Notes on Indian equities, sectors and economy

Archive for the ‘Talking up the Markets’ Category

The Sensex crossed 19K today. From here, we think markets are fully valued. This series will track people trying to talk up the market from these levels.

Talking up the Markets: Recap of FM’s statement

Posted by fairval on February 11, 2011

On 10 September 2010, the FM Pranab Mukherjee made this statement (see the earlier post):

Average Industrial growth this fiscal will be be between 12 and 13 percent, given the good showing of the labour-intensive manufacturing sector

Now it is clear that IIP will end up at around 8%. Advance estimates of the GDP peg it at 8.1%. I think that is a reasonable number. My range is 7.6% to 8.3%.

How shamelessly our politicians play the market. Now they are doing the reserve. I strongly feel this IIP data is rigged to further pull down the markets


Posted in Indian Economy, Markets, Talking up the Markets | 2 Comments »

Talking up the Markets: One sane voice, Anand Tandon

Posted by fairval on September 22, 2010

One guy who has the balls to say it like it is. Maybe TV channels will not call him for the next few months. Anand told CNBC it is time to  sell. I am sure anchor must have had a tough time..

Some excerpts:

  • Tandon added that incremental earnings growths do not justify share prices. (one of the guys we cited earlier said exactly the opposite – earnings momentum is better this time, he said)
  • Given the momentum that you are seeing in the market, it is entirely possible that it can rise a few hundred points more on the Nifty. This means that it could take off the previous high, but if you leave cheerleading aside for an investor, now is the time to be actually looking to get out if you haven’t already got out (Bravo, no broker says this on live television!)
  • This is too good. I have to quote the question as well:

If the view is caution at this point in time, which is the one space that makes you most uncomfortable and where you would advice investors to exit?

A: It is called the equity market. We have been warning about the risks globally but also being aware of the fact that there is a huge liquidity surge that is likely. Right now, you are in middle of that liquidity surge and from here on the incremental risk return is hugely against you as an investor. So while you maybe okay as a momentum player to try and ride the last 3 or 4%, as an investor there is absolutely no case now to stay invested.

  • You have to remember that you should not be trusting the regulators too much. RBI in its earlier report in the last review had said that by September we will have 5.5%. As you can see that after fudging figures (hey, someone else saying what we have been saying for a year) we are 8.5% and in spite of that RBI continues to maintain a negative real interest rate for inexplicable reasons. We have had a mother of all stimuli being presented to the Indian economy. I don’t think that we will be in a position to continue with that for far too long. Unlike the US, we are not an economy where you can continue to print money and hope that the currency will not suffer.

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Talking up the Markets -3: Ramesh Damani

Posted by fairval on September 22, 2010

Predictably, all the experts on CNBC,are still holding up the possibility the markets will go up. Some more examples from Money Control.

This is Ramesh Damani has to say:

    1. Current rally is more sustainable than last one. There are no sign of 2007-like euphoria.”
    2. I am clearly focused on Coal India IPO, I think around that time we should see index make fresh highs.
    3. The outlook is good. We could see a time before it travels to 25,000, but the sheer pace at which the market has risen back from its almost vertical fall suggests that the market wants to go higher. It might spend sometime consolidating, 21,200 is a psychologically brutal level of the market. It will spend time, in my opinion, consolidating at those levels, but ultimately this bull market will probably head much higher.

      Our Comments: Sure, the market will ultimately go up, like we will die one day. About Mr Damani’s specific comments:

      1. Current rally more sustainable? This is hindsight speaking. I have not gone back to see what MrDamani spoke in 2007, but would anyone in 2007 have said the world was coming to an end? The US economy was rocking, the global economy was rocking. And what do we have now? US and much of EU is running a double digit fiscal deficit. India has a huge fiscal deficit. And this Congress govt is increasingly looking like it believes in Indira Gandhi style socialism. We have the spectre of Rahul Gandhi become the PM in maybe 12 months. And trust me, he will be a disaster.
      2. Coal India IPO. It does appear the market is being held up to ensure that IPO goes thru. Mr Damani is right, but the message is wrong. The smart money will probably exit by the time the IPO comes.
      3. The outlook is good: Read the full thing. IT says the market will go to the previous peak, consolidate, then go forward. No possibility of valuations anywhere being too rich and so on. No need to sell. Hmm, only hindsight can say anything about this statement. We will revisit 12 months down the line

      Posted in Talking up the Markets | 1 Comment »

      Talking up the Markets – 2: Andrew Holland

      Posted by fairval on September 15, 2010

      This is among the higher end of targets for March 11.

      Andrew Holland of Ambit Capital said on a TC channel he expects the Sensex to hit 23,000 by March 2011 on the back of strong earnings in India next year.

      Posted in Talking up the Markets | Leave a Comment »

      Talking up the Markets -1: The FM and a broker

      Posted by fairval on September 13, 2010

      With the Sensex crossing 19k, markets are fully valued till April 11. But of course, markets can stay above fair valuations and stay there as long as bullish mood persists. This happens more often than not in a strong bull cycle.

      What will of interest now, is to watch who all are talking up the market. There are several interest parties who would want atleast a 6 month window of markets above 19K. We start a new series here, to record statements made with intent of prolonging the gold rush.

      The FM was first off the block last Friday. The moment the IIP data was released, he made this comment:

      Finance Minister Pranab Mukherjee said, he expects average Industrial growth this fiscal to be between 12 and 13 percent, given the good showing of the labour-intensive manufacturing sector.

      IIP for fiscal’11 at 12-13%? Economists, please revise yr GDP expectations immediately…

      Naresh Kothari of Edelweiss made this statement on ET Now:

      So there is a reasonably good chance that the market might go another 10% higher from these levels also. I think the trading range or zone of the market has changed over the last few sessions, over the last few weeks. We are now clearly in a 15000-16000 kind of a level at the bottom end to around 20000, may be even touch the earlier high of 21000 and then see where it goes kind of a range. So that is a range that I would think the market is in.

      (well, to be fair, that’s a motherhood statement, all bases covered. Not like the FM’s statement above, which is clear in its intent)

      Posted in Markets, Talking up the Markets, What was that Again? | 1 Comment »