What might be the right thing to do for India Inc.

With the value of rupee starting to appreciate again (1$=50.30Rs.) as compared to previous low of Rs. 53.40, things seem to be getting back to track. Although this might me a little early to say so, but further signs and stimulus is provided by the increase in FII net inflows.

But among this positive environment two things bother me the most (apart from offcourse the poverty in India) :
1) Our current account deficit
2)Trade imbalances

and i believe the only solution to both of these problems is : To boost our Industrial and Agricultural Production. This is the only practical solutions to most of our problems and this seems quite obvious at first look but I don't understand why the policymakers are oblivious to it.

Industrial production can be boosted if government introduces some revolutionary reforms and acts which had been left in the back-burner. Also the government alone can't do much, help of the big industrial houses is also needed. They should be lured into helping by providing (tax) incentives. Since the EU is under huge debt burden this is particularly the right time to tap the European markets. The crisis doesn't seem to end soon.
Agricultural production can be boosted by revolutionizing the agricultural sector. Its indeed time for the second green renolution. Subsidies must be properly regulated, itroduction of better technology and genetically advanced seeds and crops are few means to boost the production.

Only by doing something that produces result in material form will be helpful and nothing else. We have been making policies for a long time and now its time to implement.  Jai hind!!

Equity investments and trading

Introduction

The primary reason people enter into equity trading is because of its potential to offer huge returns and rewards. Even I was drawn into it for the same reason. It looks all shiny and glittery. But all this shine and glitter comes at a cost known as RISK. Most of the time traders (and not investors) enter market with a short term perspective which has enormous risks associated with it. The only way to avoid or at least marginalize the risk is to research exhaustively and play it smart.

My experience

I am a novice to first-hand equity investing, having just six months of experience but I have been following the stock markets and some specific stocks since the last four to five years. I slowly started to develop my knowledge and expertise in this field by reading newspaper (Economic Times and Financial Express) and books (CFA course material) and of course the internet which is undoubtedly the most informative source.

My strategy

I am a kind of trader who believes in inter-day and medium-term investments and very rarely will I involve in intraday trade. Here are some strategies I apply :

1) Look out for undervalued shares (Value Investing):

Sometimes the markets are not efficient in itself and a stock may be undervalued by the market. So I try to find out such undervalued stocks by looking at the past one year graphs and financial ratios. The information is easily available on hdfcsec.com and others other websites. The comparison of last one year price range and current price of the stock provides valuable information about it. It can be interpreted differently by different people, however while interpreting one must take note of the prevailing market conditions corresponding to the particular value of stock at that time. Eg. When the market (Sensex or Nifty) is at its years highest point and a stock of ABC company is trading at its years lowest levels then there is a possibility that the stock is undervalued.

2) Look out for news and announcements

Reading newspaper and online news reports can provide important information about a company's operations. Lookout for news of mergers and acquisitions, about commissioning of new production facility set-up and other important developments. Now in this respect one must keep in mind that not every merger/acquisition will result in a positive return or increase in price of stock. Here I'd like to share an experience with you. Once, around two years ago, I read in The Economic Times that SAIL is going to set up some new plants in tho locations and the profits are expected to rise etc. etc... The very same day I bought its shares at 220/share. And today the price is howering at 80/share. So this means I had not researched properly about the stock and had invested in vain and had to pay the price.

3)Comparing financial ratios of company with other competitors

Financial ratios of a company like Leverage ratios, solvency ratios etc. are very useful in determining the position of a company and ability to pay debts. Comparing these ratios and other financial statements like balance sheets, profit-loss statements with other peers can help in taking a smart decision for investing in a stock. However, studying and understanding these ratios require some patience but I assure you that once you start understanding them, it will be very useful.

4) Insider information

Insider information is the information provided by some management level employee of a company. It may be about a news about a new deal or merger or takeover of some other company and has not yet been made public. Obtaining such information is very difficult but if obtained from some reliable source, believe me, it can work wonders.

5) Future prospects and expectations from the company

Expectations about sales growth and global scenario. Foresight about how the sales of the company are going to be affected can be helpful.

Conclusion

Trading in equity is considered in of the riskiest business but also it is the business which can bring you from rags to riches in the matter of months (if not days). The strategies followed by any investor cannot be fool proof and should be subjected to continuous evolution. Net theories and practices should be developed, iterated and reiterated. Older theories which have proven wrong should be discarded or modified according to individuals discretion. There is no thumb-rule which can be applied to equity trading for booking profits. Portfolio should be built in such a way such that the risk is minimized and profit maximized. Cheers !!!

Should India Inc. be apprehensive about a Double - dip yet?

Not much seems to be going right at the moment for India Inc. as such. Be it the value of rupee against dollar or the industrial production growth rate. The stock-market seems to be taking a dive, although the slope doesn't seems to be as steep as the last one. Among this tumult we find the government passing The Food Security Bill amidst the tight fiscal situation. We have news about EU nations on the verge of default which further aggravates the condition. The interest rates are doing no good to the economy than the inflation. Everyone seems to have tightened their fists at the moment, be it the governments or corporates.

I believe this is what should not be happening in the economy. Cutting the costs and spending will exacerbate the situation and will lead to the development of a vicious cycle which might further lead to a double-dip indeed. The market already seems to have stagnated due to the above mentioned reasons and now if we cut the costs/spending then cash will be further sucked out from circulation. The market needs to be eased  by adding surpluses to increase liquidity which can be achieved by lowering the interest rates. Although this might hamper the inflation a bit but in the long run it would be advantageous, I believe. Radical measures should be taken by the government and industries as well to regain the lost faith of investors (both local and foreign). There is light at the end of the tunnel, but length of the tunnel cannot be estimated as yet.
 

Frustration @ Mumbai

At times, people who surround you can really piss you off like anything. In Mumbai, i came across such people umpteen number of times.

The Bus conductor or Master : I boarded the bus at Borivali and asked for the ticket till Goregaon.  He blabbed something in marathi and i said "yes". My mistake.    So he gave me the ticket till there. Now as I was some 1km away from my stop, he asked me to alight. I said this is not where i have to go, i will alight at the next stop. That idiot started to push me (not literally push me although)  into alighting right there, not understanding and all the while talking in Marathi. I got frustrated because of his ill-treatment used swear words for him (my second mistake). He got all the more excited and started shouting. These bus "masters" can be big time suckers, i tell you!! So i finally ended up alighting there and swearing at him for the next two days.

The Mid-aged Marathi in Sub-urban rail: You might be aware of the crowd at the sub-urban local train in Mumbai. Inside the train there is just enough space to keep your feet, without moving it(well its obvious). So i entered the tightly packed train and by mistake brushed my foot over the mid-aged stubborn looking marathi man. This much was enough to incite him. He started blabbing like he just had a bitter fight with his disobeying wife. I didn't mind him. Of course I didn't mind him. But it was worth mentioning.

The busy looking grocery store owner : I went into a store and asked for something. He simply ignored me the first few times and finally asked me what i wanted as if doing me a favor. So after i paid up for the stuff, he simply slid the change towards me. Never-mind. But again, it was worth mentioning.

Apart from these petty incidents i found the people very friendly and helpful. These people will really help you whenever you are in need. They will guide you for where ever you want to go (i mean the path; literally). Although if you are not marathi then at times you can find them apathetic, but its bearable.

I love MUMBAI!!!!!!!!!!!!!! 

Yeh hai Mumbai meri jaan!!!

Mumbai : The city, i feel, which can fulfill my dreams. I came Mumbai on 15th August 2011 , the 64th Independence Day, and as soon as i alighted the bus, i felt free, independent. Mumbai is in fact a very massively crowded place. If i was asked to describe Mumbai in one word it would be "CHAOS". If i was granted the privilege to use another word to describe then the words would be " ORDERLY CHAOS" Let me give you an example of this orderly chaos. You go to a sub-urban railway station on a week day and at the peak rush hour, say 9'o clock in morning. The platform is full of daily commutators. Full as in, you can see only the heads of people moving randomly in a haphazard manner, waiting for the 9:02 A.M. train to arrive. The train arrives in time and before it made a halt, a large "volume" of people seems to flow out the train and a similar volume is pushed into it. Both these processes appear to happen as if some invisible force is taking control of it. Well the invisible force is the ORDERLY CROWD. You just need to stand in the right place at the right time, rest will be done by the invisible force. Also both these processes happen in not more than 20 seconds and the train leaves the platform roughly by 09:02:30 A.M. It's not long that the train left, the people have already started rushing towards the exit door and within three to five minutes everyone leaves the platform causing the delusion as it was always so empty and no soon that the people had left, the crowd for the next train starts appearing. The cycle continues.

Another interesting feature about Mumbai is its unpredictable weather. Yes, most of you, just like me, might have heard about the moody rainy season here, but I got a chance to experience it. Its like this: You move out of your home and the sun is shining bright over your head. You are quite sure that today will be a sunny day and you needn't take your umbrella with you. You start walking towards the bus-stop which is a few minutes walk away. You reach there and the sun is still shining bright. Its been four and a half minutes and the bus has still not arrived. Suddenly something wet falls on your head. Oh my god, is it birds poop??? You touch the wet substance with your fingers to determine what it is and its not long that you will find yourself completely drenched in rain. Large drops of water falling from sky piercing through your skin as is trying to kill you. You are wet from head to toe and now the bus arrives. You get inside it quickly to prevent yourself from anymore wetness. The bus moves and in not more than a few moments, as you look outside its windows, you find the sun shining bright again, but only the roads are wet (and ofcourse you).