Haha Seems like a Classic case of Fraudulent Management
Stock was trading at more than 250 a month back on 3rd March, 2012. today it is at 71 . . . . When CMD himself is not sure about future, he would want to be the first to get rid of his holding hence he pledges.:sneaky: As the word goes out in market, other shareholders start selling. Prices will come down to an extent that the terms of offloading in the pledging contract will become active and even lenders will start selling. In short every one will start selling and hence the stock will go on hitting lower circuits. Here in this case, I believe the stock has the potential to go to Rs. 25 in the next few months.
One more question arises to me is why the CMD is not sure about the company and how a minority shareholder like us will come to know in advance. Then I check the annual report for the last year i.e. as on 31st March, 2011. I am seeing good results , increase in sales as well as profits. Then I check the Current Assets, wherein I see huge Debtors. The sign that the company may have booked fictitious sales to boost the figures / They have recklessly sold the goods without checking the ability of customers to repay. I almost can predict that for current year , the debtors figure is going to be much worse, the company may have to book huge bad debts any time soon. :nono: . . . Also one need not really do this much analysis, if he follows a simple principle that is "Never catch a falling knife" Never try to be smart by purchasing such stocks when they are available at considerable low prices when compared to their historical prices. There are people smarter than you who are on the other side selling the same stock.
The stock in the above case, Varun Industries, announced their 4th quarter result yesterday. The company did book a loss of 231 Crores in 4th quarter on account of the bad debts. :w00t: This single quarter loss has wiped out all their profits in last 4 years. And the stock is trading at 28 currently
I guess the situation right now is even worse than 2008 , that year India had much more control over its currency , a better financial system , better future growth outlook , better policy framework
Pranab Mukherjee has been rated 5/6 out of 10 by top 50 CEOs in India and they are really bearish about India
Stock markets predicted to fall down to 15k mark i think it will be good buy time then
I guess we had a discussion about currency reaching 45 mark and i was really bearish back then and much more now
Rakesh Jhunjhunwala is buying Raised his stakes in 5 stocks i.e. Aptech Ltd., Sterling Holiday Resorts, geometric Ltd, Prime Focus Ltd, Viceroy Hotels Ltd in last 15 days or so.
A peculiarity that can be seen in his last 25 years investing career.
Be fearful when others are greedy and greedy when others are fearful - Warren Buffet :-P
I guess the situation right now is even worse than 2008 , that year India had much more control over its currency , a better financial system , better future growth outlook , better policy framework
Pranab Mukherjee has been rated 5/6 out of 10 by top 50 CEOs in India and they are really bearish about India
Stock markets predicted to fall down to 15k mark i think it will be good buy time then
I guess we had a discussion about currency reaching 45 mark and i was really bearish back then and much more now
All these reason were present in December 2011 1)Rupee touched 54.30 2)Sensex touched 15K handle. 3)All the factors like policy paralysis were present in December 2011 too..
Still we saw, Sensex touching 18500 , Rupee touching 48 handle in February 2012. :-P
It takes just 2 months for things to change.
P.S. This doesn't mean that I am bullish on current state of our economy. But only thing to say is markets spring surprises which are beyond our imagination
All these reason were present in December 2011 1)Rupee touched 54.30 2)Sensex touched 15K handle. 3)All the factors like policy paralysis were present in December 2011 too..
Still we saw, Sensex touching 18500 , Rupee touching 48 handle in February 2012. :-P
It takes just 2 months for things to change.
P.S. This doesn't mean that I am bullish on current state of our economy. But only thing to say is markets spring surprises which are beyond our imagination
Yes but the situation has not improved we can call it temporary relief , RBI used the Forex reserves ,increasing interest rates in NRI deposits
I think the Talks of FDI in retail was there as an incentive for investors , IT sector looked much more positive than right now , post april things have changed a lot , Taxation issues , GAAR , Trai reforms
PS: I think we b-schoolers know about December phase a lot more than many around us , it was crucial placement time .. And anyways i dont see the issues being resolved in 2 months this time around , i hope they do
PPS: Many are even more tense if the govt is re-elected again which is a high possibility will we see people investing?
Yes but the situation has not improved we can call it temporary relief , RBI used the Forex reserves ,increasing interest rates in NRI deposits
I think the Talks of FDI in retail was there as an incentive for investors , IT sector looked much more positive than right now , post april things have changed a lot , Taxation issues , GAAR , Trai reforms
PS: I think we b-schoolers know about December phase a lot more than many around us , it was crucial placement time .. And anyways i dont see the issues being resolved in 2 months this time around , i hope they do
PPS: Many are even more tense if the govt is re-elected again which is a high possibility will we see people investing?
If the re-election in Greece next month leads to the majority to parties who signed the bail out deal / If US Fed declares QE 3 / If ECB does any sort of liquidity infusion , any one of the 3 things may lead to markets reaching 18500 in next two months.
But even I don't feel any of the three to happen , but who knows?
Yes but the situation has not improved we can call it temporary relief , RBI used the Forex reserves ,increasing interest rates in NRI deposits
I think the Talks of FDI in retail was there as an incentive for investors , IT sector looked much more positive than right now , post april things have changed a lot , Taxation issues , GAAR , Trai reforms
The problem is that Exporters are not ready to part with dollars in hand, Govt reforms are not being implemented(opposed or shelved), Eurozone crisis which is making even the large investors wary of India & its Non existent cum fictional story.
If the re-election in Greece next month leads to the majority to parties who signed the bail out deal / If US Fed declares QE 3 / If ECB does any sort of liquidity infusion , any one of the 3 things may lead to markets reaching 18500 in next two months.
But even I don't feel any of the three to happen , but who knows?
How about greece moving out of Eurozone which is now very much possibility Just read it yesterday I guess 😛
How about greece moving out of Eurozone which is now very much possibility Just read it yesterday I guess :p
According to me, that will be the most important reason for more sell off in the markets if it happens.
I personally don't worry much about our local issues. Of course, being a patriot, local issues depress me
2nd most important reason being the slowdown in the US Growth. For e.g the unemployment rate there is reducing at a lower pace than 3-4 months back.
Then China Slowdown is concerning. Our growth is more or less dependent on US + Europe + China, so when these 3 are taken care of, India will be taken care of automatically.
An example can be, US stance against the Oil producing Countries. If US doesn't put sanctions on Iran, there is hardly any reason for oil prices going up. In turn, there is no reason for our oil imports to go up. In turn, there is no reason for our trade deficit to go up. So no reason for our currency to depreciate. Its like that only US can start it and only US can end it. (Adding to US, Europe and even China also) :-P
I am worried more about no new industries on high growth path in India , the IT industry is on the verge of maturity in the lifecycle of the industry .. And i feel the hiring will decrease as we go along . We are already looking at the guidance of Infosys being 8-10 % which i feel is more reliable than what CTS is giving right now of 20% simply because CTS is now on increasing market share policy and are using cost base pricing without actually looking at profitability which is not sustainable in the long term .. Infy is still following premium pricing and loosing business and projects
Trouble with CTS is that its pushing its margin and encouraging others to reduce prices which in turn which hurt our export earnings a lot in the near future and also will decrease the Industry hiring percentage
And Currently i simply dont see a substitute for IT Industry as a revenue generator in future .. I think i am really bearish right now :p
IT Industry is on the verge of what we call as consolidation phase , and i think we will see a lot acquisitions in the near future ..
PS: Worried about trade deficit 😛 and export earnings
Why falling rupee may not reduce india's imports and increase exports so much?
Traditional economic theory suggests that when a country's currency falls (depreciates), its imports become more expensive (since $ price is same and one $ costs more rupees so the imported product becomes more expensive in rupees) and hence decline. Similarly export become cheaper (since rupee price is same and one rupee can buy less $ so $ price becomes lower). So the net result is fall in imports and rise in exports and an auto-correction of balance of trade.
In India's case this effect is limited because of the following:
1. India's total exports are $300 billion. Out of this petroleum products (gasoline, diesel etc.) are $60 bio and jewelry are $45 bio. The raw material for these exports are all imported ($155 bio of oil and $60 bio of gold) and raw materials constitute nearly 80-85% of the final price of these exports (so for $60 bio oil exports, we import $50 bio crude oil and for $45 bio jewelry we import $35 bio gold). The high import content of these means that fall in rupee has little impact in reducing the price of our exports (since the fall in export price due to cheaper rupee is offset by rise in imported raw material price). This means $100 bio out of total $300 bio exports (~33%) will not get a boost by falling rupee.
2. India's total imports are $485 bio. Out of this ~$90 bio is used in exports (oil + gold) as we saw above. Further a substantial part of $105 bio of oil (which is consumed domestically) is sold at administered prices and hence doesn't become more expensive as rupee falls. Fertilizers ($10 bio) are also sold at administered prices. This means ~200 bio (40%) of our imports are not impacted by fall in rupee. Of course the calculations in oil need to be refined since not all crude oil is converted into diesel and kerosene and petrol and lpg (other hydrocarbons don't have administered prices).
3. Lets assume $100 bio of imported oil + fertilizers are sold at administered prices. These products have sensitivities to dollar-rupee exchange rates. Rupee has fallen more than 20% in last 8 months. 20% of $100 bio is $20 bio. This is the additional burden on the government which it will finance by borrowing. India's total money supply (M3) is $1,500 bio. $20 bio is ~1.5% of that i.e. by this fall of rupee additional 1.5% of money has been created in India which means keeping other things constant this pushes up the general inflation by ~1.5%. As a result of this general inflation our exports in turn will become more expensive in rupees and hence their fall in price in $ will be subdued. Furthermore since oil prices have remained same while others have increased there may be a substitution effect from other commodities into oil (but that is difficult to measure).
4. Finally Indian government's borrowings are ~ 49% of GDP or $900 bio. Additional borrowings of $20 bio mean keeping other things same government borrowings have gone up by ~2% and fiscal deficit by ~1%.
What is the take of people here... on these five? :)
Rakesh Jhunjhunwala is buying Raised his stakes in 5 stocks i.e. Aptech Ltd., Sterling Holiday Resorts, geometric Ltd, Prime Focus Ltd, Viceroy Hotels Ltd in last 15 days or so.
A peculiarity that can be seen in his last 25 years investing career.
Be fearful when others are greedy and greedy when others are fearful - Warren Buffet :-P
the obesession for gold in india sometimes i feel if we were not into gold much then what?? i am a newbie my question is why does the govt allow MCX to run.what are these future contracts?? arent these like fixing in cricket??
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I like the analogy. Though a Future is actually more like betting.
A very simple example without any finance lingo A farmer is unsure of how good his crop of tomatoes will be, so he sells it for Rs500, 2 months before the crop matures (as a promise on paper). The ketchup manufacturer thinks that 500 is a good price to buy since the price might rise later on. So he also agrees to buy the crop, 2 months in advance (on paper). After 2 months, farmer delivers the tomatoes and the manufacturer pays 500.
This is a Forward contract.
Problem is that if the actual market price 2 months later is 600, farmer may not honor his contract. Or if the price is 400, the manufacturer may buy from the market rather than from the farmer. So we have the "risk of default". Another problem is that farmer may want to sell 470 kg, but the manufacturer may want to buy 630 kg. Or that the crop might not be ready in exactly 2 months.
To overcome these problems, there is a solution...
Now, both of them went to a third person of good financial standing whom both respect (say, an exchange) to ensure that there is no going back on the promises, plus they standardized the quantity sold, dates and other things like that - say, contracts of 100 kg each to be delivered on 3rd thursday of the month. In addition, they introduced more standardization and security measures (in Finance lingo, clearing, MTM etc).
Seems like a Classic case of Fraudulent Management
I like the analogy. Though a Future is actually more like betting.