Confused Mind Clear Answers (2012-03)
Ref: CMCA – 2012-03 of 1st March, 2012
Basic Requirements to Post Queries and Stocks Inquiries.
I am starting today “2012, March series”. Post your March comments here using comment box at the bottom or add comment on the top. This I am going to implement strictly in future. Use the Readers Corner to make any suggestions for any stock to be covered by us in future.
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PERSONAL PROBLEMS:Some readers refer to me personal problems relating to their life. I suggest them not to post them over her. Instead, send me an email toDISCLAIMER: The Author uses his vast experience of about 42 years in finance especially in bank, stock markets, bond trading, currencies, precious metals etc. He is retired and does not have allegiance to any brokerage firm,.bank, investment bank or any other professional or listed company. However, he expressly disclaims any liability for any loss, damage suffered by any reader of this blog by following any opinion or advice given by the author in good faith and without negligence. This is a free service, and should be used it at Reader’s risk and responsibility.No liability – Civil, Criminal or Tort – shall attach to the Author.
Kalidas (Anil Selarka)India, 1st March, 2012
Link to this page
Click for April-June Quarter
INDIA – STOCKS Spicejet
Dear Kalidas Jee
Thanks a lot for the practical reasoning and analysis on the prospects of direct import of ATF.
Also thanks for suggestion about reading other so-called experts (most of whom are simply crooks in the pockets of vested interests ). But frankly, I do not get any interest in wasting time over those expert-analyses most of which seems to me as nothing more than trash …. an impression which has set in my mind since I have been reading Kalidas (from the days of Moneycontrol board). I simply can’t help it.
Thanks & Deepest Regards.
Laxman
Bhubaneswar, India.
Kalidas Says … Saturday, April 07, 2012
Thanks for your compliments. However, please keep an open mind and try to learn from everywhere.
Laxman
4 Apr 12 at 11:54 AM
INDIA – STOCKS Spicejet price rise
Dear Kalidas Jee
Thanks for the clarification and suggestion.
With reference to this price rise of Spicejet there is a related news today at the following link :
http://www.moneycontrol.com/news/business/spicejet-surgesdirect-fuel-import-hopes_688238.html
If the rise in Spicejet price happens to be due to the prospects of direct import of ATF ( there by reducing the fuel cost by 18-20 % ) as per the news, can the retracement in price to “Rs 18 or about” as suggested by you be still expected ?
OR could it be at a higher level around 21-22 where I can look for buying-back / adding the stock ?
Thanks & Best Regards
Laxman
Bhubaneswar, India
Kalidas Says … Tuesday, April 03, 2012
I think that it is a misleading report. Direct import of ATF does not mean that they are “duty exempt” from payment of custom and ad valorem duty, imposed on every importer. Further, the profit margin in such mass commodity as fuel can not be as high as 20%. If that was so, none of the OMC would have been losing money.
Further, who is going to sell them ATF and from where? Spicejet is a tiny airline, and its requirements of fuel is also tiny. No major exporter country is going to deal with them directly. At the most, they can refuel at foreigh airport where the cost will be higher than the producers.
Further devaluation of rupee is also negating the benefits of lower fuel costs if any. If the cost savings could be as high as 20%, almost all major auto manufacturers will be keen to import fuel directly to support their car production. Their requirements are nearly 10 times that of Spicejet. There could be one plane against 100,000 cars. Just think of it.
Since I am negative on stocks in general due to massive shift in Government stance on taxation and other economic policies, I would take every rise in stock prices as selling opportunity. Yes, I do believe that Spicejet could revisit the level of Rs 18 within two months when the monetary crisis in India deepens. Please read other experts from Moneycontrol, CNBC, bloomberg, The Economic Times, Business Line,Myiris.com etc and arrive at reasoned decision. Kalidas is not the only one to read.
If government raises the tax demand on Vodafone after passage of the Finance Bill in the Lok Sabha, we have to see how the international investors react to changed scene where Indian Legal System will be considered as ineffective, where even Supreme Court judgement could be thrown out of the window.
Today, our capital gains are free of tax after one year of holding. Supposing the government decided to introduce Income Tax Amendment to tax such gains from 1962 onwards retrospectively, what will happen to all investors. India is like giant forest where the rules of the jungle will prevail.
Laxman
4 Apr 12 at 3:53 AM
INDIA – STOCKS Spicejet
Dear Kalidas Jee
In the last 3 sessions Spicejet has been making steady upward progress from 22.50 to 24.40, though volume is not very high … inspite of crude price remaining more or less at the same high range and progressively weakening INR. Is there any fundamental reason for this rise in Spicejet price ?
Based on your advice (to someone else) I have reduced exposure in this counter from 4300 (@ Rs 26.45) to 3000 by selling 1300 @ Rs.23.00
What should I do now… Reduce exposure further at higher prices, Buy back or Hold the existing position ? Kindly advice.
Thanks & Best Regards
Laxman
Bhubaneswar, India
Kalidas Says … Tuesday, April 03, 2012
It appears that the cancellations of several flights by Kingfisher of late has helped other domestic airlines to garner the higher market shares. Spicejet, Jet Airways, Indigo and Air India are the beneficiaries of cancellations of several flights by Kingfisher.
Do nothing for the time being. When the stock corrects to Rs 18 or about, you may buy back the shares already sold.
Laxman
3 Apr 12 at 2:28 AM
sub: query about PTC indian fin services
Dear Sir,
My previous query did not appear. What do you think about the recent news on PTC india fin servises:
http://www.vccircle.com/500/news/ptc-financial-makes-over-16x-as-multiples-buys-into-iex
Thanks,
v8r, Bristol, UK.
Kalidas Says … Sunday, April 01, 2012
There is always confusion between PTC and PTC Financial Services Ltd. PTC was only one company in the past, and PTC Financial Services is an off shoot of its parent. The stake they are referring to may be before the restructuring. We have to see the official statement through stock exchange from PTC Financial Services to digest the news referred by you. It is otherwise good news for the company but the stock does not move up in reaction. There may be something which is holding back.
Further, such one time gain is not taken as base for evaluating the company. We are normally concerned with the normal recurring income from financing operations, not one time off item. Nevertheless, the news is bullish for the company.
v8r
31 Mar 12 at 5:58 PM
Sub : India, Stock , GSPL
Dear Sir,
There is a news on GSPL regarding irregularities worth Rs 16,700 crore and purchase and sale of gas by state enterprise GSPC and alleged undue favours to corporations.
http://ibnlive.in.com/news/gujarat-govt-firm-favoured-adani-essar-cag/244234-37-64.html
What is your view on future of this stock. It is one of your favourite O&G stocks.
If the price starts dropping suddenly, should be start buying it. Or better to wait till the smoke clears out.
Thanks,
-Santosh, Bangalore, India
Kalidas Says … Sunday, April 01, 2012
The news relate to GSPC. In what way GSPL is involved?
GSPL is involved in gas transportation and and not outright buying and selling of the gas. May be GSPC is ultimate holding company of GSPL, but the GSPC investigation may not go against the GSPL.
Nowadays, the CAG goes on issuing statement of fraud running into several thousands of crores but they er never came close to prosecuting any wrong doer. Often their numbers are exaggerated. How could GSPC have given the benefits of Rs 16,700 crores to other companies without anyone taking notice. Further, if they showed such favours, did any of the company reportedly beneficiary have substantial turnover?
Adani group has consolidated profit of Rs 2,800 crores. That too is debatable. If huge benefits of over Rs 16,700 crores were given. Adani would have made several times more even if it is one of the mid scale beneficiary. Most of these companies pay little tax due to excessive depreciation and interest charges.
I very much doubt the accounting knowledge of CAG. They are just bluffing by exaggerating the revenue losses to play to the gallery. Unless they come up with exact numbers with greater details, we may not bother much about such cries in the wilderness.
Santosh
31 Mar 12 at 1:18 AM
Take care Sir.
Regards
Soma Raju
Soma Raju
30 Mar 12 at 2:36 PM
Essar Oil, further expansion on hold
Sir,
Please refer http://timesofindia.indiatimes.com/business/india-business/Essars-refinery-expansion-on-hold-as-tax-sop-ends/articleshow/12461570.cms
Is this a good news considering Essar Oil already has huge debts on its books or is it a bad news?
Regards,
Pawan,
Delhi, India
Kalidas Says … Sunday, April 01, 2012
Neutral. We have evaluated Essar Oil in the past (while recommending it) on the basis of expansion upto 18 mmt which has been achieved as matter of fact. Our expectation are based on realism.
I do not think Essar Oil, and for that matter any other refiner in India, will every go for further expansion in India. 38 mt is a distant dream which will never be implemented. Weaker rupee is a big impediment to refiners in India.
Unless the Rupee goes to Rs 31 or below, no refiner in India will ever become profitable due to subsidy based marketing of finished product – petrol, ATF and diesel. Essar will drop the plan for further expansion quietly and without any fanfare.
The future of Indian energy scene is GAS, not oil. Another alternative that the government will seriously consider is Atomic energy and Hydro Electric power. Look at Reliance. Have they made any announcement for further expansion of their refinery? Essar normally follows Reliance, not other way round.
Pawan
30 Mar 12 at 2:01 PM
Ruchiinfra-Unusual delivery volume
Respected Sir,
Y’day, Ruchi Infra traded more than a million shares, out of which 96.97% are delivery based which is unusual.
http://bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcode=509020
Earlier the company has fully redeemed FCCB’s and there is zero outstanding on this account. It seems good days are ahead for this counter.
Regards,
V.S.Kumar, Rajahmundry, India
Kalidas Says … Sunday, April 01, 2012
I do not analyze a stock or situation from delivery based to non delivery based trades, although this may be useful from trading point of view.
The last 5 days volume is between 46,000 to 97,000 shares, not really high to evaluate the effect of delivery based shares. It is possible it may be due to year end squaring of the position. However, I do not know. Do not expect better days based on such sketchy picture.
I did not see the volume of 1 million shares as suggested by you. The volume as reported by BARCHART.com for last 5 days may be seen by clicking this link.
V.S.KUMAR
30 Mar 12 at 11:12 AM
Sub :Outllook of Stock market in FY 2012-13
Sir
Your assessment of Sensex range in new financial year 2012-13 may be informed considering fundamentals of indian economy and Global scenario. Has Sensex bottomed out in Current bear market ?
Regards
Arun, Mumbai, India
Kalidas Says … Sunday, April 01, 2012
SENSEX before June 2012 – Target 15,200
SENSEX before Nov. 2012 – Target 11,800
Unless of course, there is political sea change in economic policy which is not expected by us before next budget 2013. The interest rates may rise to 12% (from current 9.5% now on deposits)
Only software, pharma may do very well. Rupee may weaken further to Rs 54 before Nov 2012 UNLESS there is dramatic collapse in US dollar due to market crash (stock, property and bond market)
Arun
29 Mar 12 at 11:20 PM
India General – Bank/DD Cancellation
Dear Kalidasji,
I guess you should be able to clarify my doubt. It is about Demand Draft Cancellation. I took a DD (Rs. 2500/-) from my (IDBI) Bank in March 2011. I missed the DD, so I wasn’t able to use it.
I requested the Bank to cancel the DD in January 2012. I have given them the scan copy of the DD and a Request Letter. The Branch Head asked me to give a Indemnification Bond (requires Rs. 100 Stamp Paper) as per Bank/RBI Policy.
I asked her, why should I give a indemnification against an invalid instrument(i.e. DD). I lodged a complaint with the Customer Care on March 6 2012, and requested a letter citing the Policy under which the Indemnification is required.
After a Month long fight through the Customer Care, the Branch Head called me today, she is trying to get the Internal Circular and will forward it as soon as possible.
The question is why should a Indemnification required against an Invalid Instrument(DD). Is it to protect the Bank Employee’s Stupidity, who may honor/accept an Invalid Instrument?
I assume you may clarify my doubt, since you are a Lawyer and an Ex-Banker.
Rajesh Kannan D, Chennai, India
Kalidas Says……Thursday, March 29, 2012
I presume that you missed the DD meant that it was lost. If that is the case, then my advice is as under:
1. Under the Negotiable Instrument Act, 1881, which governs the Cheque (includes all DDs, Promissory Notes, DPN etc), any person getting a title to the instrument in normal course gets the good title, rinsed of all defects. The holder becomes a holder in due course. He gets the title as if he got it a very clean instrument.
2. As such, the bank is asking you for indemnity in case it faces the unlikely event of facing a claim from holder in due course. In all probability, this indemnity may not be exercised at all because it is difficult to get clean title from lost or stolen instrument.
Just give the indemnity. There is no point in wasting time. The bank is right.
RAJESH KANNAN D
29 Mar 12 at 6:52 PM
Deccan Chronicle
Respected Sir,
Quite some time back Deccan Chronicle was on your stock watch list.The share price has fallen significantly.CMP being Rs. 33.15, its 52 week H/L is 90/31.75 respectively.The stock is fundamentally strong.Will it be alright to take exposure in this stock.If yes, then at what levels?
Lakshmi Lucknow India 29/3/2012
lakshmi
29 Mar 12 at 6:32 PM
Subject: FD or IOC
Dear Anil Sir,
Asking this on behalf of my brother. He has some spare cash about 10 L and wants to put them in fixed deposits which will earn him around 9%. Will he be better off putting half of his money in IOC. My thinking was the stock is at lower end and he will earn slightly less than 4 % in dividends only and if there is policy change it might give better returns than FD. Confused I am ! Also he is not at all exposed to equities and has good stable income of 1.5 L per month. Kindly advice.
Thanking you,
Amit
Galway, Ireland, 29th March 2012. 09:55
Kalidas Says……Thursday, March 29, 2012
Agreed. But as per my original advice, the exposure to OMC should not exceed more than 25% of investment budget. One may buy some, upto 15% against 30% recommended, because the markets are weak, oil prices are rising and Government policy on diesel price decontrol is not changing.
Just invest only Rs 1.5 lacs or Rs 2 Lakhs at the moment in IOC, HPCL and BPCL collectively. Buy more even at higher price later when the government changes the policy. The idea is to catch the trend.
Since bank deposit rates are fairly high, better use that opportunity at the moment because other options have many negatives.
Amit
29 Mar 12 at 4:56 PM
Dear Sir
Was there any problem with my messages? I posted twice but no reply. Please let me know if there is any problem so I can correct and not repeat the mistake. Or should I send my request to your mail? Please advise.
Regards
Soma Raju
Kalidas Says……Thursday, March 29, 2012
No there is no problem. I am not keeping well for last few days. I am replying with some difficulty. It was just excessive fatiugue. I will reply fully as soon as I recover.
Soma Raju
29 Mar 12 at 3:42 PM
Reg ;Gold and Silver
Dear Sir,
I would like to buy fresh gold and silver for short time,can u please provide fresh entry and exit level,as u had provided before,its a long time we had a strong view from u.
Thank u,
Sonali,Chennai,India,29-03-2012.
Kalidas Says … Wednesday, March 28, 2012
Although global market is weaker for gold and silver due to frequent attacks in derivative market, I think buying gold or silver in India at this point of time is most opportune due to weakening of rupee. The Rupee may remain under pressure for at least 3 more months until clear policy of the RBI and Government is known. Since you are buying in India, use current prices as guide. I do not follow the Indian Rupee prices because my holdings are mostly overseas.
sonali
29 Mar 12 at 12:18 PM
Dear Kalidas Sir,
Regarding Housing Development and Infrastructure Limited (HDIL) CMP 82.40 – Is this a good share to invest in?
Thanks,
Balasubramanian
Hosur, Tamilnadu
Kalidas Says … Wednesday, March 28, 2012
Not at the moment. Although the stock has sexy name, it is essentially a private real estate company with lot of debts. It does have lot of land assets in Maharashtra, esp in Mumbai, but I firmly believe that the real estate prices are slated for a sharp fall in Mumbai. My original advice to stay away from real estate companies until May end still hold good.
balasubramanian
29 Mar 12 at 11:24 AM
Swapping Spicejet into Essar Shipping
Respected Kalidasji,
Essar Shipping CMP:Rs.25.60 is nearing in Price level of Spicejet CMP:Rs.22.70. Considering strengths of these two stocks, can we swap Spicejet in to Essar Shipping? Pl advise.
Regards,
V.S.Kumar,Rajahmundry, India.
Kalidas Says … Wednesday, March 28, 2012
Yes, it is a good move to swap from Spicejet to Essar Shipping. The problems besetting the airline sector are likely to remain for some more time due to weakening of rupee as material factor. Do the swap.
V.S.KUMAR
29 Mar 12 at 11:08 AM
Sub: Swap from JP Power Ventures
Dear Kalidasji,
We have 1500 Shares of JP Power @ Rs.75 bought in 2011. The CMP is Rs.40. Request you to suggest us a better swap (GSPL. Arvind, Essar Oil).
Jai Shree Krishna
Regards,
Sonali Bhatt
Chennai, India
28th March 2012
Kalidas Says … Wednesday, March 28, 2012
I have always advised Readers not to swap from lower priced shares into higher priced shares, as most of the times, they do not work. Selling stock at 40 and buying other at 53 goes against my original strategy.
Yes, if you want to swap from JP Power (Rs 40) to Essar Shipping (Rs 26), it will make sense, not Essar Oil.
Sonal Bhatt
28 Mar 12 at 11:13 PM
Subject: Selling of 70% Portfolio
Respected Kalidas Sir,
As per your advice a few days back i had sold 70% of my stocks excluding OMC’s. I bought back 50% of sold value, mainly Essar oil, Satyam, Essar Shipping and sterlite, a few days back around 10% cheaper.
Sir, should i sell OMC’s by a certain percentage now (after increase in petrol prices if any in a couple of days) and did i do the right thing by buying 50% of the sold value or I should have waited more.
Regards
Suraj
Chandigarh
India
Kalidas Says … Wednesday, March 28, 2012
Yes, you did the right thing.
With regard to OMC, there is going to be long wait. The government is under pressure to de-regulate diesel prices due to further weakening of rupee, but the issue is so sensitive that it is simply afraid of adverse reaction from the people, truck drivers and other industries.
Personally, I would never sell OMC, and in fact I have not sold a single share of OMC (because I never trade).
However, if you prepared to buy back the stock after being sold, then only trade – that is sell about 35% now and buy back them again. The stocks are so much stable that most of the negative factors are already priced in.
Suraj
28 Mar 12 at 9:29 PM
India, Stock, Varun Industries
Dear Kalidasji,
Here is another one, joining the elite group of Shree AshtaVinayak, KS Oils, SKS Micro, Mannapuram Gold and KingFishers. The above said Stock is falling from heaven, but the investors are in hell now. It has lost more than 50% of value now. The CMP is 92. http://www.moneycontrol.com/stock-charts/varunindustries/charts/VI13#VI13
How do identify these kind of Stocks, before we are getting trapped. It looks like a good case study.
Rajesh Kannan D, Chennai, India
Kalidas Says … Wednesday, March 28, 2012
Selecting a stock is a long process. Just some stocks are down does not mean that they are cheap.
In respect of above company, please refer to the link which discloses that the steep fall in the prices is due to margin call related selling. The promoters have pledged 87% of their shareholding. Otherwise, this is a good company with regular profit and payment of tax. Each stock has its own merit. This stock having fallen by 40% in last few days only due to margin related selling may offer good opportunity. Please note that there is no way of knowing the margin related selling is over. So, be a buyer in small lots. When the selling subsides, as evident from lowering of volume on daily basis, one may begin to buy more.
I normally focus only on very well known and focused stocks. I never followed Varun Industries, so when my plate is full, I hardly digress from other well known stocks. From trading point of view, this stock at current depressed price may offer good entry point. Kindly do not treat this opinion as my recommendation to buy the stock.
RAJESH KANNAN D
28 Mar 12 at 7:35 PM
India, Stocks, Satyam, Reg: Sell Target
Hello Sir,
You have mentioned in stock observatory today:
Satyam is slumping after hitting recent high. Since the news is out, not much excitement is left in this counter
I have 1000 Satyam at 73.50 Should I make an exit from Satyam?
Thanks,
Ashish | London, UK
Kalidas Says … Wednesday, March 28, 2012
Only short term target is reduced from Rs 160 to 120 which may be achieved in second half. The reason for the change is that the merger is tedious process. They have to get the approval from High Court and then other regulatory authorities such as SEBI and New York Stock Exchhange (for ADR issue) Tax aspect is also not clear. We have to see the final numbers as of 31/3/2012 to see whether the merged company balance sheet is presented or otherwise.
Overall market being weak, the prolonged uncertainty even if administrative of the merged company, the stock may not perform as well as expected. The merger was expedited by TM to avoid paying Income Tax by using the built in losses of Satyam who may have provided for the payment of tax following freezing of bank accounts.
Otherwise, the fundamentals are improving. Rupee being also weak, the earning prospects will be brighter but only from June quarter ending onwards. The current quarter will be very bad for Satyam.
If you want to take short term position you may sell 70% with intention to buy back when merged company reports substantial lowering of profits for the year ended 31/3/2012. If you are not worried about the future prospects, which I believe that they are still good, in fact excellent, you may continue the position. However, it is better to sell some now with a view to buying back after Satyam result is announced somewhere in April
Ashish
28 Mar 12 at 4:32 PM
Subject : ADSL
Dear Sir,
I am holding ADSL 2100 nos at avg price 47.5 CMP : 23 .00 . I failed to swap it with IFCI as suggested by you earlier. Kindly suggest should I buy more to avg down the cost or partially/ fully book loss before this financial year end ? I am not able to take a decision , pl suggest.
Regards,
Atharva, Pune , India
Kalidas Says … Tuesday, March 27, 2012
Buy 2900 more at CMP and then rest. Yes, you can book the loss for tax purpose and then buy back in April.
Atharva
28 Mar 12 at 12:28 PM
Dear Anil Sir.. I am your big fan, and based on the recommendation, I bought 2000 sterlite at 123, 5000 Essar Oil at 68 , 8000 Essar Ship at 31, 1000 IOC at 340..
Based on following your advice I have built my above portfolio.
Please advice next steps and if I can add more to reduce the losses.
Thx
Omi, Mumbai , 27 March
Kalidas Says … Tuesday, March 27, 2012
Yes, you follow me but you observe, observe and observe and when our recommended stocks move higher and higher, you chase them and buy as above.
Buy Essar Oil 1000 at CMP and then rest
No need to do anything on Essar Shipping. You have bought more than we recommended.
No need to do anything on Sterlite Ind as price difference is not that high.
Omi
28 Mar 12 at 12:15 AM
INDIA, Portfolio update
Hi sir,
I need you valuable suggestion regarding the below stocks.
Stock Holding Avg Price CMP
ADSL 1352 30.04 23.05
Kalidas View … Buy 348 at CMP and abother 800 at 21.10
Confidence Petro 4041 6.23 5.09
Kalidas View … Buy 959 at CMP and rest
Essar Shipping 1045 34.01 26.35
Kalidas View … Buy upto 4000 shares
Rayabandi, Hyderabad, India, 27-04-2012
Kalidas Says … Tuesday, March 27, 2012
As above.
rayabandi
27 Mar 12 at 11:40 PM
Dear kalidas
please read this wonderful piece. it will bring tears to eyes.
http://blogs.economictimes.indiatimes.com/andwordsisallihave/entry/ankhiyon-ke-jharokhon-se
latha
27 Mar 12 at 9:01 PM
India, Stock – KingFisher Airlines
Dear Kalidasji,
For your Information. ICICI breaks ranks with Kingfisher Airline lenders
http://timesofindia.indiatimes.com/business/india-business/ICICI-breaks-ranks-with-Kingfisher-Airlines-lenders/articleshow/12421495.cms
Rajesh Kannan D, Chennai, India
Kalidas Says … Monday, March 26, 2012
These banks had securities for a long time, and it was their mistake that they did not sell it when the going was rough for the airline.
The things are not working well for KFA. They are surrounded by troubles from all fronts – higher oil prices, cancellation of approval from IATA, labour troubles, Tax related pressures, profitability pressure, working capital troubles and now, lenders oriented troubles. No one is going to come forward so soon as almost every suitor is waiting for some extra ordinary bargain to get into.
The stock may therefore may come down to single digit very soon. The government is doing everything it can to go against the best interests of KFA in particular and Air Lines in particular.
RAJESH KANNAN D
27 Mar 12 at 10:30 AM
Rising Interest rates – reg
Respected Kalidasji,
Govt borrowing program set to rise in next few years. Will you see rising interest rates too?
http://www.business-standard.com/india/news/govt-may-now-opt-for-bond-issuanceslonger-tenures/469025/
Regards,
V.S.Kumar, Rajahmundry, India
Kalidas Says … Monday, March 26, 2012
Yes, although MOF and RBI are not seeing eye to eye. The rates may rise to 12% at least. It is written all over the wall.
V.S.KUMAR
26 Mar 12 at 9:57 AM
Dear Kalidasji,
Re: Satyam – Tech Mahindra Merger
The correct link of Tech Mahindra shareholding is as under:
http://www.bseindia.com/shareholding/shareholdingPattern_60.asp?scripcd=532755&qtrid=72.00
Regards,
GhanshyamSuratIndia25th March 2012
Ghanshyam
25 Mar 12 at 12:08 PM
Dear Kalidasji,
Re: Satyam – Tech Mahindra Merger
Thanks for your quick response. Here are the links:
1. Press release on merger by Tech Mahindra – Mahindra Satyam
http://mahindrasatyam.com/news/documents/Tech-Mahindra-and-Mahindra-Satyam-Merger-Announced.pdf
2. Current Share holding pattern of Tech Mahindra:
http://bseplus.bseindia.com/StockReach/AdvanceStockReach.aspx?scripcode=532755
3. Current Share holding pattern of Satyam:
http://www.bseindia.com/shareholding/shareholdingPattern_60.asp?scripcd=500376&qtrid=72.00
4. Satyam – Tech Mahindra is a marriage made in heaven: Mgmt
http://www.moneycontrol.com/news/business/satyam-tech-mahindra-ismarriage-madeheaven-mgmt_683477-3.html
So, around 32 % shares of Satyam will be extinguished. I hope my understanding of the merged company’s shareholding is as above.
Kindly give your valuable views on these parameters.
Regards,
Ghanshyam
Surat
India
25th March 2012
Ghanshyam
25 Mar 12 at 10:03 AM
Precious Metals: Gold Reg: Unusual behaviour in New York COMEX Market!!!
Dear Kalidasji,
There is something unusual about this leg of fall in Gold. Earlier the fall is used to happen in US market.
But during this fall, Gold is falling in all markets but rising in US market, consistently on almost all days during this fall!
Please enlighten me on this peculiar behaviour.
Regards
Sabari
Mumbai, India
Kalidas Says … Saturday, March 24, 2012
Gold is not rising in US market, except yesterday. The behavior in other market depends on the exchange rates relative to dollar. Further, the trading in US market is mainly a paper trading in futures market where it is heavily manipulated. Other markets you quote are mostly physical markets (except MCX). I have mentioned number of times, that paper market and physical markets are vastly different.
In paper market or what you call COMEX/NYMEX the settlement is made mostly in cash or dollar, with option for physical delivery. Most trades are settled through cash settlements or without delivery. Not so with other markets, where most future trades are against physical delivery on settlement day, not on cash basis.
Sabari
24 Mar 12 at 9:06 PM
Dear Kalidasji,
Re: Satyam-Tech Mahindra Merger
In the merger scheme, the following things are to be observed:
. Tech Mahindra to issue 10.34 crore shares to Mahindra Satyam shareholders and
• Total 10.4% of Tech Mahindra’s stake in Mahindra Satyam istransferred to Tech Mahindra benefit trust, whereas the remaining32.1% stands cancelled
What impact you perceive on cancellation of 32.1% shareholding of Tech Mahindra in Satyam?
Will it have a positive effect on EPS of merged company, thereby benefiting Satyam’s existing shareholders?
Your comments on this nitty gritty please…
Regards,
Ghanshyam
Surat
india
24th March 2012
Kalidas Says … Saturday, March 24, 2012
In such cases, please include the link to the information you have so that I could go through the source before commenting.
Ghanshyam
24 Mar 12 at 8:44 PM
Subject : Awaiting Reply
Dear Anil Sir ,
Thank you for your valuable contribution and advise which is posted every single day without failure.
I sent you a mail on 03 March & 21 March 2012.
Please let me know if you have received the mail and when can I expect a reply.
Devoted Student ,
Hemanshu Sabharwal
24 March 2012 IST 03:55
Kalidas Says … Saturday, March 24, 2012
Received that. I will reply within 2 days by email only.
Hemanshu Sabharwal
24 Mar 12 at 6:24 PM
INDIA – Indian Stock Observatory .. Missing for 23rd March
Dear Kalidas Jee
It is noted that the Stock Observatory for 22nd March has been dated as
2012-03-22, Friday, India Time 9.30 am where as it was supposed to have been 2012-03-22, Thursday, India Time 9.30 am.
The Stock Observatory for 2012-03-23 Friday is missing.
Have I missed something ?
Thanks
Best Regards.
Laxman
Bhubaneswar, India
Kalidas Says … Friday, March 23, 2012
No you did not. I thought yesterday was a Friday US time (Saturday, India time) but it was Thursday US time, so it was missed. Next edition will be on Monday India time
Laxman
24 Mar 12 at 3:13 AM
INDIA, STOCKS, Shree Ashtakvinak, Reg:your views
Dear Sir,
Please advise if this stock can be bought CMP : Rs 3.70. There release is Bol Bachan is in July 2012
Thanks & Regards,
Pankaj, Vadodara
Kalidas Says … Monday, March 26, 2012
There is no logic in this stock. It rebounds from this level in the past.
If you do not own any position in this stock, just skip it. If you have higher priced stock, then you can buy more to average down the cost. This is a speculator’s stock.
pankaj
24 Mar 12 at 2:06 AM
Indian Market :-
Dear Sir
Current Nifty P/E is 18.65. At which P/E I should enter the market?
Regards,
Amit Jain
Ajmer
Kalidas Says … Friday, March 23, 2012
I do not use this method. I am more stock specific and generally go by SENSEX level, although NIFTY is more important in India. Overseas, they still use SENSEX as barometer.
Amit Jain
23 Mar 12 at 8:24 PM
INDIA, STOCKS, Sonata Software, Reg:your views
Dear Sir,
Do you track Sonata Software? If so please give your views.
I have learnt from reliable sources that its a fundamentally good company. But, not sure why its trading so cheap. It has not even participated in the recent rally since the beginning of this year.
Please advice. I would like to invest Rs. 25,000 for long term say 5 to 10 years.
Thanks & Regards,
Balajee, Chennai, India, 23rd March, 2012
Kalidas Says … Friday, March 23, 2012
I do not track Software stocks as it is very specialized field. Most of the times, it is difficult to cross check the news. We have to believe what is dished out to us by the management.
I do follow some large company stocks like TCS and Satyam. Another company I knew was ADSL (Allied Digital Services Ltd).
I am basically old economy player, relying more on hard assets as base. Software companies, Investment banks and other service company have only manpower or computer equipments as main asset. I feel that I have more chance of making serious mistakes in this industry, so I avoid altogether.
Balajee
23 Mar 12 at 7:31 PM
India Stocks, You Input Please, Pasting message from 21st March
Dear Sir,
I am sorry to paste this message with updated CMP here. I think it’s easier for you to check the new message than searching for my old message. I would like to get your opinion on my current portfolio. I have been holding most of these for longer than 1.5 years. Right now all of them in Red. Should I book losses and switch to your strong recommendations like Essar Oil or should I continue to hold? Eagerly waiting for your inputs.
Adani Power : 894 shares @112.99, CMP 67.35
Hindustan Dorr Oliver : 1430 share @93.88, CMP 32.65
Lanco Infratech : 5400 shares @28, CMP 19.05
PFC : 970 shares @223.15, CMP 185.35
Jubilant Life Sciences : 400 shares @319.92, CMP 179.6
Thank you,
Soma, Rajahmundry, India, 23rd March.
Soma Raju
23 Mar 12 at 5:39 PM
Dear Kalidasji,
Re: Merger of Satyam-Tech Mahindra
Since the merger of Satyam and Tech Mahindra has been announced at a swap ratio of 17:2, Tech Mahindra shares are rising much in proportion to Satyam shares. As per closing prices of 22nd March 2012, Tech Mahindra is trading at around 724, while Satyam at 80, where as in keeping with swap ratio, Satyam price should have been 85. Why does market reacting in such a fashion, though merger is still 6-9 months away? What do you observe from such price difference and what do you suggest for accumulating Satyam shares at current prices?
Regards,
Ghanshyam
Surat
India
23rd March 2012
Kalidas Says … Thursday, March 22, 2012
The merger has taken place in which Satyam is merging into Tech Mahindra. Thus, a time will come when the Satyam shares will stop trading during exchange days, but Tech Mahindra stock will continue trading. There will be discount in Satyam shares which may be around 5% to 10% (when the de-listing of Mahindra Satyam dates are near). This is perfectly normal. This is why we had suggested as strategy to buy 60% of Mahindra Satyam and 40% of Tech Mahindra because we did not know nor could we figure out how TM was proposing to merge with Satyam.
Now that the uncertainty is removed, both shares will gain. When TM shares gain, Satyam will also gain but at discount of about 5% to 10% to TM prices. Satyam stock was under pressure due to merger process unknown. It used to trade for a long time near 66 to 68 level for a long time.
The merger will be booked before March 2012, although physical merger may be delayed for a few more months due to various approval required, High Court, SEBI and Company Law Board. The idea of booking merger before March 2012 was to take advantage of “loss set off” against the profit of TM, so it has to pay less tax. We have explained this before, so avoid its repetition.
Now that cat is out, and the market is in bear phase, not much excitement is left from trading perspective. There is no point to add more position now. Go for other counters. Yes, fundamentally, the Satyam is an excellent buy and in all probability, TM stocks will reach over 1200 in about 9 months time when the combined result will start announcing from June quarter onwards.
The stocks usually move up or down in excitement. When the element of excitement is removed, the active traders rest themselves, the volume goes down and the stock gets into consolidation mode. Better search for other bargains such as Sterlite Industries, Essar Oil and Essar Shipping all of them are available in good price.
If you are owning a stock of Satyam, ride the rally and if you do not own any, then skip this counter and search for new counters where the element of surprise or excitement is not lost.
Ghanshyam
23 Mar 12 at 11:24 AM
Sub: Stock Advice
Hi Kalidas,
Hope you are doing good.
I currently have INR 2 Lakhs (in cash) and need your valuable advice on the stocks where I can put the money.
Appreciate your response.
Thanks,
Prasad
Hyderabad, India
Kalidas Says … Monday, March 26, 2012
The time is not right to go for any investment into Indian Stock market now. Wait for a few more days, say 2 weeks or so, before we can appreciate the entry points. The market is having more downside than upside. The index may sink to about 14,800
Prasad
23 Mar 12 at 1:18 AM
Sub : Duration of bear market
Sir,
End of current bear market phase is predicted in May 2012 considering 18 months from top of Sensex made in Nov.2010.Is there possibility of prolonging of bear market to 27 months ie. till Feb 2013 ?
Regards
Arun , Mumbai, India
Kalidas Says … Thursday, March 22, 2012
You are asking technical question whereas I am not really a Technical analysis based player. I go by fundamentals, and take the position accordingly.
Arun
23 Mar 12 at 12:08 AM
Apologies the subject line has got mixed with the content in my below post.
Atharva
22 Mar 12 at 6:36 PM
Subject Gold and returns Dear Sir, I have been investing in Gold ETF’s since Mar 2009 and holding @ 175 gms of gold bought in various phases till Sept 2010. With average gains of more than 47% % till date on CMP.
My query is what % rise you expect on investments made freshly in next 4-5 years? As I intend to invest another Rs 3 lacks instead of keeping them in bank FD’s where I have parked this amount . Also what should be the strategy of booking profit in gold ? as till this time the down side has been not very steep to have sold and re-purchased at lower levels.
Regards, Atharva, Pune, India
Kalidas Says … Thursday, March 22, 2012
You have to evaluate relative cheapness of various investment items, such as stock and Gold. The gold price will gain probably in April when Bernanke is expected to announce new QE3 program which may be nicknamed something else. Sell the Gold at that time about 40% (when it is close to or above $1800) and switch to the following stocks:
Essar Oil
Essar Shipping
Sterlite Indusries
Tata Global
- which ever is cheaper.
Atharva
22 Mar 12 at 6:33 PM
Dear Shri Kalidasji,
I am holding following stocks and facing 19.21% loss. I sold 400 satyam out of 500 nos. at 68 and bought essars and adsl should I buy back satyam
I seek your valuable advice and guidance for future path on the same
Scrip Quantity Cost Price CMP
ADSL 250 30.77 24.75
Kalidas View … Buy 350 more at Rs 23.50 or about because the market is weak
ESSAR SHPNGS 200 34.50 28.00
Kalidas View … Buy 300 more near about Rs 26
ESSAR OIL 400 66.25 57.05
Kalidas View … Do nothing, Just maintain the position
IOC 30 426.00 271.00
Kalidas View … Most news related downside is over. Better add 30 more at CMP
SATYAM 100 91.00 81.20
Kalidas View … Do nothing. Enjoy the rally and when the stock is near 108, then sell it.
With regards,
Kolkata,
India
Kalidas Says … Thursday, March 22, 2012
Are you in habit of chasing the stock? We were suggesting Essar Shipping when it was near Rs 26, and you bought when it was continually rising. You thought that the stock will run away from you and therefore you bought with the result that you got trapped.
Wherever the price difference is not huge, we have not suggested selling the stock. Follow the actions as per Kalidas View against your stock specific query.
R.Barma
22 Mar 12 at 4:08 PM
Hello Sir,
Please share your views on the NBCC IPO, its open now for bidding till 27th. The Bid price is 90.00 – 106.00, is it worth to invest in this IPO. Awaiting your valuable comments.
Regards,
Suman
Zurich.
Kalidas Says … Thursday, March 22, 2012
I do not follow any IPO.
Suman Chakrabarti
22 Mar 12 at 2:37 PM
India, Stocks, Your Input Please
Dear Sir
I have been following your blog for over 6 months now and learning a lot from your answers.
This is my first post and would like to get your opinion on my current portfolio. I have been holding most of these for longer than 1.5 years. Right now all of them in Red. Should I book losses and switch to your strong recommendations like Essar Oil or should I continue to hold? Eagerly waiting for your inputs.
Adani Power: 894 shares@112.99, CMP 67.75
Hindustan Dorr Oliver: 1430 shares@93.88, CMP 34.05
Lanco Infratech: 5400 shares@28, CMP 20
PFC: 970 shares@223.15, CMP 195.15
Jubilant Life Sciences: 400 shares@319.92, CMP 180.85
Thanks
Soma, Rajahmundry, India, 21st March.
Soma Raju
21 Mar 12 at 8:55 PM
India, Stocks, ESSAR Oil, Reg: Bugdet Impact?
Hello Sir,
Within a span of 15 days (6th Mar to 20th Mar) Essar Energy has appreciated about 50% from 101 to 150 on FTSE however Essar Oil is just not moving into the positive direction. There was an update today about Holding(s) in company: http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=11151775
Considering the fact that Essar Oil’s Ist phase of expansion at Vadinar refinery will be completed by end of this month why is this stock just not moving? Am I missing something?
Kindly enlighten.
Thanks as always – Ashish | London, UK
Kalidas Says … Tuesday, March 20, 2012
Bad market for oil stocks in India. Almost all refinery stocks in India, RIL, IOC, HPCL, BPCL (some exception here), MRPL, Essar Oil, TNPL, GAIL etc are all under performing ahead of budget. What you quoted about the increased capacity of Vadinar refinery was mentioned by us as one of the key reason for recommending this stock.
Another reason for weakness of this stock in India was the sudden development regarding the Sales Tax deferral issue which devolved upon liability of Rs 6300 crores under Supreme Court order. Not many are aware of real implications of this judgement, and many analysts in foreign broking house, in Citigroup and Merrill Lynch wrongly analyzed this issue.
Otherwise there is nothing and I am therefore never worried about this stock. Last two quarters’ poor earnings were mainly due to (1) closure of refinery for 35 days for maintenance purpose (similar event took place for RIL during this quarter, so that its upcoming result will not be good) and (2) payment of sales tax deferral liability to the extent of Rs 6300 crores, caused the stock to slide. The citigroup even forecast the stock to go down to as low as Rs 26.
Further, not many people are aware of Essar Energy LLc. The link you have quoted also increased its holding beyound threshold of 5% which is a good development.
So relax if you are holding the stock. If you are not holding any, better buy some.
Ashish
21 Mar 12 at 7:37 AM
RPOWER : 875 shares @ 250 – CMP: 125
HPCL : 190 shares @ 495 – CMP: 293
BPCL : 100 shares @ 653 – CMP: 685
IOC : 300 shares @ 416 – CMP: 270
Query:
1) Should I sell BPCL and average down HPCL and IOC ?
1) Should I sell RPOWER and buy Satyam ?
Regards
Nipi
Washington DC USA
Kalidas Says … Tuesday, March 20, 2012
Do the following:
Nothing wrong in buying RPOWER again. In fact we did suggest it when the stock below Rs 80. You may do the following:
SELL RPOWER@CMP – you raise cash + Rs 109,000 (Loss taken Rs 109,000)
SELL 100 shares @ 685, you cash + Rs 67,000
BUY 150 shares of IOC @ Rs 270 – You spend – Rs 40,000
BUY 150 shares of HPCL@293 You spend – Rs 45,000
BUY Essar Oil 1,250 @ 55 (-Rs 70,000)
Buy Essar Shio1500 @ 26 (-Rs 39,000)
BUY PTC Financial 2,000 @16 (-32,000)
Net Cash flow: Minus 49,000 which you will infuse new money
Nipi
21 Mar 12 at 12:53 AM
Satyam TM – Board Meeting on 21 March
Dear Kalidasji,
Satyam Computer Services Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 21, 2012, inter alia,, to consider the Amalgamation of the Company with Tech Mahindra Limited, along with the amalgamation of Venturbay Consultants Private Limited, C&S System Technologies Private Limited, CanvasM Technologies Limited and Mahindra Logisoft Business Solutions Limited (being wholly owned subsidiaries of the Company or Tech Mahindra Limited) with Tech Mahindra Limited, with a view to consolidate the information technology / software and related businesses and to form a single entity providing services in this sector.
Thanks
Srinivas | Bangalore
Kalidas Says … Tuesday, March 20, 2012
This is what we guessed a little while ago when we stopped the readers from selling this stock. It looks certain that the TM is expediting merger to take write off of IT demand of over Rs 1500 crores so that it can be set off against the profit. They want to complete the merger before the end of March 2012 to account for the set off and save the taxes. They know very well, that it would not be required to pay tax later when the Supreme Court hears its petition. At that time, there is nothing wrong in paying the back taxes.
Those who sold this stock may buy back some of the sold stock position (if not all). The swap ratio may be also announced, more in favour of TM because they can show Tax related losses as reason for lower valuation. One may buy TM (35%) and Satyam (65%) of investment amount to make sure that in the event of unfavorable swap ratio, TM stock may move higher and Satyam a little bit lower. This is a hedge type scenario.
Srinivas
20 Mar 12 at 8:41 PM
Essar Oil ,Vadinar- New projects
Expansion of existing refinery to 18 million tonnes through the addition of a Delayed Coker Unit
As part of a continuous optimization programme, the company has decided to further expand the refinery’s capacity to 20 million tonnes by September 2012.
Expansion to 38 million tonnes through the addition of a new Crude Distillation Unit and associated secondary units
Additional single point mooring system to handle crude
New product jetty
Regards
Pratik ,India
Kalidas Says … Tuesday, March 20, 2012
38 million tonnes may be a distant future, but the immediate goal is near achievement level. We already considered this while recommending this stock for the first time.
Pratik
20 Mar 12 at 7:20 PM
Subject: Swap / Indian Stocks
Dear Anil Sir,
Kindly suggest a good swap for the following stocks.
Stock
Buy Price
Quantity
CMP
ZEE NEWS
15.61
3000
10.55
TATA TELE
14.45
1000
24.45
RUCHI INFRA
20.64
3000
15.30
SPICEJET
42.16
500
23.30
These stocks together constitute not more than 5 % of my total stocks, but would like them to swap in to better performing stocks.
Other than these I hold Satyam, Essar Oil, IOC, HPCL constituting almost 70% of total stocks and are all in good profit.
Looking for your valuable insight,
Thanking you
Amit
Galway, Ireland. 20/03/12. 11:00
Kalidas Says … Tuesday, March 20, 2012
Note the following:
Tata Tele, though a good name, has lot of debt and profitability low. We would sell and swap into companies in your portfolio having growth and also less debt. The candidate is Ruchi Infra whose annual sales will rise by 50% this year, alhough the profit growth is subdued. (due to Parent, Ruchi Soya’s manipulation). This company is very unique in infrastructure.
Zee News was my very bad choice. It is not working and may take a long time to work. We have to switch.
Do the following:
SELL zee News all 3,000 take a loss of Rs 15,000 (+30,000)
BUY Ruchi Infrea 1,000 @ Rs 15.40 (-15,400)
SELL Tata Tele all (1000 @ 14.40) Take the loss of Rs 10,000 (+14,000)
BUY PTC Financial Services Ltd 3000 @ 15.95 (-48,000)
Do nothing for Spice Jet for the time being.
Amit
20 Mar 12 at 6:53 PM
Essar Oil, Averaging price
Sir,
You mentioned to some of your readers including me that we may average Essar Oil when it is 10% down from CMP. What would be the right entry point for that?
I hold 10,000 stocks at 68 and I can buy another 10,000.
Regards,
Pawan,
Delhi, India
Pawan
20 Mar 12 at 5:48 PM
Essar Energy & Essar Oil,
Dear Sir,
Finally your view is being echoed. Merrill has given a target of 265 for Essar Energy against CMP of 141.
http://www.ft.com/intl/cms/s/0/0558b0ba-719c-11e1-8497-00144feab49a.html?ftcamp=published_links/rss/markets_equities/feed//product#axzz1pdEekiAX
Notably Essar Energy has risen by 40% in last 12 days. Merrill also says that good news is expected on Essar Oil tax issues in a month.
Regards,
Sarvottam, Mumbai, India
Kalidas Says……Tuesday, March 20, 2012
I could not access the link provided as the site needed some registration. i had registered before but forgot the password.
In any case, I am much forward looking than other analysts. Essar Oil will have its value speak after April end when its final quarter result may be out. The full year result may not be good because of closure of refinery for 35 days and adverse sales tax deferment ruling. It will start the year of 2012-13 on very good note and since the present quarters will become comparable quarters in future, the numbers in 2012-13 will look more promising than before. The stock would react more positively in the ensuing year therefore.
Sarvottam
20 Mar 12 at 1:33 PM
India, Stocks
Sir,
Struck in the following stocks. Need your suggestion.
JSW Inspat steel 3600@ 27.18 CMP 13.55
Kalidas View Just buy 1400 shares and then forget about it for 1 year (Cash invested Rs 19000 approx)
Sree Renuka sugars 700@ 79 CMP 34.1
Kalidas View : Buy 300 more at CMP
NHPC 2200@33 CMP 20.7
Kalidas View: Buy 800 more at CMP (you invest Rs 17,000)
Shipping corporation 280 @ 132 CMP 64.1
Kalidas View: Buy 220 more at CMP and then relax (you invest Rs 14,000)
Also I can invest upto 50 thousand. Should i sell all these and swap for IOC? I currently have IOC 385 @ 343 CMP 272
Regards
Siva, Sydney, 20-Mar-2012
Kalidas Says……Tuesday, March 20, 2012
No. it would not be a good swap. Your losses in IOC is just 20% which it can recover in few sessions when the diesel price policy is announced.
However, your losses in other counters are more than 50%, that is, you have to double the stock just to break even. It is advisable to sell some IOC booking 20% losses and place the funds in other good companies where your losses are over 50%.
Kindly therefore proceed as per Kalidas View provided under your queries.
You will SELL IOC just 185 shares (leaving 200 shares) = you realize Rs 50,000 booking 20% losses
You will invest Rs 19,000 + 10,000 + 17,000 + 14,000 = Rs 60,000
You will therefore invest only Rs 10,000 as new funds.
ANAND SIVA
20 Mar 12 at 12:34 PM
Hello Sir,
I have 3 lakhs rupees in cash and looking for an opportunity to invest into stocks and I have following stocks:
Qty Price CMP
IOC 140 @ 352 269.35 Kalidas View … Buy 160 more
HPCL 126 @ 395 290.20 Kalidas View … Buy 124 more
MRPL 690 @ 72 66.05Kalidas View … Do nothing
Could you please advise?
Thanks,
Moorthi, Washington DC, USA
Kalidas Says … Monday, March 19, 2012
The cat is out finally during last budget. While the statement of Pranab Mukherji is vague yet, he has been hinting that the oil subsidy is being phased out sooner than later. this is why he is referring to prospects of lower interest rates from RBI who has been insisting on fiscal discipline and lowering of budget deficits. It is possible only when the subsidy is withdrawan.
It was also mentioned in the budget that Center’s rôle of subsidy will be direct, giving cash instead of bonds as in the past.
Under the circumstances, you may average down the cost of IOC and HPCL as suggested under respective stock. Do nothing for MRPL where the price difference is not wide enough to buy more.
Moorthi
20 Mar 12 at 9:10 AM
Rejoinder to Bhushan’s Suggestion – Tax Saving Bond
SBI and other banks are issuing 9.25% – 5-year-lock in fixed deposit. Interest can be drawn monthly or quarterly or any other way. No loan available on the FD. No premature closure. Even karur vysya bank is also issuing this TAx Shield FD (bond).
Manjunath.
Manjunath
19 Mar 12 at 10:44 PM
India, Standard Charted PLC, Recent Announcements
Dear Sir, It was recently announced that Standard Charted Plc Will be made 1:1 Equal to shares listed in London Exchange which made the PLc shoot up from 77 to 106 in just 2 days,But there have been two other announcements on the site which i’m unable to understand which i’m attaching below
http://www.bseindia.com/stockinfo/anndet.aspx?newsid=a7455c72-85ee-459d-bbf7-0f1d38eb5717
http://www.bseindia.com/stockinfo/anndet.aspx?newsid=f32fc153-369e-4412-897d-228f0b339e09
Please Shed some light on thse and guide us as i am invested in this with a quantity 0f 1500 in total and an average of about 108 , I kept this as long term call for good 5 years , With the recent announcements please let us know how to deal with this??
Thanks & Regards
Bilal Vohra
kanpur, India
Kalidas Says … Monday, March 19, 2012
What the shares awarded under option has to do with your position? You are unnecessarily carried away. SCB is the solid bank with decent earnings. Relax.
Bilal Vohra
19 Mar 12 at 4:45 PM
Sub: Regarding Dabbu’s query
Hello Anil, Dabbu,
To save tax, he can invest in long term FD (I think it has to be at least 3 or 5 years) which is tax deductible (investment is deductible from income for tax filing). Note that interest is still taxable when he recieves it later. SBI gives nearly 10% interest, so it is safer option.
Regarding the note on exemption from filing, it is to be noted that it is applicable only for salaried employees who are getting less than Rs 5 lakh income. They still need to pay tax. They have to inform employer of any extra income outsaide salary, so that employer can deduct TDS on that as well (or they can pay TDS in SBI). Thus they will PAY tax completely, but need not file tax returns. They will have to file returns if they forget to pay TDS in this way or if by mistake they ask employer to deduct extra tax on these “other income”. Hope this clarifies.
Regards,
Bhushan, City: Hassan, Karnataka, India.
Bhushan
19 Mar 12 at 12:31 PM
Hello Sir,
I am looking to buy gold in London. Any suggestions about where to buy it in London? I have enquired in some of the local jewellers, but not sure if I can trust them on the purity they offer. Please advise.
Thanks
Suresh, London, UK
Kalidas Says … Sunday, March 18, 2012
Try “Goldmoney.com”. They open the account and also deliver the gold physically throughout Europe, including UK. If you do not want physical delivery, try http://kitco.com
Suresh
19 Mar 12 at 6:41 AM
India Income Tax – senior citizen – Tax Saving Bond
Pranam Guru Ji,
My father is retired and his annual income for current financial year ending 31 March 2012 is estimated to be Rs.3,25,000 which included earning through pension and interest earned on savings.
Since the tax rate applicable for individual between 60 to 80 years is Zero up to Rs 2,50,000 my father would like to invest Rs. 75,000 on some Tax savings bond or any other tax saving instrument before 31th March 2012 to save tax on his income.
Could you please advise in this matter?
Regards
Dabbu
Baroda, India
17th March 2012
Kalidas Says … Saturday, March 17, 2012
To my limited knowledge, the Tax Savings bonds are limited to only Rs 20,000 against Rs 75,000 desired by you as mentioned.
Further, the Net Tax rate after initial allowance of Rs 250,000 will be very low. There is no point to invest into Tax Savings bonds therefore. How much you will save after all? few hundred rupees? If he want to avoid TDS, he can split up the deposit and also go to different banks so that same bank does not club all the deposits to make TDS work.
Alternatively, he can invest into solid stocks like ONGC which if sold after one year would not be subject to any capital gain tax. Yes there will be higher risk in equity, but the ONGC stock is near low end which limits the downside.
Bank deposit is the best investment for your father. He worked his life through, so let him rest and not think of making more money at this age. Why does he want to make more money now? His best days are gone, let him realize that. Even I do not invest more in paper assets because my age is over 64.
Further, there is no requirement of file Tax Return if income level does not exceed Rs 500,000. This is really puzzling to me. If one is NOT required to file Tax Return up to Rs 500,000, then for all practical purpose, he is exempted from paying tax. How the Income Tax department will come to know of any person’s tax avoidance if he is not required to file the tax return for income below Rs. 5 lakhs?
Do not simply try to save the tax. If something happens to your father, how the asset would devolve upon his wife and children? Unless there is second name or some nomination is filed and registered, some complications could arise later on.
Make sure that nomination is registered because many banks while they inform that the nomination is registered, in reality they are not. Always obtain a letter of confirmation from the bank separately or let the deposit receipt acknowledge the nomination on its own face.
Dabbu
17 Mar 12 at 6:55 PM
Indian Stock
Dear Sir,
Pls reply my Question.
Amit Jain
Ajmer
Kalidas Says … Saturday, March 17, 2012
Replied.
You are making my job difficult. When you remind, be precise of your post date so that I could locate. Further, you are putting up too vague questions without proper details, quotes, CMP etc. Please read the CMCA charter again how to put up the queries before us.
If you want proper answer, ask proper questions as required under our Charter as described in the foregoing article.
Amit Jain
17 Mar 12 at 5:11 PM
India, OMC
Dear Sir,
There was No announcement for Diesel Deregulation in this Budget, therefore how do you think that the OMC stock will behave?
I have 1000 HPCL at 420/-, should I buy more at CMP-300 or wait for correction?
And do you think that Diesel Deregulation can ever happen in this UPA GOVERNMENT?
REGARDS
SAKCHI,DELHI,INDIA
sakchi
17 Mar 12 at 3:16 PM
India, Stock, Allied Digital – Investment
Dear Sir,
Allied Digital has mentioned in its website that it has bagged a number of awards. Can ADSL be considered from an investment angle.
Rama Raaja, Coimbatore, India, 17/3/2012
Kalidas Says … Friday, March 16, 2012
We have already suggested as strong buy sometime ago when the stock was near Rs 29. In fact, we have suggested the level of Rs 25.5 as preferred entry point which is close to current market price.
It has come down due to weak market which makes it a very good buy. Most of the negatives, relating to Tax matters, appear to be behind. Read CMCA column for last two months, you will get the reference
Rama Raaja
17 Mar 12 at 10:46 AM
Dear sir,
Stocks – General – Common behavior of investors:
While reading the below email from Prashant and your reply – I felt I am in the same boat.
To quote - wherever I take position I will keep losing – This is exactly valid for me too.
When i sell a stock, it starts rising in the market. When I buy it, it rises for some time and then it goes down, and I will keep waiting for it to rise – some times that never happens. The problem is I do not know when to buy and when to sell and when to book partial profit etc…
You have explained very well in your reply with some points – but when you get time could you please write an article like ‘Rules an investor should follow’. It will probably be summarizing all the advices you have already given over a period of time in your different replies, but it will be much more useful if all those advises (and some more) are together.
Thank you,
Satya
(PS – I have not mentioned my specific stocks here as I thought it does not add value here, in this email)
Kalidas Says … Friday, March 16, 2012
There is already an Article under “How to Invest Series” titled How to Trade stocks and Indices – Kalidas’s 23 Commandments
Satya
17 Mar 12 at 10:44 AM
Subject: Pranab Mukherjee and Rangarajan interview post budget regarding deregulation of Diesel and reducing subsidies in general
Respected Kalidas Sir,
Please copy and paste these links to see the Pranab Mukherjee and Rangarajan interview post budget regarding deregulation of Diesel and reducing subsidies in general.
http://www.timesnow.tv/Frankly-Speaking-with-Pranab-Mukherjee-1/videoshow/4398168.cms
http://www.timesnow.tv/Frankly-Speaking-with-Pranab-Mukherjee-2/videoshow/4398156.cms
http://www.timesnow.tv/Rangarajan-hints-at-deregulation/videoshow/4398157.cms
Regards
Suraj
Chandigarh
India
Kalidas Says … Friday, March 16, 2012
Did not have time to watch the video but read the opinion and statement of the Finance Minister. There is vague statement that GOI is going to deregulate the diesel prices but when and how much we do not know. Under the present policy, even Petrol prices are deregulated, but in reality none of OMC including ONGC is willing t raise the prices to compensate themselves of the price differential. It is not only the cost recovery but also add the reasonable profit margin.
Unless the Diesel prices rise by 80%, there is no way the OMC can not only recover the losses due to subsidy but also make some profit (<5%).
Pranab Mukherji goes on blabbering about the parliament democracy and the power of parliament to make anything into a law. However, everyone knows that Parliament approved whatever is proposed by the incumbent government. It is only a formal approval of proposal laid down before Parliament for approval, and present government with its majority can easily get those approval due to its simple majority.
What Pranab Mukherji proposed, it would be approved into a law due to parliamentary majority – it is as simple as that.
Suraj
17 Mar 12 at 8:23 AM
Sub : India, Stocks, essar oil, sell call
I got Reliance power from Reliance natural conversion with price of almost 240.I have averaged down at 78 to bring down price at 160 and since it was in 90s for quiet long booked almost 50% loss and exited at 88.
I was having Indian Oil corppration at 340 and exited at 270 to switch to Esaar oil and Essar shipping.
I have switched to Essar oil at average 61 rupees (It did touched 74 after that). Now as per your sell call if sell I Essar oil again I will be in loss.After exiting Reliance power it moved to 135+ now and Essar oil went down to 56.
I am not sure where I am going wrong, wherever I take position I will keep losing, it may be reliance natural, indian oil or essar.Please suggest me since I am already at heavy loss and my capital already reduce to less than 50%. Sincere apologies if I have bothered you, but I always look at you for guidance
Thanks & regards,
Prashant, Chennai, India
Kalidas Says … Friday, March 16, 2012
No need to sell Essar Oil in your case. When we recommended the Essar Oil for the first time, we did say that better be a seller when it reaches above 70s. It did go and you were in 20%+ profit at that time. However you set the goal too high. Whenever any stock rises rapidly for 50% or more, it becomes initial trading selling point. Essar Oil was first suggested by us at Rs 46 when we wrote in this column that “Just buy it”. Now, 46 to 72 (if not 74), is difference of Rs 26 which is over 50% based on the price of Rs 46
There is nothing wrong in not selling it if your goal is long term. When you buy a stock on long term basis, there comes a time when you feel like trading on short term basis. When you buy a stock on long term basis, you do not look at the daily prices. When the stock comes within 20% of the long term target, then only you begin to look at that stock on daily basis. When we mentioned that long term target for Essar Oil was Rs 160, then unless stock reaches to Rs 128 or about, one does not have to look at it. No stock goes up in a straight line.
Where you went wrong was the fact that “you are always in habit of counting losses”. You never count the losses all the time, and you have to evaluate each trade independently of other stocks. When you bought Essar Oil and were at profit of 20%, you thought that you were still losing 30% from old trades (of Rpower). That is, your original loss was 50% and you could recover only 20%. If you had treated the transaction as independent of all other trades, you would not have made that mistake.
Also take the example of RPOWER. When the stock was in 80s, we did ask Readers to buy that stock (with RCOM in 70s) but instead of buying, you sold it because of our strong recommendations of Essar Oil. When one stock is about to begin a strong run, there is no need to switch to another horse. Better be on same horse than others.
Please remember that you can not make profit in every trade in the stock market. Even I can not make money in every trade in spite of years of experience.
Do the following.
1. Disregard our SELL call on all stocks
2. No need to sell Essar Oil. In stead, be a buyer if the stock goes down due to budget announcement raising the fees for exploration companies as suggested by some other readers (I have not verified that information as yet0
3. Stay with your existing position and trust our reasons for believing in Essar Oil which should outperform every other stocks after April 2012 (when the last quarter result is out and reflected – annual result may declare losses due to exceptional item of Deferred Sales Tax item). The real rise in
Essar Oil will begin from Mid July 2012
4. Do not trade too much. If your judgement does not work well, just stay put and allow time to heal the judgement. You are not in “awkward stocks” which will never recover. You are in some of the largest companies in India, so believe in them.
Prashant
17 Mar 12 at 2:40 AM
India Equity – Oil Exploration Stocks
Dear Sir,
Whats the impact of increase in Crude Oil Cess from 2500/MT to 4500/MT on Oil Exploration Companies such as ONGC, Cairn India and Essar Oil. Stock prices of these companies have fallen by 5 to 6% today.
Thanks
Muthu
Chennai; 16-Mar-2012
Kalidas Says … Friday, March 16, 2012
It will have temporary effect. Later on, these companies will pass on the cost to the consumers. As result, the energy prices, Petrol, ATF (used for Airlines), Diesel, LP Gas and CNG prices will rise. It is an extreme step backward and I do not know why the government is doing it.
Almost every country in the world, is extending benefits to oil exploration companies to become energy independent of Middle East and other sources. GOI is doing exactly opposite which shows the mediocrity of the Prime Minister and Finance Minister. Oil exploration is highly speculative and risky business. They have to spend the billions and years before they could have major find. The government is not financing them for their exploration efforts, so why just put its leg between the wickets?
Use it as a Buy opportunity after about 15 days, because analysts will be busy in major brokerage house, and they may come up with negative recommendations or downgrades of the very companies you referred to. Buy those stocks at that time. No need to jump in right now – let the news be digested.
Muthu
17 Mar 12 at 1:40 AM
I am reproducing a portion of the interview of FM by Mr.Raghav Behl as appearing in moneycontrol website.
Q: There are elements in this Budget of the old command economy thinking of the government. First is the Vodafone retrospective amendment. This is the old – government is right, everyone else is wrong mindset. Then you have ONGC where you sell shares a week ago to the public and then you impose a cess. If I, as a private listed company were to do that, tomorrow morning Sebi would haul me in for insider trading?
A: I am doing it with the revised guidelines of Sebi. I would not have done it if Sebi did not revise their guidelines. Therefore, don’t compare between non-comparables.
Q: I am not entirely convinced of which guideline of Sebi you are referring to which has been changed?
A: The latest amendment where the private sector and public sector have been brought at par. The corporate sector has this buyback arrangement and they are extending the same to us.
Q: I am referring to the Sebi requirement for companies to make mandatory disclosures of price sensitive information if they have it. If the government is going to impose a cess, presumably the government has been talking about this within the Finance Ministry for the last 20-25 days. When you have that information and you sell your shares to another shareholder, under Sebi law this is suppression of material price sensitive information and you are therefore subject to very stiff penalties. In fact, it is also a criminal offence?
A: No, I am not aware of the legal position of it. It is not that. The cess is within the control of the government. It is in an Act passed by Parliament via the Regulation Development Act, which empowers the government to impose the cess.
Is the stand taken by FM, in your opinion, morally and ethically correct and in the interest of the nation over long term?
VC Sekar, Delhi, India
1/3/12
Kalidas Says … Saturday, March 17, 2012
I have already mentioned in one of the reply that the interviewer deserve to be complimented for sharp and incisive questions.
Pranab Mukherji is morally and ethically bankrupt.
vc sekar
17 Mar 12 at 12:39 AM
Budget-2012, Analysis, Seeking Opinion
Respected Kalidasji,
Today FM Sri Pranab Mukherjee has submitted his seventh budget in Loksabha. Taking cue from your analytical thinking, I interpreted the budget in the following way. http://economictimes.indiatimes.com/news/economy/policy/budget-2012-13-highlights-of-pranab-mukherjees-speech/articleshow/12288334.cms
1. Budget is inflationary, borrowing will be increased, excise duty increased, fiscal strength is much weaker than last year budget time. More inflation means more devaluation of Rupee.
2. When decisions on subsidies, retail liberalization, GST, DTC, Aviation are not taken and postponed continuously, valuation of political management falls causing more uncertainty and under investment in the economy, growth falters.
3. Like in West, in India too media is appreciating FM budget which they coined realistic without understanding delay in decisions causing much hardship in the future.
4. The economy has not stress tested for West sovereignty/bank collapse, war with Iran, increasing twin deficits, weather changes etc., and Govt has no idea on these.
5. New political leaders like UP’s Akhilesh Yadav, Nitish Kumar of Bihar are promoters of development, why UPA is not dynamically anchoring these resources instead of worrying on Ms.Mamata Banerjee?
6. Overall a timid, bureaucratic budget lacking imagination and its effect will pull many people down to poverty level.
7. In these situations your opinion on budget and investment opportunities especially your recommended Essar Oil/Shipping, OMC’s shares under new scenario may kindly spell.
Yours Respectively,
V.S.Kumar, Rajahmundry, India.
V.S.KUMAR
16 Mar 12 at 11:57 PM
India >> Petrol Deregulation Interview – Pranab Mukherjee
Dear Anilji,
Namasthey, Thank you for your dedicated guidance to all we small investors with proper guidance and lessons; May God bless you a Very Healthy, Happy and Wealthy life..
Please find the link to the CNBC-TV18 Interview of Pranab Mukherjee:
http://www.moneycontrol.com/news/economy/39petrol-price-rise-will-happen-via-executive-actions39_681640.html
Your views please.
Regards,
Sreeram, Singapore
16th March 2012
Kalidas Says … Friday, March 16, 2012
Thanks. The CNBC interviewer deserve to be complimented for some sharp questions which Finance Minister was unable to reply.
The Finance Minister at best was evasive. He is following dangerous precedent by re-opening the case of Vodafone with retrospective legislation in the Taxation law. So, what you consider legal under present law will be illegal tomorrow with retrospective legislation. It is also unconstitutional.
If the GOI does serve demand on Vodafone to pay the Taxes in spite of Supreme Court ruling, it will serve a serious notice to FDI, FII and Private Equity players NOT to invest in India. If Finance Minister is under pressure to balance the budget, let him do away from oil price and fertilizer subsidy altogether which is right thing to do, instead of bending backwards and using thoroughly incompetent measure to apply material tax law retrospectively and harass the genuine foreign investors.
Sreeram, Singapore
16 Mar 12 at 9:43 PM
India Stock :- Unitech
Dear Sir
I can buy unitech on this level. and what will be trend of India market this position.
Regards,
Amit Jain
Ajmer
Kalidas Says … Saturday, March 17, 2012
Unable to appreciate your question. Are you buying first time? What is “this level”. Please be price or quote specific, and do not use adjectives.
If you are buying for the first time, wait for a few days to see the trend how the market takes the budget in its stride. Otherwise, when the stock is at Rs 25.50, you may buy for the first time.
Please note that I am not in favor of any real estate stocks until Mid May 2012
Amit Jain
16 Mar 12 at 7:28 PM
Dear Sir,
There is not much for Airlines Industry in this budget, i have 3000 shares of Kingfisher Airlines at 23. Do you still advice to hold on to them or swap to other stock (may be Essar Shipping) or sell to raise cash?
Best Regards
Shaan, Bangalore, 16th Mar’12.
Kalidas Says … Friday, March 16, 2012
I have already advised readers to limit their exposures to KFA up to Rs 50,000, whereas you have invested Rs 69,000. Try to sell 1000 shares in rally and swap to Essar Shipping. One can increase the exposure only when the more finance is available or when the Airlines take action to raise the fares by at least 35%. Even if one has to pay a bit higher at that time, it would be worth it.
It looks like from budget highlights that the Government is likely to announce soon FDI upto 49%, and at the same time limits the FCCB limit to US$ 1 billion. It does not make any sense. Supposing 49% amount to $ 3 billion in the case of say Air India or Jet Airways, would the GOI reject it or accept it.
Wait until the policy measures on Airlines are very clear. Regardless, the important issue is whether the lenders will dole out more money to the sick airlines.
Why not the government is taking measures to increase the Airfare in India domestic route which will restore the profitability? If the profitability improves, all problems will disappear. The Government of India is trying out medicines for headache whereas the pain is in the stomach.
Shaan
16 Mar 12 at 7:27 PM
India Capital Market – Stock Swap Ratio
Pranam Guru Ji,
My Apologies. I am basically talking about ‘Stock Swap Ratio’ in general and not linked to any specific Stock.
Or may be in financial terms it’s technically called ‘Swap Ratio’. The ratio in which an acquiring company will offer its own shares in exchange for the target company’s shares during a merger or acquisition.
Could you please advise on the valuation method used to determine the Stock swap ratio.
Is the valuation done on Asset based or Earning based or Share price or anything else?
Is there any industry standards applicable in India or overseas for determining Stock swap ratio?
Does different industry/sector follow different valuation method to determine Stock swap ratio?
Regards
Dabbu,
Baroda, India
16th March 2012
Kalidas Says……Friday, March 16, 2012
There are no standard rules. Capital intensive stocks or merger are based on Asset Valuations (Hotels, Airlines, Shipping lines) whereas Earnings are used in low asset based companies such as Software, financial companies, banks, etc.
There are no definitive guidelines. This is why the Independent Auditors are appointed to advise the minority shareholders on adequacy of asset swap ratio.
Dabbu
16 Mar 12 at 3:26 PM
Subject : Gold 999.9
Dear Sir,
As recommended by you, to buy gold now as it is going down. I went yesterday to purchase 50Gm gold, with local well known jeweller.
Here I came to know interestng fact that, only banks and Tanishq is authorised to sell 999.9 purity gold in India,, where as all other jewellers sell upto 999 purity.
Hence why when 999 was available at 27950 per 10 gm + 1% vat so final 28230, but i bought from Tanishqe 999.9 at 28200 + 5.5% dye making charge + 1% VAT which effectivly brought up price to 31118 per coin.
Please advise if my transaction was the valid thing or should I consider the 999 coins of Gujarat Gold Counsil, sold by local jewellers. As per Tanisq guy banks do not buy back 999.9, but only tanishq will buy it back in future with the same rate as of 999.9 in future.
Also how practically 999 is different from 999.9
Humble Regards,
$amir, at Baroda now, 03/15
$amir
16 Mar 12 at 2:56 PM
Re: Goldman Sachs
Dear Kalidasji,
Your sentiments about GS and their ilk are well-known to us. Today the same have been echoed by one of the insiders. Interesting read:
http://www.nytimes.com/2012/03/14/opinion/why-i-am-leaving-goldman-sachs.html
Best Regards,
Ajay Dand, Mumbai, India.
Kalidas Says … Thursday, March 15, 2012
Thanks. Also read my comments to Nisha just below this post.
Ajay Dand
15 Mar 12 at 6:51 PM
Attitude of big banks
Dear Sir
Interesting read, resignation post by goldman Sachs executive.
http://www.nytimes.com/2012/03/14/opinion/why-i-am-leaving-goldman-sachs.html?ref=business
Thanks
Nisha
S
KL _Malaysia
Kalidas Says … Thursday, March 15, 2012
It is a voice of a disgruntled small time employee. He is too junior to merit so much of importance. The said employee is very young and almost a puritan. A freshman just out of the business school. Almost all brokerage firms, especially large ones, do not care much about the customers. They run their own proprietary books under which the only motive is the profit for the firm. They usually take a view, act on it, take a position and then advise the customers the only opposite view and make them take opposite position so that whatever they sold, are bought by the customers and whatever they bought or accumulated, are advised to be sold by their customers. Most of large brokers or investment banks are suckers.
GS used to rule sky when its own key employees were having top positions in Treasury department, like Rupert Rubin who was treasury secretary during Clinton days, and Hank Paulson who was also Treasury Secretary during President Bush days or the days of financial crisis. Both of them were CEO or President of GS. They obviously used to pass on the key financial news or policy matters to the GS traders who used to take the position accordingly. Even a Business News Channel like CNBC used to have many anchors who were once upon a time were GS employee or associated with them one way or other. With key news under their wrap, GS traders would assume certain trading position, then disseminate opposite views in the form of news broadcast through CNBC and others. Their customers will therefore take opposite positions and lose the money. In short, they will have trades and media under their control.
This is the reason that post financial crisis, GS used to make billions of dollars in Fixed Income trading when its nearest competitor Morgan Stanley would make very little or even lose money. How come? Because, Morgan Stanley or Merrill Lynch would not have classified information what we normally call “Insider News”.
One can make huge money only if he has some “insider knowledge”. This is why in famous movie “Wall Street”, Mr. Gekko (played by Michael Douglas) says that the key to trading is “Information, Information and only Information”.
In a way, America is a classic racist society. The famous Galleon Fund Manager Mr. Rajratnem was a Sri Lankan and brown skin boy who reportedly made only $55 Millions based on inside information passed on by GS executive (an Indian). Rajratnam was finally prosecuted successfully and condemned to prison fof several years.
Whereas the fraudsters like Madooff, Stanford who made away billions of dollars were let off and they are still running scot free only because they are white Americans.
Yes, GS is having bad time and running through the days of falling tides. The latest rules under Frank Dodd act and Walker’s rule do not permit these banks to take own proprietary position as result of which they are losing billions or do not make enough money. It is possible that after a while or so, GS management would finally decide to shed its status of a “Bank” and surrender the license. They will then be free to take their own proprietary position. However, they will not have luxury of having inside information from the US Treasury department. Their best days are gone for at least next 3 years.
Nisha
15 Mar 12 at 2:42 PM
India, Equity, Aviation
Sir,
I have 700 KFA @ 23. Looks like the final show down is nearing. They have stopped their international operations too. If it comes down to sub 18 levels, is it worth buying more ? Aviation minister today said that Malya will find investors on his own, and SBI is not funding him further. You have been strongly advising it, but with the latest developments, please suggest.
Thanks,
Vijay
Bangalore
Kalidas Says … Wednesday, March 14, 2012
No change in views. The lenders always behave like a young lady. When she says no, it means yes. Do you remember the song ” Bol Radha Bol Sangam hoga ke nahin” – Nahin, kabhi nahin and then hoga, hoga jarur hoga.
SBI does not act on its own. When the Aviation or Finance Ministry says – do it, they will do it. The Chairman of SBI is a sycophant of the finance ministry.
I have given clear advise on KFA, so if you are convinced, do as per the original advice. We do not like to rehash same advice again and again to different readers. Our language is clear, crisp and without any double interpretations.
Vijay Hegde
14 Mar 12 at 11:45 PM
Essar Oil & Essar Shipping
Dear Sir,
Good Morning.
I have Essar Oil & Essar Shipping at below rates.
Essar Oil: 2158 @ 62 – CMP 59.10
Essar Shipping: 3000 @ 33 – CMP 28.95
In the Stock Observatory you have advised to sell the stocks by 70% of the portfolio. Essar Oil & Shipping is about 55% of my portfolio, should I sell these stocks also or should I wait for some time, I can wait for about 6 months.
Please advice.
Best Regards,
Manoj,
Chennai.
Kalidas Says … Wednesday, March 14, 2012
Essar Oil – SELL 658 at CMP or in rally this week
Essar Shipping – SELL 1500 when the market is up or stock is up. It is stable but raise money.
You have to buy back these stocks when they correct and come by 11% from your selling price. At that time, do not come to me to ask whether you should buy back.
Manoj PK
14 Mar 12 at 11:24 PM
Kalidasji
I have Essar oil, Essar Shipping planning to hold
for one year. Do i still need to sell 70% of the shares
or can i hold ?
Thanks
Sunil
Bangalore
india
Sunil
14 Mar 12 at 5:40 PM
Subject: Sell call, 70% shares
Respected Kalidas Sir,
Regarding your sell call in sector swap section to 70% extent, I assume that this sell call refers to shares other than your recommended shares like Essar oil, Essar shipping, Sterlite, IOC, HPCL, GSPL and PFS etc. The reason being I am asking this because last time about 18months ago when you asked to sell 90% of all of our holdings, I thought you were asking to sell 90% of our holdings except of OMC’s. At that time I reduced all my share holdings up to 90% but did not touch OMC’s.
Later I realized My mistake that your sell call included all shares.
Please correct me if I have misunderstood your sell advice this time also.
Regards
Suraj
Chandigarh
India
Kalidas says….Wednesday, March 14, 2012
Yes, you are right. It applies to all stocks including Essar Oil, Sterlite, Essar Shipping, GSPL, PFS.
Since you are holding stocks like IOC and HPCL for over a years, you may not sell them because your overall exposure would have come down substantially. Further, lot of rumors are abound that the Government may announce “diesel excise tax” on diesel driven car to reduce the subsidy (we do not know who benefits in such subsidy – whether all 3 – govt of india,ONGC and OMC equally or otherwise. It is possible that if the diesel excise tax is introduced, OMC may have to subsidize less if the share is reduced equally. As such, OMC stocks + ONGC may gain regardless of the market. It is only a question of waiting until budget time or just a few more days, so wait for OMC.
Except for OMC and ONGC, reduce the exposure to other stocks by 70%. Others are sold with a view to buying back during market correction.
Suraj
14 Mar 12 at 12:54 PM
Dear Guruji,
I will be grateful to you for your astute advice on following stocks.
Dena Bank 100@ 108(Sep-10) CMP 94.2
Hindustan Construction 200 @ 85 (22-Feb-08) CMP 29
Reliance 6@ 2911 (price considering bonus) (Oct-09) CMP 829
Ruchi Infra 400@29 (Nov-10 to May-11) CMP 16
Unitech 106 @ 95 (Jan-10) CMP 31
There are other good stories in my portfolios like IOC, Essar Oil, L&T, BPCL, IDFC, Idea Cell, Satyam etc.
Regards,
Yogesh Khandagale
Baharin
Kalidas Says … Tuesday, March 13, 2012
Ride the rally for next two days and then only sell some of the bank stocks.
When you sell bank stocks, then buy RIL to average down the cost. I doubt whether your cost could be so high if spin off values are taken into account. Just check your records whether they are correct. RIL has not come down by 80% unless the spin off values are ignored.
You may buy Unitech (500 more shares). Ruchi Infra – just buy 600 more shares and hold until final result is out in end April. No need to book any loss on this counter.
Yogesh Khandagale
13 Mar 12 at 6:45 PM
India Capital Market – Stock Swap
Pranam Guru Ji,
Could you please advise on the valuation method used to determine the Sock swap ratio.
Is the valuation done on Asset based or Earning based or Share price or anything else?
Is there any industry standards applicable in India or overseas?
Does different industry/sector follow different valuation method to determine Sock swap ratio?
Regards
Dabbu,
Baroda, India
13th March 2012
Kalidas Says … Tuesday, March 13, 2012
Unable to understand your question. What is “Sock Swap” ratio? Do you mean Stock Swap ratio? Spell check your write ups before you post.
And which company you are talking about for Stock Swap Ratio or are you hinting at our Stock Swap column.
Your questions or query has to be specific so as to be meaningful. This query will be deleted when you repost your query again with specific reference.
Dabbu
13 Mar 12 at 3:54 PM
Dear Sir,
India Stocks – SATYAMCOMP
Presently holding 2000 Nos @22 – CMP 68
(sold 2000 @92 in June 2011)
What strategy should I take now:
Hold not to sell more as you have suggested today in Stock Observatory. Wait for some more time. The scrip is testing the patience at 65-75 range. Book 50% profit at current level and invest the funds in some potential growth stocks like IOC, GSPL etc. (holding small exposure in both stocks)
Thanks & Regards,
Matthews
Doha – QATAR
12.03.2012
Kalidas Says … Monday, March 12, 2012
Read my reply to Ghanshyam just following your post. I avoid its repeat.
There is no need for TM to declare the losses before the end of 31/3/2012. However, the losses may be announced when its final result is announced near April end or mid May.
When the SWAP ratio is announced now, it will not be evaluated by any analyst because the major financial details will be absent. As such, the stock may gain (both Satyam and Tech Mahindra with TM gaining a little bit more because of more favorable swap ratio expected by us)
You may hold the share for another two weeks, and in all probability, the stock may pass the hurdle of Rs 75 this time. If it rises too much, sell 75% of total position in ensuing rally. Since you have sold 50% already at hefty profit, your entire capital has been recovered (if your cost is Rs 22 against selling price of Rs 92), and what has remained now is the “floating profit” – you can not lose money here.
Swapping into other stocks, though they are good one, is not desirable right now, because the potential gains in Satyam could be more and all uncertainties may come to an end except the Income Tax related matter.
Other good stocks like IOC and GSPL can wait for the time being. The market is weak and the budget is around the corner. So hold on to cash for the time being.
Matthews
13 Mar 12 at 2:08 AM
Dear Kalidasji,
Re: Satyam Computer Services Ltd.
Today, on 12th March 2012, Satyam traded in NSE as under and the deliverable quantity is as high as 80.97% of the traded shares. It is really intriguing. Kindly throw light on such an extra ordinary development.
EQ
Symbol: SATYAMCOMP
ISIN: INE275A01028
Market Tracker
Regards,
Ghanshyam
Surat
India
12th March 2012
Kalidas Says … Monday, March 12, 2012
Looks like someone is accumulating stock, most probably Tech Mahindra management or someone related to them. It could be that the merger and swap announcement may be in process which may be finalized before financial year 31/3/2012. It is possible that Satyam may provide for Income Tax liability in its book which may force it to declare loss (which can be always reversed if its appeal succeeds). The idea behind is that Tech Mahindra will be able to set off its profit against such losses, so that its tax liability may be reduced substantially. By declaring losses during this time, TM can expect to have better Swap ratio in its favour.
These are all Tax Avoidance transaction which are treated as Tax Planning. Earlier, TM had indicated that the merger may not be complete before the end of next financial year, that is, 31/3/2013
Only yesterday, we advised readers not to sell anymore of Satyam and hold on to them, before opening of the market and above news release to postpone the selling. We are lucky that our advice is likely to turn out to be a good one.
We should hear some announcement before the end of the week or latest by 21/3/2012 because the final Income Tax installment is due before 30/3/2012 (last working day of current month)
I normally do not analyze the data of delivery based or non delivery based transactions. Most of the time it is a futile exercise.
Ghanshyam
12 Mar 12 at 11:02 PM
Indian Stock :- Glaxopharma, East India Hotel
Dear Sir,
I have 100 share Glaxopharma and 1000 shares of East India Hotel. Should I swap both stocks to essar oil and gspl.
Regards,
Amit Jain
Ajmer
Amit Jain
12 Mar 12 at 6:48 PM
Home Loan prepayment vs. FD vs. RD vs. Equity – II
Dear Kalidasji,
39 Lakh home loan is for 10 years. Last week 5 lakh of part pre-payment was done. Plan to do similar part pre-payment of 5 Lakh each every year. This comes to 24 lakh towards pre-payment. Regular EMI payment is not shown in the table. Due to pre-payment loan would get closed in next 4 years.
Do you suggest any change here ? What about silver holding ? Do you suggest any partial selling of silver if we see better price ?
Thanks
Srinivas | Bangalore | Mon 12 March | 11:25 am IST
Kalidas Says … Monday, March 12, 2012
Understood. My advice remain same. Do not prepay housing loan as yet. When the rate difference between deposit and Housing Loan rate widens to 4.25%, then only think of pre-pay it.
No need to sell any Silver for the time being. In fact, one may buy it when it falls below Rs 32.85.
Srinivas
12 Mar 12 at 1:58 PM
Indian Stock :- IFCI
Dear Sir,
You said ifci sell. Now today you said swap to ifci on this level. why and what to do. what will be trend of India market in march and april.
Regards,
Amit Jain,
Ajmer
Kalidas Says … Sunday, March 11, 2012
Do not quote me out of context. We suggested selling IFCI when it ran fast from Rs 24 to Rs 48 in 2 months, and now that IFCI has consolidated at lower level, and MCX issue being done recently giving IFCI good profit that will be known in this quarter, We suggested buying again. There was no MCX issue in pipeline when the stock was suggested by us at Rs 24 which went to Rs 48 without MCX news.
Market trend is down and will remain so for another 3 months.
Amit Jain
12 Mar 12 at 1:46 PM
Home Loan prepayment vs. FD vs. RD vs. Equity
Dear Kalidasji,
I am posting this query on behalf of my brother. He is 39 years,
working in US as a software consultant. He is married and has 2 kids (5 yrs). He has got Green Card and plans to work in US for next 5 years.
He has 2 homes, one of which has outstandling home loan of 39 Lakhs
with interest @ 11.25% floating rate. These two home are generating
monthly rent of 38000/pm. He has no other liabilities. He has montly
investible fund of $2000/pm. He has 10 kg physical silver @63000/kg.
Now he has 15.5 Lakh cash and wants deploy it as per the following
asset allocation.
1. Rs 5.0 Lakh homeloan prepayment done – Balance loan Rs 34 Lakh
2. Rs 5.0 Lakh @9.50% 10Yr NRE FD – IDBI – no penalty for pre-closer
3. Rs 50000/pm @9.25% 10Yr NRE RD – HDFC – no penalty for pre-closer
4. Rs 50000/pm in equity for next 12 months
5. He wants to decide whether to deploy the remaining Rs 5.5 Lakh in prepaying the loan or to buy equity during April-May’12 crash – OMC, Essar Oil/Shipping etc. Currently no equity holding.
——————————————————————–
Time Rental HomeLn NRE_FD NRE_RD Equity Total
Line 5% 11.25% 9.5% 9.25% your Funds
Income 39Lakh IDBI HDFC picks Invested
Annual Prepay 10Yr 10Yr /Year
——————————————————————–
1-Apr-12 0.38 5.0 5.0 0.0 5.5 15.5
1-Jan-13 3.80 5.0 0.0 5.0 4.5 14.5
1-Jan-14 4.79 5.0 0.0 6.0 2.0 13.0
1-Jan-15 5.03 5.0 0.0 6.0 1.0 12.0
1-Jan-16 5.28 4.0 0.0 6.0 1.0 11.0
1-Jan-17 5.54 0.0 0.0 6.0 1.0 7.0
1-Jan-18 5.82 0.0 0.0 6.0 1.0 7.0
1-Jan-19 6.11 0.0 0.0 6.0 1.0 7.0
1-Jan-20 6.42 0.0 0.0 6.0 1.0 7.0
1-Jan-21 6.74 0.0 0.0 6.0 1.0 7.0
1-Jan-22 7.07 0.0 0.0 6.0 1.0 7.0
——————————————————————–
Total A 56.97 24.0 5.0 59 20 108
——————————————————————–
Total B 32.16 24.0 21 110 50 237
——————————————————————–
Total A = Total money invested under each asset
Total B = Asset/Fund value after 10 years
Rental income would increase @5% pa
Kindly review this plan and guide us.
If there are any charges for this, please let us know.
Thanks
Srinivas | Bangalore | Sun 11 March | 11:35 pm
Kalidas Says … Sunday, March 11, 2012
Let us say, the funds are kept in the short term FD and when the opportunity comes within say next 3 or 4 months, his net interest loss may be say Rs 3,000 (4 x 750) and he gets good opportunity to invest Rs 5 lakhs in equity, it will be easy to make 0.6% (Rs 3,000 / Rs 500,000 %) which he lost in interest.
Other things look okay. In stead of taking one RD for Rs 50,000 per month, he should have taken 3 RD, say Rs 10,000 pm, 10,000 pm and Rs 30,000 pm maturing after 5, 7 and 10 years to give him the flexibiity. Often, the banks do say that there will not be penalty for pre-closure, but the rules of the bank may change, and at that time there will not be proof to suggest that there will be no penalty for pre-closure.
Srinivas
12 Mar 12 at 2:05 AM
The real state of real estate : India
http://www.indianrealestateboard.com/forums/showthread.php/14767-The-real-state-of-real-estate-in-India
DG LONDON UK
Kalidas Says … Saturday, March 10, 2012
Thanks. Looks like the writer is from Indian Infoline. This board may give wider information about the real estate state.
DG
10 Mar 12 at 3:09 PM
Dear Dir,
I am sending you this mail from Mumbai and I am on a vacation here, I am getting good buyers for my 2BHK flat in Thane and 1 acre plot in Wada, Please let me know if I could sell them now. I am also wanting to buy a flat in Goregaon when the property prices come down, please guide me as already I have incurred huge financial loss in Dubai 3 years back. I cant afford to take any risk and I desperately need your guidance in this.
Thanking you
Lilian
Thane
India
Kalidas Says … Friday, March 09, 2012
Please be very specific when you refer any question. When you say, that you are getting good buyers for 2BHK in Thane and for 1 acre plot in Wada (where it is?), I may not be able to understand the current situation. However, if you are going to swap the property from Thane to Goregaon, then it would be a good swap. I understand that Ajay Piramal group is building mega estates in Goregaon, a fabulous one, at about Rs 10,000 per sft, which is almost ruling rates in Thane (near Hirandandani estate where my friend is going to buy an apartment there). The difficulty in Piramal offer is that it would take 3 1/2 years to complete the project.
I will reply to you after you clarify the numbers.
Lilian
10 Mar 12 at 1:23 AM
Sub: Real Estate Crash
Dear Sir,
In today’s stock observatory, you commented that the real reason why property prices are not coming down is amount of fiat currencies chasing the properties.
You also mentioned that Gurgaon is coming up well. Do you still envisage property prices coming down here. I am a resident of Gurgaon and wish to buy a house/flat for self use. Could you suggest time / other indicator to go for the purchase.
Regards
Vivek, Gurgaon, India
Kalidas Says … Friday, March 09, 2012
I am sorry I was not specific to the nations concerned. The nations having almost zero interest rates were hinted at. India already has over 10% interest rate. I have amended the article.
From the number of emails that I have been getting from Gurgaon developer, I think that the quality of property being built there now, are far superior than other locales in India, including Mumbai.I am not familiar with Gurgaon, so my opinion is a bit away from credibility. However, from what I understand from various developer’s offers, the rates appear to be reasonable having regard to construction cost of late.
Are the rates around Rs 3500 to Rs 5000 per square feet for normal locations? (not upmarket). If so, it will be a good to buy whether for own use or for investment purpose.
My general view is same as mentioned before. Although I am wrong in assessing that the prices may start going down from November onwards, and culminate in May, 2012, I have to state that the prices are not going down nor they are going up. The cost of construction and finance cost have gone up so much that it will be difficult to see severe reduction in prices. I sold my Mumbai property last year, and I am informed as late as now that the prices are almost same and very few deals are taking place.
If you want to buy home in Gurgaon for self use, and the prices are reasonable, (if they are really Rs 3500 to Rs 5000 per sft, then they are reasonable), you may go ahead and buy it. So far as I am concerned, I do not have ability nor time to spend so much money in India when I am no longer living there.
Whenever you refer any question, you should be very specific about the numbers. Vague statements like the property prices are not coming down, or they are going up, or use some adjectives such as they are costly or cheap, I can not make any assessment. Unless you show me numbers to back up your statements, I can not be advice specific.
Vivek
9 Mar 12 at 8:52 PM
Dear Anilji,
At the very outset I would like to expressed my heartfelt gratitude to you for your uninterrupted public service for the last several years. By flouting your advice I have lost whatever I had in the year 2008 due to my leveraged position in F&O.
Now, I have some money approx. R. 1.5 lac and I have intended to invest the same in secondary equity market in phased manner. But, Harshad, Ketan, satyam, sub-prime, etc. have created a fear psychosis in my mind. Further, I am also very much skeptical about the recent rally, which resembles the breathtaking rally started in August 2007 and finally nifty reached the life high and the aftermath is known to all. Now, I am eyeing some of your recommended stocks viz. PFS, Ruchi Infra, Essar Oil. But, you have said that market may bottom out around May 2012. Do you think that market has bottomed out for the time being or it may retest the Dec. 2011 low. Even though I think my question may appear foolish to you, still I am asking this because I don’t believe that the bear phase is over and don’t find any reason for the indices to soar so high so hastily.
Soumen Roy
Kolkata
Date: 09.03.2012
SOUMEN Roy (Kolkata, India)
9 Mar 12 at 2:44 PM
Sub: India, Stock – Kingfisher Airline
Dear Sir,
Sometime back (may be in Jan-2012), you told that we will wait to see KF will come to single digit. At the present scenario, we do not know what will happen to this stock. The borrowing banks simply can not let this company bust. At the same time the govt is not seen interested to do something (unlike in case of Satyam, where they acted promptly).
Do you think, at the present scenario, there is more clould surrounding it, and better to wait to see the stock comes Rs.10-12, before jumping to pick it
Thanks,
-Santosh, Bangalore, India.
Kalidas Says … Thursday, March 08, 2012
Yes, I agree. I did envisage that the stock might come down to single digits. We waited for a long time, and now that the intensity of troubles is hurting not only the KFA but also its lenders SBI, ICICI Bank, BOI, PNB, BOB and other banks. Some banks from Karnataka may also have been involved but their names are not published as yet.
The government was not able to act due to multiple problems. (1) the state election in Uttar Pradesh which has just completed (2) The troubles are not only at KFA but also at Air India, Jet Airways and Spice Jet. It is an industry problem, not specific to KFA.
If they try to bail out KFA, there may be similar demand from JA and Spice Jet also. Air India being a state owned airline, any help to it may not be quoted by other privately held airlines. But when a privately owned airline like KFA is sought to be bailed out, other larger and smaller players like JA and Spice Jet might put up similar demand or they might allege favoritism, nepotism, corruption etc. which the corruption tainted government can no longer afford to tackle any more.
As such, there is nothing wrong in waiting. When the bad news are running down in avalanche, the stock could go down to single digit. But supposing, some good news do come out, there may not be enough time to react and take immediate position. This is a highly speculative share at the moment, and not meant for retirees, salaried employees earning
I would therefore take a small position, say up to Rs 25,000 with clear understanding that I am taking almost 50% to 60% loss risk in the event the KFA is forced to fold up. If the stock does fall to single digit, then I would pump in another Rs 25,000, netting Rs 50,000 in all which should not exceed more than 2% of total investment budget. The idea is when 2% of your portfolio is invested, and you are forced to take the loss by say, 50%, the total loss would not exceed 1% of total portfolio, which is easily recoverable.
It is a big airline, and Vijay Mallya is unnecessarily made “Gabbar Singh of Sholay”. In reality, it is not so. If he was the only one bad, why other airlines like AI, Jet Airways and Spice Jet are not doing well? If there is a severe flooding in your area and your home also comes under water, will it be your fault? One has to digest the news on this line. If you can not afford to take loss, stay away from it. There are tons of other good stocks in the market place.
Santosh
9 Mar 12 at 1:21 AM
India , Stocks, Rebalancing Portfolio in Depressed Market
Sir,
While studying through your website, I came across a reference to ’Rebalancing Portfolio in Depressed Market’ and also a reference to Excel Table. I was unable locate the Table itself.
I shall be highly obliged if you could guide me how to access the Excel Table - I am pretty sure the Table will be self-explanatory.
Thanks
Sudesh Kawan
Youngstown, USA
Kalidas says………..Thursday, March 8, 2012
Thanks for your email Following are the links to the old article and its spreadsheets. Please download them from box.com (Download pool in the right hand side bar)
Article:
Article: Rebalancing Portfolio in Depressed Market
Spreadsheet:
Excel Spreadhsheet: Rebalancing Portfolio in any Market Phase.
You can download these files and open them on your local computer. In fact, almost all PDF files have been hosted there. Go through the index and visit each article of your interest.
Sudesh Kawan
8 Mar 12 at 9:45 PM
Sub: India, Stock – MCX IPO listing strategy
Dear Sir,
MCX IPO is opening on friday. I have received 8 stocks from the IPO out of maximum( Rs.2L) retail application. What should be strategy on the listing day. Some brokers are talking, it may give Rs.300 to Rs.350 listing gain.
Should I sell on listing day and take profit/loss whatever comes or It is better to wait for 1-2 weeks to realise better profit and exit.
I am not look to keep it as a long term porfolio stock like others( Essar Oil, OMC, Satyam) which I am holding.
Thanks,
-Santosh, Bangalore, India.
Kalidas Says……Thursday, March 08, 2012
This stock is going to do well whether the market is good or bad. Yes, in bull market it would have done better. Since the stock does not have any history, it can open to any level. I do not know where it will open because I am mostly a secondary market investor – I never bought any stock in IPO.
So, if you are getting a good return even if the quantity is small, you may sell it and book the profit. It may be noted that this stock will be a star performer when the bull market returns. You can see the turnover in on MCX exchange and on cash segment of BSE and NSE.
However, I am never going to buy this stock, because the derivatives are the worst casualty when the market collapse. The present financial crisis is mainly due to collapse of derivatives, and today, the markets are kept alive by the derivatives related trades only. Almost all markets, including Dow and NASDAQ, and also in India, the turnover in cash segment has gone down drastically, and this is the reason why many brokers are shutting down their operations.
Look at the most important brokers in the world. Even when the Dow is near 13,000 within few % of all time high, the brokers like Goldman Sachs, Morgan Stanley, UBS, Credit Suisse, Merrill Lynch, Barclays, HSBC, RBS (Royal Bank of Scotland) are all losing money and business. Most of them are losing their investment banking income because most cash investors are withdrawing money and only derivative traders are keeping the markets afloat.
In stock market when there is a chance of making money, no one bothers about fundamentals or personal likes or dislikes or morality. When one feels like buying “Broker’s stocks” it is one of those clear indications that the market is going to fall steeply.
Look at the financial shares, especially of those brokers such India Bull Securities, JM Financial, and many other leading brokers, they are simply massacred.
Santosh
8 Mar 12 at 5:08 PM
Dear Sir,
India, Stocks,General – Concept of reducing loss.
About 4 mails below this, I see in your reply to Mr. Badrinarayanan G., I see you suggested him to reduce loss by buying the stocks that fell more (by buying IOC and HPCL).
I am trying to understand – How does this concept of ‘reducing loss’ work? Isn’t it becoming like cost averaging – which may not work always.
And why did you not suggest him to buy more of HPCL which reduces loss by much more?
(BTW, actual reduction in loss is much higher – 173 for IOC and 248 for HPCL for each share)
Satya, Hyderabad, India, 8/3/2012
Kalidas Says……Thursday, March 08, 2012
When the market is in downward mode, we do not invest new money, but just reallocate the money from existing portfolio. Please read my original article “Re balancing portfolio in depressed market”.
As result, I tried to reallocate the resources by selling the stock with minimum losses and shifting the funds to stocks having larger losses. That is, if one is losing 14% in one stock, and 30% in other stocks, we sell the first and buy the other. When we are comfortable about the market, or when the market becomes a screaming buy, we invest new money at that time.
Coming to Mr. Badri’s portfolio, he appear to have bought the stocks in final stages of strong rally in OMC stocks. He must have felt that these stocks were running away. We never suggested buying the OMC stocks after they have gained over 30% in less than 45 days. Some readers who were just watching these stocks after our strong recommendations felt that these stocks will never come down and they bought them at very high prices. Nothing wrong with buying these stocks as we were super bullish then and even now. But when the stocks are available at Rs 380 why should you buy them at Rs 480?
Now coming to Mr. Badri’s stocks, whether he holds BPCL, IOC or HPCL does not make much difference, because when the sector moves, almost all stocks move up in varying degree of course. So, it was perfectly safe to sell BPCL with minimum of losses to switch to IOC and HPCL. When the OMC stocks recover, the stocks that have fallen most will recover fast, so HPCL was the main candidate to go for. This is why we suggested selling BPCL and switching to HPCL first and IOC later.
Yes, it was a case of cost averaging. It will work in Mr. Badri’s case, because all of them are very solid companies. They are extremely large and their difficult days have come only due to large increase in oil prices. If oil prices were near $80 or about, these stocks would have been making money even if the cost of buying was higher than others.
Satya
8 Mar 12 at 4:53 PM
Sub:Happy Holi
Respected Kalidas Sir,
Happy and colourful Holi to You and your family and and also to all my brothers and sisters who are following you.
Regards
Suraj
Chandigarh
India
Suraj
8 Mar 12 at 11:40 AM
Kindfisher Airlines
Dear Sir,
IT department has issued the show-cause notice to KFA, here is the link
http://www.moneycontrol.com/news/business/it-dept-issues-show-cause-notice-to-kfa-sources_677626.html
I am holding 3000 shares of KFA at 23, CMP is 21. Do you advice to buy more or stay put in this stock?
Best Regards,
Shaan
Bangalore, 7thMar, 21:32
Kalidas Says … Wednesday, March 07, 2012
Stay put. Nothing new.
shaan
8 Mar 12 at 12:02 AM
Sir,
I read the special situation part on Essar Oil that you have covered. Regarding the sales tax exemption adding to the GRM point, I understand your explanation that sales tax is over and above the price so it does not affect anything for Essar. So what you meant I believe was for old sales they have made provisions and henceforth they will charge an additional sales tax to its customers.
1) So Government’s this exemption scheme was ONLY to provide pricing power to companies like Essar Oil over its competitors. Am I correct?
2) Also, I am not aware of Business models of refining companies, but if they have long term contracts of supplying refined fuel at certain price, do they have this pricing power where they can increase the price to the extent of sales tax?
Please throw some more light on these 2 aspects.
–
Regards,
Sumit Gupta
Bangalore (India)
Kalidas says………..Wednesday, March 7, 2012
We do not understand your question. in any case, we have covered entire situation in sufficient details. Either you accept them as it is or reject them based on external views or reports, and take appropriate buy/sell/hold actions.
We do not consider here the Government’s intention to provide Sales Tax related incentive. It is deferral of tax and not equivalent of exemption. It merely means that the sales tax so collected mayu be used by the company to finance its other trade operations instead of paying to the government immediately. No company or for that matter no Auditor will allow the tax deferral amount to be treated as Income and also pay Income Taxes on such fictitious income, unless there is accounting fraud or the Auditors are compromising accounting standard.
We are not detectives as to know what exact entries are passed in the company’s books. If there is anything irregular from normal accounting rules, the Auditors have to report in the form of note to the accounts. Merely reporting as note also does not absolve the Auditors from their statutory responsibility.
Sumit Gupta
7 Mar 12 at 9:53 PM
Dear Sir,
India, Stocks,OMC’s
I bought the following scrips
BPCL BuyPrice 788 Qty 100 CMP 659
HPCL BuyPrice 546 Qty 100 CMP 298
HPCL BuyPrice 424 Qty 500 CMP 298
IOC BuyPrice 446 Qty 150 CMP 273
IOC BuyPrice 405 Qty 500 CMP 273
Satyam BuyPrice 105 Qty 100 CMP 65
Ispat Ind BuyPrice 25 Qty 1000 CMP 13
Kindly Advice me what to do?I actually asked query in CMCA June 2011, where you told me that you will reply later. I did copy & paste from there and so error in cmp asked in my query asked recently.
With Regards,
Badrinarayanan G
Kalids says…….Wednesday, March 7, 2012
SELL 100 shares of BPCL at CMP – Loss booked Rs 12,900. Cash Raised Rs 65,900
BUY IOC 100 shares at CMP, Losses reduced 100X (Rs 446 – 273 = 73) = Rs 7,300
Cash used Rs 27,300
BUY HPCL 100 shares at CMP. Losses reduced 100 (546-298 = 148)x 148 = Rs 14,800 Cash used Rs 29,800
Buy Ispat Industries at CMP. The losses reduced 1000 x (Rs 25-13=12) or Rs 12,000
Thus, by above swap, the losses are reduced by Rs 34,100 against loss booked in BPCL Rs 12,900
Fresh cash used will be Rs 65,900 – (27,300 + 29,800 + 13,000) = – 4,000
That is, losses are reduced by Rs 34,100 by investing Net Extra funds of Rs 4000 only.
If you have more money, buy 150 shares of IOC and HPCL atCMP which may cost you Rs 85,000 more. It will bring down losses by Rs 33,500
badri
7 Mar 12 at 8:32 PM
REC Bonds : Invest or Not ?
Dear Sir ,
I am invested as follows
15 % into Equity ( Essar @ 54 and OMCs since 210 )
40 % into Metals ( Gold and Silver ) at 2008 prices
60 % in Bank FD .
I will be getting annual bonus with my March salary . It will be close to one month of salary . This will be surplus money for me . I wanted advise on where to put this money .
Today REC has come up with Tax Free bonds issue (I am in 30% tax bracket ) , which trigged this query .
Sachin , Pune , India
PS : I read your blog every day , All was well so did not post any comment .
sachin
7 Mar 12 at 2:54 PM
Hi,
I came across this article. Do you see this as a positive or a negative impact?
http://timesofindia.indiatimes.com/business/india-business/Foreigners-can-now-invest-directly-in-Indian-stocks/articleshow/11331706.cms
Regards,
Vinod, Bangalore, India, March 7, 2012
Kalidas Says … Tuesday, March 06, 2012
Old news. It is just a formal news. However, what is QFI? An ordinary foreign investor is allowed or not allowed is not known. There are too many issues. Almost all foreign investors will be required to take out PAN card, open bank accounts in their name which is currently not allowed. We have to see the full guidelines covering Security purchase and Sales, short term and long term capital gain tax, bank accounts and management, and repatriation of amount from Indian Rupee.
No effect is seen at this stage because the information is too sketchy. Indian Rupee is not a convertible currency, so how are they going to address the convertibility remain to be seen.
Vinod
7 Mar 12 at 11:57 AM
ESSAR OIL, Downside price target
Respected Sir,
Like your observations on Essar Oil smart people have valued it correctly and maintained its price in Rs.60’s. But recently, it has fallen below Rs 60 due to the following article in Business standard.
http://www.business-standard.com/india/news/essar-oil-caught-in-tax-turbulence/466843/
My question is war clouds, Europe debt bomb, budget failure, like IFCI, whether this share too will behave similarly?
In the current situation, how smartly we can take position in Essar Oil and requires your guidance. I am having 800 shares of Essar Oil @Rs.50.
Thanking you,
V.S.Kumar, Rajahmundry, India
Kalidas says…….Tuesday, March 6, 2012
I have dealt with all these issues mentioned in the news report. They are just rehash. There is nothing new except perhaps the loss of insurance claim.
Since most readers are worried of so called negative news, they may sell the stock and stay away from it. I am not changing my original recommendations which is still a “very strong buy”. Yes, present weak market and rehash of same old news may need some adjustment, but as most readers are aware of my position that I do not trade but take long term investment position.
Having said that, please note the news referred to which were already addressed to in detail in the past. I reiterate them as per Stock Observatory India No. 47 today under Special Situation.
The stock has dropped to Rs 56 or about which offers a good point of entry. Those who are afraid of negative reports in the press, may avoid the stock and if they already own it, may sell it out and remain with cash.
V.S.KUMAR
7 Mar 12 at 9:46 AM
Essar Oil, downside target
Respected Sir,
Thanks for a detailed reply to my previous question. In continuation to that, I would like to know the downside worst case target for Essar Oil in particular given your Sensex target of 14,800. I bought one lot at 61 and second lot at 68 when you recommended that Essar Oil < 73 should be bought for a target of 92.
I am not a trader and I have been holding your recommended OMC stocks for almost 2 years now. I would want to sell 20% of my Essar Oil portfolio and buy back later only if you see huge downside from here. If the stock is not breaking 50 then I will hold. No problems with that.
Regards,
Pawan,
Delhi, India
Kalidas says…….Tuesday, March 6, 2012
There is absolutely no guarantee that the Essar Oil will not go below Rs 50 if the market goes down very steeply due to sort of a crash. when the market collapses or goes down very steeply, there are always some traders who might have bought the stock on margin as result of which they may have to wind down their leveraged position.
In normal circumstances, the chances of stock going down to such low prices are very remote. But nothing is impossible. Look at IFCI. There was no basis of the stock going back to less than Rs 20 when the company was nearly 20 times stronger than what it was 5 years ago when the stock did go down to Rs 8 (to Rs 14 where it remained there for long time). But it did.
When we recommend buying a stock, we mention a range within which it may be bought. Similarly, we suggest the range within which it may be even sold. If the stock does go down to Rs 50 or below, it could be bought nearly twice as much. Such a low level does not stick for too long time. Same is true for OMC stocks which will super perform when the government’s oil price policy changes. The present day of low prices will never come back for another 50 years for them.
As mentioned in our earlier report before, the next quarter (QE 31/3/2012 or last quarter) will be much better than last three quarters. The previous two quarters earnings were bad due to (1) the plant being shut down for 35 days from third week of September to fourth week of October 2011) and (2) unexpected judgement from Supreme Court which slapped sudden liability of over Rs 6,300 crores. Both of these factors will be absent. We will have full performance this time.
The real earnings potential will come to full glory only after end of 1st quarter of new financial year 2012-13 (1QE 30June2012) that would be declared in last week of July or mid August. This quarter will reflect extra earnings due to additional capacity coming on stream after March 2012. The full extra capacity by 50% will be operational by September 2012 which, if it remains time bound, will have material effect on following quarter for QE December 2012 (which will be known in January end following). There could a dampener in the form of extra depreciation and interest expenses which will be debited to normal P/L account. One need to sell the stock before the actual result comes out.
I used to buy this stock when it was in early teens (Rs 11 to Rs 14) when the company was in utter financial stress due to huge debt at that time (Rs 7000 crores) I sold it at highest level of Rs 230 after beginning to sell from Rs 136 onwards in small lots. It then went as high as in Rs 320 or even more intra-day.
Today, the Essar Oil is much stronger company than before. In fact, the entire group is 10 times stronger than before due to sale of “orange stake” which got them over Rs 20,000 crores. This is the reason we suggested swapping from under-performing OMC by 10% to 20% into Essar Oil for not only quick recovery of small losses but also earn substantially more in shorter time frame.
All these factors were mentioned by us while recommending it. You should read it again and again what we wrote instead of seeking reassurances from us from time to time only because the stock did go down from Rs 68 to current level of below Rs 60. When the stock did go down to Rs 46 during intra-day after SC Judgement, we mentioned to many readers “just buy it”. Some of them did. To them, the stock was up by 50% when the stock was re-bought by you at Rs 68 (Rs 68 – Rs 46 = Rs 22 which is nearly 50% of Rs 46). In fact we did ask them to sell from Rs 63 onwards to Rs 72 on short term basis, and the stock did go to Rs 71 intra-day.
It may be noted that as per the report then,the Essar promoters too bought extra stake from the market at as high as Rs 200 after which the stock rallied over Rs 300. The stock today is at Rs 60 or just 18% of its life time high or 1/5th of what it was before. What we call it as “bankruptcy price level”, that is, the price is discounted to reflect the possible bankruptcy. Is there anything to suggest that the company is near bankruptcy today? No way. It is absolutely ruled out. Then why bother about low prices and many weird stories?
Pawan
6 Mar 12 at 2:29 PM
Global, Currencies, GBP, Reg: when to send money to India
Respected Sir,
I want to remit about 10000 GBP to India so just wanted to know if you foresee GBP to appreciate against INR.
Lots of people are speculating that rates will be better while Olympics around July. I have no urgency and I can wait till June. Kindly advice.
Ashish | London | UK
Kalidas Says … Monday, March 05, 2012
It is extremely difficult to take view on GBP vs Indian Rupees. Olympics may not have much effect on exchange rate. Further, you have to compare the interest rates on GBP and Indian Rupees. Even on NRE deposits, one gets nearly 9.5% for deposits upto 5 years. That is, 0.75% per month. Thus, if you wait for say 6 months for exchange rates to improve, you may lose interest @ 4.5% ( 6 months x 0.75% per month). Translated into Indian Rupees terms vs GBP. (Rs 78.87 per GBP now), that is, you will lose 4.5% of 78.87 or Rs. 3.55. If you feel that Indian Rupee will weaken versus pound to (48.87 + 3.55 =) 52.42, then you can wait. If you wait for full year, you will lose nearly 9.5% or nearly Rs 7 per pound. That is, pound has to go to Rs 55.87 if foregone interest is counted.
At the moment, the Rupee is weaker. While the Indian economy is much stronger than US, UK and Europe (there is no marked unemployment, job losses, very high inflation (inflation is developed country is highly understated and in India overstated), except some slow down). India is not as bankrupt as US, UK and Europe combined. In fact, Government of India is the richest government in the world – its stake in State Bank of India alone is over Rs 100,000 crores (US$ 20 billions). If you add up just all nationalized banks, Government of India has prime assets of over Rs 300,000 crores (market cap of non-SBI nationalized banks is over Rs 225,000 crores appx) That is, Government of India owns real assets worth Rs 300,000 crores or nearly US$ 60 billions. Add to it its holding in over 200 PSU, the real assets the Government of India owns is over Rs 10,000,000 crores or nearly US$ 185 billions.
It is just that Government of India does not know its own wealth or potential. The total debt of India will be far less than the assets owned by Government of India. In fact, there will be net surplus whereas almost all western governments are BANKRUPT having almost $ 40 trillions of debt under their management without any real assets as most assets are privately owned, not by the governments.
This is why let the present weakness play its part and let the rupee go down for a few days and then send the money to India. I don’t care what the exchange rate is because in next 10 years, I will be earning over 120% by way of interest (on compounded basis) and Indian Rupees is not going to go to Rs 130 to US Dollar or Rs 210 vs British Pound.
Ashish
6 Mar 12 at 5:47 AM
Dear Sir,
India, Stocks,OMC’s
I bought the following scrips
BPCL BuyPrice 788 Qty 100 CMP 618
HPCL BuyPrice 546 Qty 100 CMP 374
HPCL BuyPrice 424 Qty 500 CMP 374
IOC BuyPrice 446 Qty 150 CMP 321
IOC BuyPrice 405 Qty 500 CMP 321
Satyam BuyPrice 105 Qty 100 CMP 92
Ispat Ind BuyPrice 25 Qty 1000 CMP 21
Kindly Advice me what to do?
Since my computer @ home is not working , I am posting from from office.Kindly bear with me,Sir.
Thanking You,
badri,Chennai,India
05.03.2012 6.01 p.m
Kalidas Says……Monday, March 5 2012
All prices (CMP) given are wrong. Check your prices again and resubmit. We do not know how did you buy these stocks at extremely high prices. Were you chasing the stocks?
badri
5 Mar 12 at 8:33 PM
Hi Sir
These are the events dates announced for the month of march . How do you see its impacts on the markets
MARCH 06th : UP ASSEMBLY ELECTION RESULTS
MARCH 08th : ECB INTEREST RATE DECISION
MARCH 14th : RAILWAY BUDGET
MARCH 15th : RBI MONETARY POLICY REVIEW
MARCH 16th : UNION BUDGET
MARCH 20th : BOND REPAYMENT DATE OF GREEK GOVERNMENT
Regards
Ranjith
Emirates Airlines
Dubai, UAE
Kalidas Says……Monday, March 05, 2012
I do not want to speculate on political events.
ECB interest rate decision will be to maintain the present rates. No one raises the rates after doling out $ 750 billions in special financing to over 500 banks.
Bond Repayment is already discounted. What is not discounted is whether the private holders of Greece debt have agreed to bear haircut of about 60% as discussed in earlier meetings after which ECB extended the assistance to the banks.
Ranjith
5 Mar 12 at 4:10 PM
Hold or sell all
Sir,
In view of your warning of a coming correction/collapse, should one continue to hold the stocks you recently recommended like Essar group stocks, GSPL, Sterlite etc. Everything seems to be correcting with the markets. Also, you suggested that the correction will be about 1000 points which should take Sensex to 16,800. Should 16,800 be used as an entry point again?
Regards,
Pawan,
Delhi, India
Kalidas Says……Monday, March 05, 2012
There are two aspects. If you want to trade, then you have to follow different strategy. You have to wait for real bargain to enter (normally after a loss of about 500 points or at least two negative sessions of at least 100 points fall. After buying, when the market rallies, you do not set target to sell, but the moment intra day target after a couple of days rally of again 100 points in each session. I do not advise on trading situation. My remarks in Stock Observatory column are general and meant for those who want to take either trading or medium term situation.
The “Stock Observatory India” does not deal with price target of 6 months beyond or long term targets (above 2 to 3 years). There will be specific recommendations for long term investment stocks which will be started soon, but it would be a priced publication.
Coming to your scenario, we were very specific to reduce the position when the Index rose to 17,800 or more. When the market falls, it takes with it almost every stock in varied proportion.
The stocks like Essar Oil could have been sold at around Rs 70 if you wanted to trade. When the stock has corrected to Rs 61, there is no point to get out. If at all, the price could bot be obtained at Rs 70 and it went down to say Rs 67 or 68 (3% to 5% down from recent high). then it could have been sold without waiting in the line or queue. One may always wait to get the highest price during the day, but it is not possible because day high and low target is set by the traders who make the market unofficially in these stocks.
The stocks like Essar Oil, Essar Shipping and Sterlite Industries are excellent stocks and the price at which they are available is also excellent. I would not trade these stocks except to the extent of just 30% of position held. You sell 70% to trade only when the stock is up and you are making between 20% to 30% at least. Lower the price, lower the sales volume.
The market is not going to stop at 16,800 but will go down more to 15,200 and after budget, to about 14,800, the original target we set last year. The reason is that the GDP growth will be still lower, taxation will be high (they are demanding more of service tax), and corporate tax level may remain same or increased. I normally do not want to speculate on Budget because it is unpredictable. I invest into a company, so bother more about that company rather than budget or market.
So, if you want to trade, go ahead and sell 20% of portfolio because you missed the bus of higher prices. However, when the opportunity comes, you have to buy back those stocks without specifying target prices. The concept of target price does not work properly in trading situations.
Pawan
5 Mar 12 at 2:27 PM
KFA – Profits are Mine,Losses are Yours : Gopinath
Dear Kalidasji,
Below is the article by Gopinath on KFA saga.
http://lite.epaper.timesofindia.com/getpage.aspx?pageid=17&pagesize=&edid=&edlabel=ETBG&mydateHid=05-03-2012&pubname=&edname=&publabel=ET
Gopinath says – Banks should convert 100% of their debt into equity,remove chairman Vijay Mallya and appoint a professional board to salvage the airline,instead of the management
Everyone in media is prescribing SATYAM act for KFA. Govt may be looking for right time for this. Can this happen just after budget, between 16-30 March ? Or end of June ?
Thanks
Srinivas, Bangalore
Kalidas Says … Sunday, March 04, 2012
KFA is not Satyam. There is no fraud in KFA, there was one in Satyam. Disease is different, maladies are different, so the remedies and medicines are also different.
Capt. Gopinath has a personal grudge against Vijay Mallya. He was previously associated with the Deccan Airways which was taken over by Kingfisher Airlines. The troubles at KFA are not unique – it is an industry problem. Almost all airlines from Air India to Jet Airways, KFA and Spice Jet are losing money for the reasons well known.
When the troubled times come, even closest family members become your enemy, so did happen with Capt. Gopinath who was removed when his airline was taken over. He has personal grudge, so let him nurse it. Where was he all these time for over 2 years now? Why did not he blurt it out then?
Read him, smile at him and dump him. I would do that.
Srinivas
5 Mar 12 at 10:39 AM
Subject : Gold , Silver:
Respected Sir,
I hope my message finds you in good health.
As per our previous assumption India will pay Iran in terms of Gold for oil imports.
But news coming out are that India will offset Oil imports from Iran against , various export to Iran, in rupee terms with account at UCO bank.
In the international scenario, Govts are adamant on keeping gold price in check by using derivatives. As well rupee is rising in India.
In these circumstances How do you expect gold and silver to be a safe bet, from this level, we have targets for upside, but my question is what is the possible downside.
Asking because, if one is buying at this level, what is the loss that is/he should be ready to bear. in gold and silver at downside.
Investment horizon is 1 year.
Regards,
$Amir, Mumbai, 4th March 2012
Kalidas Says … Sunday, March 04, 2012
Make a habit of spell checking your message and proper capitalization. Do not use crude abbreviation.
Iran exports over $9.5 billions of crude oil to India whereas it imports not over $2.5 billions. Balance $ 7 billions is required to be settled in Yen ( as asked by Iran) or possibly in Gold. Further, ONGC, GAIL and Petronet are scouting Iran for gas exploration, production and imports. Gas is very important commodity as it is increasingly used in power plants. The demand is more pressing due to abject failure of RIL to shore up the dwindling production which has shrunk by over 67% by now.
There is a news that Reserve Bank of India is going to permit the Indian businesses to increase their spending abroad by investing overseas. This move is intended to weaken the Indian Rupees because there will be more selling of rupee in favor of dollars.
I am amazed at the sheer stupidity of RBI Governors and officials to even think of this move. China after almost 20 years of getting FDI running into over $1.5 trillions is not tired to attract more money into China, whereas India is tired to get more FDI after reaching Forex reserve of $300 billions, almost 10% of China’s exchange position.
Whole world wants to invest into India, and these guys are permitting Indian businesses to invest overseas. The intention is “just weaken the currency” by not naming the actions but do it covertly and surreptitiously without anyone taking any notice.
With weaker bias for Rupee, relative intended policy actions, weaker GDP, weaker stock markets are all recipes to let Gold and Silver prices higher. The current crash in Gold price is due to paper trading, not in physical markets. We get full page advertisements in local newspapers from various gold traders to encourage holders to sell physically by offering good prices. There is a wide divergence of physical and derivative markets.
As result, there is always downside – take it as 10% all the time. It is normal risk. Why the people bother about 2% to 5% in gold price loss as material loss of their wealth when their equity investments go down by more than 50% to 70% without even hurting them?
$amir
4 Mar 12 at 2:45 PM
KFA – selling of pledged United Spirit shares by bankers
http://www.moneylife.in/article/ub-group-hugely-leveraged-kingfisher-is-only-one-of-the-problems/21354.html
Dr Mallya and other promoters hold around 59% stake in Kingfisher Airlines and have pledged 90% shares out of this shareholding to raise Rs592 crore. Similarly, Dr Mallya and other promoters have a 29% stake in United Spirits and have pledged 93% of these shares to raise Rs3,600 crore.
Following the debt restructuring, bank’s holding in KFA is as below
SBI – 6%
ICICI – 5.5%
IDBI – 5.5%
BOI – < 2%
PNB – < 2%
UCO – < 2%
What is preventing banks to sell pledged shares of United Spirit ? Is it a possible event ? If so how this will play out ?
For the first time since its troubles began, the KFA management has threatened a shutdown at a meeting with its pilots in Mumbai on Saturday.
Please share your views.
Thanks
Shrinivas, Bangalore
Kalidas Says … Sunday, March 04, 2012
Since when Mister Mallya has become Doctor Mallya? When did he acquire Doctorate degree? Is it honorary in recognition for his ability to get high level debt borrowing?
We knew about United Spirits pledging of shares for more than a year or so, and in fact asked readers not to invest in that company until KFA saga is resolved to satisfaction.
As an ex-banker, I do not understand why did not these lender banks decide to sell off the UB stake to ward off the losses and instead decided to make provisions hurting their balance sheets? If they sell the stake now, whatever provision they made so far may get reversed to the credit of Profit and Loss account to the extent of realization.
Holding of 22% stake is quite large, especially when most of them are nationalized banks. If more of their debt is converted into equity, it will be virtually nationalized Airline on par with Air India. Its rating will therefore improve if it is nationalized officially rather than unofficially as it is now.
Srinivas
4 Mar 12 at 11:05 AM
Spicejet – Maran to hike stake by 5% (to 48.59%)
Dear Kalidasji,
Kalanithi Maran is set to infuse Rs 100 crores in the airline, for an additional 5 per cent stake. This is the second fund infusion by the promoter group in less than six months. Last October, promoters had pumped around Rs 130 crores into the airline. Coming as it does when most airlines in the country are faced with mounting losses and funding concerns, the latest capital infusion will provide breathing space for SpiceJet. With 4.29 crores shares to be issued, the exercise values the SpiceJet stock at around Rs 23. Post the announcement late Friday, the stock rose more than 4 per cent to close at Rs 21.55 in the special trading session on Saturday
Just wanted to update.
Thanks
Srinivas, Bangalore
Kalidas Says … Sunday, March 04, 2012
Yes, it is good news for the stock. However, the losses are more than capital infusion.
At the moment, almost all Airlines are flying in same sky – all are incurring heavy losses. I consider Kingfisher Airline more preferable than Spicejet because it is already in hot water and efforts are already on way to extend nearly 1000 crores loans from the lending banks and another $500 millions (Rs 2500 crores) from possible stake buyer (British Airways associate or some other Gulf airline). In other words, Maran’s contribution of Rs 100 crores appear tiny compared to over Rs 3000 crores in the waiting in the wings of KFA. In short, KFA is more advanced in its search for cash or assistance than Spicejet or Jet Airways although it is more in serious trouble than others.
I believe that its lenders are more in serious troubles than KFA itself. When a bank lends too much to its borrower, it is the borrower who calls it a shot.
Srinivas
4 Mar 12 at 10:17 AM
Dear Kalidas
My twin sister got her green card last week. What are the advantages of green card. Does the person get social security schemes also like a US citizen.
Would you know if she can sponsor my son i.e. Her nephew and if that is not possible then me and then I sponsor my son who is now 3 years old.
I ask you cause you recently immigrated to USA.
Regards
Princeofindia
Abu Dhabi
Kalidas Says … Sunday, March 04, 2012
If her parents are in India or outside USA, the process of sponsorship will take over 12 to 15 months.
However, if she applies after her parents are visiting in USA, that is, her parents are physically in USA, then in that case, it will take just 3 to 4 months to get them Green Card. We got green card within 3 months because my daughter who is US citizen, applied for it while we were physically in USA visiting her on regular visit visa.
To my knowledge, the requirement is that only a Citizen can sponsor her parents from both side – her own or her in laws. As a green card holder, she may be able to sponsor her parents through normal channels which may take 1 year to 3 years minimum.
Princeofindia
4 Mar 12 at 5:07 AM
Regarding ITC
Sir,
I have 150 shares of ITC at Rs. 203 which is 20% of my portfolio. I swapped some of the stocks where I was making profits to ITC in anticipation of correction in stock markets and this being relatively safe sector and stock. ITC went up to 212 Rs. but has been falling from past few days and has gone back to 204 today. Should I continue to hold? Based on your suggestions to others, I have an option to hold OR sell and hold cash OR swap to to Gold. Please suggest.
I am also holding Essar Oil, PTC India and Essar Shipping.
–
Thanks,
Sumit Gupta
Bangalore (India)
Kalidas Says……Friday, March 02, 2012
The stocks like ITC, Hindustan Lever, Dabur, Godrej Consumers are considered defensive stocks which normally rise when the markets go down. They are basically anti-market stocks. These stocks are good to park money in bull market because they are at lowest. When the market corrects, these stocks move higher.
The stocks like ITC, which deals mainly in Tobacco, are better AVOIDED during pre-budget days, that is, from February onwards until following April end or early May, because the government usually hike the duty (excise and imports) during budget days.
ITC is a solid company and now well diversified, yet the stigma of tobacco still sticks. Trade in these stocks for entire 12 months except February to April. that is, you invest into them for 9 months at the most, and avoid buying 45 days before Budget and another 45 days thereafter. You bought it near pre-budget days, so feeling the pressure of it going down .Although down market favors this stock, pre-budget days pressure is more potent than the positive feeling of down market. You may sell 60% of them now, and buy back when the budget effects are over somewhere in mid May.
ITC is highly undervalued stock but it will remain so for a long time until real bull market emerges. Until such time, it will be range bound. The stock is better bought at a time when SENSEX is at least 1500 points ahead. similarly, it is better sold When the Index is nearly 1500 points less or corrected when the stock is trading nearly high.
Sumit Gupta
2 Mar 12 at 9:59 PM
Solar Energy and related stocks
What are your views on Solar Energy over next 5 years ? Do you think it is worth investing in Indian companies like Indo Solar who have started solar panel manufacturing in India ?
Mukesh
Hong kong , March 2nd 2012
Kalidas Says……Friday, March 02, 2012
Although Solar stocks are a fade nowadays and Governments world over are promoting it with cash incentives, I am of the opinion that the technology is still primitive. Producing energy is not enough, but the storage of electricity (battery) is very important. So far, there is no break through in battery technology where one can store power up to say 100 kv at least. At the moment, the highest rated battery (Lithium type) for commercial appliances are not over 24 volts which can run only for one hour or so.
The oil available is so plentiful that it would take another 20 years before we can have viable solar energy. This energy is useful alternative if there is no demand for storage and where the power used instantly.
I live in a home in USA where our entire home is solar based. We are using it fine, but there is no storage if the day is darker without sunlight. It may last for two days at the most.
There may be many stocks in India of which I am not aware. Suzlone is pioneer in wind generated power, but it has contracted so much of debt that it is un-viable.
With billions of barrels of oil and gas lying below ground, whether on shore or off shore, it is better to use traditional energy source and focus on companies producing them.
Mukesh
2 Mar 12 at 3:39 PM
Sir,
MRPL to Essar:
I have 2000 MRPL Avg. buying Price @ 72.65 and CMP 72. Do you recommend switching it with Essar Oil?
IRA Account:
I also wanted to ask you about IRA account in the US. I have enquired that one can Invest in Gold (coin or bullion) in IRA account.
The advantage I get is, IRA funds are Pretax funds and I save some money on my Tax returns.
If after 2-3 years I want to close this account, I can do it and I can get back the same funds in either US$ form or in the form of physical gold.
Because this is IRA account, the day when I close this account (before retirement) I will also be charged with 10% penalty on it + tax (I can take this funds out the next year after I move out of the USA to save on tax).
In 2 years I am planning to move back to India for good, the IRA account is saving me 1700 US$ in tax return per year. is it a wise idea to invest in GOLD in IRA account in the US?
The fees applied are, 0.02% + 3 % + trade fee per annum on the total value of the IRA funds.
Regards,
Jatin
Bay Area, USA
3/1/2012
Kalidas Says … Sunday, March 04, 2012
I will reply to you tomorrow. Watch this space.
Jatin
2 Mar 12 at 1:53 PM
Hello Sir,
I have 100 Cairn India @334 CMP 376.
A PIL has been filed in Supreme court to declare the deal illegal.
SC will listen to it on Friday.
Would you think after all these approvals given by Indian Govt. this deal can still be termed illegal. If so what could be the effect for CAIRN ?Shall I sell it?
Thanks,
Girish
PUNE INDIA
Kalidas Says … Thursday, March 01, 2012
My guess is as good as yours. How do I know what Supreme Court is going to decide. It has become a fashion to move the court all the time by some nasty people.
I would not sell but buy more if the stock corrects.
Girish Barhate
1 Mar 12 at 10:05 PM
PTC financial Services stock has hit upper limit on following announcement
http://www.bseindia.com/xml-data/corpfiling/AttachLive/PTC_India_Financial_Services_Ltd_290212.pdf
Regards
Pratik, Baroda India
Pratik
29 Feb 12 at 9:02 PM
Dear Kalidas
I bought 3000 Essar Oil @ 61.35 a few days back. Actually I did not intend to buy more than 1000 but somhow tempted to buy this quantity. Should I stick around for some more time or exit the extra 2000 quantity at CMP 63. My portfolio is heavily skewed towards Oil & Gas with IOC,HPCL,ONGC, RIL & Petronet in addition to the Essar Oil constituting more than 50 % of my total investments in equity.
Regards,
Mohan, Mumbai, India 29th Feb 2012
Kalidas Says … Tuesday, February 28, 2012
Sell either of IOC, ONGC, RIL or Petronet (preferred to sell more) and retain Essar Oil. If you do not wish to touch above named stock, then only sell Essar Oil.
When you are uncomfortable, always do what you really feel. Your inner voice is always more powerful than Kalidas.
Mohan
29 Feb 12 at 2:36 PM
Stuck in Confidence Petroleum
Dear Sir,
I hold 17000 Confidence Petroleum @ 11.2. CMP 5.6. You had told me in the 18th Feb post that you will write about this stock in the stock observatory.
Now as one the reader shared the link of CCI imposing the penalty on Cylinder manufactures. I have around 1L loss in this share. What do you advice? swap to some other share? or hold it? or sell and sit on cash?
Shaan
Bangalore, 28th Feb’2012, 22:47
Kalidas Says … Tuesday, February 28, 2012
I need time to study this stock in details. The information available so far is sketchy which takes more time to gather info from other sources. I will try to finish my study in next 3 days or so and will comment in Stock Observatory.
The company is in very lucrative business. There is no way it can lose money unless there if fraud. It is getting extremely large orders from companies like IOC and may be there is some investigation about the cartel arrangement, but I am not too worried. It will take months before we know the result and the above company is not the only one.
Why do you guys take such huge exposure in small cap companies? I do not even recommend Rs 5 lakhs in huge company like Essar Oil, how could you invest Rs 2 lakhs in small company? The stocks below Rs 20 are always speculative and go down very fast because big players are prevented by their charter not to invest into such penny stocks.
At the moment, I am not worried. Even a company like CRISIL has recently rated this company much higher 3/5 on valuation basis. CRISIL is an associate of S&P. Further, the annual report suggest huge increase in turnover and also profit. The company is also a good tax payer so that the chances of bogus profit reporting are less. Unless there is huge fraud in accounting, there does not appear to be anything wrong. But the fact of the matter is that the stock is too low to believe that nothing is wrong. I agree on this point. But we are not detective. I will see what is wrong and where. Give me a few days.
If I were you I would not take any loss. Stay put is my advice. Do not go by cartel related news, such news appear from time to time and such organization do not have teeth. Further, this company is not named specifically.
Shaan
29 Feb 12 at 1:18 AM