Financial Wisdom – By Kalidas

Radical Solution for Credit Crisis from Kalidas

ACTION TIME TO BUY the Stocks

with 93 comments

Rummaging through the Rubble


ACTION TIME TO BUY


Filtered Stocks – Short & Long Term

What is more Important in stock markets – ENTRY or EXIT time?
This question has been nagging the minds of all investors ever since the stock market was
invented. There is no clear answer so far, although hundreds of books have been written on
stock markets. The simple answer is as under:

EXIT Time for Bull Market; ENTRY Time for Bear Market

Now that we are in a bear market by all means, the question is whether it is right time to enter in
this bear market or bulls are still being slaughtered? Whenever you try to buy, you become a bull
and when you try to sell, became a bear.

 

Whenever the market goes down, they call it “Profit Taking.” No one ever says “Loss taking.”
Right now, the damage is more like Katrina. Rubble, rubble everywhere. You have to find
something valuable available virtually free.
In investment, an Investor usually asks the following questions (some they are explicit, some
they ask within themselves)
  1. Is it right time to Buy?
  2. Will not the markets go down further?
  3. What should we buy?
  4. How long do we have to hold?
  5. How much we can possibly gain?
  6. What is the downside risk for the stock?
If above questions are answered, the investor loosens the purse and starts investing.
However, during this market collapse, especially in India, the investors have started asking the
following questions. Our comments are given immediately below in Blue.

 

1. Oh my god? How low the SENSEX will go to?

We are in worst ever credit crisis. It is specific to USA, and has spread to Europe and UK. It
is limited to a financial sector. No one knows how low will SENSEX go, so let us not involve
in prediction game. Further, we are going to invest into individual stocks, so why dwell too
much in the big talks like Index movement?

2. Are we finished or washed out with the market?

The market never gets finished or washed out completely. The market lives on. So use steep
correction as suitable investment opportunity

3. When will the market revive? Will it go to 21000 again?

Again, predictions game. Whether the market goes up or down, we are concerned whether
the stocks that we have invested in will give us suitable return. Yes, any sizable gain in a
short term will be a bonus. Focus on one to two year’s horizon. The target of 21000 is not
achievable in a medium term (next five years or so). The losses are so much, that the
investors will be keen to take profit, if the stock makes a gain of 10% to 30%. No one has
more patience now.

4. Will the market go to 5000?

When the market was at 21,000, the brokers were talking about the index going to 50,000 to
60000. Now that, the same brokers are talking about 5000, and if it goes to 5000, they will
talk about 3000. There is no end to it. To be quite honest, individual stocks do not
necessarily track indices. For instance, when the market was near 12000, Hotel Leela comes
down to Rs. 21.85 and with the present index of 8500 (35% down), same stock is trading at
Rs 26.50. You therefore better worry about the stock you are going to invest in rather than
talking about markets that will lead you nowhere.

5. How much we should invest? Should we invest all now?

It depends on your risk taking abilities. Do not invest more than you cannot afford to lose is
the principle of stock market investment. Not everything is going to zero. There are values in
the stocks when they are battered. The present opportunity is on a golden platter. So use it.
To give you an example, take Arvind Mill that has collapsed into Rs 13.10 today. Even a yard
of Arvind Mill fabric cost over Rs 30 to 45 per meter, or one shirt cost over Rs 150 to Rs 300.
With this amount one can buy about 10 to 20 shares of same Arvind Mill.

The stocks today are so cheap that even toilet paper often cost more. Do one exercise. Take
the inventory of items of your household that you have not used for more than 12 months.
Sell it out in open house or garage sale or sell it out to some hawkers who buy such stuff in
barter trade. Ask them to pay cash instead. Use that money to buy above quoted cheap
shares. You will be able to reduce dead inventory in your home; make enough space, clean
up the excesses and got some really valuable shares, that may double or triple in less than
one or two years. Please note that when the confidence returns in the marketplace, these
stocks multiply in less than five trading sessions.

If they have come down very fast, they will climb up with equal speed. Please be practical.

6. Is it not risky to invest now?

There is a risk everywhere. Even if one is healthy, he can be in bed if he meets some
accident. When one comes out of his home or office, there is no guarantee that he may not
be hurt by someone walking on the street or sidewalk. Do not ask such questions – they are
not worth even asking, where is the question of getting the answers?

You: Great, I now understand the game. I will take reasonable risk. So pick up some stocks for
me and advise me. I am buying on two year’s horizon at least
.

Me : That’s my boy. Now I will tell you what should you do. Remember, this is a stock market
and this time it is tough. If you are not made of steel, try to become one.

How to Buy in Washed Out Market?

There are two angles. One for domestic investors and other foreign investors or NRI. Following
is the consideration that governs my approach:

  1. Strength of Rupee (for International Investors including NRI)
    a. The stocks are cheaper by 50% to 80%, and the currency is cheaper by 20%
    (from Rs 39 to Rs 50). This makes the stocks very cheap if you decide to send
    more remittances to India (and you must)
    b. India may suffer in pace, but not in aim. The growth may be subdued somewhat,
    but will pick up in 12 month
    c. Current weakness in Rupee is due to manipulation in world market by USA and
    another, sudden fall in all markets have initiated margin calls even on funds facing
    redemption pressure. This is temporary event. The Rupee will regain its strength
    soon. The relative strength of dollar is more on weaker side. In fact it could
    collapse under its own weight.
  2. Strength of Economy (to all investors)
    a. The days of US supremacy is gone, That nation is heading towards disintegration
    slowly but surely.
    b. The days of consumptive society is also gone. The days are for savers who have
    preserved the wealth.
    c. Only those countries will prosper who have larger population. China and India
    head the pack but the India is ahead in domestic based growth whereas china
    rely on export led growth.
  3. Sectoral Growth (to all investors)
    a. A growing economy needs power, infrastructure, oil and gas, transportation,
    hotels, shipping, port developments. The info tech, pharmaceuticals,
    entertainment sectors will perform better.
  4. Regional Growth
    a. There will be more trades within Asia and South East Asia. The wealth has been
    transferred to Asia, South East Asia, Middle East and Far East. Africa is now on
    the verge of expansion.
  5. Commodity Growth
    a. Steel, Cement, Auto, Agriculture, Plastic, Chemicals will outperform. While world
    may be reeling in recession, India will be on expansion mode after present turmoil
    is fully played out
    b. Oil and Gas will outperform Coal; entertainment will outperform and dominate
    service sectors. Copper, Aluminium, Zinc, Tin, Stainless Steel and Carbon Steel
    will lead the sectors. These are most attractive sectors today
    c. Finance sector will take back seat, not because of its potential contribution but
    more due to risk aversion
    d. Agriculture sector will mushroom most. Sugar, Soybean, Coffee, Corn will
    outperform other soft commodities.
  6. Growth in Housing
    a. This will be engine for growth. Home Mortgage and Home finance industy will
    prosper as the default rate will be minimum.
    b. The sytem of mortgage in India is diametrically opposite to what is found in USA.
    They are incomparable
    c. Home furnishing industry will prosper.
  7. Precious Metals and Diamond
    a. Gold and Silver will outperform diamond industry for at least 2 to 4 years. Future
    currency regime in the West will be relatively gold and silver based. This will
    cause demand to outpace the supply.
    b. Growth in diamond demand depends on countries like USA, Japan, Europe and
    UK. The Japan will be major customer for diamond due to rise in Yen which will
    be perennial feature for next 7 years
  8. Banks and Financial Sector
    a. Banks will underperform especially private sector banks due to dearth of capital.
    b. Stock market will revive but still under perform.
    c.
    Debt market will prosper due to high interest rate.
    d. Insurance sector in India will be more stable than rest of the world.
    e. Much depends on Taxation policy. There is strong case for lower corporate tax
    and also personal taxation. Interest rate and CRR policy will take a back seat.
    However, these are politically dependent, so anything could happen.
  9. Growth inTextile and Garment sector
    a. They will be more domestic and Asia dependent.
    b. Garments will outperform textiles.
  10. Growth in Music and Entertainment industry.
    a. Music, TV, Video, Audio and multimedia industry will have huge growth for next
    decade.
    b. Bollywood will emerge as challenging center to Hollywood
  11. Growth in Sports industry
    a. Cricket as usual
    b. Followed by Football, Tennis and Gymnastics
    c. Sports related Advertisement industry will have maximum growth

Based on above concepts, the following is the basis of industry, sector and stock selection.

  1. Select The industry
  2. Narrow down to sectors within that industry
  3. Select companies having least debt
  4. Select Two top tier companies, One middle tier and One small cap with innovative
    technology.
  5. Select the popular companies. It is more like a fashion parade or beauty contest, where the
    most popular contestant wins.
  6. Stock selection will be on following basis:
    a. The defensive sector will under perform – like Food.
    b. The stocks that have dropped most will rise fastest.
    c. The stocks that have not fallen much (less than 30%) will under-perform.
    d. Mid Caps will outpace main Index stocks and also small caps.

What the Investors must do as preparatory steps?

  1. Avoid putting in new funds at the moment. The market is having strong negative bias.
  2. Reshuffle the portfolio for the time being. It is like raining heavy outside forcing you to stay
    home. So while you are at home, do something – clean up at least. Do not take a nap.
  3. Normally, I keep the list to 12 stocks,.Since many stocks have fallen over 80%, the list is
    expanded to 20 stocks at the maximum.
  4. Sell high PE stocks and raise the cash.
  5. Swap stocks from higher value to lower value. Never swap from lower value to higher value.
  6. Do not go for stocks for less than Rs 5 as there is chance that there will be reverse split or
    consolidation of shares. They may convert 10 shares into 1 share, for example.
  7. Make a recent inventory in your home. Chose the items that have not been used for last 12
    months. Sell them out and raise cash whatever the amount for buying some mid cap stocks
    that have become small caps.
  8. Be prepared to withdraw money from Provident fund (taking a loan), borrowing against Life
    Insurance policy and and Bank’s fixed deposits, and postal savings. That money will be used
    to buy new stocks when the market has almost stabilized or drops another 30% from current
    level. This may happen, do not be surprised.
    a. The thinking is that when the stocks rebound from very low base, they could have huge
    % returns. Some stocks may rise 4 to 5 times. (400% to 500%) in two years. Even if you
    part with higher deposit interest rate of 10% per annum or 20% in two years, the % gain
    of about 400% to 500% will more than compensate the loss of interest income.
    b. Do not go for stocks which have not fallen much. When the market recovers, these
    stocks will fall because the investors will go for stocks having fallen most.
    c. Under current environment, the stocks having moderate level of debt are more
    acceptable. Capital intensive stocks may not perform well.

Stocks in the Dock:

I normally limit the selection of stock to 12 but due to heavy fall, many stocks have fallen to great
extent. I have therefore extended the list to 20. After some time, they will be whittled down to 12
after profit taking in some of the least prioritized stocks (last 8).

I have given the following 5 stocks as selection list. There will be 15 more that will be added on
daily basis @ 5 stocks per day.

Stock

IFCI

Sector

Finance

Market

India

Symbol

IFCI.NS

CMP 08/10/28

16.90

Target ST

39

Target LT

81

Year High

121.20

Year Low

15.40

ST Hold

9 m

LT Hold

18 m

Current PE

1.88

% Down Peak

-87%

Downside

-20%

Upside

400%

PE 2009

 

Div Yield% CMP

No Div

Buy Range

12~31

Sell Range

39~81

Comments

One of the cheapest finance stocks. Net Worth turned positive after many years. Swap from higher value banks such as SBI, HDFC, BOI, BOB, and UTI. Low P/E, good growth in loan books benefit.

Stock

LIC Hsg Finance

Sector

Finance

Market

India

Symbol

LICHF.NS

CMP 08/10/28

177.75

Target ST

360

Target LT

1,020

Year High

402.90

Year Low

164

ST Hold

9m

LT Hold

24m

Current PE

3.62

% Down Peak

-56%

Downside

-10%

Upside

300%

PE 2009

2.65

Div Yield% CMP

5.61%

Buy Range

140~180

Sell Range

360~480

Comments

If one can not buy this stock, he should retire from the stock market. Current fall in prices is related to problems in Home finance in USA, and other western countries. Indian is not related at all, but the funds are getting out of any housing finance related stocks. This fear is behind the fall. This is one of the finest stocks you can own, better than even IFCI. The company has access to large funds with parent LIC whereas other institutions have to borrow at higher prices, reducing their spread. This stock is better than even HDFC. It will overtake HDFC in 3 years time.. Take out your money from deposits or PPPF and invest here. Much safer than others. I would even switch by selling HDFC into this counter. Selling HDFC will get me nearly 8.5 shares of this counter. This will outperform every other sector in Housing Finance sector Swap from SBI, BOI, BOB, LT into this counter immediately

 

Stock

Bharat Petroleum Corp Ltd.

Sector

Oil/Refin

Market

India

Symbol

BPCL.NS

CMP 08/10/28

272

Target ST

360

Target LT

785

Year High

556

Year Low

206

ST Hold

9m

LT Hold

36m

Current PE

6.21

% Down Peak

-51%

Downside

-30%

Upside

185%

PE 2009

4.53

Div Yield% CMP

1.47%

Buy Range

187~257

Sell Range

360~450

Comments

DO NOT be guided by numbers. They are erratic, following wrong accounting practice. The lower profits mainly due to pending subsidies. GOI issued 8% Bonds but they accounted it as Investment rather than income. It is not BPCL liability. The properties held by company are highly undervalued. EPS in this authors estimate using proper accounting will be well over 120 placing this stock as absolute bargain. The time is coming for lifting of subsidies that may happen after election. On 5 years horizon and expecting normal accounting, the stock trade over 2400 in 5 to 6 years. Expect fat dividend when the company starts using proper accounting. Until such time the stock may remain under pressure. Only Long term investors may touch this stock . Please note that due to improper accounting standard, the company understates profit and may therefore have more downside risk

 

Stock

Hindustan Petroleum Corp Ltd

Sector

Market

India

Symbol

HPCL.NS

CMP 08/10/28

180

Target ST

360

Target LT

1800

Year High

405

Year Low

164.10

ST Hold

9m

LT Hold

36m

Current PE

5.38

% Down Peak

-56%

Downside

20%

Upside

800%

PE 2009

4.50

Div Yield% CMP

 

Buy Range

140~187

Sell Range

360 plus

Comments

Same as BPCL, but this company is better. I would personally like to invest into lower value shares, as large cap stocks see the exodus of funds due to crisis.

 

Stock

Ambuja Cements

Sector

Cement

Market

India

Symbol

Ambujacem

CMP 08/10/28

49.50

Target ST

92

Target LT

180

Year High

161

Year Low

43

ST Hold

9m

LT Hold

36m

Current PE

5.85

% Down Peak

-70%

Downside

-20%

Upside

265%

PE 2009

4.50

Div Yield% CMP

5%

Buy Range

41~60

Sell Range

108~135

Comments

This is one of the finest stock in Cement sector. It could be privatized too at above 100 price. Even the current dividend yield is over 5% on current price, from dividend alone. Swap from ACC into this counter. After

 

Do not be guided by Dow’s sucker rally of 889 points yesterday. There are two possibilities:

1. A massive rally is rigged a few days before the bad news come out. The stocks then retreat
but still stay above desired support level. For instance, if Dow had fallen before 8000 and the bad
news were released then, there could be massive fall. If the market is pushed by 1000 points, and
then the bad news released, the market will remain above key level and the collapse avoided.

2. There is really some good news, but none was released.

NOTE: If you want fully formated article, please use PDF 08-011-Action Time to Buy – in the sidebar Download center. Take a print out (colour preferred) and then read it well. I will go on adding 5 stocks per day until 31/10/2008. The PDF file will be revised every time it is changed, so that you will have latest update.

This strategy holds good for any market. Just the stock name changes, The players and tools remain same.

ADDED TODAY (30-Oct-2008)

Stock

Essar Oil

Sector

Oil

Market

India

Symbol

EssarOIL

 CMP 08/10/29

76

Target ST

180

Target LT

480

Year High

360

Year Low

54

 ST Hold

9m

LT Hold

18m

Current PE

8 Est.

% Down Peak

-85%

Downside

20%

Upside

600%

PE 2009

>20 Est

Div Yield% CMP

NiL

Buy Range

61~92

Sell  Range

181~310

 Comments

This is the fastest growing stock in the Indian stock market. The company has come into production after 4 to 5 years. Its quarterly sales jumped from Rs 562 crores to Rs 9000 crores. For full year it may exceed the sales of Rs 36000 crores. This company is unique in that it is oil producer (like ONGC) and also a refiner (like BPCL, HPCL, MRPL), so its profitability will be higher than SOE Refiners and also MRPL. Its expansion plan will take hold in another 18 months. Since US does not have refining capacity, it may have to lease refiners like Essar and RPL. The potential of this company is simply huge. Yes, there were times when the Essar management wanted to privatize, but then dropped the idea. (After this author’s article on MMB). Even the management took new shares at Rs 200 plus. One may sell any share over Rs 600 and buy this share. The upside potential is simply outstanding. Buy with both hands. Risk of privatization is least now. Credit market is so tough that even the best borrowers do not have line of credit to pursue acquisitions. Do not wait – just grab it now and then buy more if it does come down. When oil prices rise, this stock benefits because it is also a producer. If Oil goes down, Essar as refiner benefits. This will become Index stock in 18 M

Stock

Essar Shipping

Sector

Shipping

Market

India

Symbol

ESSARSHIP

 CMP 08/10/29

31.90

Target ST

140

Target LT

360

Year High

252

Year Low

31.65

 ST Hold

9m

LT Hold

24m

Current PE

8.57

% Down Peak

-87%

Downside

15%

Upside

800%

PE 2009

2.5

Div Yield% CMP

NIL

Buy Range

31~43.50

Sell  Range

210~310

 Comments

This company is uniquely placed, so rise in oil prices will not affect it. It has youngest fleet and also many tankers. Since Essar Oil has come into production with expected revenue of Rs 36000 crores per year, this company will be prime beneficiary for transportation of oil – crude from middle east to India and from India to overseas. Its revenue could grow 4 fold in one year, and its profit will expand 4 times. With equity base very low, this will be the fastest rabbit on Indian stock arena. I would not be surprised, if the EPS reaches even Rs 16 to Rs 20 in less than 12 months. The stock is near 12 months low. It has some of the finest potential. Just grab it when the market opens.

Stock

India Hotels

Sector

Hotel

Market

India

Symbol

INDHOTEL

 CMP 08/10/30

45.80

Target ST

92

Target LT

180

Year High

163.80

Year Low

43

 ST Hold

9m

LT Hold

24m

Current PE

8.61

% Down Peak

-72%

Downside

15%

Upside

400%

PE 2009

6.85 Est

Div Yield% CMP

4.1%

Buy Range

39~60

Sell  Range

92~40

 Comments

Best blue chip hotel stock of Taj Group of Hotels with largest revenue base of 1600 crores. Have presence in all metro and tourist cities. Good Dividend yield of 4%, low PE and best management can make this stock highly favorite. It is perhaps life time opportunity to buy at cheap price

Stock

Taj GVK Hotel

Sector

 Hotel

Market

India

Symbol

TAJGVK

 CMP 08/10/30

44.95

Target ST

108

Target LT

160

Year High

205

Year Low

40.85

 ST Hold

9m

LT Hold

24m

Current PE

3.96

% Down Peak

-80%

Downside

18%

Upside

400%

PE 2009

3.35 Est

Div Yield% CMP

7%

Buy Range

38~45

Sell  Range

108~

 Comments

This is premier Mid Cap stock with lot of growth. Decent yield of 7% should make you think why not you withdrew bank deposits and invested here. Weak rupee helps, good management. This can shine more than its parents = Indian Hotels

Stock

Royal Orchid Hotel

Sector

Hotel

Market

India

Symbol

ROHLTD

 CMP 08/10/30

42.15

Target ST

81.

Target LT

180

Year High

174.60

Year Low

38.50

 ST Hold

9m

LT Hold

24m

Current PE

3.71

% Down Peak

-78%

Downside

15%

Upside

300%

PE 2009

3.50 Est

Div Yield% CMP

14.23%

Buy Range

35~45

Sell  Range

81~131

 Comments

One of the cheapest hotel stocks with dividend yield of 14%. -40% higher than bank deposits. Less Debt, good presence in Bangalore, Hyderabad, Pune, Mumbai (All info tech centers).Also Goa.  Weaker Rupee helps. Trading at 33% discount to Book Value. Most negative already discounted.

(ADDED 4-Nov-2008)

Stock

Hindalco

Sector

 

Market

India

Symbol

HINDALCO

 Px 08/11/04

64.40

Target ST

108

Target LT

180

Year High

202

Year Low

38

 ST Hold

9M

LT Hold

18M

Current PE

4.52

% Down Peak

-68%

Downside

40%

Upside

187%

PE 2009

6.00

Div Yield% CMP

2.88%

Buy Range

42~61

Sell  Range

108~180

 Comments

Looks very cheap stock, but it is more due to share splits that have seen the stock having face value coming down to Rs 1. At the same time, it lost the status of blue chip and reduced to penny stock. Unless the company does reverse split so as to bring the value of stock close to Rs 300, large funds buying may be restricted. Funds have sold it good time. On fundamental basis, I take the view that there would be massive inflation in less than 12 months that will push up commodity stocks very close to highest price seen recently. Weaker rupee may also help the stock in translating $ prices to rupee.

 

On individual basis the Debt level is very high. The under subscription of rights issue results in heavy selling pressure from the sponsoring Merchant Bankers. The company may have to raise capital again in difficult market. There are better metal stocks. Still good to own at this price for short term trading until fresh capital is raised later. Trade and do not hold on longer term basis. Do not take up rights issue if given again. Do not chase the stock. Buy at your leisure.

Stock

Balaji TeleFilms

Sector

Media

Market

India

Symbol

Balajitele

 Px 08/11/04

70.75

Target ST

141

Target LT

420

Year High

388

Year Low

62.75

 ST Hold

9M

LT Hold

36M

Current PE

5.52

% Down Peak

-82%

Downside

15%

Upside

600%

PE 2009

4.20 My Est

Div Yield% CMP

4.95%

Buy Range

61~108

Sell  Range

172~420

 Comments

The stock dropped sharply due to Balaji’s break off with Star who will be the biggest loser in the deal. What attract me most is that this is the only company (after MTNL) which is completely debt free and that too in industry that is normally saddled with debt. This could be the reason for the strong management response to Star. Ekta Kapoor is extremely talented lady and her brother too is shaping up well. The Kapoor clan has broad range of talents in TV serials, movie and marketing. Since I am very bullish on the Media sector, that may even compete with Hollywood head on, there could not be a better stock than Balaji Telefilm. Expect rise in dividend payment after excluding Star. Go for it.

Stock

Dish TV

Sector

Media

Market

India

Symbol

DISHTV

 Px 08/11/04

17.50

Target ST

42

Target LT

108

Year High

106.40

Year Low

11.75

 ST Hold

12m

LT Hold

36m

Current PE

Negative

% Down Peak

-84%

Downside

-30%

Upside

+500%

PE 2009

Negative

Div Yield% CMP

NIL

Buy Range

14.10~23.50

Sell  Range

42~84

 Comments

May appear a risky stock, not for widow or salary earner but for businessmen.  Extra ordinary potential for this industry. Saddled with debt but also accompanied by creative talents of Zee Tele group. The promoters do not have financial acumen though. They do not know how to and when to raise money.

The company’s growth in sales (Over Rs 400 crores – third largest in industry) is major consideration for this author to suggest this crying baby. Their attempts to raise the capital failed two times. When they were in need, they fluttered with the pricing and now they have no choice – difficult market. Still the industry in very strong growing phase that will attract overseas media companies to India.

Hollywood on declining trend whereas Bollywood on upward climb. Quality of film making, sop opera, talents, technical finesse have improved beyond imagination. Literate and skilled software are invading into entertainment industry.

Ambani’s venture with Spielberg may create new dimension or confidence for Indian entertainment industry where millions of household will forego meal but watch the TV news, Cricket and sop operas. Sports (Cricket) are another major attraction for media. Further, losses of this company are academic by way of heavy depreciation. Real cash losses are not that significant. Once this company recovers, it will be on fast track. At the moment, risk of investing is average.

India’s susceptibility to vagaries of weather that results in flood and avalanche, necessitate use of satellite technology that is also indigenously produced at fraction of the cost. If the company can enter the broadband and other internet technology with greater emphasis, it will have major growth.

Oct 28, 2008 (Ref: 08-011-Action Time to Buy) – Updated till Nov 5, 2008

Stock

Guj State Petrochem Ltd.

Sector

GAS

Market

India

Symbol

GSPL

 Px 08/11/04

29.90

Target ST

56

Target LT

81

Year High

114.45

Year Low

28.40

 ST Hold

9m

LT Hold

18m

Current PE

15.84

% Down Peak

-75%

Downside

-15%

Upside

180%

PE 2009

13

Div Yield% CMP

2%

Buy Range

23.50~36

Sell  Range

61~81

 Comments

Gas stocks are the future. GSPL is mainly involved in transportation of Gas from producers to ultimate consumers, commercial, industrial or residential.

Supply side: The Gas production will be increased substantially in India – from Bombay high to Godavari basin – that requires an efficient distribution via Pipe line. HSPL has over 1100 km pipeline at its command, and more on the way in next 12 months. It will have compounded growth of over 20% for next 2 years and then 30% for following 3 years.

Gas prices are loosely controlled, so negative effect of controlled prices on the stock is less.

On Demand side, more and more public vehicles being converted into natural gas driven (LPG/CNG), the distribution via pipeline assume supreme importance. Larger housing colonies of future will install piped gas system. This is where GSPL and Petronet come in to play vital role in distribution. There is also a possibility that neighboring Pakistan may become its important customer when the things settled down politically there. No other company is better placed than GSPL to deal with Pakistan when the demand originates from there.

As Product, the gas is self lubricant and emits almost no smoke, so it is “Green” in nature.

Financially, the company is very liquid, profitable with excellent balance sheet. Large cash holding, earning good interest on Fixed deposits. Its EPS may rise to Rs 10/shr in 5 years based on higher demand, more pipelines, higher gas prices and realizations, and fresh demand from neighboring states like Maharashtra and Rajasthan.

GSPL is still an adolescent. In 7 years it will be a very healthy adult earning substantially. This is a stock more like Provident Fund where you contribute regularly to earn large lump sum at the end of 10 to 15 years. Please note that it will not be a run away performer, but sure, steady and sound one.

SWAP

If you own the following stocks or slow movers, you may sell them to raise the cash and Buy the above stock. The idea is to enhance the potential return in short time frame. Please note that in down market, such swaps may worsen your position. However, if you are careful as well as lucky to have bought stocks near low, the SWAP will not only recover but also make handsome gain.

SELL

Insraprastha Gas (IGL), say 1000 @ 105 to realize or

GAIL (about 15%) of current holding say, 150@ 250 and

You are swapping stocks within same gas sector with a view to providing greater and faster return, retaining same sectoral advantage

OR you can sell any slow movers having higher value and SWAP them into this stock

+

+

105,000

37,500

BUY

GSPL , say  3,600 @ 29.30 from IGL proceeds or 1280 from  GAIL proceeds.

105,000
37,500

Kalidas, Hong Kong

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93 Responses

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  1. Dear Sir,

    Excellent article. Wish you and your family Happy and prosperous Diwali.

    Regards,
    NandakumarAS

    Nandakumar

    October 29, 2008 at 4:56 pm

  2. Nice writing style. I look forward to reading more in the future.

    Josh Maxwell

    October 29, 2008 at 5:00 pm

  3. Dear Kalidas Sir,

    If indian IT is facing a downturn, then i think there wont be any growth in india till IT grows. IT is the main driver of growth in India. Already layoff’s and Pay cuts have started in IT Sector in India. Sir i might be wrong, You are the right person to tell.

    Srini
    Bangalore

    Srini

    October 29, 2008 at 5:09 pm

  4. Dear Sir,

    Its an excellent article about art of Investing. It could be guiding light to every investor. Really you make the investing job is so easy for us. Every reader is indebted to you

    Warm Regards,
    Rajmohan babu
    Pointe Noire Congo

    Rajmohan babu

    October 29, 2008 at 6:25 pm

  5. Hello Sir,
    Simple , lucid and an excellent article. It shows correct path to every investor. Words are not enough to say thanks. You deserve more than thanks.

    Regards
    Raj

    Kalidas Replies : Always mention under your signature place and country. We follow this protocol all the time.

    Also spell check your message so that it is not taxing on the reader.

    Raj

    October 29, 2008 at 7:11 pm

  6. Dear Kalidas sir, Every investor who has access to this report will feel highly confident and will face the stock market battle with ease and come out with winning spree. Let the world (cnbc, ndtv and other channels) say anything. We have one person KALIDAS(Like Lord Krishna)on our side. The end victory is always ours.
    Thanks and regards
    Ravi, Chennai, India

    Ravi

    October 29, 2008 at 8:01 pm

  7. Dear Kalidasji,

    thanks for such a understandable and clear article. It is really helpful for newcomers.

    Hari, San Jose, USA

    Hari

    October 29, 2008 at 8:34 pm

  8. Dear Sir,

    I think there is an error with regard to Ambuja cement. The dividend yield is less then 4% at CMP as the face value of the stock is 2 rupee.

    regards,
    v8r, Mumbai, India.

    Kalidas Replies to v8R(ref: 0810-038 -Thursday, October 30, 2008)
    You are right. I stand corrected. I am changing the table also. india is the only place where they declare the dividend on face value % basis. All around the world, it is paid as DPS or Dividend Per Share (not %)

    However, EPS projection remain same. The value does not change, but dividend a key factor does changes the merit of the stock. Thanks

    v8r

    October 29, 2008 at 8:57 pm

  9. Dear Kalidas Sir,
    The download center is not seen in the webside.can you please help.
    -Santosh, Banglore(India)

    Kalidas Replies to (ref: 0810-036 – 29-Oct-2008)
    I do not know why it does not show up on your computer. May be it is the security setting. It is seen in most of the cases. in Internet Explorer, go to Internet Explorer menu>Internet Options>Security Setting tab>Select Internet in Zone selection (not Intra Net) and also chose Medium security>Click OK and then restart the Internet Explorer.

    If it does not work, I have no solution – I am not software engineer. However, I have sent you the file of the present article by email – check your In box

    santosh

    October 29, 2008 at 9:31 pm

  10. Kalidas Sir,

    Please throw some more light on these issues

    BPCL:

    Why do you say the oil bonds are not a liability? I do not have knowledge on this particular matter but as I understand all the money generated from bonds are liability

    Kalidas: BPCL was compensated by GOI for Interest subsidy by giving them 10% Coupon Bonds with 5 years to 10 years maturity. It was in payment of subsidy. Instead of giving cash, they gave the bonds. These bonds figure as Assets and not liability. They are showing it as Investment Asset and matching liability on liability side, when there is no liability. They should have credited to Profit and Loss account.

    IFCI:
    Do you see any chances of IFCI being converted to bank in near future?
    Kalidas : NO. It will happen when the capital market is good.

    Regards,
    YSB, Delhi

    Kalidas Reference: 0810-037 of 30-Oct-2008)

    YSB

    October 30, 2008 at 12:27 am

  11. With your call I sold 100% and sitting on cash.
    You have given a long growth for Gold.
    Now even stocks looks very attractive, so what Percentage of money should gold-cash-stocks..?

    Thanks,
    Siva
    NYC/Hyderabad

    Siva Kollipara

    October 30, 2008 at 1:23 am

  12. Kalidas Ji,

    I want to send you an email as asked by you before, can you email me and let me have your email id.

    I am in some serious trouble and really need yoru advice.

    Your follower,
    VictorJunior
    Delhi, India

    Kalidas Replies:
    Sent you separate email sending my email ID. Use it discreetly.

    victorjunior

    October 30, 2008 at 5:00 am

  13. Hello Sir,

    Thanks for your views .. Can you enlighten us with your thoughts on the aviation sector ? I have a chunk of investment on scripts like Deccan aviation, spice jet etc .. I am already in a loss of 15-20 %. Should I shift to IFCI, HPCL BPCL, LIC HOUSING FIN. etc .. or shift my investment from banks ? What do you say ?

    Regards,
    Richie, Mumbai

    Kalidas Replies to Richie (ref: 0810-039 -Thursday, October 30, 2008)
    for some time, the oil prices will begin to rise, reaching climax near 20 Nov (+/- 3 days) due to short recovery. The OPEC countries will tighten short squeeze by cutting production further by 1.5 mbpd in second week of November ahead of December expiry settlement. As you know that Airline stocks are inversely react to oil prices.

    Nevertheless, the problems facing by the Aviation stocks are industry related, common to almost all airlines. I consider such problems as buy opportunity. When the company have their own problems independent of industry or country problem, then only I avoid those stocks.

    In India, where the Aviation sector is state owned over 50%, the GOI will ultimately solve their problems.

    Deccan Aviation (now Kingfisher Airline) is a good recovery play, but of late they appear to have tight liquidity. However, because Vijay Mallya gave it the brand name of Kingfisher, there may be something in it. On its own, it is a weak company but good market share. I am sticking to it.

    The shares as above are weak, may get weaker, due to industry specific problem. I am therefore owning them on long haul.

    LIC Housing finance is the best to own. It will prosper regardless of slowness of economy. India is highly populated country, and it is now every Indian’s dream to own a home. So on demand side, it is insatiable. This is the best grade investment Stock that may rise to over Rs 1500 in 5 years time (on all bonus and splits adjusted basis, dividend is excluded – that is treated by me as regular return every investor should have for his investment)

    HPCL, BPCL are all have Oil specific problems. They are also very good to own, though some may report temporary losses in a quarter due to subsidy problem. They will under perform for the time being.

    What I find is that your portfolio is tied to movement in Oil prices – Aviation and refineries react negatively to Oil prices which are set for rise. You may diversify a bit into others – there are umpteen choices in this carnage.

    Further, Rupee depreciation which works against the investors in aviation and oil sector. If GOI changes the policy towards the appreciation, then Aviation and Refineries will benefit most. Go for some gas stocks instead which has the best future – GAIL, Petronet, GSPL, Indraprastha Gas.

    If I were a long term investor, I would stay in the stocks like LICHF, Ambuja Cements etc, including strong companies in Aviation sector such as Jet Airways followed by smaller rivals like KFA and Spice jet.

    IFCI is the best value stock at current prices. Buy it upto Rs 30, it will work well.

    Please note that in India, the interest rates are incredibly high that increases the burden of Airlines and shipping which are capital intensive. If GOI had allowed the Rupee to appreciate to Rs 26 to 31 as it was destined to in natural course, all the above stocks would have been trading at 3 to 5 times current level. Also Interest rates would have come down to less than 5% that would have helped new home owners and LICHF that could have gone into mid 800 by now.

    Richie

    October 30, 2008 at 5:32 am

  14. Would appreciate your views on Suzlon Energy ? CMP is very attractive as per me.

    Kalidas: I am not following this stock. I will reply if have fully investigated. It is not my style to give you half hearted reply. Normally, I do not involve into hyped and green energy stocks.

    Nitin Pillai - Mumbai - India

    October 30, 2008 at 11:10 am

  15. Sir

    The article is excellent. After reading your articles, people like me getting better insights and learn the way to analyze the stock before purchase.

    Kindly update regularly on the stock picking and exit of the stock. Most of the analysts always give the buy call only. Could you comment on the following stocks

    1. Alok Industries
    2. Idea cellular
    3. HCC

    Some time back , the idea cellular was bought while merging at the price of Rs.175. However today it is trading at Rs.39.

    As for as our country is concerned the number of mobile users are increasing. Before 10 years it is only for the rich people since it cost around Rs.10 per minute. Now it is cost 10 paise per minute for some option, and every body is using the mobile phone (business man, salary people, student, housewives etc). Hence this industry is yet to get saturated and in the growth path only.

    Like wise the Hindustan construction is now getting the major orders and expected to get more orders once nuclear plant construction started.

    Kalidas Replies to R. Yuvraj (ref: 0810-040 -Thursday, October 30, 2008)

    Idea Cellular:
    Although the company makes good money and P/E may look low, it is highly leveraged company. Its total debt and revenue are almost 6500 crores I have simple rule that rarely betrays me. A company should have Sales Revenue nearly 4 times that of debt level. Another is, that a company should not spend towards interest more than 4% towards interest servicing. This company pays nearly 10%. I feel that the stock is relatively expensive. Just because it has come down from high of 135 is not a good reason for me to get into it. There are many that meet my criteria, so why go for Idea?

    HCC
    Do not know this stock. In this environment, I would not look at construction companies.

    Alok Industries
    Again, I do not know this stock. I just glanced at the numbers. Again this is highly leveraged company. Its debt level is 3 times annual sales. The interest cost of Rs 132 crores against debt level of 5700 crores works out to only 2.31%. It suggests most of its debt may be in the form of Convertible Bonds; that means that there will be heavy dilution in equity. Even then, the company does look promising. Most of the debt holders have lost over 75% in investing into this company (they converted debt into equity at Rs 55 to 71).

    The chances of good profit are good, but dividend may become progressively lower due to higher capital base. In the era of credit crisis, the cash is king, and debt leads to death. Yes from PE ratio, it is cheap; but PE ratio is not everything. In most of the Marwari type of companies, the leverage is huge that gives us low PE and higher risk.

    I would rather switch to IFCI which is trading at the same price, low PE like this company, lower debt level, support from GOI, has huge equity assets of other firms, and relatively higher prospect of being converted into bank later. I think IFCI will out perform this stock, although both are in different industries.

    R. Yuvaraj

    October 30, 2008 at 2:34 pm

  16. Dear Sir,
    I am heavily stuck with JP Associates (230 @CMP 312), GMR Infra (222 @ CMP Rs.179.24), Kalindee Rail, Geojit Financial (215 @CMP 97.62).
    As of now I am treating them as bad (lost?) investment I shall really be obliged if you can put your views on these equities.
    As per your suggestion of sit on cash , whatever cash I could accumulate during last six month, with that I have gone for IFCI 1000 @ CMP 17.80), SPICEJET (1000 @ CMP 11.0) & HPCL (190 @ CMP191).
    I can wait for 3-4 years

    Best Regards,
    Ethereal
    Mumbai, India

    Ethereal

    October 30, 2008 at 4:34 pm

  17. Dear Kalidas,
    Thank you for posting such thoughtful messages. I became very frustrated when my investment capital eroded by 30% last Friday, but now after reading this article I feel confident. Could you please take few minutes and throw some light on my pf? I have 2100 RPL@80,1700 GMR@145 averaged, 1000 IFCI@40, 150 Areva@300, 350 GodawariPow @250, 400 Natco @70, 300 Rel pow @160.
    Please excuse me for personal questions.
    Thank you again,
    Rakesh
    Hyderabad,30 Oct08.

    Rakesh

    October 30, 2008 at 5:21 pm

  18. I work for a sovereign wealth fund. I have tracked you for many months now. You were the only one screaming to sell when everyone was advising buying.You saw the first sign of trouble months before it appeared on the horizon. I respect your knowledge and more importantly your sharing of knowledge (not many do it).

    The above article is good and the only point i disagree is your advise of taking out money from PPF.

    XXX

    October 30, 2008 at 6:06 pm

  19. Dear Kalidasji,

    Are you going to update the 5 stocks only in the PDF file?

    Would be nice, if those stocks could also be updated in this article, as due to browser issue im unable to see download center.

    Kalidas It will be updated in the article itself. I need some time.

    Thank You & Regards
    Girish, Pune, India

    Girish

    October 30, 2008 at 7:30 pm

  20. Can you pls send me 5 stock list for today since i was unable to view th esame in your blog.

    Vinod

    October 30, 2008 at 7:44 pm

  21. Hello Kalidas Sir,
    Well and Wish you the same. I am one of hardcore follower of your articles. This amazing “https://anilselarka.wordpress.com” Blog is getting more and more popular day by day. I am very happy and excited about the number of hits it is receiving. Every investor who has access to this report will feel highly confident and will face the stock market with ease and come out with winning results.
    Earlier I use read many news papers and Magazines on financial news, Now I just read all your article , digest it and take action. That is it. It is working for me. That is the important of your article.
    Sir, Me Raj ( Wipro, UK) Initial I offered my services to develop web site and Blog on your name . The new Blog come in very good way. I would like to suggest some improvement on this Blog. Please consider my suggestion if you would feel right:

    A. On Blog:
    1. On top of the Blog ( Financial Wisdom – By Kalidas) , that space you can make it very attractive, please refer the following links : http://www.ameinfo.com/173510.html
    Eg: Financial Wisdom – By Kalidas Date:
    (News, Analysis, Strategy, Action) Blog visited by no people:

    Below this: Headline of the new Topic and Date, like
    Eg: ACTION TIME TO BUY the Stocks 29/10/2008 ; 10:10:10

    2. Please ensure that, only one article will be displayed on Blog at a time, other old article will be archived , PDF’ed or given link to the old articles.
    So, one article followed by reader comments and voting tool.
    3. Search bar, Author details, Chat bar, Download tool bar etc, are should be kept left or right side of first page of the Blog not very down.

    B: I request you to please give an Ad in India on this Blog , Fellow Small Investor were desperately looking for these type of correct and genuine information.

    C. To generate some revenue from Blog, I can help you in Brining some very big companies (Like Wipro) Advt to your Blog. Even you can register Google’s Ad sense section. For every hit, you will be getting some cents.
    My Idea is: Make Kalidas to earn money from Blog, Advt, publishing books etc. So that you need not to spend much time on other activities to earn money.

    D. Need Advice from you:

    Sir, Most of the time I followed you suggestions and earned a lot and also lost all profit in this Bear run.
    One of my Close friends had advised me to Invest on “Mercator line” which is having business in (Shipping, Dredging, Oil Rigs). I put most of my hard-earned money (Nearly Rs12Laks) on this stock. I brought the stock in the following way:
    On 20/07/2008 I brought 2000 @ 70.70
    On 30/07/2008 I brought 1000 @67.50
    On 10/08/2008 I brought 1500 @ 61.00
    On 22/08/2008 I brought 1000@ 57.50
    On 08/09/2008 I brought 1000 @48.50
    On 18/09/2008 I brought 1000 @40.00
    10/10/2008 I brought 1500 @ 34.75
    15/10/2008 I brought 500 @ 30.30
    Now it is trading at around 29.50, now I do not have any money to Invest on this script again. I am on 48% loss.
    Could you please suggest me on this company future and Also please suggest me how I can get back my principal amount from this counter.

    Note:1. Sir, this is very length email , please don’t ignore because of the length. I desperately need your advice.
    2. I too sent a email to your gmail id.

    Regards
    Raj (Wipro) , London, UK, 30/10/2008

    Kalidas Replies to Raj (Wipro) (ref: 0810-041 of Thursday, October 30, 2008 )
    You made a wrong move. You bought into Shipping stock when
    – The oil prices were rising (negative to shipping)
    – The tanker rates were falling (negative to shipping)
    – Interest cost in India and abroad were rising. (negative to shipping)
    – Rupee was falling (negative to shipping company because fuel cost in rupee terms were rising.
    – You were counting your losses, and buying again and again at the height of credit crisis.

    Good stock, wrong selection at wrong time. This stock does not have very high upside, but can cover your costs in 18 months.

    Sell 40% and swap to IFCI at about Rs 17.8
    Sell 30% and swap to RNRL at about Rs 41
    Sell 30% and swap to Essar Shipping at Rs 31 (It has higher upside)
    then give time for above stocks to work for you.

    Note If you have spare money, buy Essar Oil about 2000 shares or more either now or in stages and 5000 shares Essar Shipping, 2500 of Royal Orchid Hotel, 2500 of Taj GVK Hotel and 2000 of Indian Hotel. Quantity may depend on your risk taking capacity. Do not overextend your self. It will be also good idea to convert $ into Rupees, so that your cost is effectively cheaper by 20% due to rupee’s depreciation. Also remember that the market is very volatile, so buy in stages without any worry, just as you did for mercator lines. Refer to my Appended Post of 5 more stocks and also see the updated PDF file in the side bar.

    Raj ( Wipro)

    October 30, 2008 at 10:31 pm

  22. Kalidasji,

    Thanks for sharing your knowledge with all of us. I have question, I am new to stock market and just want to ask you, is it better to buy stocks in lot of 20-30 stocks of a given company (as and when we have money, just like SIP in mutual funds) or accumulate money over time in bank and buy 300-400 stocks in one transaction? Thanks

    Ajay, Gurgaon, 31-10-2008

    Kalidas You mean 20 or 30 shares (not stocks) of a company. that is a better choice. It is more like a Recurring Deposit account. However, you are absolutely new, so better be very careful of selecting some good stocks. You will do better if you pick up the stock of some blue chip companies or some Government owned companies so that your investment is not turned into loss by some crooked company management.

    Ajay

    October 31, 2008 at 7:34 am

  23. Hello Kalidas,

    What do you think about diversificaton of stocks in ones portfolio ?

    When I see the stocks suggest in this article, We have 3 stocks in Hospitality sector and 3 in Refinery. So if hospitality sector is not doing well for some reason then it would have effect on all the 3 stocks. Just wanted your view on diversification aspect of ones portfolio.

    I really like the way you write about the fundamental and financial of company. Amazing !

    Nitin Pillai - Mumbai - India

    October 31, 2008 at 10:34 am

  24. Dear Sir,

    I have the following two doubts. Please clarify:

    1) I think it is better to wait for couple of and let FII sell completely (Every day they are net sellers of app 1000 crore rupees as per bse site).

    2) This one is a bit cynical but I would like to get it clarify anyways. What are the chances that the Indian markets will not go the japanese way (about 38000 in 1989 and now about 9000)? It will be great if you point out the difference between the japanese situation and the current indian situation.

    Thanks,
    v8r.

    v8r

    October 31, 2008 at 11:03 am

  25. Sorry, for the first question, it is “for couple of months”.

    Regards,
    v8r.

    v8r

    October 31, 2008 at 11:05 am

  26. Hello Sir

    Thanks for the excellent article.- The download center is not visible to me. Can you please sent file to me by email

    Thanks, Amin Shekh Amravati-MH INDIA
    Kalidas It is sent by email. I may be visiting Amravati in 3rd week of November. Send me your contact details. i will be mostly in Mehfil Hotel for about 7 to 10 days

    Amin

    October 31, 2008 at 2:19 pm

  27. Where is the PDF of ‘Action Time to Buy’ why m not been able to see. I can only see the link which is an HTML page.
    Kalidas It is already there. There is vertical scroll bar which is very faint. Go to the top and second item from top is the PDF file relating to Action Time … article.

    Ashish

    October 31, 2008 at 2:39 pm

  28. Ohh still cant get it… will you be able to mail me the PDF file on the gmail ID?

    Ashish

    October 31, 2008 at 4:51 pm

  29. Sir

    i dont agree with ur advise to invest in essar oiland essar shipping.please avoid these 2 counters since ruias group is known to cheat investors through finanial reengineering. let us not invest money in any company where the management reputation of sharing wealth with investors is zero.

    XXX

    October 31, 2008 at 4:57 pm

  30. Sir ,I am wondering about these Essar scripts
    Following your advice last year on MMB I bought both oil and ship scripts without my heart in these scripts,and made fastest 300% to 400% profit hardly in matter of two months. Came out of them early Jan after your sell call. Beauty was when you gave your call on MMB then only they started moving. )Till then they were sleeping.( all 4 years of bull run)

    Again Last night you gave a call and first thing in the morning I did was I bought them and they started moving as if there is no tomorrow.:-) I was of the opinion you have only retail investors like me as followers. Looking at these essar movement I feel some big players in the Indian market read your articles and bet .
    One behavior I have observed about this Essar Oil is, it moves a lot only during the last 15 – 20 minutes. Essar ship will be 5% upper circuit for weeks . If you don’t; buy in the morning half an our or so you will never get Essar ship unless markets turns around.

    My only worry is Ruias are not investors friendly. As you know they want every thing for themselves.

    Shiva
    Bangalore India

    Shiva

    October 31, 2008 at 11:40 pm

  31. I have invested in midday multimedia 2years back. Since then it under performed the market. Should I average?my buying price was about Rs 50. pl. advise.

    Kalidas Replies to Rajarshi (ref: 0810-042 of Saturday, November 1, 2008)
    Yes. I also bought 2500 shares of Mid day today @ 12.10

    Please write your message properly, spell checked ( I have done that for you today). In two lines you had 12 errors. I would not reply such messages in future.

    rajarshi

    November 1, 2008 at 3:21 am

  32. Mr. Kalidas

    Your post is really interesting and it looks like you have played your cards right and made some big money.

    I would like to know if credit crisis is going to develop in India in near future. Though Indian banks seems good now I think job losses in India will be main reasons for the foreclosures and breaks the real estate business in India which results in credit crisis?

    Us Recession and Obama WIn -> which applies breaks to Outsourcing and results in job losses-> foreclosures -> bank failure.

    1)Can you please discuss these links for me?

    Thanks
    Chakri

    Kalidas Replies to Chakravarty(ref: 0810-045 of Saturday, November 1, 2008)
    There are no foreclosures in India. Mortgage rules in India are diametrically opposite to that of USA. The courts in India are also very liberal. If they find that the borrower can repay the loan by alteration in terms, they will agree to it under Directive Policy under the constitution, which is non binding but offers social guidance to all branches in the government.

    It may sound that there will be job losses in IT sector, but that is only short term. We have to see whether there is sustainable job losses. The present troubles have developed at fast pace in USA, and world economy being interlinked globally, there will be some fall out on short term but not on sustainable terms.

    Recession or not, people are now addicted to computers like a morning cup of coffee or tea. For a person like me, the computer is my first wife, physical wife second. The demand for software professional will only rise, not fall.

    Indian software companies are liquid, they do not have much debt. They can not fire an IT professional today and rehire him next day. They will wait for 3 to 6 months before firing and causing job losses.

    Indian banks are not involved in sub prime related crisis, except ICICI Bank, SBI, BOI and other banks having offices abroad. ICICI Bank leads the pack. Others being nationalized banks have avoided the crisis by default – they do not have decision independence.

    Forget Obama – he may not win at all. The things may change at last moment. He drove out the accompanying journalists from New York Post, Washington Post and one more, that will carry tales at last moment. Racism will play silent role – no one will be explicit, like in India, where the dalits or harijans are still being hated in real sense despite legal protection. Ideal is one thing, its practice is another.

    chakravarthy

    November 1, 2008 at 6:35 am

  33. Essar shipping – In the conference call notes at Moneycontrol, I read that the Debt as on 30th September stood at Rs 4500 crore while net sales in the quarter is 696 crore.

    You have advised that Sales should be nearly 4 times that of debt level. Why are you making an exception in this case ?

    Regards, Shailesh, Delhi

    Kalidas Replies to Shailesh(ref: 0810-044 of Saturday, November 1, 2008)

    Moneycontrol reports:
    Total Share Capital 426.21
    Net Worth 3071.30
    Total Debt 1710.45
    Net Block 2123.71
    Investments 3124.62
    Net Current Assets -466.58
    Total Assets 4781.75

    Read the following from Moneycontrol statistics:
    http://www.moneycontrol.com/india/stockpricequote/essarshipping/essarshippingportslogistics/07/21/balancesheet/marketprice/ESP

    You should always try to check the real numbers from Moneycontrol or IndiaInfoLine with the rumors or unauthenticated reports.

    1. The Essar Debt is 1700 crores against Net Wroth (equity+ reserves) of over Rs 3070 crores, which places debt:equity ration of just 0.56
    2. Essar shipping and Port Logistics is the full name. They are in capital intensive industry where the debt level, especially long term debt, is unusually high. Shipping and Airline business are different than rest of the businesses, in that each ship and airplane cost several hundred crores to build. They are usually financed by long term loans or leases from manufacturers themselves. It is the short term liability (that includes 12 months liability under installment loans of long term debt) that causes maximum troubles.
    3. I have not made any exception. However, it is a rule of thumb. It applies almost universally.
    4. Essar Shipping is strong in “Tanker business” for transportation of oil. They will have captive demand from now on, because their major associates, Essar Oil, has commenced the production, and its revenue is now 9000 crores per quarter. They may not be able to meet even external demand. The annual revenue of Essar Oil will be around Rs 36000 crores of US$ 8 billions plus. On quantitative basis, the Essar Oil will produce over 12 million tonnes per year. You can now imagine what will be the demand for their services.

    shailesh

    November 1, 2008 at 9:25 am

  34. Sir,
    One of the factors you are considering in determining hot picks is %Down from peak. Since typically stocks stay at peak for a very short period, would it not be good to consider %Down from AVERAGE VALUE for a period, say one year ?

    RamW, Bangalore, India.

    Kalidas Replies to RamW (ref: 0810-046 of Saturday, November 1, 2008 )
    Not possible and not suitable. Often the prices are rigged near the close of the day. Further, there are also variation of price during the day.

    The correct course is to take the monetary momentum, that is, volume x Price to give you the idea how much money has gone into the referenced stock. But such statistics are not easily available on public forum or website.

    Further, in investment, especially for long term, such thread bare analysis is not required. Use of common sense rather than X-raying every skeleton of the stock body is required.

    RamW

    November 1, 2008 at 12:29 pm

  35. Hi,

    Can you throw some light on current rally in markets world wide. Just few weeks back we were raising concerns of world wide recession and now we are seeing everyday rise of 600 plus points on index.

    Are we out of woods and created a bottom at 7500 index levels or some more pain is still left.

    Regards,Ajay.

    Kalidas Replies to Ajay(ref: 0810-048 of Saturday, November 1, 2008 )

    Read all posts and then enquire. I have replied many times, This is the last time. Right now, we are in middle of war – anything can happen. There is no end to predictions. They do not make money. If you are player, not spectator, you can make runs or money. It is more like 20:20 game, where one hits the ball the moment he enters. The spectators merely clap.

    Further, mention city and country under your signature always, otherwise no answer will be given in future.

    Ajay

    November 1, 2008 at 12:42 pm

  36. A genuine query. You have mentioned that Essar Oil is also a producer of oil apart from refining. Since I am from the Oil Industry, I am not aware of any oil being produced by Essar Oil so far. though they have few blocks with them for some time. Could you give details of the same.
    Xavier, UAE

    Kalidas Replies to Xavier(ref: 0810-047 of Saturday, November 1, 2008 )
    Refer to their web site. They are reportedly producing smaller quantity as per press report- 200K bpd or thereabout. They are the only producer in real sense after ONGC

    Xavier

    November 1, 2008 at 1:11 pm

  37. As you said mercator lines doesnt have high upside still it zoomed 20% in a day wat was the reason behind it? Even I hold the same stock should i go for Essar oil instead of this.

    Ashish

    November 1, 2008 at 5:54 pm

  38. Sir
    I guess you need to investigate the Essar oil details mentioned on their site. If Cairn and BG have drilled hundreds of wells over a decade they have not managed to reach more than 100K production, so how come Essar oil is producing double thier capacity – needs to be looked at and where are they producing. In India 1000 bbls/day is a good yeild from one well, so you can imagine how many wells have to be drilled and successful.
    Xavier UAe

    Xavier

    November 1, 2008 at 7:41 pm

  39. I was referring to the article on the link http://www.moneycontrol.com/india/news/news/essar-shipping-sees-dipthroughputnext-two-quarters/364079
    which claims to have the conference call notes. It mentions “..Debt as on 30th September stood at Rs 4500 crore..”

    I did check the numbers on the Moneycontrol site which are based on the March 08 annual report. It seems that they have increased the debt level in recent months.

    The link also has an interesting comment “Company has 30 rigs, out of which 6 rigs are operational and 3 will be operational soon …”

    I believe that EssarShipping would be a good investment. The only red flag I can see is the amount of debt.

    Regards.
    Shailesh , Delhi

    shailesh

    November 2, 2008 at 3:01 pm

  40. I too have the concern that Xavier,UAE has raised above. I did some search on the Internet after reading your post on Moneycontrol on 13-Nov-07 titled “Essar Oil Target 2800 – READ THIS- 300,000 crores FRAUD”. I could not confirm any oil production at that time. The only article I could find at that time was the Reuters report at this link http://www.reuters.com/article/IndiaInvestment07/idUSBOM11758520071206?pageNumber=2 which mentions “Essar Oil is aiming to produce 250,000 bpd of equity crude by around 2015, but is targeting exploration opportunities rather than asset purchases to reach that goal”

    The quarterly company update at http://www.essar.com/oil&gas/pdf/2008_10_31_Q2FY0809_AnalystCall.pdf mentions “1,078 bbls of oil produced from ESU field during the quarter” at page 14.

    This indicates that they are not producing much oil at present but do have plans for the furure.

    Regards.
    Shailesh
    Delhi

    0811-007 Kalidas Replies to Shailesh ( Monday, November 3, 2008)
    Please note that we are relying more on Refinery operation. The oil production is a bonus. while I am not technical person, please look at the following from Essar Oil web site:

    Quote
    • 180 Sqkm of 3D seismic acquired and 10 wells drilled in block CB-ON/3, Mehsana. Currently producing from one field with certified 2P of 2.7 mmbbls and 2 additional discoveries under appraisal.
    •• Produced and sold more than 17,000 bbls of crude oil.
    • 15 core holes drilled and coal tested for permeability, gas content, etc. in CBM block in Raniganj.
    •:• drilling of 15 test wells and acquisition of 120 LKM of seismic under progress.
    • Spent about US$ 75 Mn on Exploration & Production during financial year 2007-08.
    • Committed work programme in the current phase of existing blocks is to the tune of US$ 290 Mn of which US$ 130 Mn will be spent in current financial year. Work programme includes:
    •• G&G evaluation and seismic programmes in Assam, Madagascar, Nigeria & Vietnam
    •• Drilling of wells in Raniganj and Mehsana
    •. Development of Ratna fields
    Unquote

    Also visit the link http://www.essar.com/oil&gas/invrelation_Presentations.htm

    Refinery is 50 times bigger operation, so focus on the Refining. Production is a bonus.a

    shailesh

    November 2, 2008 at 3:22 pm

  41. Sailesh
    There is something rather wrong with all the Essar site info I suppose. In the days when there are no rigs available how could they have 24 rigs lying idle at all. Also where are the 6 rigs deployed.
    Need to really investigate all the data. As also thier oil production claims.

    Xavier

    November 2, 2008 at 4:41 pm

  42. kalidasji,

    I am big fan of yours since IFCI on MMB. I have 25000 shares of IFCI.
    you have given a target of 80. Don’t you think so the stock has the potential to perform much better than 80 …its book value is around 40 and within 1 yr it will surely reach 100. …so my target is around Rs. 700. do you think it can reach there in 3 yrs.

    0811-006 Kalidas Replies to Sanjay Shah (Monday, November 3, 2008)
    This is my last request to you and all boarders. Please mention your name, city and country under your signature as per the protocol. I will not reply if these details are not given and your enquiry also stand the risk of being deleted. Also, avoid using abbreviation like tgt for target etc.

    for IFCI – the circumstances have changed. The entire banking and finance sector the world over have been de-rated downwards, so the money allocation for this sector will be much less. There is no take over story nor the stake sale. Further, apart from IFCI, there are hundreds of stocks in devastated market that may compete with IFCI for attention. Top 5 brokers are dead. They were controlling over $1.5 trillions collectively. Their support is also gone.

    Things have changed. Money has disappeared. Most money is destroyed. so, when the money is not available for investment, the stock prices can not rise to the extent you projected.

    Be a realist now. It will take years before the new vibrant bull market emerges. You have to scale down the target, short, medium and long term.

    Sanjay Shah

    November 3, 2008 at 1:38 am

  43. Hello,
    I had a detailed go thru your article and the recommendations for the buy at this current market stage. My simple question is in this BEAR Market the safest bets would be Blue chips like (L&T,Reliance, Infosys, BHEL, TCS, SBI, etc and some others like SESA GOA, CIPLA, NTPC, PNB, etc). Don’t you think if you can get them at Sensex @ 8000 about levels you can make some good money in future when market consolidates. Is investing the hard earned money in IFCI, Essar companies, etc would do the proper justice? I appreciate your thoughts on them, but just wanted to know the reason for explicitly avoiding these Blue chip stocks and others I have mentioned above. Thanks in advance.

    Suman
    Zurich.

    0811-008 Kalidas Replies to Suman (Monday, November 3, 2008 )
    Good question. In stock market, to make money, one has to buy the stocks that have great upward potential and trading at cheapest price. When I was the stock broker, the average PE used to be 12 times, because interest rates were at reasonable level of 6% to 8%. Since then, in the name of Consumer oriented growth, the rates were lowered to incredible level that increased the thinking of higher PE and at the same time, encouraged Yen and Dollar carry trades. Nowadays, 20 times PE is considered normal and 30 to 50 times PE was considered normal for growth oriented stocks.

    We are therefore in the era of high PE stocks. The commodity stocks like Reliance had been trading at 8 to 12 times as usual, but then it was propelled into 4o to 50 times only because they split up the company and issued papers of the spun of companies, where nothing else has changed. LT was another example. These stocks have corrected over 40% but still not that good enough, whereas my picks have gone down by 80% to 90% with their growth rate remaining slightly dented, but well above large corporate.

    Large corporate blue chips rely mostly on funding through debt (so as not to dilute EPS) whereas the present scenario is the non availability of capital and wholesale destruction of money that has just disappeared due to death of toxic derivative. Smaller mid cap stocks can perform better in such scenario.

    Why should not buy MTNL , a debt free company, trading at very low PE, present or prospective? Why not I buy LIC Housing Finance which pays handsome dividend and also has above average growth, and trading at very low PE. Why not I buy IFCI when it has corrected 90% and trading at only 1.33 times PE compared to 11 times of current PE for Reliance (prospective is much higher) and LT at current PE of 20 times?

    Further, there is a undeniable principle that the stock that comes down fast, climb up equally fast as soon as recovery sets in. The stocks like Reliance and LT do not pay enough cash dividend (giving bonus shares – a paper exercise is like printing share certificates in home factory same way the government prints $700 billions at its mint) to justify their buying at this stage.

    Blue chip status is like reaching top of Himalayas. That status may be lost and some other stocks may replace them. I have never erred on this belief. When SAIL was trading at Rs 5 , I was the biggest buyer, but the orders were not getting filled even for 50,000 – Bank of India used to be bought at Rs 10. Today both stocks are at 12 times to 26 times in spite of market having corrected so steeply. It is possible that RIL will lose another 300 to 400 to come down to Rs 900 level and may even touch critical 800 level. LT will lose another 70% to come down to Rs 300 or about. This was predicted by me almost 10 months ago on MMB of CNBC.com for India.

    I have no loyalty to blue chips nor hatred. I just consider value and which stock can possibly give me above average return in short time frame and also consider the safety with earnings. Old leaders are tired. They have to be replaced with new ones. This is election time – we want CHANGE

    Suman

    November 3, 2008 at 5:51 am

  44. Hello Kalidas,

    I believe you were going to name 15 stocks, I believe this article was not updated after Oct 30th with next 5 stocks. Eagerly waiting for it. Thanks

    Kalidas: The market rallied too much, so wait for some correction to suggest some stocks.

    Nitin Pillai - Mumbai - India

    November 3, 2008 at 9:26 am

  45. Dear Sir,
    For Essar Shipping you have indicated buying range more than CMP. May be typo?? Or is there any specific reason?

    Shiva
    Bangalore India

    0811-010 Kalidas Replies to Shiva ( Monday, November 3, 2008)
    Right you are. It was meant for Essar Oil. For Essar Shipping, it is 31~43.50 for time being, though I will still buy upto 53.50

    I am correcting the error.

    Shiva

    November 3, 2008 at 11:03 am

  46. I have 2700 3iinfotech shares @Rs.100,1100 RPL @Rs.142 and 1500 GMR shares @Rs.140.Kindly advise me on the above shares.

    SIVA KUMAR

    November 3, 2008 at 11:21 am

  47. sir,
    no posting of your valuable reeccomendations after 10 stocks? in fact ROYAL ORCHID HOTEL LTD. is the last one as on 03.10.08 2PM
    regards
    ajay
    delhi

    ajay singh

    November 3, 2008 at 4:29 pm

  48. HPCL has rallied today to above 200 from 165 last week. I missed the opportunity to buy this stock at 164.Do you think we will get another chance at 160s or we should buy the stock at it’s present price of +200.

    0811-013 Kalidas Replies to Sanjay (Monday, November 3, 2008)
    in my recommendations, I mention the buying range, so go accordingly. Also read NASA everyday.

    No, one must not buy HPCL at this price. We are still in bear market. Nothing is going to run away. I have already mentioned be prepared to buy Refinery stocks from 2nd to 3rd week of November especially around Nov 20 when the stocks could come down, Oil going up and producers going up and refineries going down.

    Write your name as signature with city and country. You will not get answers if you do not mention this in future.

    Sanjay

    November 3, 2008 at 5:28 pm

  49. Sir U say we should read NASA? What is nasa?

    Sanjay S
    Abu Dhabi
    UAE

    Sanjay

    November 3, 2008 at 6:52 pm

  50. Hi Sanjay

    U just see top right corner in the recent post, there is NASA- News Analysis Stragedy and Action, Kalidasji analysis every important news and what action we have to take current market

    Rajmohan babu
    Pointe Noire Congo

    Rajmohan babu

    November 3, 2008 at 7:55 pm

  51. Kalidas ji,

    Can you please share your views on GSPL. The stock is sitting on the sidelines during the ongoing massive rally. I had previously 200 at the price of 57. I bought 200 more at 31/- to average down my price. I have 6 HDFC bank shares at 1100/-. Shall I sell them and switch to GSPL or any other share?

    Thanks,
    Alex
    New York

    Alex

    November 3, 2008 at 10:32 pm

  52. Hi Sir,

    As you suggested earlier I have rebalanced my portfolio, now I have Abhishek industries 3000@7.64 , DISH TV 2000@12.55, Essar shipping 300@34.65 , GSPL 700@31.78 , Hotel leela 500@26.07 , IFCI 4700@18.46 , MTNL 200@59.30, RNRL 1000@46.21, Spice jet 3600@13.25 , TAJ GVK 100@48.50.
    So far spent 2, 92,000/-, I have 1, 58,000/- left to invest.

    Can you please suggest me that do I need to invest any shares now or I can wait till speech delivered by new president. Also please let me know is there any stocks I need to sell in this rally and what are the stocks I can accumulate in this portfolio even after president speech, is there any other scripts I need to add to this portfolio.

    Please suggest me sir.

    Thanks & Regards
    GS, Hong Kong

    GS_2007

    November 4, 2008 at 1:25 am

  53. Hello Kalidas,

    In NASA section, The “Action” says to buy Oil producers, Gas, Steel and Auto. Can you please name 2 stocks in each sectors ?

    I have named few if you can please let me know if it looks good to you.
    Oil producers : Cairn India / ONGC
    Steel : Tata Steel
    Auto : Ashok Leyland / Swaraj Engines
    Gas : RPL / GAIL.

    But I see that all these stocks have rallied at least 5-10%. Should I wait for fresh investment ? Your advice is important

    0811-015 Kalidas Replies to Nitin (Tuesday, November 4, 2008)
    Oil Producers: Buy them when the oil is down sharply in next 10 days

    Steel: TISCO has debt problem. However, you may buy it on short term basis. On longer term, I prefer JSW Steel if its sharp rise recently has come down due to profit taking. Alternative safe bet is SAIL but JSW may give more gain. Please note that this is only on short term basis. They may have to raise thousands of crores at much lower prices due to weak capital market. This stock has all potential to come down to as low as 60. Corus acquisition was the biggest blunder of Ratan Tata, who wanted to emulate Mittal who outdistanced him in steel business.

    Auto: Ashok Leyland has image problem – does not do well even in bull market. Hinduja name is not liked by many. Unless the stock comes down to less than Rs 8, I will not buy it. Prefer Tata Motors instead. It looks like you like AL due to low price level, but in stock market, the popularity wins like a beauty contest.

    Gas: GAIL is preferred with Petronet, GSPL, Essar Oil (strong buy).

    I avoid RPL for one reason – Both RPL and Essar Oil have same production capacity. Essar has 117 crore shares outstanding, whereas RPL has over 475 crores ( not exact figures – check in monycontrol.com). Essar Oil promoters sometime ago, reportedly bought the shares @ 200/shr if I am right. then the stock went up to Rs 360.

    Now, the price history shows that Essar had gone to 360 with 117 crores shares, then how could we expect RPL to outperform Essar Oil with nearly 4 times shares and same revenue? I have not studied RPL in detail, because all information are sketchy. It is Ambani name driven. Essar Oil is also a producer thought small scale, whereas RPL is not. To me, Essar Oil is 4 times more valuable than RPL. I would rather swap from RPL to Essar Oil for that reason.

    Nitin - Mumbai - India

    November 4, 2008 at 5:07 am

  54. Kalidasji,
    pls suggest.

    I have 180 ITC at Rs 165 (CMP 165) (from past 1.5 yrs).
    According to you scrips that fallen less will fall in coming days.
    Do you think there is any sense in keep holding this or you suggest selling it and averaging IFCI, Indian hotels,LICHF with same amount.

    Prashant (Chennai, INDIA)

    0811-018 Kalidas Replies to Prashant (Tuesday, November 4, 2008)
    It seems to me that FII buying has started today, may be for short while, since almost all heavy index stocks are up.

    ITC is a good long term safe and sound stock. From appreciation point of view, I would do the following:
    Sell ITC Buy IFCI (It has just begun to move and one may not see the low prices again even in correction), Indian Hotels – still at acceptable price and LICHF may be bought only in correction – it is up by 20% since I suggested.

    Of course, I do not want to discourage you to ask. But try to take your own decisions when so much help has been rendered, tools provided and methods suggested. I can not go on replying same person all the time.

    Prashant

    November 4, 2008 at 4:50 pm

  55. Sir , i would like to have your view on Balrampur chini
    for short term

    Ankur Samel

    November 4, 2008 at 5:48 pm

  56. I have 2700 3iinfotech shares @Rs.100,1100 RPL @Rs.142 and 1500 GMR shares @Rs.140.Kindly advise me on the above shares or suggest any swapping of shares with your recommendations.

    Regards

    SIVA KUMAR

    VIJAYAWADA, A.P. INDIA

    SIVA KUMAR

    November 4, 2008 at 6:01 pm

  57. Sir,
    Thanks for your insightful comments and detailed analysis. On GSPL I am concerned about Guj. govt. decision to transfer 30% of its Profit Before Tax towards welfare activities to Gujarat Socio Economic Development Society. I believe this will harm existing shareholders and keep share prices depressed long term. Would appreciate your thoughts on this.
    Thanks.
    Warm regards
    Liju J
    New Jersey, USA

    0811-021 Kalidas Replies to Liju J (Wednesday, November 5, 2008)
    It can not be. It is a public listed company. May be there is some mix up. Send me the link for my study. I checked GSPL web site but no such reference. Gujarat government is only a shareholder, major one, of course, the entire company is not owned by them.

    Liju J

    November 4, 2008 at 7:48 pm

  58. Sir, In your recommendation on HINDALCO, you have take the view (a) that there would be massive inflation in less than 12 months (b) that it will push up commodity stocks very close to highest price seen recently. Do you expect that apart from metals, even crude oil to shoot up again?

    0811-019 Kalidas Replies to Sekar (Wednesday, November 5, 2008)
    Yes, this is why I have been telling you to watch closely the Oil prices close to Nov 20~24 when the December expiry hits with over 300 Millions Barrels of Oil shorted or having open interest, that constitutes 20 days of consumption in United States.

    sekar

    November 5, 2008 at 1:03 am

  59. Sir, I am Sekar from Delhi, India

    sekar

    November 5, 2008 at 1:04 am

  60. I love your straight talking. Your views are right on target and clear. You are an experienced stock investor. Hope to read many more such articles from you.

    Shiv Kumar,
    Doha,
    Qatar.

    Shiv Kumar

    November 5, 2008 at 1:35 am

  61. Sir,
    You mentioned that you are withdrawing “sell all” call. I have also started buying as per your guidelines. Can you also please mention what % should we still be on cash now ? 80% ? ( sorry, if I have missed some of your messages where you would have answered this )

    As someone else already asked, while everything else is rallying, GSPL has stayed at the bottom. Is this a strong buy now ?

    RamW
    Bangalore, India

    0811-018 Kalidas Replies to Ramw (Wednesday, November 5, 2008)
    60% Cash + 10% Gold + 5% Silver + 25% Stocks

    RamW

    November 5, 2008 at 2:18 am

  62. Kalidas Sir, since you prefer companies with no debt and which are cash rich – My question is
    How would a company like GMR INFRA which has a lot of potential stand but still has debt with high interest?

    i’d like your opinion on this according to your convenience.

    Kishore
    Sydney, Australia.

    kishore

    November 5, 2008 at 1:55 pm

  63. Hi Kalidas sir,

    Can you please give me your opinion on Spice jet, I have 3600@13.25 , Seems to be its moving very slow, even IOC has reduced 4.4% on fuel, can you please share your short term and long term target on this stock.

    Thanks
    G Sankar, HongKong

    0811-023 Kalidas Replies to G Shankar (Wednesday, November 5, 2008)
    I am not short term operator. It is difficult to give ball by ball commentary to every reader. I am not short term trader. I have provided tools in the form of article how the Oil, Dollar and Gold behave and why. If the oil rises, the airlines, refineries go down and vice versa. I am owning Spicejet from 9.85 onwards, (have also paid 21.85 and 17.85) and I am prepared to sit it out.

    gs_2007

    November 5, 2008 at 3:33 pm

  64. Sir,

    You have predicted that oil will fall down sharply in next 10 days
    (“0811-015 Kalidas Replies to Nitin (Tuesday, November 4, 2008)
    Oil Producers: Buy them when the oil is down sharply in next 10 days”)
    and around 20th Nov rise up again.
    I understand your logic behind the projected rise in oil around 20th Nov, but what will cause oil to fall sharply before that?

    Ashish Dandekar, Doha, Qatar

    0811-027 Kalidas Replies to Ashish Dandekar (Wednesday, November 5, 2008)
    It is already explained in the Article “Oil down, dollar Up, Gold down” what the hell is going on” . Please do not ask questions if they are already answered in the previous article.

    To answer you this time, please note that US administration is shorting Oil futures (December that settles on 20/11/2008) and buying $ index so that Oil goes down and $ going up, other currencies go down. On settlement day, the position is reversed – buying back oil contracts sold short and selling $ to buy the shorted euro and other currencies.

    This is a cmplex game – so see my article. It gives perfect explanation with diagrams.

    Ashish Dandekar

    November 5, 2008 at 3:36 pm

  65. Respected Kalidas Sir,

    You had put a great post regarding your e-mail to Mr. Bush of America. It is no longer on the site. Please let us know what happened and if somebody hacked it so we can’t see it?

    I hope nobody is trying to use force on you, because we are with you so please don’t be afraid.

    Thanks. Amit, Mumbai

    Kalidas:
    It is already there on the side bar. click it and you get it. I kept it on main page only for a few days. Its purpose is served.

    Amit

    November 5, 2008 at 4:55 pm

  66. Sir, Now that Obama has won, would you like to re-visit one of your replies above especially on IT Sector. Indian readers may like to have your views on Obama election under NASA.
    Sekar (Delhi, India)

    sekar (Delhi, India)

    November 5, 2008 at 6:16 pm

  67. Sir,
    Your target of Balaji Tele. 420 in 3 years looks too An Optimistic. Once you had commented that Sensex old Highs are far (5-7 years) away from now, then how could Balaji will cross old highs in 3 years ?? Balaji’s superior days have gone. They created nothing except MESS on Indian television. Now people are fed up With this SAAS Aur BAHU Drama. And their running Serial “KAHANI HAMARI (Ekta) MAHABHARAT Ki” is Super Duper FLOP. And Income of Tushar Kapoor will not be gone into pocket of Balaji’s investors.
    Thanx Jayes Ghatkopar Mumbai

    0811-025 Kalidas Replies to Jayesh (Wednesday, November 5, 2008)
    I considered everything. I maintain my opinion.

    Noted your disagreement.

    jayesh

    November 5, 2008 at 6:36 pm

  68. Sir,

    This is in reference to your reply to 0811-021 Kalidas Replies to Liju J (Wednesday, November 5, 2008)

    The news of Gujarat Govt dictate to state PSU’s for 30% contribution on PBT for social pending is true. I am afraid that the fortunes of GSPL might change now. I am attaching the links to that news article.

    I would appreciate your views after this news.

    http://www.expressindia.com/latest-news/Stocks-of-state-PSEs-take-a-dip-after-govt-diktat-on-welfare-cut/361224/

    http://in.news.yahoo.com/48/20080924/814/tnl-modi-has-his-way-all-6-gujarat-pses.html

    0811-024 Kalidas Replies to Kiran Patel (Wednesday, November 5, 2008)
    Thanks for quoting. Here is the relevant paragraph:

    “It is not mandatory for the government companies to contribute from their PBT. We have just dispatched request letters to them for this. The PSEs would contribute for social causes only if their respective board of directors and shareholders agree to this,” he said. (A 1984 batch IAS officer, Agrawal is also the member secretary of the Gujarat Socio-Economic Development Society (GSEDS), ”

    This is not going to work. GSPL is a listed company, and Gujarat government is NOT authorized to force the company to pay 30% of pre-tax profit at the expense of shareholders. It is the domain of the central Government who are authorized to receive taxes only under Income Tax Act.

    The monority shareholders are a very powerful force, and any payments made to the principal shareholders or its associates amounts to distribution of capital, not authorized under Company Law ans also under listing rules. (I am also a Lawyer)

    It appears that the Government of Gujarat is bankrupt, and it finds difficult to raise money by way of normal state level taxes. Asking publicly listed company, which have national appeal, will set a bad precedent if allowed – in fact it is illegal and unconstitutional. If this is allowed, the Government of India will ask its 300 odd companies to pay such taxes in addition to normal Corporate Income Tax, and in that case, the SENSEXC could drop to less than 1000. This will never happen nor various mutual funds will ever allow to happen.

    I will also write a letter to SEBI, NSE and BSE asking them to ensure that profits of publicly listed companies are not diverted at the instance of some irresponsible State government.

    Earlier, Sardar Sarovar tried to redeem deep discount bonds before maturity which was twice thrown out by the Gujarat High Court. Sardar Sarovar is also part of the Gujarat Government.

    Yes, the investors will be put on caution. Instead of getting into such controversial stocks, it is better to divert into other stocks – there are thousands in this carnage that are better than or equal to GSPL, including Petronet, the part investor in GSPL. They too will not allow to happen.

    Looks like Narendra Modi has gone crazy. He is emboldend due to very little opposition and is trying to capitalize on his popularity built over his infamous anti-muslim sentiment. Sooner he goes, better will it be for Gujarat. (I am also Gujarati and Hindu)

    Again, thanks for drawing my attention. I will make suitable change in my stock sheet to caution the investors.

    Kiran Patel, Mumbai

    November 5, 2008 at 6:39 pm

  69. Sir,
    GSPL in it’s latest Board meeting has passed a resolution to seek shareholder approval to contribute Rs.64.4 crores in Financial Year 2008-09.Such resolutions have been pushed through by other PSU’s in Gujarat and unless minority shareholders act fast the same will happen at GSPL too. Pls. find the relevant para below.

    “Gujarat State Petronet
    Published on Sat, Oct 25 at 13:13,
    Source : NSE
    Gujarat State Petronet Limited has informed the Exchange that the meeting of the Board of Directors of the Company was held on October 24, 2008. The major outcomes of the said Board Meeting are as under:
    2) The Board Considered the proposal for the Contribution to Charitable and other Funds not directly relating to the business of the Company, etc. and has decided to seek the approval of the shareholders for authorizing the Board to contribute to charitable and other funds, etc., not directly relating to the business of the Company or the welfare of its employees of a sum upto Rs.64.40 Crores during the financial year 2008-09.”

    Time for minority shareholders to unite and prevent such blatant violation of shareholder rights.

    Warm regards
    Liju J

    Liju J

    November 5, 2008 at 8:42 pm

  70. Sir,

    According to the link below,

    http://www.moneycontrol.com/india/news/business/gmdc-okays-30-pbt-portion-to-charitable-institutions/358301

    GUJARAT MINERAL DEVELOPMENT CORPORATION’s board has already approved this 30% contribution and the affected shareholders have moved the Gujarat High Court in protest.

    Kiran Patel, Mumbai

    November 5, 2008 at 9:04 pm

  71. Dear Lilu J,

    I also hold shares of GSPL. This is indeed a matter of concern for us. If you know how we can oppose this, please inform us.

    Best regards,
    v8r, Mumbai.

    v8r

    November 5, 2008 at 11:11 pm

  72. Sir,
    I know you are bullish about entertainment and media sector. As you have given Buy call about DishTV, Balaji Tele & Tips Ind. I would be thankful if you analysis a compnany “Compact Disc” which is operating in Animation Industry that is related to Entertainment and media sector. As far i know Animation industry is just beginning to Shine In India. It is trading at very low PE of Rs.1, Dividend yeild 2% at CMP.It has gained 70% within a week and also has issued warrants to non-promoters whose price is double than current market price.(CPM-43 and Warrant Premium-90)
    I Also would like know about a hotel stock “Country Club”.This company has targeted group of people who have affordability to pay 80K per year for buffet, dinner and many cool club stuffs at very reasonable price. I know there are many persons in Mumbai who are not Super Rich but also not Middle class.
    Thanx and warm regards , Jayesh Ghatkopar Mumbai

    jayesh

    November 6, 2008 at 3:50 am

  73. Respected Sir,
    You have recently added some stocks on 4-11-08 in your RECENT TIME TO BUY article, but the download centre file is not updated. Today at 6.40 a.m. when i have downloaded the PDF file from download centre it was old one.

    ALKESH SHAH , AHMEDABAD

    November 6, 2008 at 9:12 am

  74. Sir,
    Keeping in view the recent happenings in GSPL (proposed 30% contribution to Gujarat state welfare), would it not be prudent to invest in Petronet LNG instead (around 30 – 35 level)? Would you still rate GSPL above Petronet LNG now?

    Ashish Dandekar, Doha, Qatar

    0811-031 Kalidas Replies to Ashish Dandekar (Thursday, November 6, 2008)
    Agreed. Petronet LNG is equally good, in fact sometime better. Switch it or ignore my recommendations altogether due to reported development of which I was unaware.

    Ashish Dandekar

    November 6, 2008 at 2:49 pm

  75. Dear Sir,

    Can you update the PDF files of action to buy and as well confused mind and clear answer for the month of Oct.

    Rajmohan, Pointe-Noire, Congo

    Kalidas: Action Time is updated. when I update Confused Mind for Oct, I will advise you here
    Confused Mind – October 2008 – PDF file is posted for download under NASA folder.

    Rajmohan babu

    November 6, 2008 at 6:45 pm

  76. sir,

    do you follow sugar stocks? should i invest part of my money in some sugar stocks? retail price is ruling around rs. 22 in kolkata.

    Kalidas: Sorry, I do not follow sugar stocks.
    rajarshi
    kolkata,india

    rajarshi

    November 6, 2008 at 8:04 pm

  77. Kalidasji,

    Have invested recently(last week) in GSPL QTY 2000 @ 36 and now cmp 29. Keeping in view the recent happenings in GSPL (proposed 30% contribution to Gujarat state welfare), shall I wait for this stock to move up and then swap with petronet/similar stock in the same sector, or swap it now even booking loss in GSPL? Your advice will be appreciated.

    Thanks in advance

    Rang-jama, Bangalore, India

    Rang-Jama

    November 7, 2008 at 12:08 am

  78. kalidasji,

    will we see 2200 on nifty again or what is the bottom of this fall…. we have already once fallen to more than 60% from top.

    I know this question is not related to the topic but would be grateful if you can reply.

    Sanjay Shah, Mumbai
    your old fan of MMB-IFCI

    0811-037 Kalidas Replies to Sanjay Shah (Friday, November 7, 2008)
    Never fight the momentum. You never know where will it lead to. I do not follow NIFTY as closely as you do. I think you are F&O player and play Nifty futures. Probably, you are Chartered Accountant, if I remember

    In this kind of panic driven market, one moves with the momentum. One places buy order way down judging from Asian leaders (if HSI is down 10%, then SENSEX may come close to 8% to 9%) . so you place buy order 9% down. If it gets hit and the market rebounds, throw back into the market again. Never take chance beyond a few minutes.

    I do not trade futures, so do not take my opinion for granted.

    for market having fallen 60% from top is not good way to judge the overbought and oversold market. The sensex went up from 2780 to 21000 or 600% from low. If it gives up gain 60% from the top, it is still 200% above the all time low when it began to rise from that point.

    Right now, SENSEX is affected more by external factors like Dow. It is like Himalaya melting down, causing downpour everywhere. But yes, the market in India is coming closer to level I would see suitable for long term investing. Short term, anything may happen.

    Sanjay Shah - Mumbai, India

    November 7, 2008 at 3:22 am

  79. Hi,
    Can you please advice the action on MIC Electronics, I have some 200 @ 132, and the CMP is 44. The stock looked good to me sometime back with current PE:5.58 and EPS-7.89, but have some losses booked on it. Shall I average it out in this market. What should be the level and how does the prospect looks like. Any suggestions are welcome.

    Thanks,
    Suman.
    Zurich.

    0811-042 Kalidas Replies to Suman (Saturday, November 8, 2008)
    Be a buyer up to 9 times more what you have. it is no doubt one of the best high growth companies with very niche product having excellent growth potential. The sports industry in India is having tremendous growth where display products of this company will be in great demand. I do not know why did they make acquisition in Australia though.

    This kind of company could command very high P/E but due to poor market it has come down to current level. Its debt level is low, high tech, excellent product, in best market, niche product, is all you can find in this relatively small but efficient company. It does not have long history.

    I will also buy this company. Do not fiddle with other stocks by swapping this into others. This should be kept as a core holding in any growth investor’s portfolio.

    Incidentally, it will also help me in one of my sports related projects in India under development. This is what we were looking for. Thanks for referring your question.

    Suman

    November 8, 2008 at 5:41 am

  80. Sir,

    I hold Arvind Mills (ARVMIL@ 13.62, CMP 16.4, Profit 20%) and Abhisekh Industries (ABHIND@ 7.06, CMP 8.4, Profit 19%)

    Should i swap this with any other shares. Please advice

    Thanks
    Prabu, Chennai, India

    0811-044 Kalidas Replies to Prabu (Saturday, November 8, 2008)
    Kindly note that I can give you the tool and various suggestions as already published. Rebalancing ..article also contained broad outlines. It is difficult for me to give every reader broad range of advice on daily basis on their daily position like a ball by ball commentary.

    Right now, you are sitting on profit, These are small value stocks and if they make money, sell them and retain cash. when they come down, buy them back again. the markets are simply too volatile. whenever you are in decent money and if you hold in good sizes, you may take profit.

    I provide solution to the people who were trapped. Those who come back to profit, may do whatever they like.

    Prabu

    November 8, 2008 at 11:22 am

  81. Dear Kalidasji,

    I had posted a message on Stock Swap and then under this topic as well giving details of my holdings and requesting advice for stock swap, but it seems my is rejected. Please let me know if I didnot post it in a right manner.

    Thanks,
    Sarit Mumbai India

    Kalidas: You wee already replied once as under. Is there anything else?

    0811-032 Kalidas Replies to Sarit (Thursday, November 6, 2008)
    TCS is solid company with no debt and huge sales and profits. But the number of shares are too many. It did not go up as much as it should. Further, both Tata Steel and Tata Motors are reeling under debt and irrational acquisition of Corus and Jaguar. Tata house itself is reportedly selling these shares to meet the Corus related obligation.

    Your losses are 40% nearly. You have to shift to the counter where your gain in short time could be 80% to 120% minimum. If you want to remain in software industry, then there is no other better scrip than what you hold. what you can do is to sell 70% when it goes higher and buy back when it corrects. Go on doing exercise.

    Alternatively, you may SELL the TCS (497) 300 shrs and buy Essar Oil (Rs 80) 1900 shares. If Essar goes to Rs 112, your capital is covered. Anything above is your profit. SELL another 50 shares of TCS and switch to IFCI 1500 @ 18 or below. When IFCI reaches 25, your losses on TCS equivalent is recovered. Anything above is your profit

    Sarit

    November 8, 2008 at 12:59 pm

  82. Respected Kalidas sir,

    i have invested about 20 lakhs and my investment has gone down by 75%.
    i am having the following scrips in my portfolio. Please adivcce what to do
    Bartronics 3000 at Rs.200/-
    Compact Disc Ltd. 100 at Rs.90/-
    Biocon 1600 at Rs.200/- [X-bonus]
    Kingfisher Air Lines 1250 at 190/-
    Well spun india 750 at Rs.112/-
    XL-Telecom 400 at Rs.250/-
    Dish TV 1000 At Rs.90/-

    a. sreenivasa reddy

    November 8, 2008 at 7:25 pm

  83. Hi,
    Would like to know your views on ‘GTL INFRASTRUCTURE LIMITED’. I have some 200 @ 43 and CMP hovers around 38 levels. Looks like a good company to me although with Negative PE and EPS. Does it makes sense to hold or sell as it reaches 40 odd. Let me know your thoughts.

    Thanks,
    Suman
    Zurich.

    0811-045 Kalidas Replies to Suman (Monday, November 10, 2008)
    I do not follow this stock, but a glance suggests that it is in the business of building Telephone towers, highly competitive industry. It is difficult to make money in this business. The growth is only in smaller towns and villages. I do not see much prospect for the time being, when the capital spending by even telecom companies will be much lower.

    Better swap to Essar Shipping in correction or other stock you already own (as mentioned by you in earlier query or Swap to Dish TV or IFCI or Tips Industries)

    Suman

    November 9, 2008 at 12:13 am

  84. Dear Kalidasji,

    Which is the best stock -Nagarjuna Fertilizers or IFCI to milk profit in momentum play?

    V.S.Kumar
    Jorhat, India

    0811-048 Kalidas Replies to V. S. Kumar (Monday, November 10, 2008)
    There are no more momentum play. If there is momentum, it id downward. Upside is only short recovering, not Investment buying as yet. Investment buying comes when new money comes in.

    Forget Nagarjuna Fertilizers – it was a story stock. Reliance taking over. Now, Reliance group itself is at receiving end. Wait for my article in NASA on How good the Reliance Petroleum is for investors that may be published by tomorrow evening.

    V.SIVA KUMAR

    November 9, 2008 at 12:00 pm

  85. Repected Kalidas sir,
    I am a reglular reader of your articles since last one year. I want to meet you at amravati in the 3rd week of November. How can i contact you? Please reply the mail.

    Pankaj Belsare
    Nagpur-08, Maharashtra,India

    Kalidas: I will inform you by email and also on this forum.

    Pankaj Belsare

    November 10, 2008 at 1:11 am

  86. Hello sir,

    I am constantly following yor articles in moneycontrol and as well as in your blogs.

    As you have suggested to invest on some of the very good stocks , i need your advice on how to allocate money to the stocks you have specified.

    I am planning to invest 5 lakhs, kindly can you pls let me know what % of money i need to invest in the stock you mentioned.

    Thanks
    Sreenivasa Murthy
    Bangalore

    Sreenivasa Murthy

    November 12, 2008 at 5:09 pm

  87. Hi Kalidas Sir,

    Thanks a lot for this wonderful Article. Such articles helps to enhance knowledge. Once again, thanks a lot for nice buying tips.

    Regards,
    AVKCA, Pune, Maharashtra, India

    Atul Kulkarni

    November 15, 2008 at 2:49 pm

  88. sir,

    a couple of hotel stocks in your buying list. I have some shares in hotel Leela at 31. sir, what should i do? average or sell it out?

    rajarshi
    kolkata
    india

    0811-072 Kalidas Replies to Rajarshi (Monday, November 17, 2008)
    To seek advice on any stock, mention stock name, symbol with exchange extension (.b for BSE and .n for NSE), Qty, @Cost and CMP. No reply will be posted if these details are not given. Please note that for future guidance.

    You are in good stock and sector. Of late the trading range is very narrow between 24.50 to 32 (only once it dipped below to 21). This hotel may face some funding shortage due to delay in cash release from its US partner (Blackstone group). I would not sell it. Just by again at 23.50 to 24.50 and when it hits 28~30 sell it due to bad market. for instance, if you buy 5000 at 23.50, sell 3000 around 28~30. If it drops, buy back again with same money. If it goes higher, sell another 2000 keeping old stock as fixed inventory. Long term target (12 months) is into 50~60

    rajarshi

    November 17, 2008 at 1:18 am

  89. Dear Kalidasji,

    When does a company file bankruptcy, are TATA’s and BIRLA’s at the same stage of filing bankruptcy, why should government of India help them for this misadventures.

    Also could you please help me to know the future of GHCL BSE code 500171 CMP: 24.81

    Thanks,
    Sarit

    Spell check your message, before you post.

    0811-085 Kalidas Replies to Sarit (Thursday, November 20, 2008)
    They are nowhere near bankruptcy – how did you get this idea? They are large group, and they have variety of assets.

    Rarely, Indian companies file for bankruptcy, because most of them are still run like a family concern. There are very few who can be called truly professional.

    Sarit

    November 20, 2008 at 2:16 pm

  90. Dear Kalidasji,

    That’s the reason I asked when do the companies file bankruptcy since I really don’t have any idea of it. Seeing big companies like Lehman Brothers filing bankruptcy and now people talk about GM which is one of the best companies so I thought same would be possible with TATA’s too.

    Thanks,
    Sarit Mumbai India

    0811-087 Kalidas Replies to Sarit (Friday, November 21, 2008)
    The company like GM was bankrupt for over 12 years – it was living on borrowed time and also disguising liabilities under Pension Funds. Its finance subsidiary, GMAC (General Motor Acceptance Corporation) bonds are treated like junk for over 15 years.

    Anyone could not bankrupt – there are no exceptions. It is like every human has to die one day. It is a eternal truth. A human lives for 80 to 90 years maximum, whereas a Corporate lives on for 150 years at the most. Show me a company which is over 150 years old under same name and structure.

    Sarit

    November 20, 2008 at 6:49 pm

  91. hello kalidasji, this is a small investor frm mumbai. We had interacted earlier on MMB on the essar steel delist issue – nick hhh rules.. i do a bit of research on my own and buy stks, stks r my passion.

    Pls write to me so that i can mail u all the details.

    Ur reply is eagerly awaited.

    thanx

    hththt

    November 21, 2008 at 6:40 pm

  92. Kalidasji,

    With BRIC countries looking to lead the way in terms of growth in the future with big infrastructure spending plans, how would GMR INFRA (NSE:GMRINFRA at cmp@54.65) prospects be going ahead looking at a short,medium and long term.

    Thanks and Regards
    Kishore
    Sydney,Australia

    nanda kishore

    November 22, 2008 at 2:20 pm

  93. Kalidas Ji,

    This is victorjunior again.

    I am sitting at a notional loss of 70% on my invested portfolio, I understand it would not be possible to recover my capital unless I invest fresh amount now.

    My question to you is;
    Is this the right time to buy the stocks recommended by you in this article?
    Or should I wait for further downside if there is more as per your acumen?

    Your follower,
    victorjunior, Delhi

    0811-113 Kalidas Replies to victorjunior (Monday, November 24, 2008)
    You took my email ID and never came back. Right now, defer your buying for about a week. Then wherever the stock goes down more, buy it. Just focus on your original portfolio. Stocks are like girl friends. Do not change them too often.

    victorjunior

    November 24, 2008 at 6:42 pm


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