to mammoth imports then what will happen to this inflation? Will the CAD increase or decrease? Yes, some might argue that debt market will bring in foreign funds if the rate of interest is high. Okay fine, but then how long will Foreign Institutions buy Indian "Junk" Papers, if the economy collapses? Is there any value of Greek Papers today?  

Insane "Bookish" Economists, I pity for you all.
The moot point is that India Inc is collapsing, due to bad loans or due to non payment of high cost loans, as their business are becoming uncompetitive as compared to the international players. So, it is high time that cost of money comes down, so that the economy picks up steam. We can think about inflation later....!!At the moment let us fix our attention on growth and let the government come out with plans  for fiscal consolidation.
Also, it is seen many companies took loans for organic and inorganic growth, but other extraneous factors, robbed them off the necessary cushion to pay-up the EMIs. Look at the case of Suzlon Enegy Ltd: it bought REpower Ltd at high value and then suddenly the whole wind energy business collapsed in entire Europe. Misfortunes never came alone, then the US, became an open case of sub--prime disease and then the ultimate, the sovereign debt crisis in the Europe, put the final nail in the coffin.

What the government did? Gave economic stimulus. Fine, but it did not take the stimulus back fast and started giving inflation projections, which is a sort of dangerous. Should I have explain this too..........? 
In the US the government helped the corporations to tide over the crisis for the moment by buying out the toxic assets, and the result is that the US economy is now booming. But this government could not hold on to a wonderfully gifted economy from the NDA government and messed up everything. 

Another thing which is worth noting here is that: whenever, the Indian Markets started performing well, the government came out with some sort  of activities, which are harmful for the markets, either it is in the form of STT or increase in Capital Gains Tax or Promissory Notes or GAAR or something or the other. In the last 7-8 years we have been bombarded with all these weapons of  "Mass Capital Destruction". The government always had one example to give--the overseas market is not doing fine. But now when the US market is booming our government has no answer as why our markets are in a pathetic state?

Besides, every attempt had been made to milk the poor investors, starting from the FMO to Brokers to Stock Exchanges. There are hardly any steps taken to improve the investor interest in the market, in the form of giving some incentives. The result is that we have a 5-year BEAR MARKET in the small and mid cap space, which is deceiving too, when compared to the large caps. When the Sensex is near its all time high, many small caps are near their all time lows. Why is unusual thing happening? Who is responsible for this mess in Small and Mid Cap space? This is the space where the retail plays the most, and if this space is not performing,  how can one expect the retail to be back again? The stock exchanges instead of encouraging this space, went on putting all sorts of restrictions. The scrips are still put for months in T-group, then circuits are reduced to as low as, 1.8% and all sorts of torture. 
India Inc is now virtually on a ventilator but still the RBI, and some of our friends, think it is too loose to go for rate cuts---lest inflation increases. Okay fine. But who will feed you if the whole India Inc collapses?
I just shudder to think how professionally managed Companies like Tulip Telecom Ltd or Suzlon Enegy Ltd, go for CDRs? These are world class companies, but are now gasping for breath and is running heaven and earth for some concession on the loan amount. Though the present FM, has asked the banks to be liberal, but then the Great Indian Media seems to say, why so much time has been given that loans become bad?
I understand when an odd journalist from a 3 rd grade publication asks, this kind of stupid question, but I get puzzled when a seasoned journalist like Lata Venkatesh, of CNBC TV18 asks the same to former CMD of SBI. And I am happy the way the gentlemen answered her, with a bit of scorn.
The question is how will you fight with an American Company (US) who takes loan at 3-4% against an Indian Company who take at 12--13% (min). How can you think the price of apartments going down, when the interest cost takes up 15% of the total cost of the building? How long can you make your business competitive by cutting labour and electricity and other cost, unless the cost of money comes down. Or else India Inc has to go for zero debt companies, which is very difficult.
The loan theory to control inflation absolutely looks rubbish to me for a long term solution. Yes it can be used for the short term, but then this RBI Governor and bunch of economists spoiled everything by its over use for so many months. The wounds have become gangrene now, and it is high time that we bring in new specialists, rather those inflation--fighting fire-men. If there will be no one to make forest to supply wood, then who will employ these firemen........?
But the hopes are still on the current Finance Minister, to bale out of this crisis. He was successful during the Asian Crisis (1990s) and also during the US sub-prime crisis, and I am sure this time also he would be  able to tide over the situation. Only problem with him is that once, the market starts to boom, he either comes up with some additional taxes or some welfare schemes. He should not suddenly break the rhythm of the market.