AFTERMATH OF GLOBAL SLOWDOWN

Have you ever realised that man remains generous and accommodating to his fellow beings only till the time he himself is well-heeled? Basically affluence is the breeding ground for magnanimity and philanthropy. And since nations are guided by men, you can expect similar behaviour from all nations. But what happens when nations themselves are ravaged by depredations of recession and economic collapse? In order to seek answer to this question we need to logically predict the turn of events from the symptoms as visible today.

The first thing that this truly global recession will bring about is trade wars. It still hasn't started in full scale but the writing is on the wall. World Bank has recently announced that 17 countries from G20 have already taken some protectionist measures against foreign competition to survive the recession. World Trade Organisation report has confirmed last week that there has been significant slippage towards protectionism from richest countries.

As the global economic crisis deepens, the shadow of trade war will lengthen. No wonder trade is likely to be main topic at the G20 Meet on 02 Apr 2009 in London. G20 Meet is bound to issue out strong statements against protectionism but will the G20 nations themselves abide by the rule book of WTO in their own countries? Haven't most of them already committed the crime as World Bank and WTO reports suggest? Good intentions alone cannot help nations to work against trade barriers. Local politics and question of survival of politicians will push nations towards trade conflicts. Once trade barriers are in place we shall see replay of scenes from Great Depression of 1930's. It is commonly believed that passage of Smoot-Hawley Tariff in the USA brought the global economy down then. Will it be different this time around? I wonder.

If trade war rages on a global scale, world trade will come to a grinding halt. In fact now itself, without any significant trade conflict, global demand has collapsed. WTO has forecast that global trade, as measured by volume, will decline by 9% this year. Such a devastating fall has not been seen in the last 60 years. And this decline is not attributed to trade conflicts. Just imagine what will happen to global trade once trade wars are declared by nations!!!

Time is running out for world leaders who wish to avoid global catastrophe. Leaders of G20 nations have their last chance on 02 Apr 2009 when they meet to alleviate this global crisis. Whether they establish $100 billion fund to lubricate global trade finance as suggested by World Bank or use other innovative ideas, they must be utterly sincere in implementation and enforcement of the same. Like it or not, brutal truth is that today the world depends on leaders of G20 nations to steer it away from Global Depression.

TAKING STOCK - BUY RECOMMENDATIONS OF FEB/MAR 2009

Archana Debanath
24 Mar 2009

It just occurred to me that in this blog site I had started giving buy recommendations for retail investors in different stocks across various sectors from 25 Feb 2009 onwards. Today it is exactly one month since then, and that calls for some stock taking to evaluate the efficacy of my recommendations. For me it is basically an exercise to know whether I have been able to successfully guide the retail investor in an otherwise baffling market. For me it is judgement day today because as I plead my case before you, it is for you to pass the judgement. We shall evaluate post by post and in each post we shall investigate the performance of all scrips mentioned therein. Lets begin the proceedings!

Indian Markets Feb 2009 : Public Banking Sector - Buying Opportunities
This post was published on 25 Feb 2009 and gave out buying recommendations in five PSU banks as per details given below:-

1. State Bank of India(SBIN). On 25 Feb 2009 SBIN closed at 1037 and I had recommended a buy at 920 for a gain of Rs 80/90. SBIN touched a low of 891.5 on 09 Mar 2009 and recorded a high of 1085 today i.e. 24 Mar 2009. Going by my recommendations an investor would have booked a profit of nearly 10% in one month in this scrip.
   
   
2. PNB. On 25 Feb 2009 PNB closed at 341.4 and I had recommended a buy at 338 for a gain of Rs 35. PNB touched a low of 286 on 06 Mar 2009 and recorded a high of 382 today i.e. 24 Mar 2009. Going by my recommendations an investor would have booked a profit of more than 10% in one month in this scrip.
   
   
3. Bank of Baroda. On 25 Feb 2009 Bank of Baroda closed at 216.9 and I had recommended a buy at 198 for a gain of Rs 25/30. Bank of Baroda touched a low of 180.2 on 09 Mar 2009 and recorded a high of 239.4 today i.e. 24 Mar 2009. Going by my recommendations an investor would have booked a profit of more than 15% in one month in this scrip.
   
   
4. Syndicate Bank. On 25 Feb 2009 Syndicate Bank closed at 51.25 and I had recommended a buy at 47 for booking quick profit. Syndicate Bank touched a low of 37.5 on 12 Mar 2009 and recorded a high of 50.35 today i.e. 24 Mar 2009. Going by my recommendations an investor would have booked a profit of nearly 7% in one month in this scrip.
   
   
5. IDBI. On 25 Feb 2009 IDBI closed at 49.4 and I had recommended a buy at 40. IDBI touched a low of 39.5 on 12 Mar 2009 and recorded a high of 47.95 today i.e. 24 Mar 2009. Going by my recommendations an investor would have booked a profit of nearly 20% in one month in this scrip.

Indian Markets Feb 2009 : Pvt Banking Sector - Buying Opportunities
This post was published on 25 Feb 2009 and gave out buying recommendations in five Pvt Sector banks as per details given below:-

1. ICICI Bank. On 25 Feb 2009 ICICI Bank closed at 340.6 and I had recommended a buy at 300 for a gain of Rs 50/60. ICICI Bank touched a low of 252.3 on 06 Mar 2009 and recorded a high of 373.8 today i.e. 24 Mar 2009. Going by my recommendations an investor would have booked a profit of 20% in one month in this scrip.
   
   
2. HDFC Bank. On 25 Feb 2009 HDFC Bank closed at 864.3 and I had recommended a buy at 800 for a gain of Rs 70/80. HDFC Bank touched a low of 774 on 06 Mar 2009 and recorded a high of 974 today i.e. 24 Mar 2009. Going by my recommendations an investor would have booked a profit of 10% in one month in this scrip.
   
   
3. Kotak Bank. On 25 Feb 2009 Kotak Bank closed at 253.3 and I had recommended a buy at 225. Kotak Bank touched a low of 208 on 06 Mar 2009 and recorded a high of 290 today i.e. 24 Mar 2009. Going by my recommendations an investor could have locked in a profit of more than 28% in one month in this scrip.
   
   
4. Axis Bank. Recommended buy target not reached.
   
   
5. IndusInd Bank. Recommended buy target not reached.

Indian Markets Mar 2009 : IT Sector - Buying Opportunities
This post was published on 01 Mar 2009 and gave out buying recommendations for five IT companies. However recommended buy targets were not achieved.

Indian Markets Mar 2009 : Auto Sector - Buying Opportunities
This post was published on 02 Mar 2009 and gave out buying recommendations in five Auto companies as per details given below:-

1. Tata Motors. On 02 Mar 2009 Tata Motors closed at 145.6 whereas I had recommended a buy at 145 and a sell at 200 to book profit. Tata Motors touched a low of 135.2 on 06 Mar 2009 and recorded a high of 183.9 on 19 Mar 2009. A retail investor still stands to gain about 12 % from this trade even at the closing price of 162.4 today i.e. 24 Mar 2009.
   
   
2. Maruti. Buy target not reached.
   
   
3. M&M. On 02 Mar 2009 M&M closed at 319.9 while I had recommended a buy at 319 and a sell at 400. M&M touched a low of 306.6 on 06 Mar 2009 and recorded a high of 392.5 today i.e. 24 Mar 2009. A retail investor stands to gain about 17 % from this trade even at the closing price of 374.7 today.
   
   
4. Hero Honda. Buy target not reached.
   
   
5. TVS Motor. On 02 Mar 2009 TVS Motor closed at 19.9 whereas I had recommended a buy at 19.35 and a sell at 25 to book profits. However the scrip touched a low of 18.6 on 03 Mar 2009 and a high of 22.25 on 16 Mar 2009. A retail investor still doesn't stand to lose anything from this trade even at the closing price of 20.15 today i.e. 24 Mar 2009.

Blog posts published on 09 Mar 2009 were on stocks from Infrastructure , Realty and Cement Sectors viz IVRCL Infra, GMR Infra, DLF, Unitech, ACC and Ambuja Cement. Recommended buy targets for all these scrips have not been reached yet.

Finally it is for you to decide whether I have stood by the interest of retail investors or not. Buying levels for 26 scrips were given, out of which 15 scrips have still not reached the recommended buying levels. But all scrips which reached my recommended buying levels have given 10% to 20% profit in one month. No scrip has given any loss which is what satisfies me most because all said, today a retail investor is in no position to withstand the jolt of even one bad trade. Being conservative in buying approach is the name of the game. Hence 'no trade' is much better than a losing trade, since 'no trade' does not snatch away your hard earned money from you.

I have submitted my case before you. Now it is for you to pass the judgement!!

Dow Jones - Expected Movement Mar 2009

Dow Jones is witnessing a very interesting period for traders. It had achieved its bottom target of 6460 in the first week of Mar 2009 and had to move up minimum by 38.2%. That meant a gain of 780 points from the low of 6460. In other words it should have reached minimum up to 7240, which it did. In fact on 18 Mar 2009 it touched the level of 7550. In short Dow has achieved its target and qualifies for a fall. The fall should take Dow back to its lower level of 6460 or thereabouts in a fortnight. However, if the fall is very sharp then downward slide may take Dow to the band between 5950 - 5780.

Expected Nifty Movement

Since other world markets including the Indian markets rose piggy back on American markets, the down hill journey is expected to be no different. Nifty will also witness its share of selling in coming days and will be eager to tumble down to at least 2550 level. The only saving grace will be if it takes some support at 2700 and bounces back again to 2850. But in the short term Nifty is bound to be back trading at 2550 level. Traders can make merry with this kind of situation. But a word of caution for traders : just see to it that Nifty doesn't breach 2500 on a closing basis. If that happens then be prepared for a blood bath!

Indian Democracy : Road Ahead

Here we are at the threshold of exercising our right to rule our own selves in the most populous democracy of the world. We, the people of India, are once again gaining prominence as the General Elections approach in a month's time. We have reason to feel elated about this exercise being conducted in a country with a population of 1.15 billion people, representing 17% of the world's population. We feel elated because we have been successful in holding on to democracy in such a culturally, linguistically and genetically diverse geographical entity for more than 61 years. We feel elated because we have been successful so far to remain united against periodic onslaughts from divisive forces, by holding on to the ideology of democracy. This means that as a polity we have been able to hold on to power for 61 long years. And over these years we have only gained in strength as a free democratic nation.

In this journey of democratic India, I have had my share of experiences as a voter - bitter as well as sweet. In the process of evolving into a strong democratic nation we have to go through these bitter experiences. But after every bad experience if we as a nation can take lessons and improve upon our system then we are ultimate gainers. On the other hand if we simply shrug off the bad experiences as necessary evil then we stand the risk of moving backwards. Let me assure you that none of us will like that.

So what should be our action plan? What should we, as responsible citizens of the largest democracy, do to evolve faster as the strongest democratic nation on this planet. For that first we have to identify our bad experiences and then only can we find remedies for them. Here I have made an humble attempt to identify some bad experiences from my point of view, which are listed below:-

1. There is very little to choose from as far as candidates of all parties in fray are concerned. I know this point has been debated often but it still needs our attention. We as voters are reminded again and again that we must firstly exercise our valuable votes and secondly we must do so in a judicious manner. But you tell me, if I don't find even a single suitable candidate in fray, what should I do? No Vote is not an answer because 65% of our population is not literate and hence can be swayed by unscrupulous candidates. Isn't it the prime responsibility of political parties to give tickets to only untainted and genuinely respectable candidates?


2. There is a general tendency to employ unfair means and all parties are culprits for the same. In a country where 60% and more of the population live below poverty line and 86% live on less than Rs 120 per day, it is so very easy to employ unfair means. But will that not make us a week democratic nation in the long run? Are the political parties listening or do they think that they will not be effected by India becoming weak? Let us not live in fool's paradise and imagine that it doesn't effect us if we are in a political party. You don't have to look far to get an answer as to what happens to political parties in a weak democracy. Just look at Pakistan today!

Although the list of what is bad with our democracy can go on and on, but to my mind these are the two major malaise that Indian democracy is suffering from. We as a nation have to find remedies to these ailments and we do not have a choice. If not ballot then the other option is bullet. We have no choice but to put our faith in democracy and see to it that the roots grow stronger by the day.

What can be done to remove the ills in the process of electing a democratic government - this question is uppermost in the mind of every common man. Let me take the liberty to put forward some of my ideas below :-

1. We have a literacy rate of 65% which is abysmally low for any strong democracy since democracy rests on the pillar of literacy. This is after 61 years of trying in every manner that we could. And if you look at China they have 98% literacy after they decided to give priority to education in 1985. It took just about the same time for all South East Asian nations to show the same result in literacy. What is wrong with us? We need to wake up and have Public Private Partnership to promote education and literacy to the remotest corner of our country. Lets not take shelter in the argument that we are geographically a vast country with a massive population and the task is difficult. China's example should silence such voices.


2. 60% of our population lives in villages. Poverty is rampant. Here if I espouse Public Private Partnership in financially empowering our rural and semi rural areas, there will not be many takers. But I can see light at the end of the tunnel even though you may not agree now. We are headed towards a situation where Corporates have started taking serious note of C K Prahalad's arguments that there is "Fortune at the Bottom of the Pyramid". This happy situation has been galvanised by the global economic crisis. Just a couple of years back some corporates were mocking C K Prahalad saying that there is no fortune but "Mirage at the bottom of the Pyramid". Now we find the corporate world seriously planning to tap the bottom of the Pyramid, that is the poorer sections of our society. This is the current strategy of Indian Corporate houses for survival. Once that happens we will find Government joining hands to improve infrastructure in rural and semi rural areas, meaning more jobs will be created in those areas. From there on the virtuous cycle will take over and one day we will find a strong rural India as the backbone of a strong nation.

Here I am reminded of lines from a song called Imagine by John Lennon : " You may say I'm a dreamer..... but I'm not the only one".

Indian Markets Mar 2009 : Infrastructure Sector - Buying Opportunity

Infrastructure as a Sector should be gearing up to take credit for outperforming the market in near future. It has been beaten down enough for obvious reasons of credit crunch. So one was expecting some relief rally in this sector since Govt is expected to focus on infrastructure and power in India. These two sectors require urgent attention in India and Govt had conveyed enough towards the same. Good intentions of Govt aside there seems to be no infusion of smart money into these sectors so far. In other words, signs of Accumulation are missing in the charts.

Talking of pure infrastructure companies, one is left baffled to find that their charts are in shambles. Maybe its a reflection of the global contraction in 2009 that World Bank has predicted on 08 Mar 2009 in preparation of G-20 Finance Ministers' Meet on 14 Mar 2009. Developing countries are expected to be worst hit with a financing shortfall of $270 bn to $700 bn this year as per World Bank estimates. No wonder the charts are so bearish even after interest rate cuts and other sops Indian Govt has offered. So now is the time to pick buying opportunities in infrastructure companies albeit with due caution. We shall analyse buy levels of two important infrastructure companies.

IVRCL Infra
Ivrcl Infra is safe till it does not close below 96 . However close below 96 will be catastrophic for IVRCL. Hence there is no buying sense at the present level of 110. The first buying opportunity for retail investors is at 53. However a close above 130 from present level will offer good buying opportunity, which seems quite unlikely at the moment.

GMR Infra
Retail investors should not touch GMR infra at current level of 68 even with a 10 ft barge pole. The first real buying opportunity will present itself at 28. There may be some buying interest generated at its historic low of 40, but then its better to exercise restraint. However if you have a big appetite for taking risk then you may try your luck at 50.