Financial Wisdom – By Kalidas

Radical Solution for Credit Crisis from Kalidas

Stock Watch – No entry yet

with 3 comments

Following stock picks are meant for general guidance of investors. They are based on the circumstances prevailing on the date of issue. This is what I would do if I were you at this point of time.

Be careful while using them after 2 months – things may change. There is no guarantee that it will work for every reader or investor. Use it according to your temperament, understanding, risk taking ability and experience. This is normally meant for Cash investors, not for those who want to buy or sell on leveraged basis. It will be numbered serially as 08-0nn where 08 is the calendar year followed by serial number. Latest post will figure on the top. The readers may post their comments. They may not be answered by the Author unless he finds compelling reasons to do so.

Written by anilselarka

November 6, 2008 at 10:07 pm

3 Responses

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  1. Dear Kalidas sir, When we can expect stock recommendation in stock watch and stock swap.
    Thanks and regards
    Ravi, Chennai, India


    November 10, 2008 at 10:42 pm

  2. Dear Kalidas,
    I know you from your post at moneycontrol. Your effort to educate the investing community is highly appreciable. I want to know your views of Indian Sugar Sector. Will it revive in longer future say 3 years. The sugar sector gave a hype and astonished every investor by diminishing in a high charged bull market.
    Whenever retail investors step forward to buy this sector it slips and to my belief no investor in Sugar stocks have any hope. What is the reason? Your views please.


    0811-056 Kalidas Replies to Mukhya (Thursday, November 13, 2008)
    I do not follow sugar sector for the simple reason that I dislike price controlled items. The present bull run and bear run in sugar sector due to large position taken by Hedge Funds. Now 70% of hedge funds have almost closed down, they will not become active for at least 2 years -t hey are beaten to death.

    You must understand that there are now 2 markets – one paper trading and another physical. The pricesrose and fall rapidly in paper market. The sugar spot market was affacted due to paper trading on other exchanges. But physical is physical. The farmers or factories will not lower the price by 50% only because of paper trading.

    This is why I do not recommend sugar stocks, Consult some other experts in this field.


    November 12, 2008 at 10:49 pm

  3. Dear Kalidas,
    Your call on IFCI may not work well for the near term. IFCI is a scapegoat of the Indian Government to butterise our corporate world. Previously it made huge losses due to its dole to the corporate world. It invest with the political direction and made losses. So it was eligible to get a dole from a GOVT treasury got this. We all know these doles will be directed to corporate for Indian style bail out plan. Surely you will ask- so why it is making profits at present. This is due to the booming SENSEX. All worst class stocks moved in this non-fundamental sensex run. So, it’s portfolio also run and it made some profits. In and around 2000-01 there were many calls from the analysts for IFCI. As you and we expect 21000 is at least 7 years away, expect return from IFCI is also 7 years away. It’s NPA is almost nil. This is due to the GOVT’s initiative with a dole. As I told, this dole is given for future Indian style bail out plan for politically favoured corporate. It has already started to give loans and those loans with interest will not be repaid by our corporate. So bad debt will loom large on this stock. And my view is it is rushing towards 11 level from where it has started it’s journey to 100.
    Thanks a lot for your educative endeavour.
    Mukhya, India

    0811-059 Kalidas Replies to Mukhya (Thursday, November 13, 2008)
    Some time people have bad idea how badly so called bad debts are reflected. As you are aware, the banks lend 75% max against any asset. IFCI was a term lender. it was lending against Fixed Assets. An assets is classified as NPA if the borrower does not pay interest for 2 consecutive quarters. If interest chargeable is say 10% per year, non payment of 5% will classify entire loan of Rs 100 as NPA in spite of the fact that the Asset backing was Rs 130. The problems of NPA is many times magnified.

    May be in some cases there are some favours to the corporate, But these are hard asset financing. It is the borrowers’ plan that went awry. Many of IFCI bad loans were to steel sector which was an industry problem then. when the steel prices went up their bad loans came down.


    November 12, 2008 at 11:51 pm

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