Dalal Street

I have been watching this channel for quite soemtime and find that, their analysts are really ill informed and biased. Consider the reviews of their infamous analyst, S P Tulsian. His view on Tech Mahindra during listing were it would list around Rs450 and would not go below Rs400. His levels of 400-450 never saw the light of the day. I would have forgiven him had he kept quiet. But today, when Tech Mahindra is now quoting around Rs590(25% higher than his Rs450) he says it is a good bet amongst those recently listed. Why does he keep changing his levels for the stock so drastically within such a short span of time when the company has not made any major announcement or results ?

Consider another analyst, Manish Bhatt of Prabhudas Lilladher,
Bhatt: Tech Mahindra should list at Rs 540. One can sell its shares on listing.One can buy GMR from the markets at current levels.
BUY GMR ? Good Grief, Mr. Bhatt!!!

Why such short sighted analysts get to be in the limelight to influence retail investors who are known to have the herd mentality ? Believe in the fundamentals of company and management (like Infy) before you make investment decision in the Chor Bazaar of Dalal Street 😉

Templeton’s emerging market guru, Dr. Mark Mobius today told the media that they are likely to introduce a new fund offering in November 2006 – Templeton SmallCap or MidCap Fund in India. Currently Mobius is focusing on smallcap and midcap stocks which are consumer oriented in India for the funds he manages.

Mobius further added that,” We have an underweight position on India relative to Russia, Brazil and China. Brazil is the largest, followed by China, Russia and India. We are looking for the day when valuations come down and we can buy in and get a big exposure in India“.

Of all the large PSU banks in India, IDBI is the laggard and has one of the highest NPAs with very non-friendly staff and non-consumer oriented banking products. In the 90s IDBI & ICICI were at par because both of them were industrial lending institutions. But in the late 90s, ICICI changed its policies and started writing off NPAs from cash profits every year and has attainted a healthy stature today. However, IDBI slacked and is still one of the worse banks in the country.

The RBI’s decision to handover United Western bank to another bank which is struggling to keep pace with is a bad move. However, IDBI is paying twice the book-value and 31% premium to the stock price of United Western Bank shares taking into consideration Sept-12th closing price of UWB.

IDBI issued its shares at Rs80 some 8 years ago and just on one or two ocassions the stock price has crossed oevr Rs80 when all the other investments have multiplied 8-10 times on Dalal Street. Considering this background and the huge NPAs and inability to perform, I recommend an exit for current stock holders of United Western Bank and maintain a SELL and underperforming rating on the stock.

Morgan Stanley might remind you of the infamous analyst, Andy Xie who came on CNBC TV 18 and announced that the party on Dallal Street is over – India was headed towards BEAR MARKET for the next 18-24 Months. And we are now seeign the sensex at 11,900 levels again.

Last month JP Morgan downgraded India and I told you folks to “just ignore it“. Morgan Stanley has taken a “U” turn and is now raising India’s GDP forecast from 6.8% to 7.6%. It is very likely that India will outperform Morgan Stanley’s expectations.

Last month we saw FII inflows of around $1 Billion(Rs4,5oo crores) Cheers!!! Individual FII investors will have different views and they keep reshfulling their portfolio.

Case Study for Market Behavior:
For example consider the Satyam stock which is regarded as a favorite amongst institutional investors. Satyam around Rs800 trades at a discount of 20 for its 2007 earnings while Infosys and Wipro trade at 30 for their 2007 earnings. When institutional investors are buying the stock, it moved up ir-respective of the direction of sensex and nifty. When the buying stopped, it lost its momentum and went into correction phase.

Why some are buying and some are selling ?
Satyam doesn’t maintain consistency in its earnings which is the hot favorite parameter to measure the stock amongst Fund Managers here. Observe last 8-12 quarters and it is evident.
Some fund managers argue that Satyam will touch $1 Billion in revenues this year and that is a very important mile stone to bag larger orders. They further think that company will not only be consistent for next 4-8 quarters but it will grow and hence they are buying. Some argue that it is hard for satyam to touch the Billion dollar mark but they are just holding to test its performance for next quarter.

Bottomline:
In this way individual stock will get re-rated or downgraded and FII money will continue to flow into Indian equities. If you can hold stock for the next 3 to 5 years, then BUY any fundamentally sound company you will make money. Else take my advice and go for SIP investment in mutual funds.

Morgan Stanley GDP Forecast for India,
Indian Investor ,
India Mutual Fund ,
Indian GDP

CBI has chargesheeted former SBI fund managers for shaking hands with Big Bull turned scamster Ketan Parekh for buying Padmini Technologies Stock from Triumph International by means of off-market purchase. (Greedy promoters had changed the name of Padmini Polymers to Padmini Technologies). The whole scam resulted in a net loss of Rs60 crores to SBI Mutual fund investors.

Ketan Parekh’s Triumph International made a presentation before the SBI MF Investment Committee for a preferential allotment of Padmini Technologies shares. Based on this presentation team member Sonia Sharma prepared a research report which was biased. Sonia didn’t verify the debt and other financial parameters of the Padmini Tech/Polymers. Sonia misused her position and this report formed the basis for all investment decisions.

The investment committee then met to discuss the investment proposal. The offer was rejected by the board headed by then MD Niyamatullah. The Evil, Sandeep Sabharwal filed a fresh notice in favour of accepting the offer allegedly without any proper reason. This time it was accepetd by the board.

CBI alleges that Sabharwal fraudulently approved the proposal for purchase of the shares.It further says that the Former SBI MF Head, Niyamatullah, fraudulently approved the proposal for investment of shares of Padmini Technologies on the basis of a research report and discussion sheet that had been prepared to cause wrongful gains.

Rajat Jain then was CIO and Head of the investment team. The chargesheet alleges that all proposals were routed through Mr. Jain. Ajay Bodke, who at that time was a Fund Manager, also allegedly put up a proposal for purchase of the shares for three different schemes of SBI MF. PR Upadhyay has also been charged with joining the conspiracy. He was the VP at the time and a member of the Investment Committee.

What to do now ?
Business Standard reports that, Sandip Sabharwal now with Lotus AMC has resigned. So one thing is for sure, Lotus hired Sandip without looking into his background. Stanchart and PNB which should have sacked their managers, Ajay Bodke and Rajat Jain, have issued statements that they, are not under pressure to resign. They are scamsters potential scamsters. Investors, how safe is your money in the hands of Stanchart and PNB funds with such shady fund managers managing your hard earned money ??? If I were to make a decision as an investor, I would redeem the schemes that are directly under Ajay Bodke or Rajat Jain.

Concluding Remarks:
I would personally not invest and AVOID all schemes of SBI Mutual Fund(including Magnum fund), PNB Fund and Stanchart Fund until the respective AMCs clean up their house. I would also avoid Lotus AMC.

Remember how Morgan Stanley analyst came on CNBC TV 18 and announced that Indian stock market is headed towards a bear phase ? And today we are back at 11,500 levels. I had advised not to panic during the fall.

This time Morgan’s Gora bhai, JP Morgan has downgraded India. I am glad if you have ignored his words, if not just do it 😉 We saw a rock solid quarter ending June-06 and what makes him downgrade India ? Remember, India’s sovereign rating was upgraded by Fitch just few days ago ? OK. I am sure you are totally confused now.

This is quite common in the western markets. One FII downgrades while the other upgrades. Don’t take it too seriously. Play your own game, it is as simple as that. What has happened in the past few years is we have seen the Indian market and economy mature and its depth has increased such that it is no more dependent on Big Bull like Harshad Mehta or Ketan Parekh. Institutions from around the world are betting Billions of dollars on India’s growth story. Don’t get distracted by downgrade or upgrade. Believe in value investing, you will make a fortune in 10 years 🙂 You don’t have to have a Stanford or IIM MBA.