Category: Economy, Markets and Macro Views

We are presenting to you the historical returns in India after a Bear market. This is the First Part of the three part post. Part-II will cover the concerns and how they can be mitigated. Part-III will cover Fundamentals and Outlook. Read Every Word of this Article Carefully. Sensex has corrected by 50% in the last 9 months which augurs well from wealth creation point of view. At current levels it is trading at a historical low on one year forward P/E basis. Investments in equity with long term perspective at current levels will help generate good returns. (more…)

If you are a regular reader here, we started recommending HSBC and also track their Sr. Fund Manager, Mr. Duggal. We now present to you an insight on HSBC’s India investment strategy. Indian markets continue to face headwinds in the form of global risk aversion and deceleration in corporate profit growth due to slowing economic activity. Risk aversion is unlikely to end soon but don’t expect it to get worse either. India’s Growth (more…)

For the week ending 4 Oct’08, headline (wholesale price index, WPI) inflation was 11.44%, lower than market’s estimate (11.9%). Inflation for 9 Aug ’08 was revised upwards 19bps to 12.82%. [Did the Government manipulate ? Is their metrics / procedure buggy ?]

Prices of basic food articles such as food grains, cereals, fruits and vegetables remain firm. Vegetable prices have moved up considerably on a week over week basis. The fall in inflation is due to the fall in non-administered petro and manufactured products. (more…)

The Reserve Bank of India in a surprise move has cut the CRR by 100 bps taking the total cut in the past 10 days to 250bps. CRR is now down from 9% to mere 6.5%. This is probably one of the sharpest cuts in the Indian financial history. The move will infuse Rs 40,000 crore liquidity into the system, thus meeting the industry’s demand of Rs 100,000 crore put forth few days ago.

Additionally, the RBI has also revised Interest rates on FCNR and (more…)

Historically, FIIs have been the major movers and shakers of the BSE Sensex. In most cases, the domestic Mutual Funds have taken the opposite approach, SELL when FIIs Buy and vice-versa. However, due to smaller participation by domestic funds [1/3rd of FIIs], FIIs tend to be the momentum movers. The following data shows how FIIs and domestic mutual funds have invested in the past 6 months in Indian equities. (more…)

Due to marked deterioration in earnings outlook ICICI Secucties – i-Sec has lowered our target PE multiple to 11.8x (one Standard deviation below the 8 year mean of 15.9x) against 15.2x (8 year median) used previously. i-Sec has also pushed back the investment horizon to March 2010 from Sept 2009 to price in a more prolonged phase of risk aversion and now expect Sensex level of 16050 by then. (more…)