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(IC) or Nasdaq listed companies such as Infosys Tech (INFY) and SATYAM
INFOWAY (SIFY). To track the Indices and Prices of shares, visit
Bombay Stock Exchange
(BSE) and National Stock
Exchange of India
Please note the Astrologers Fund, Inc was stopped out of a first trading
buy on the May 15th NYSE ADR listing SAY- Satyam Computer Services Ltd
at a buy price of US$10.50 with an intermediate-long term target of $15.
We are now looking to buy SAY in November under $7, with a new, lower
2002 target of $10+. We also recommend SIFY under $1 for a long term
buy to $1.50 to $2.50 which it reached earlier than expected 11/25-11/26.
The BSE SENSEX closed on 29th Nov'01 at 3287 up 7.6% from the 2.11.2001
close of 3053. There was a local holiday on 30th Nov'01.
We had predicted BSE SENSEX to be range bound in the month of Nov'01 - between
a level of 2850 and 3200, but the BSE SENSEX was in control of the Bulls for
The intra month high and low for the BSE SENSEX for Nov'01 was 3377 and
3013. BSE SENSEX convincingly breached the level of 3250 and was very close
to the next resistance level of 3400. BSE SENSEX could not sustain higher
levels and settled at 3287 levels from the high of 3377. The under tone was
bullish and not range bound as predicted. TMT Stocks and Cement Stocks
were the main drivers of the BSE SENSEX.
The BSE SENSEX is due for a reaction of another 100 points anytime, but
the under tone is bullish. Short term target of BSE SENSEX is a level of
3600, but this level may not be seen in the month of Dec'01 itself. It may
well be seen by first week of Jan'2002.
BSE SENSEX will find a strong support at around 3150 levels.
Dec'01 will be "Traders Month". Punters can enter into select Software,
Cement and Pharma Stocks when the BSE SENSEX reacts to this level of around
3150. Traders are advised to book profits when BSE SENSEX is around 3600
We recommend the following as purely Trading Stocks in their respective
a) Software - INFOSYS, WIPRO, DIGITAL and HCL TECH.
b) Cement - ACC, GUJRAT AMBUJA, LARSEN.
c) Pharma - REDDYS, RANBAXY.
Macro Level indicators for the Financial Sector for the Indian Economy are
still negative. Govt. of India decided to inject US $ 375 Million to bail-out
two nearly bankrupt Public Sector Banks - Indian Bank and UCO Bank. McKinsey
had mentioned about the problems in the Indian Public Sector Banks. We had
referred about the same in our Nov'01 forecast. It is promising to learn that
the Indian Govt. is addressing the problem and is injecting capital into
sick Public Sector Banks with a rider of professional and clean management.
This is good news, although tax-payers money is being utilized to bail-out
We are also concerned about the US Market. If NASDAQ closes below a level
of 1865 for three consecutive days - there will be a crash in the US Markets.
This will impact the Global Stock Markets with BSE as no exception. Punters
to keep an eye on the NASDAQ also.
The US led 'War against Terror' seems to be going as per plan and the situation
looks in control in Afghanistan. This region is not without its problems even
in its current positive situation. There are too many imponderables plus
Pakistan is a suspect State. Pakistan's double standards have become public
now but USA still strangely supports its old cold-war ally. A stable Pakistan
is important for South East Asia.
We also recommend that High Net Worth Investors should lower their exposure
to the Equity Market and Shift to Gold till end March'02. We have mentioned
earlier also, that astrologically things do not look good in February/March'02.
The situation will look stable as regards 'War against Terror', but in Feb-March'02,
we expect turbulent times for the American and British Economies. This will
have global impact as well. Hence our recommendation about Gold to investors.
1. Investors and Readers may kindly note that we update the "India
Web Page" keeping in mind the weekly settlement, which is on a Friday. Hence
sometimes the update is late/early by a few days.
Ideally we should have updated the Nov'01 forecast on 31.10.2001. But
this was mid-week i.e. Wednesday. Hence we waited for the update till Friday
- 2.11.2001, to end the weekly settlement in T+5 Scrips.
2. The BSE SENSEX was bullish or the "Technical Pullback" was much stronger
than predicted for the month of Oct'01. This was contrary to our predictions
- as the "Retracement" was upto a level of 3098 for the BSE SENSEX. We had
predicted that a level of 3000 would not be breached during the rally or
"retracement' in Oct'01.
BSE SENSEX was bullish on account of :
- Fresh Buy-Back Norms issued by SEBI. This makes buy-back of its own
Stock by a Corporate easier, as per new guidelines by the market regulator
in India - SEBI. Markets welcomed this announcement.
- Better than expected Q2 results from Indian Pharma Majors - REDDYS LABS.
and RANBAXY etc. This is on account of 'Flight 911' and 'Anthrax Bio-Terrorism'
in USA. Strong export orders executed for Generic Antibiotics - CIPRO, DOXY
and Anti-Depressant FLUOXETINE by these Indian Pharma Majors.
Intra Month, High and Low for BSE SENSEX for the month of Oct'01 was 3098
and 2742 respectively. The month of Oct'01 is stretched till 2.11.2001, as
per para (1), as above. BSE SENSEX closed on 2.11.2001 at 3053 - up 9.2 %
from the close of 1.10.2001.
3. We expect the BSE SENSEX to be range bound for the month of Nov'2001.
The BSE SENSEX should trade between 2850 and 3200 levels. No new Stocks are
being recommended. We stick to our old favourites as mentioned in October
4. We would like to point out however that some of the Indian Macro Level
Economic Indicators are still negative. Stock Markets can only rally in the
near or medium term if these negative elements are addressed by the Indian
Govt. Failing which Markets will dip in the medium/long term. We still believe
that one of the safe bets, to make money in the Indian Stock Markets in
the current scenario, is to invest in Profitable PSUs like NALCO, ONGC and
IBP, which are "Disinvestment Candidates".
The second safe bet are "M & A Stories". That is why we recommended
TATA POWER. Indian PHARMA Majors are also a safe bet, but when the Markets
react. At these levels it is dangerous to enter into REDDYS and RANBAXY.
We missed this bus !
5. Global Consulting Giant - M/s. McKinsey Inc. in its recent report is
ringing alarm bells for UTI and the Indian Banking Sector. McKinsey mentions
a) UTI - India's largest Mutual Fund, may need upto US $ 1.0 Billion to
b) Indian Public Sector Banks will require fresh capital infusion of
US $ 9 to 15 Billion over the next five years. NPA of these Banks is a
major cause of vulnerability. McKinsey believes that if fresh capital is
not injected in these Banks and also the NPA problems is not taken care of
by the Management of these Banks, then the Indian Banking Sector will face
This Banking Sector problem can have a bearing on the overall health of
an already recession hit Indian Economy. The Indian Finance Ministry will
have to come out with some sops again, to bail out UTI. In addition some
PS Banks also need fresh capital injection or face closure.
We feel that this negative Macro Level parameter needs to be finally addressed
by the Indian Govt. No decision is being taken on both the above issues in
the past six months and in the end both UTI and some PS Banks may bleed to
death, if not treated now.
6. On the flip side, if the American War crosses the boundaries of Afghanistan,
then the BSE SENSEX can go to any levels - as mentioned in October'2001 forecast.
It depends on what dimensions does the American War against Terror take
? Anybody's guess ? Investors to keep an eye on Afghanistan also
America was attacked by terrorists on 11th Sept'2001. A day which
shall never be forgotten in American and World History. We strongly condemn
these attacks on American soil. These events(referred to Flight 911 for
future correspondence) led to a snowball effect in the world financial markets
and India was no exception. NYSE and NASDAQ were closed for four days. Carnage
was witnessed after the American Markets opened. Bush Administration has
declared a "Worldwide War on Terrorists". This War can have far reaching implications
which are difficult to forecast.
In the Indian context, as predicted BSE SENSEX was bearish for the month
of September. BSE SENSEX closed on 1.10.2001 at 2787 down 14 % from August'2001
closing of 3245 level. Intra month high and low were 3267 and 2594 respectively.
New eight year low was tested at 2594. This had the effect of Flight 911.
Pre Flight 911 - BSE SENSEX did slide to 3150 level, as forecasted.
In fact BSE SENSEX closed on 11th Sept'2001 at this crucial level. BSE
SENSEX went into a tailspin post Flight 911 and breached 3096 - the existing
52 week low. In fact BSE SENSEX crashed to its new eight year low closing
at 2599. Software Stocks were hammered down to
new lows. Old Economy Stocks were also beaten but the TMT Stocks were
massacred. Pharma Stocks also lost on profit booking.
IMF in it's recent report on India has forecast a GDP Growth of below
5 % for the current fiscal. We have been mentioning this for the past couple
of months. Indian Govt. now has declared that GDP Growth will be hit on account
of Flight 911 fallout, but does not agree with World Bank estimates. It
is still talking up the Indian Economy !
We are not bullish for the month of October'2001. We expect a "Technical
Pull-Back" for the BSE SENSEX to rally to a level of 2850. If this is breached
the rally may last for another 150 points to take the BSE SENSEX to a major
resistance level of 3000. We feel this will not be breached. The BSE SENSEX
has fallen whopping 20 % from September opening of 3245 levels to 2594 levels.
A retracement is expected to 2850 to 3000 levels as mentioned above. Generally
when Markets fall so sharply a Technical Pull-Back also called "Retracement"
On the other side, if the American War goes beyond the boundaries of
Afghanistan - we expect the BSE SENSEX to crash to its existing low of 2599
level. If this level is breached it is possible to see a level of 2450.
Keeping in view the above, only one new share is being recommended.
TATA POWER - India's largest private sector Electricity Producer. We
predict TATAs might pick up the controlling stake in the controversial American
ENRON promoted company - M/s. Dabhol Power Co. India.
We stick to our old favorites :
- LARSEN & TOUBRO at around Rs. 144.
- NALCO at around Rs. 42.
- ONGC at around 120.
- TATA POWER at around Rs. 80.
These are the levels indicative if the American War confines to the
boundaries of Afghanistan and BSE SENSEX is around 2600.
Investors to exit the market completely if the American War spreads
beyond Afghanistan as then we can expect the BSE SENSEX to be around 2450
or any lower levels - 2150, depending on the scale and magnitude of the
American War. If Pakistan erupts, then America will have to exit the Pakistani
soil and may shift the Command Center to its new found ally - India. We
are in for
un-predictable times and I personally feel it will be a "Black October"
for the Indian Stock Markets.
BSE SENSEX closed on 31.8.2001 at a new 50 week low - 3245. It was
marginally down a 1.18 % from BSE SENSEX close of 3284 on 1.8.2001. The
BSE SENSEX was range bound with intra-month high and low closing levels
of 3359 and 3245 respectively. We were bearish for the month of August'2001
and advised investors to stay away from Software Shares. The BSE SENSEX
could not break all important resistance level of 3360. Software Shares
were battered to new lows.
We had predicted the BSE SENSEX to test a level of 3096 - the existing
52 week low. We fell short again !
We have been warning investors of India's poor macro-economic fundamentals
in the recent past. Our views were endorsed by a leading International
Rating Agency. Standard Poors on Tuesday the 7th of August'2001 downgraded
India's local currency(Indian Rupee) rating by a notch and revised its
outlook on the country to negative, citing poor public finances and slow
reforms. General Govt. debt could approach an alarming figure of 70% of
GDP or more than 400 % of revenues - higher than in most similarly rated
countries as India, as per SP.
In addition, JP Morgan announced that the move by SP was justified.
Macro-Economic condition has deteriorated in the past months in India and
there are no signs of reversal. Future looks gloomy still. JP Morgan said
- Combined Fiscal Deficit will exceed 10 % of GDP. This has been the
case for the past three years in a row. This shows that across the political
party lines there is no improvement in managing the Indian Economy. One
should not entirely blame the current Indian Finance Minister - this is what
JP Morgan seems to hint. No doubt that he has to pump-prime the economy as
soon as possible.
- There are no signs of Industrial Growth. Figures released by the
Govt. of India bear testimony to the above fears by JP Morgan. Industrial
production is down to a dismal 2.1% for Q1'2001(April-June) as against
6.1% for YOY for Q1'2000. This is despite thirteenth good monsoon rains
- GDP growth slowed to an estimated 5.2% last year(April'2000 to March'2001)
from the previous year's 6.4%. The GDP growth is estimated by the Indian
Central Bank Governor at 6.5% for this fiscal(April'2001 to March'2002)
but as per JP Morgan this figure maybe as low as 5.5 to 6.0 %. This figure
is also estimated by some leading economists in India. Some of the economists
estimate the GDP growth this fiscal to be slightly lower than even 5.5%.
Keeping the above factors in mind and also the Technical Analysis of
BSE SENSEX, we predict that the BSE SENSEX will test the existing 52 week
low of 3096 in September'2001.
We have been predicting this for the past few weeks, but the BSE SENSEX
showed a very strong support at 3250 levels in August'2001. This was finally
breached as BSE SENSEX settled at 3245 on closing of 31.8.2001. The next
strong support for BSE SENSEX is at 3175 or as per other analysts at 3150.
We predict that this support of 3175 or 3150 will be breached and BSE SENSEX
will crash to it's existing 52 week low of 3096 in September'2001. If the
BSE SENSEX does not stabilize at 3096 levels, then one expect a level of
2850 in the next couple of months. We will advise accordingly.
Investors are advised to wait for this level of 3096 to be tested and
then take investment decision in the following two old economy shares, which
have been recommended earlier :
- LARSEN & TOUBRO
We are not bullish on India Pharma Shares as per renowned Pundits of
Indian Stock Markets. Due regards and respect for them - but with overall
sentiment being so weak, we feel the Institutional Investors will book
profits in the Pharma Sector to keep their cash flows positive and will
switch to Debt Instruments.
Investors are advised to stay away from Software Shares till further
notice as we predict NASDAQ to hit a level of 1492 in the coming two three
NIKKEI 225 is at a new 17 year low - 10, 410 and NASDAQ is near 1800
levels. Global problems do have an impact on Indian Stock Markets as India
is no longer a closed economy as was the case in pre-1991 era. If DJIA,
NASDAQ and NIKKEI etc. are hammered, BSE SENSEX will also bear the brunt.
Investors to be very cautious in September'2001.
1. As predicted BSE SENSEX was bearish for the month of July'2001.
On 29th June'2001, the BSE SENSEX closed at 3456. On 1st August'2001,
the BSE SENSEX closed at 3284 - down a whopping 4.98 %. This closing level
of 3284 for the SENSEX is a new 12 week low. The intra-month high/lows
for the SENSEX were 3512 and 3244 respectively. The Indian Stock Markets
including the premium BSE could not sustain higher levels. Software Stocks
were battered to very low levels of new 52 week lows.
We had predicted that the BSE SENSEX would breach a level of 3150
and then test the existing 52 week low 3097. It tested an intra-day low
for July'2001 at 3244 as mentioned above and then there was a brief technical
2. On the macro-level, as mentioned in our July'2001 update - Fiscal
Deficit of Government of India, was a major cause of worry. The figures
released by the Ministry of Finance corroborate our views. For Q1 2001 i.e.
April-June'2001, the fiscal deficit is 1.7% of the GDP as against 1.17%
for Q1 2000. This needs to be pruned failing which it will have serious
impact on the already beleaguered Indian economy.
UTI fiasco snow-balled in July'2001. UTI's Chairman and two Executive
Directors were arrested alongwith a BSE Broker on insider trading charges
and also on account of "US 64" Scheme meltdown. Govt. of India, stepped
in and the new UTI Chairman has declared that w.e.f. 1st August'2001 small
investors can redeem a maximum of 3000 units of 'US 64" at the issue value
i.e. at par @ Rs. 10 per unit. This has put some stability in the financial
markets failing which BSE SENSEX would have tested the predicted lows as
above. Medium scale investors in "US 64" Scheme have to wait for further
news from UTI. Large investors re-deemed their units under the "US 64" Scheme
in March-May'2001 ! They had inside news ! Might is Right in India ! Ordinary
investors in this Scheme are trapped and are at the mercy of corrupt establishment.
Just for matter of record - Govt. of India bailed out UTI in 1998-99
with capital injection of Rs. 30 Billion ( US $ 636 Million at current
exchange rates as mentioned below).
I personally feel that things are not rosy with other score odd Schemes
that UTI Operates. Pandora's Box has been opened with 'US 64" fiasco. There
are talks in the Ministry of Finance and UTI to make "US 64" an NAV linked
Scheme from the current "Fixed Rate of Return Scheme" in a couple of years.
There are unconfirmed news that other UTI Schemes which offer a fixed
rate of return may also be dumped in future and be converted unilaterally
to NAV linked schemes. This is perjury with National Wealth. UTI must weed
out the corrupt elements and put it's house in order with efficient and
market savvy managers. It has a total corpus of Rs. 600 Billion ( US $8.9
Billion at current exchange rate of 1US $ = Indian Rs. 47.00) and is the
largest domestic Financial Institutional (FI). UTI must put it's house in
order and restore investor confidence.
3. We are bearish for BSE SENSEX for short-term i.e. around Mid- August'2001.
We predict BSE SENSEX to test it's existing 52 week low of 3097 during
August'2001. After testing this level there could be a very sharp brief
technical rally of 100 to 150 points.
We are not adding any new Stocks for investment for the moment. At
around 3150 to 3100 levels we only recommend our old favorites :
- LARSEN & TOUBRO
Investors are advised to stay away from Software Stocks.
BSE SENSEX was bearish for June as predicted. BSE SENSEX closed
on 29th June'2001 at 3456, down 2.8% from opening level of 3558. The
intra month high and lows for the SENSEX for June'2001 were 3589 and 3298
respectively. This low of 3298 was a new 11 week low.
We continue to be bearish for the month of July'2001. We
predict the BSE SENSEX to test the existing 52 week low of 3097. There
is a support at 3150, which we feel will be breached.
Macro level parameters of the Indian Economy continue to be disturbing
- Fiscal Deficit causes a major worry.
- Disinvestment of Govt. Equity in PSUs is slow. Against a target
of Rs. 100 Billion till 31.3.2001, Govt. of India could only raise
Rs. 5.8 Billion by selling BALCO Equity.
- Agricultural Growth was below 1% last fiscal year i.e. April
2000 to March 2001. In India financial for the Government is April-March.
This is really disturbing. Indian Agricultural output has been decling
but this figure of less than 1% is disturbing. This reflects on the purchasing
power of the people who are dependent on agriculture for their living.
This figure was around 1.3% a year before last. This also reflects on
Indian GDP as a whole, as 25 % of India's GDP comes from Agriculture.
India is still an agrarian economy, although it is perceived to be a super-power
in Software Development in the Western World.
Agriculture Growth needs to be addressed by the Indian Government
-India's largest Financial Institution " Unit Trust of India (UTI)
" is facing tremendous redemption pressures for its flagship scheme
"US 64". There are a lot of reasons being attributed to this by UTI and
Media. The fact is that UTI was hit by the Indian Stock Markets Crash of
March'2001 led by NASDAQ Crash. Coupled with this was the Indian Bull -
KP going burst, during the same time. UTI was holding large chunk of three/four
KP's favorite ICE Stocks. There are rumors in the market that there was
some nexus between top brass of UTI and KP. This needs to be probed. In
March-April'2001, UTI re-deemed to Indian Corporates and Investors "US
64" Units worth Rs. 42.0 Billion.
UTI is in a financial mess. It announced on 3rd July'2001 that
it will suspend redemption of "US 64" Units till 31.12.2001. This leaves
investors in the lurch. Investor sentiment is severely effected and UTI's
credibility is lost.
The NAV of one Rs. 10 face value "US 64" Unit is around Rs. 6.8
only now as per reliable estimates. UTI has slashed dividend on "US
64" from 13.5% last year to 10% this year. UTI pays it's annual dividend
on "US 64" Scheme on 1st July every year since 1964, when the scheme was
UTI has a total corpus of Rs. 600 Billion. It invests in
Equities, Govt. Debt. Instruments and other financial instruments
in the market. It is learnt from reliable sources that UTI's exposure
to "US 64" is around 25 % of the total funds it manages in India i.e. Rs.
600 Billion. UTI's exposure to "US 64" Scheme hence is estimated at Rs.
150 Billion. It is learnt from reliable sources, that on account of UTI's
Stock Market Operations, it has suffered a loss of US $ 1.0 Billion (Rs.
47000 Million or Rs. 47 Billion assuming that 1 US $ = 47.0 Indian
Rupees at current exchange rate) since June'1998-June'2001. On account of
these losses UTI is unable to pay back investors for "US 64" Scheme.
UTI says that it will only be able to re-consider the redemption
of funds to investors in "US 64" Scheme, if the BSE SENSEX rises by 20%
from the current levels of around 3400. This is un-becoming of India's
largest Financial Institution(FI). What if the Indian Stock Markets do not
rise by 20% or so ? Will UTI again defer the redemption of it's flagship
scheme "US 64" Units ? This is ambiguous and Indian Finance Ministry must
take immediate action to bail out UTI and restore investor confidence.
On account of the above disturbing factors we feel that investors
should wait for the BSE SENSEX to test a level of 3097 and then take
decisions to invest in the following stocks, which we have recommended
in the past.
No new Stocks are being recommended at present.
- LARSEN and TOUBRO Ltd.
Investors to kindly note that the above recommended stocks are
for long-term investors - who can hold them for six to nine months.
1. We continue to be bearish till 2nd July'2001 - the date fixed
by SEBI to abolish Badla System and to start Futures/Options Trading
on the Indian Stock Markets. Finally, SEBI did decide to scrap the age
old "Badla" much sooner than expected. FIIs did react very positively
to these announcements and BSE SENSEX did touch a high of 3760 during
May'2001, but closed today on 1st June'2001 at 3558, marginally up from
opening level of May'2001.
We advise Investors to stay away from the market till 2nd July'2001.
2. India's Sovereign Rating has been downgraded toady from "Stable"
to "Negative" by a renowned global credit rating agency - FITCH. India's
growing fiscal deficit, delay in privatization of PSUs and deterioration
in Foreign Investment Climate have been sited as the major reasons for
this downgrade. I expect this will have a bearing on the FII investment
in the Indian Stock Markets till the time the present Indian Government
can pull up its socks and improve its performance.
I predict bearish conditions in the Indian Stock Markets for
If BSE SENSEX breaches a level of 3421 convincingly, then the
BSE SENSEX will slide to 3097 levels, as mentioned in our earlier update.
3. IBP - As predicted, IBP touched Rs. 400. Investors are advised
to book profits by at least selling 75 % of their holdings. Balance hold.
Sell around Rs. 600 in a few months !
No additional shares are being recommended till 2nd July'2001.
Let the markets be allowed by SEBI to work in a normal manner.
Till 2nd July'2001, all short sales are banned. This is not normal market
4. Investors are advised to book profits in Stocks where they
are making even marginal profits. Avoid capital loss. Stay away especially
from ICE Sector as I feel this sector will see the maximum fall in the
coming weeks due to bull unwinding. All positions - Long or Short have
to be squared up by the 2nd July'2001.
As predicted the BSE SENSEX was bearish for the month of April'2001.
It tested a new 52 week low, although it closed slightly above the 2nd
April'2001 closing of 3441 level. BSE SENSEX closed on 3.5.2001
at 3494 levels. The Intra-Month movement in April'2001, was a high
of 3637 and a new 52 week low of 3097.
We had predicted that if the BSE SENSEX breached 3421 levels
then it will tumble to 3150 levels. Exactly the same happened and in
fact the BSE SENSEX crashed to a intra-day level of 3097. However it
did not close below this crucial level of 3150 on any day. BSE SENSEX
closed on a daily basis, during the month of April at its lowest at 3184
level after testing a new 52 week low of 3097.
Frontline Technology Stocks were battered merciliessly. We
saw new 52 week lows for INFOSYS( Rs.2720) and SATYAM(Rs.160).
Our predictions went wrong for these two scrips. We had mentioned Rs.
3800 for INFOSYS and Rs. 210 for SATYAM as good levels to start buying,
when the BSE SENSEX was around 3150 to 3200 levels. The SENSEX level
suggested was dot on, but at these low levels of BSE SENSEX - INFOSYS
was battered to Rs. 2800 levels and SATYAM to Rs. 170. INFOSYS closed
today at Rs. 3800 and SATYAM at Rs. 207.
On LARSEN & TOUBRO and TISCO, our recommended levels were
more or less correct. LARSEN touched a low of Rs. 206 and TISCO was available
around Rs. 115.
After Bombay Big Bull - Mr. Ketan Parikh(KP), went bust in
March'2001, the markets crashed. His scrips mainly - Information Technolgy,
Communication and Entertainment Stocks (ICE Stocks) were massacred
on BSE. Really bear hammered to unrealistic low levels. One of KP's
scrip was SATYAM, which saw a low of Rs. 160.
A few Indian Banks also lost money with KP going burst. Govt.
of India intervened through SEBI and as a "first step" banned all short
sales, to arrest the sliding markets. This arrested the markets to fall
further downwards from 3097 levels. Markets stabilized by SEBI intervention.
Unfortunately Indian Stock Markets including BSE are a few
Markets in the world, where one can go short on the scrips within the
weekly settlement without having physical delivery of shares. In the
carryforward system at BSE - "BLESS" and at NSE - "ALBM" one can go short
for 90 days max. without having physical delivery of shares through a
"stock lender" or one's own shares. This point is in favour of bears and
the FIIs have been demanding a ban on this age-old system in India called
'Badla System". Under this system - Shortsellers are at an advantage when
the markets are bearish. FIIs will have to wait for some more time till
another KP like scam to happen in India when SEBI will ban this "Badla
System" of forward trading !
FIIs are right. This practice of getting a "contango" reward
to a short-seller plus the difference in price, if any - should be
scrapped. "Futures and Options" need to be put in place. This will take
some time in India as these advanced tools for speculating need a lot
of infrastructure and guidelines. We in India might take another couple
of years to scrap "Badla System" and put in place "Futures and Options".
SEBI - The Indian Stock Market regulator announced some harsh
measures to curb speculation in Mid-April. All Short sales were banned
are still banned. All forward positions - 'Long' or 'Short' in
the Group "A" Scrips (wherein carryforward is allowed) on BSE have to
be 'squared off' by 2nd July'2001. This date - 2nd July'2001, is sacrosanct
and SEBI has announced that ban on short sales will be lifted by this date.
When one is playing/tinkering with the basics of the Stock Markets - In
this case "Ban on Short Sales" in all Stock Markets in India including BSE,
predictions have little room.
We expect wild fluctuations in BSE in the month of May'2001.
No one knows what is the extent of long and short positions in the
BSE 30 SENSEX Scrips where in Carryforward Trading is done. Now till
2nd July'2001, one can only Buy first and then Sell and not the other
way round as "Short Sales" completely banned by SEBI. This is an artificial
sort of market and we advise Investors to stay away from the market, till
We still predict a level of 3097 for BSE SENSEX being tested
again in May/June'2001. The upperside for a Bull Market would mean
that BSE SENSEX closes above 3650. There could be wild fluctuations
in individual Scrips and the BSE SENSEX, as bears and bulls both will
be squaring off their speculative positions by 2nd July'2001.
If the BSE SENSEX closes below this level of 3100 for two/three
days in a row - do not by shocked to see a BSE SENSEX of 2850.
The BSE SENSEX has touched a 52 week low of 3436 in Mid-March'2001
and it was near this low at 3441 on first day of the financial year
in India i.e. 2.4.2001. We predict a bearish market for the month
of April'2001. There could be technical pull back of about 100 to 150
points of BSE SENSEX. Looks difficult.
The BSE SENSEX is expected to breach the level of 3421 and
close below this level. This will lead to BSE SENSEX tumbling to
a level of 3150. BSE SENSEX should find a strong support at this level.
If this level is also breached, then there will be a bloodbath on BSE
and other Stock Exchanges in India. Investors to take notice of this
level. We feel this level will not be breached. But no one can predict
We advise investors to start buying the following shares
at this level of 3150 to 3200 . Investors to keep in mind that market
will be bearish till May'2001. The returns should be expected on the
following shares keeping four to six months perspective :
1. INFOSYS - This is the darling of Indian Stock Markets.
It is a Rs. 5 paid up share and currently quotes at Rs. 4100. At around
3800 - 3900 it is a good buy. It's ADR is also listed and traded at
NASDAQ - INFY
2. SATYAM - Another blue chip in IT Sector. It is a Rs. 2
paid up share and currently quotes at Rs. 240. At around Rs. 210 -215
it is a good buy. SATYAM's subsidiary a ISP Provider is listed at NASDAQ
3. LARSEN and TOUBRO(L & T) - Cement and Engineering
Major. It is a Rs. 10 paid up share. They are expecting to hive off
their Cement division into a JV with an overseas Cement Giant - LAFARGE,
BLUE CIRCLE, HOLDERBANK, CEMEX etc. They will get huge cash for this
sale. They are also expected to spin off their 'Software Exports Division'
into a separate company - LTITL i.e. Larsen Toubro Informational
Technology Ltd. This re-structuring is expected to be done this fiscal.
L & T post re-structuring will be a hard core Engineering
Giant. Currently the Share quotes at Rs. 218. At around Rs. 200 to
Rs. 210 it is a good pick.
4. TISCO - We already are bullish on this Steel Major. It
is currently quoting at Rs. 118 per Rs. 10 paid up share. At around
Rs. 112 it is a safe long term (six) month investment.
We expect these shares to give at least 30 % ROI in the next
six months if not more. Long term investors can hold till further
period subject to our comments for May'2001 onwards
We had a predicted a bull market for Feb'2001. Our predictions
fell short of actual bull levels for BSE SENSEX. Our prediction was
around 4780 levels but the BSE SENSEX could only reach 4460 levels. Prime
reason being the NASDAQ EFFECT. The TMT Stocks in India are called ICE
Stocks - Infotech, Communications and Entertainment Stocks. Some of the
ICE Stocks on the BSE SENSEX hit their 52 week lows on 2nd March (weekly
settlement) or earlier during the month. Stars of Indian Stock Markets
- INFOSYS and SATYAM hit their new 52 Week lows on 2nd March'2001. This
is the main reason of BSE SENSEX closing at 4095 levels on 2nd March'2001.
However, all our shares except MTNL outperformed the BSE
SENSEX once again. We predict for March that the BSE SENSEX will test
a level of 4040. It should not breach a level of 4000 decisively. It
is breaks this level, then it fall sharply to a level of 3850. We feel
it will, if NASDAQ breaches all important level of 2000. Investors to
keep an eye on these levels. There will be further erosion in ICE Stocks.
Keep away from ICE Stocks for the time being as there could be some more
We feel the market will be sideways or bearish. India did
sign WTO Agreement which will come into effect from 1.4.2001. From
this date onwards, almost 750 new items will be freed from Import License
Regime. Govt. of India will only control the inflow of imports by
Tariff Barriers and not by License Barriers. This will have a serious
impact on some domestic industries, which need protection.
In view of the above two parameters, we are not recommending
any additional Stocks for March'2001. We are very cautious and wish
to wait till 15th March'2001.
Our forecast for Jan'2001 for BSE SENSEX was 3950 to 4300.
We expected a healthy market on account of Indian Government's serious
efforts to privatize PSUs. Govt. is moving ahead slowly but surely
on PSU Disinvestment. Our predictions were more or less correct. BSE
SENSEX touched a intra-month low of 4000 and a high of 4400 during
BSE SENSEX closed at 4352 on 2nd Feb - weekly settlement.
We predict a BULL MARKET for Feb'2001.
BSE SENSEX could touch 4790 by End Feb. Crucial level of
BSE SENSEX of 4300 has been broken decisively. This is the 200 DMA
for BSE SENSEX.
Foreign Institutional Investors (FIIs) have pumped in approx. US $ 900
Million into the Indian Stock Markets, in the month of Jan'2001.
Inspite of the Killer Earthquake in Western India on 26th Jan'2001,
the FIIs are bullish on the Indian Economy. The prime reason being that
Indian Govt. since the last two decades has been only talking about disinvestment
in PSUs, but there was no action on the ground. This time, actual disinvestment
is happening. Fiscal Deficit will be contained by this PSU Disinvestment.
Although the Disinvestment Process is slow, but it is actually happening.
This is a very bullish sign for FIIs.
Secondly some major destinations in Asia are 'falling out of favour' with
the FIIs. There are reports that FIIs are pulling out huge amount
of Dollars from Philippines, Indonesia and Thailand on account of political
instability in these three Asian countries. These countries were once
'Hot' Destinations for FIIs. Hong Kong due to its Chinese parentage
is not getting due share of FII funds because of China's Human Rights
history. America is talking tough with China on this important issue.
Earlier this would not have effected Hong Kong, but now it definitely
does. Hong Kong is not attracting Foreign Funds for its Stocks. Lastly
- Japan is not able to pull itself out from recession.
Indian GDP estimates are around 5.6% for 2001-02. Plus it is expected
that US President Bush will lift Sanctions on India in March'2001,
which were imposed in June 1998, after Indian Nuclear Explosions in May'1998.
This is a very positive news for the Indian Economy.
All these factors put together plus a clear signal from the Charts -
A BULL RUN IS EXPECTED ON THE INDIAN STOCK MARKETS FOR
The following is an update on some select shares that we forecast would
outperform the BSE SENSEX in February 2001:
1. IBP: This PSU Petroleum Retailing Stock closed at BSE on 2nd Feb at
Up 58 % from Jan'2001 level of Rs. 156. Global
Petroleum Giants - SHELL, EXXON-MOBIL, TOTALFINA etc and Indian Petroleum
Giant - RELIANCE are interested to pick-up Indian Govt.'s 33.6 % equity
stake in IBP in the Disinvestment process. We expect this Stock to
be anywhere between Rs. 400 to 600 in the next two months. That is
why we called this stock as a "Multi Bagger of 2001". Investors
to decide target prices and exit levels on their own.
2. MTNL: This Telecom PSU Stock closed at BSE on 2nd Feb at Rs. 204. Up
7 % from Jan'2001 level of Rs. 190. We expect MTNL to touch Rs. 250
in Feb'2001. Exit level - Rs. 240 for investors.
3. HINDUSTAN LEVER : This FMCG Multinational Giant is weak. Exit at Rs.
220 or even earlier. It closed at BSE on 2nd Feb at Rs. 200. It is
looking weak both - fundamentally and technically.
4. ONGC: This Crude Oil and Natural Gas PSU has got up from its deep slumber.
This will be another IBP Story. A Multi-Bagger. It closed at
BSE on 2nd Feb at Rs. 149. There is a major resistance at Rs.
155 level for this Stock. Once it crosses this resistance it will
shoot up to Rs. 220. This is a Blue Chip PSU Stock, which is grossly
undervalued. We expect this stock to give multiple returns in the next
phase of PSU Disinvestment in June'2001. Investors to decide accordingly.
LONG TERM INVESTORS ARE ADVISED TO HOLD ON TO THIS STOCK AND EXIT AT
Rs. 600 to 900.
5. NALCO: This Aluminium PSU Giant closed at BSE on 2nd Feb at Rs.
48. Down 6 % from Jan'2001 levels. Like ONGC this will be disinvested
in the second phase of PSU Privatization in June'2001. We expect this
Stock to be Rs. 80 in Feb/March'2001.
We recommend two new stocks for Feb'2001 :
a) RELIANCE INDUSTRIES Ltd. - "RELIANCE" is India's Largest Private
Sector Company. It is a Petro-Chemical Major. It closed at BSE on
2nd Feb at Rs. 394. Its 52 Week - High and Low are Rs. 391 and Rs.
199 respectively. Target price Rs. 480.
b) TATA IRON AND STEEL COMPANY - "TISCO" is India's largest
primary Steel Producer in the Private Sector. It closed at BSE on
2nd Feb at Rs. 143. Its 52 Week - High and Low are Rs. 149 and Rs.
85 respectively. Target price Rs. 180.
As predicted the Indian Stock Markets were range bound. BSE SENSEX did
touch 3803 to 4278 on intra-day basis. We had mentioned the range
to be 3850 to 4200. It was more or less in this range.
We forecast a healthy market as Govt. is giving strong signals that Reforms
will be pushed through in the next three months, come what may. PSU
will be disinvested. We have been telling this PSU STORY much in advance.
The BSE SENSEX would oscillate between 3950 to 4300 levels in Jan'2001.
Select PSU Shares will outperform the SENSEX.
Exactly the same is going to happen what we had predicted six months ago.
Govt. will privatize PSU Companies in Phases . Market discounts the
future. Some PSU Stocks are already galloping - MTNL, BHEL etc.
We do not recommend any new shares. Our shares are talking :
- HINDUSTAN LEVER. We recommended at Rs. 165. It closed today at
Rs. 203. Up 23 %. This could be around Rs. 240 by end Q1 2001.
- MTNL. A telecom PSU. It closed today at Rs. 190. We recommended at
Rs. 110. It was Rs. 170 when we last updated in Dec'2000. From that
level it is further up by another 11 %. This share could be around
Rs. 240 by end Q1 2001.
On the PSU - we continue to be bullish on two of our old favorites, we
recommend the following specifically again, if already not purchased
- NALCO. Aluminum PSU. At around Rs. 51 per Share it is still a good buy.
We expect 60 % appreciation by end Q1 2001.
- IBP. Petroleum Products Retailing PSU. This is currently quoting at
Rs. 156. It is still a plum pick at this level also. We expect 50 % appreciation
by end Q1 2001.
The information above is provided by the
source indicated and presented by the Astrologers Fund Inc. Neither
the Astrologers Fund Inc. nor the source guarantee that the information
supplied is accurate, complete or timely, or make any warranties with
regard to the results obtained from its use. The Astrologers Fund does
not guarantee the suitability or potential value of any particular investment
or information source. Remember always to check with your licensed financial
planner or broker before acting. This is just the starting point of your
research and you must carefully investigate before you buy/or sell.