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EJ's Blog

price the asset not time the asset !!!

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Oil is well !!! almost..

Posted by EJ on March 7, 2011 at 12:37 AM Comments comments (0)

The current spurt in oil prices is nothing to do with its supply concerns ( it was propagated !!) but to do with the massive consumption by emerging economies and recovery seen in the US and europe. This time the peak cud be much higher and damage, even bigger. However it will take some time...say few quaters. The damage will be multiple times as it will derail the consumption recovery in emerging markets. The higher inflation is already a prob for the business, with all input cost going up, we cud see serious backlash if oil crosses 140 level. US economic numbers are highly positive. Brace for a downward pressure in asset prices.


Posted by EJ on January 13, 2011 at 11:19 PM Comments comments (0)

Why blame poor onion for this chaos. In a higly inflationary India, any product or service cud have played the same role where there is no real clue about demand or supply, say railway fare, air fare, school fee, electricity charges, milk, tea, coffee, spices, clothes etc. Since onion being highly perishable and part of indian food culture, it was used as a potent weapon to get a certain lobby its cherished objective...RETAIL SECTOR FDI !!! It may create an orderly logistics, yet the base price of all the products will inch up. Rural consumption probably never got affected by high onion or tomato price as their requirement is met by local or in house produce or a substitute product. The incentive for farm sector had dropped after massive austerity package from the govt like Rs.2 per kg of rice, guaranteed employment with little to add to economy etc. It is like old communist days of Russia where a loaf of bread, milk, small housing was provided irrespective of what the citizen really produce economically thereby killing the incentive for true value addition. Now draw the same paralance in Indian farm sector. Assume the guy who gets Rs. 2 a kg of rice and some employment benefit from the state, no longers works for his own farm and goes to market to buy onion @ Rs 60...so the goverment policy had put more consumption power in hands or rural poor or just added few degrees to inflation !!!

"Vishmha Pitamaha" of indian mkt

Posted by EJ on November 24, 2010 at 11:30 PM Comments comments (0)

As we see the drama unfolding and the battle in the mkt continues, the " Vishmha Pitamaha" stepped in with all the ammunition. If you are seeing a very composed and resilient mkt, it is because of him. He stepped-in equity mkt, bond mkt whenever there is crisis to oblige his royal masters at Hastinapur ( read Delhi ). Only difference this time is "Vishma pitamaha" is trying to save his own ( shud we say robes ). Yes friends that is the reality of Indian mkt. Watch out for false resilience in the mkt. Underbelly is revolting and may throw up.

Biggest beneficiary-- Indian Public??

Posted by EJ on November 19, 2010 at 5:00 AM Comments comments (0)

Call rate from abt Rs.10 to 25 paise ( imagine the cartel of few had taken us for a ride for 7-8 years that is excluding govt. utility providers...!)

Guess who is lobbying hard against number portability?

Who will gain in case the licences are cancelled?

2G service was milked to the extent by 2008 that incremental effort wud have got blood instead of milk !! so if govt managed to sell the spectrum then it did a smart thing...

Any asset valuation(licences) during 2008 cud have been a curse to acquirer due to what happened afterwards (credit crisis).

If some of the companies managed to sell these assets to foreign investors at an inflated price, then they(FI) are fools. In the same breath, we do not complain about the heady valuation we are getting these days in our equity or property market.

Finally govt managed such a whopping 3G valuation due to these 2nd generation providers as it made 1st gen cartel to realize that monopoly is over.

Eco-report 25-10

Posted by EJ on October 25, 2010 at 3:00 AM Comments comments (0)

Moderate growth signal kept coming from the US last few weeks suggest the growth is stable but not outstanding. By Nov end, the next round of quantitative easing may start. Consumption will remain soft in spite of holiday season.

G20 cud not agree to any firm point on currencies, hence left to the mkt forces to decide on this issue. We may expect further weaking of Dollar;subsequent uptrend in commodity prices and emerging mkt stocks. Emerging mkt like China, India faces bigger inflationary problem in next few quarters.

Huge IPOs those are hitting Asia will absorb the liquidity from secondary mkt. Expect action in selective counters. IPO refund will give sporadic push to mkts. Real estate, financial, auto segment looks good.

Eco-report 24-09

Posted by EJ on September 23, 2010 at 11:01 PM Comments comments (0)

    Jobless claim in the US was marginally up showing the weakness in the labour market is still prevalent. Existing home sales data was better. However it does not imply any major change in housing sector. The continued tax credit will definitely help consumption but not housing. Going fwd housing is not going to contribute to the general economy significantly. Today's new home sales and durabale goods data will throw more light on this. Other data to watch out for is German IFO ( industrial activity ) to be realeased today.

    FOMC remarks were good enough to make the bond traders happy with fixed income bonds appreciating globally including those in India. There is a catch though as domestic inflation is much higher and beyond comfort level of the policy makers. However nobody wants to switch off the growth engine so soon as global condition is not capable of providing any cushion. We expect a pause in the rate hike cycle in India, hence a bullish stock market running into 3Q. Watch out for massive flux of IPOs. It may drain out liquidity from secondary market.

Harvest season !! ( 21-09-10 )

Posted by EJ on September 21, 2010 at 1:02 AM Comments comments (0)

This is wot is called harvest season. There is ample chance that the current rally may extend to one more mth till Q2 results are out. One catch; the data due this week may slow down the momentum a bit; shud be used as further buying opportunity. FOMC meet tomorrow will throw light on the state of recovery in the US and elsewhere.

With first round of correction, move into midcaps; will outperform the big caps. Bigcaps will stabilize at these higher levels unless the results show ugly surprises.

Stay long for the week

Posted by EJ on September 6, 2010 at 2:34 AM Comments comments (0)

Last Friday's job data soothed the nerves of the mkt across the globe. A 57K drop as against the expectation of over 100K was definitely better. Asian stocks gained so did Indian stocks. CRB commodity index is showing a clear uptrend and gold is down. Sanghai steel prices touched upper circuit. Next whole week there is no major primary data due. So expect a short yet firm rally along with profit taking. Move into index majors where exit will not be an issue.

Poor growth till 2017 !!

Posted by EJ on August 30, 2010 at 3:05 AM Comments comments (0)

Yes, that is what some of the economist predict and presented their research work on the sidelines of the central banker conference in Wyoming. They have analysed the data of last 15 post eco-crisis and came to this conclusion. The concern is there in every quarter and central banks will run out of ammunition soon as the fiscal situation is not good enough to continue the stimulus worldwide. To cut the story short, it needs other effort to keep the recovery on track as Mr. Bernake put it ....“require appropriate and effective responses from economic policy makers across a widespectrum including private-sector leaders". How do we assess situation in domestic environment? Well, the pvt sector is proactive, govt is supportive "mango people" is optimistic. Only prob is whether these combined can withstand another global slowdown? Moral of the story, upside potential for asset price is limited !!

Technical traders saved the day

Posted by EJ on August 26, 2010 at 12:02 AM Comments comments (0)

Last night's price action in the US stocks have more to do with  tech trader short covering rather than the fundamental boost. The data was as weak as expected and may continue to remain so for this quarter. Mkt will remain choppy untill next set of data comes out in black or white i-e we r talking about a recovery or continuation of lower trend. Asia mkts just tracked the US mood and shorts were covered. However if one notices the lack of strength in commodity basket , recovery appears muted in near term. CRB looks further down with one exception; GOLD. There is many factors those are chasing gold right now. One of the bigger reason is in our own backyard; India. Good harvest and a festive season will increase the demand. USDINR is expected to remain firm so as gold price in INR.


Watch out for today's job data in the US for more clues.