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Foreign investors may invest and trade India through Country Funds (IIF, IFN, IGF, JFI), or individual stocks with ADRS on the NYSE such as ICICI (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 (NSE).

Note: 05/08/2002 The Astrologers Fund did a small initial buy of IFN at $10.55 for a number of its clients.
On 5/31, we upgraded and  recommended India and BSE for more clients, believing the war will be over soon and that bargains are to be had among the fear. Second buy of IFN at $9.60.  Our 12-18 month target is $12.50+.

BSE SENSEX closed today i.e. 2nd Dec'02 at new four month high of 3270. Up whopping 10.6 % from a close of 2957 on 8th Nov'02 as last month's reference date. The intra month high and low levels for BSE SENSEX were 3276 and 2936.
We had mentioned in our last month's forecast that if the "Reforms and Disinvestment Process" are not brought on track by the GoI - the BSE SENSEX will tumble. The Indian Prime Minister had to step in and assert his views on the coalition partners that there is no other way to take the Indian Economy forward. The partners agreed and BSE SENSEX leapt to a near new four month high. There was some compromise done by the Indian Prime Minister. He put on hold Disinvestment and Privatization of PSU Oil and Gas Companies - for the time being HPCL, BPCL will not be privatized. Equity in ONGC and GAIL will not be off-loaded in the domestic and overseas markets by way of ADRs or GDRs etc. Compulsions of coalition politics but a very strong position taken by the Prime Minister to put back the Reforms and Disinvestment Process on track, failing which the BSE SENSEX would have crashed below 2830 levels. There would have been flight of overseas capital by FIIs.
FIIs poured huge amount of funds into the Indian Frontline IT Shares viz. INFOSYS, WIPRO and SATYAM. These shares clearly out-performed the BSE SENSEX. The BPO ( Call Centre ) Story plus good results by the IT Majors lead to a sharp rally in these blue chip shares.
Select Old Economy Stocks were up sharply alongwith the PSU Stocks which will now be disinvested completely privatized. The overall market sentiment turned bullish as the news trickled in that come what may - The Reforms are here to stay.
We feel that BSE SENSEX is due for a sharp correction but the undertone is confirmed bullish now. Some profit booking is advised to investors 3300 level - which is the major resistance level. The levels to watch for Dec'02 are :
R1 3300 R2 3400
S1 3250 S2 3170
If BSE SENSEX closes above 3400 level for two days - we could witness a sustained bull-run to a level of even 3600.     
No new shares are being recommended. Below are the closing prices as of today, of Shares of our interest which we have been tracking for a few months:
1. NALCO - Rs. 90. Up sharply as the Disinvestment news was confirmed by the GoI. Weak bulls may have sold in panic at around Rs. 70. We mentioned to investors in last month's forecast not to book losses in our 'old favourite' Share and stay invested. Yes, must have caused heartaches but it was worth it !
2. ONGC - Rs. 359. It touched a new 52 week low of Rs. 406. Profit taking as Saddam allowed UN weapon inspectors inside Iraq ! Global Oil prices softened. We advise investors to stay invested and book partial profits at Rs. 420+  
3. HPCL : Rs. 230. Up smartly on good Q2 '2002 results. We feel investors should exit from HPCL for the time being. It is up smartly from a low of around Rs. 175 in Nov'02.
4. RELIANCE - Rs. 294. Up smartly from Rs. 258, on news of the KG Basin Gas discovery. Investors to advised to hold on to RELIANCE for long term. Target Rs. 400+.
No new shares are being recommended
The forecast for Nov'02 is late by a week due to local holidays in India during the week 4th to 8th Nov'02. The weekly close of 8th Nov'02 is the reference date for close of Oct'02.
As predicted the BSE SENSEX was bearish for the month of Oct'02. The intra month high and lows were 3039 and 2828. This level of 2828 was a new 52 week low for the BSE SENSEX. SENSEX could not go past 'R 1' Level of 3050. NIKKEI INDEX - N 225, tested a new nineteen year low of 8197 in Oct'02. This also has a bearing on BSE SENSEX. Japan is still the biggest economy in South East Asia. 
BSE SENSEX closed on Friday 8th Nov'02 at 2957 - very near to the level of 2959 as close of 1st Oct'02. A very sharp technical 'pull back' in the BSE SENSEX was noticed (nearly 100 points) after breaching the level of 2850 - as predicted. The BSE SENSEX breached 2850 level as the NALCO Disinvestment was
'put-off by another three months - till Jan'03. This lead to a bearish sentiment in the Indian Stock Markets. Privatization of HPCL and BPCL was also further delayed.
The FIIs do not take these developments in a positive way and hence were net sellers in all PSU Stocks and other frontline Momentum Stocks which have a heavy weightage in the SENSEX. The Indian Government should not delay the Reforms Process including Disinvestment and Privatization of PSU Companies. This will lead to a longer bearish sentiment in the SENSEX.   
BSE SENSEX breached the all important level of 2850 on an
intra-day basis twice and tested a level of 2828. BSE SENSEX did not close below the level of 2850 for three consecutive days. This could have lead to a crash in the BSE SENSEX.
The improvement in sentiment was on account of good Q2 results by select shares viz - NALCO, ONGC, HPCL, BPCL, TISCO and RELIANCE. CEMENT and FMCG companies viz - ACC and NESTLE disappointed with poor Q2 '2002 results.
We predict the BSE SENSEX to be bearish or flat till the Indian Govt. can put the Disinvestment and Privatization process back on track. Failing which, very specific stocks will outperform the SENSEX.
The levels to watch for Nov'02 are :
S1 2950  S2 2830
R1 3050 R2 3150

Investors to please note that if BSE SENSEX closes three consecutive days below 2830 - SENSEX can crash to its three year low of 2594. We only recommend one new Stock - India's largest Private Sector Company and Petrochemical Giant - M/s. RELIANCE INDUSTRIES Ltd. - known as RELIANCE. This company found huge amount of Natural Gas reserves in the 'KG Basin' in India in Oct'02.
M/s. NIKKO RESOURCES of Canada and RELIANCE jointly explored this huge Natural Gas reserve in India. The Natural Gas would be available for sale in four years from this Basin to bulk customers in India. Gas reserves are estimated to the tune of approx. 7 trillion cubic feet from this Basin. India will no longer be dependent on imports of Natural Gas from Bangladesh or Iran etc. This is a huge deposit of Natural Gas found by RELIANCE + NIKKO JV and will make India almost self-suffiecient in Natural Gas after taking into account Natural Gas production by ONGC. This Natural Gas production in four years from 'KG Basin' is a very important news for the energy deficient Indian Nation. We recommend purchase of RELIANCE for long term, at a price of around Rs. 240 to 245. It closed on 8th Nov'02 at Rs. 258. Target price - Rs. 400+.
The delay of Disinvestment of NALCO spelt doomsday for this Share. The Stock crashed to close at Rs. 72 as on 8th Nov'02. Investors are requested to stay invested in this Stock. We know it is painful, but we can't fight the GoI. We once again re-assure investors that NALCO is a Rs. 200+ share. When the Disinvestment and Privatization takes place this share can be Rs. 450+ also. It all depends on which MNC - PECHINEY, BHP or ALCOA bids aggressively for strategic sale of 27.15 % of Indian Govt. Equity to get the management control. We feel that NALCO will be privatized early next year and hence investors are requested to stay invested. The Indian Govt. has no option but to put the Reforms Package including Disinvestment back on tracks. Failing which SENSEX will crash to 2594 or lower levels and there will be flight of FII Capital from Indian Stock Markets. The Indian Finance Minister can't afford this peril. In the Tenth Five Year Plan (2002-07), the Hon. Minister has earmarked a figure of Rs. 80, 000 Crores ( approx. US $ 16 Billion ) to be raised via the Disinvestment and Privatization of PSU Companies. It is imperative that it is only a question of time - NALCO etc. would be privatized. This is one of the ways to plug the huge Indian Fiscal Deficit. The Tenth Plan also targets an annual GDP growth of 8 %.We feel this figure of GDP growth is too high. Indian Govt. is targeting of 'Chinese Levels' of GDP growth of the Nineties ! God Bless India !
ONGC closed on 8th Nov'02 at Rs. 391.
HPCL closed on 8th Nov'02 at Rs. 206.
Investors are requested to stay invested in ONGC and HPCL. Natural Gas prices are still controlled by the Govt. of India. APM was dismantled w.e.f. 1st April'02 for Crude Oil and select Petroleum Products. Natural Gas prices will be de-controlled in phases w.e.f. April'03 onwards. Currently Indian Govt. pays ONGC a subsidized price @ US $ 2.8 per MillionBTU of Natural Gas. The market price for imported Natural Gas will work out as of today for Indian Customers @ US $ 3.5 per MillionBTU. This reason of price
de-control and the 'Iraq Factor' is keeping the price of ONGC near its 52 week high of Rs. 400. ONGC is the largest producer of Natural Gas in India ( approx. 60 million standard cubic metres/day).
ONGC is a clear market 'out-performer'. Bravo AFUND ! ONGC is a Rs. 600+ Share ! Investors to please book partial profits at around Rs. 420+ levels.
United Phosphorus Ltd. - It touched Rs. 185+ in Oct'02. We had requested the investors to book profits at Rs. 180+. We hope investors booked profits. We advise investors to exit from this share at around Rs. 200+ in the near term.
Investors to keep a very careful watch on SENSEX level of 2830.
The BSE SENSEX closed on 1st Oct'02 at a level of 2959 down
7.2 % from a closing level of 3187 as on 2nd Sept'02. The intra month high and low for BSE SENSEX for Sept'02 were 3193 and 2949. A distinct bearish undertone as we had predicted.
The primary reason for the BSE SENSEX to be in the bearish mode was the derailment of GoI's 'Disinvestment Programme' under pressure by the coalition partners of the Federal Government in Delhi. The postponement of big ticket Disinvestment of GoI's equity by way of 'strategic sale' in PSU Oil Majors viz BPCL and HPCL by another three months by the CCD headed by the Prime Minister sent shock waves in the Indian Stock Markets. All other PSU Stocks were also sharply down on this disappointing news.
In addition to this was the weakness in the global markets lead by the American Stock Markets. The Japanese 'N 225 Index' was at its 18 years low on 4th Sept'02 at a level of 8995. The weakness in global markets has an impact on the BSE SENSEX. 
The new Finance Minister announced a federal 'Drought Relief' package for the farm sector to the tune of Rs. 7000 Crores
( approx. US 1.44 Billion ) for the current fiscal year. Details of the package are available at MoF's Official Website.This will make things worse for the Indian Fiscal Deficit which is already at alarming levels. IMF and FIIs are not happy at these 'dole outs' by the GoI. First it was 'UTI' bail out package and now this 'Drought Relief' package. FIIs were net sellers of equities and debt in the Indian Financial Markets. To 'add fuel to the fire' - IMF announced that the Indian Economy will grow only by 5 % this fiscal. GoI is still sticking to it's estimates of a GDP growth of 5.5 % or more.
The PSU Stocks crashed on the news of delay in the Disinvestment Programme of GoI. The following are the closing prices of PSUs of our interest as on 1st Oct'02 :
ONGC - Rs. 337
NALCO - Rs. 85
HPCL - Rs. 173
We advise investors to stay invested in these PSU Shares as the GoI has no option but to put the 'Disinvestment Process' back on track. GoI needs funds to bridge the alarming Federal Fiscal Deficit.
Investors who had missed the opportunity to enter the above PSU Shares can enter when the BSE SENSEX is around 2900 levels.
We expect the BSE SENSEX to be bearish for the month of the October'02. A very important support level to watch is 2850. The following levels are to be kept in mind :
S1 2950 S2 2850.
R1 3050 R2 3150.
If the BSE SENSEX breaches the support level of 2850 - we are in for a steep fall in the SENSEX. On the charts the next support level is too far away ! We feel the SENSEX will rebound sharply from the 2850 level to settle close to 2900 levels. But in the prediction business no one can be 100 % accurate. We again repeat if the BSE SENSEX closes for three consecutive days below a level of 2850 we will see blood bath on Indian Stock Markets. It might test the existing 52 week low for BSE SENSEX of 2718. This may not happen but one cannot rule out the possibility.
No new shares are being recommended.
M/s. United Phosphors Ltd.(UPL) which we recommended as a medium term investment at Rs. 115+ is outperforming the SENSEX. It touched Rs. 170+ and closed today at Rs. 153. Investors to start booking profits at Rs. 180+ onwards. This is a 'M & A' Story and that is the reason it is out performing the SENSEX. UPL may buy a sick pesticide company in North India and inject funds to restart operations to manufacture a Herbicide which has a good export potential apart from having a good domestic market.
Investors are advised to keep an eye on the BSE SENSEX level of 2850. This is a very important level.


The BSE SENSEX closed on 2nd Sept'02 at a level of 3187 up 5.8% from the 5th Aug'02 close of 3011. The Intra month high and low levels for the BSE SENSEX for Aug'02 were 3227 and 2932 respectively. The BSE SENSEX could not breach the major resistance of 3300 level. It did test on an intra-day basis the important support level of 2950 i.e. 2932 but managed to close above 2950.
Finally, Govt. of India (GoI) decided to privatize NALCO on 23rd Aug'02. This is the day we have been waiting for more than a year. In the first phase - GoI has asked for bids from companies whose nett worth is more than US $ 250 Million, for strategic sale of its 29.15 % equity in NALCO. This equity will to be sold under 'Open Bidding' process. The GoI will transfer the management control to the highest eligible bidder. The last date of submission of the bids is 16th Sept'02. It is learnt that global Aluminium Majors have shown interest in this 'strategic sale' of GoI's 29.15 % equity in NALCO. The global majors as per media predictions are - ALCAN, ALCOA, PECHINEY, BHP, MITSUI and KAISER etc. Domestic Aluminium major - HINDALCO will also participate in this sale. We predict that HINDALCO will aggressively bid for this sale and may be the winner. Do not be surprised if they are the highest bidders at Rs. 250+ per share. NALCO closed today at Rs. 114. There are rumours in the market that at this level of bid from HINDALCO it would team up with ALCOA of US. At a bid price of Rs. 250 per share, funds required by HINDALCO + ALCOA would be to the tune of US $ 1.5 Billion. Let us see what happens in the 'Open Bidding'. We shall know the results by Mid Oct'02 as regards the winning bidder.
In the second phase 10 % of GoI's equity in NALCO will be sold to Indian public through an IPO. In the third phase an ADR offering for 20 % equity has been finalized. Finally 2 % of the GoI's equity will be offered to NALCO's employees. This is really a good way to sell GoI's equity in NALCO as it will fetch the best price for NALCO's Equity Shares. Eventually GoI will only hold 26 % equity in NALCO. This complete process should take about 12 months. But the Stock Markets discount the future. Faithful and patient investors who bought NALCO at around Rs. 45+ should make mega-bucks in the next six months !
In another bold move the new Finance Minister announced on 31st Aug'02, announced a very bold 'bail out' package for ailing UTI - India's largest Mutual Fund under the control of the GoI. The total package is a whopping Rs. 150 Billion i.e. approx. US $ 3.0 Billion over the next two years. Even this positive announcement did not have a sustained 'bull effect' on the BSE SENSEX today. There was a brief rally which took BSE SENSEX to a level of 3227 but this higher level could not be sustained. This 'bail out' package announced for UTI is a big 'bull trigger' as per our understanding of the Indian Stock Markets. The details of the UTI bail out package are available on GoI's Finance Ministry Website.
The new Finance Minister also indicated that he would soon announce 'bail out' packages for ailing domestic financial institutions (FIs) - IFCI and IDBI. These domestic development FIs are stuck with huge NPAs in the dubious Steel Companies and other Industrial Sector Companies which are either sick or have dubious management. The Finance Minister wants to 'bite the bullet' once for all and put UTI, IFCI and IDBI in the hands of professional management and wishes to weed out sloppy and corrupt elements which have lead to this situation in the pillars of Indian Financial Sector.
We congratulate the new Finance Minister for his bold initiatives and admission of the facts that there is a problem which needs to be solved. We are surprised that even by these bold announcements, to put the house of FIs in order - the BSE SENSEX did not stage a 'bull rally' that could sustain even a for a day.
We feel that this is a signal that the undertone for the Indian Stock Markets is bearish for September'02. Levels to watch are :
S1 3150 S2 3050 S3 2950
R1 3300 R2 3400
The Disinvestment Process of BPCL and HPCL - India's Giant Oil PSUs, has once again being spiked. This is the third time that the privatization of these blue chip Oil PSUs has been delayed. The Disinvestment Minister is doing an excellent job, but some coalition partners in the Federal Govt. are opposed to the privatisation of these Oil PSUs. They are talking about 'security risks' as Crude Oil and downstream products i.e. Gasoline, Diesel, ATF etc. are very dear to the Nation in case of a war with Pakistan. These are stupid and baseless arguments. The GoI is not giving 'management control' in these Oil PSUs to overseas Oil Giants or Investors. We feel it is matter of time and the Disinvestment Minister will have his way. 
IMF has once again warned GoI on Fiscal Deficit. The drought which has hit Northern and Central India recently will 'add fuel to the fire'. Revenues will be dented and on the other side GoI will increase expenditure in rural areas by providing assistance to the poor farmers who have lost their crops. This will further deteriorate the Federal Fiscal Deficit.
IMF has been pushing the GoI for the past few years to raise revenues by broadening the tax base and strengthening the tax administration machinery in India.
We agree that Fiscal Deficit is a 'One Point Agenda' which the new Finance Minister has to address on war footing. He is capable of taking bold and tough steps. Political compulsions do come in the way when the Federal Govt. is a 'Coalition Govt.' with socialist elements.
We do not recommend any additional Shares for Sept'02.
We would like to highlight some important issues which will have bearing on one of our old favourite Stocks - PSU Oil and Natural Gas Giant, M/s. ONGC Ltd. The Indian Govt. currently holds 83.64 % equity in ONGC. The balance is held by domestic FIs and the investing public. Hence, as of now ONGC is not a very liquid stock. We have been recommending this PSU Blue Chip since a level of Rs. 120+  over the last one year or more. It closed on 14th August'02 at a level of Rs. 361. We stick to our prediction that ONGC will be a 'muti-bagger' for 2002-03.
We feel this Stock needs a further 're-rating' as the management of ONGC is suddenly in an 'aggressive mode and overdrive' for take overs after dismantling of APM in the Petroleum Sector w.e.f. 1st April'02. ONGC has decided to acquire a controlling stake in a loss making Refinery - M/s. MRPL based in Mangalore. It has already picked up 37.39 % equity in MRPL from AVB Group. MRPL is JV between AVB Group and PSU - HPCL, but its balance sheet is bleeding. AVB Group has decided to exit from the crude oil refining business as it is a 'non-core' business for them. MRPL is a loss making 9.0 Million Tonne west coast based oil refinery. ONGC has plans to pick up further equity to increase its stake to 51 % and have controlling stake in MRPL. ONGC paid only Rs. 600 Million (approx. US $ 12.0 Million) to acquire this 37.39 % equity stake from MRPL. It will inject additional Rs. 6 Billion ( US $ 120 Million) to acquire the additional equity to get controlling  51 % equity stake. Further ONGC will inject Rs. 3.0 Billion ( US $ 60 Million) in MRPL as working capital under the restructuring plan being worked out with the lenders. Some loans from the domestic lenders will be converted into equity under the restructuring plan. Post restructuring the equity capital of ONGC will go up slightly from the current level of Rs. 14.26 Billion (US $ 285 Million). The profits are on the upswing for ONGC for Q1 2002 as APM dismantling has had a very positive effect on the sales and net profit as per details given later in this note. As mentioned earlier ONGC is virtually a debt-free company since June'02. We predict that in a few months ONGC will buy out the entire equity of HPCL ( 37.39% ) and MRPL will become a subsidiary of ONGC. Do not be surprised if MRPL is merged with ONGC in the near future. ONGC will benefit by way of 'tax breaks' on account of losses on the books of MRPL. Win win situation for ONGC !
ONGC has bought over Indian Energy Assets of Scottish Oil and Gas Company - M/s Cairn Energy Plc. These assets are a couple of operational Crude Oil Wells and a Natural Bas Basin, held by Cairn Energy India Pvt Ltd. Cairn Energy Plc. has sold all its Crude Oil and Gas assets to ONGC at an undisclosed amount. Market sources estimate that ONGC paid US $ 60 Million to Cairn Energy Plc. This is another positive news for ONGC as it gets access to additional Crude Oil  and Natural Gas.
Further ONGC has got the nod from the Indian Government to set up 600 retail outlets in five Indian States. It has applied to the Indian Govt. for additional retail outlets outside these five States. ONGC will be thus totally vertically integrated Oil and Natural Gas Company - Oil Exploration and Production, Refiner and Retailer of Gasoline, Diesel etc. in the near future.  
There are plans by the Govt. of India to disinvest some of its equity in giant Oil and Gas PSU Corporations in the current fiscal in order to raise Rs. 255 Billion ( US $ 5.1 Billion) to bring the spiraling Federal Fiscal Deficit under control. A very bold move by the Disinvestment Minister. We congratulate him and the PMO. Finally the Indian Government is putting it's act together and addressing this thorny issue of Fiscal Deficit. We do not know if the Government will be able to disinvest its equity in these PSUs as below as coalition partners may put spikes in 'selling-out' government jewels !  Government of India (GOI) plans to sell part of its equity in ONGC, IOC and GAIL to raise US $ 5.1 Billion this fiscal.
As regards ONGC - The Indian Govt. currently holds 83.64 % equity. The balance is held by domestic FIs and public. One can notice that as of now ONGC is an "ill-liquid stock". FIIs do not hold ill-liquid stocks in their portfolios. GOI plans to sell 25 % of its equity in ONGC this fiscal. The modalities are not known as yet. There could be an IPO, ADR and/or Strategic Sale like IBP. This is another positive news for ONGC - It is a Disinvestment Candidate ! FIIs are very pleased with privatization and opening up of the economy in developing countries.
The current EPS for ONGC is Rs. 38 as of 31.3.2002 and quotes at a very low P/E ratio of only 9.5. We identified this Stock when the P/E ratio was only 5.0. It has out performed the BSE SENSEX over the last 12 to 15 months. We feel like IBP - ONGC should settle at a P/E ratio of 15 to 20. This should translate to a market price of
Rs. 570 to 760. In the near future the ONGC can quote at Rs 800+ per Rs. 10 paid up Share.
Briefly let us go through the fundamentals of ONGC. It is a gold-mine ! The equity capital is Rs. 14.26 Billion (US $ 285 Million) and sales from operations as of 31.3.2002( end of fiscal 2001-02) was Rs. 232 Billion ( US $ 4.65 Billion ). Reserves as of 31.3 2002 were at whopping - Rs. 278 Billion ( US $ 5.57 Billion). Net Profit from operations for the last fiscal was Rs. 62 Billion ( US $ 1.24 Billion ). This makes ONGC the most profitable company in corporate India with net profit for fiscal 2001-02 in excess of US $ 1.0 Billion. For Q1 2002 ( April to June'02) the sales are up by 23 % and the net profit is up by 25 % as compared to Q1 2001. If we extrapolate the annualized EPS on the basis of Q1 2002 EPS, we get an astounding EPS of approx. Rs. 55, not withstanding nominally increased equity capital on account of proposed 'restructuring'. Long term investors can expect a price of Rs. 900+.
ONGC has plans to Bid for strategic equity sale of HPCL or BPCL in the ongoing disinvestment process. GOI has in principle approved the disinvestment of GOI's equity in Petroleum Giants - HPCL and BPCL. The quantum of equity stake to be sold in HPCL/ BPCL is to be finalized soon by the Ministries of Petroleum and Finance in conjunction with the Disinvestment Ministry. Imagine if ONGC can get controlling stake in HPCL. It will then be totally integrated Oil and Natural Gas Giant. Valuations will be enhanced further.
ONGC Videsh Limited - a 100 % subsidiary of ONGC is also on an 'overdrive'. It is acquiring Oilfields overseas and also picking up equity stakes in giant projects worldwide. ONGC has huge cash reserves as mentioned above. ONGC Videsh Ld has injected US $ 1.0 Billion as equity in Russia in "Sakhalin II" Project. The Russian Govt. and an American Oil Giant are other promoters of this rich Oil and Natural Gas Field in Russia - Sakhalin II. ONGC is also interested in bidding for Natural Gas Basins in Bangladesh. This tiny nation has huge Gas surplus and will float global tenders soon.
We advise our long term investors to hold on to ONGC till further comments. Fresh investors can also enter ONGC at
Rs. 340+ levels. There are unconfirmed reports in the market that some FIIs have started buying this 'ill-liquid' Stock. Watch this Stock soar.


BSE SENSEX closed on 5th August'02 at a level of 3011 down 8.5 % from the closing of 1st July'02 of 3289. The intra month high and low for the BSE SENSEX in July'02 were 3367 and 2932.
We are updating the August'02 forecast a few days late. The Indo-Pak War Clouds have receded. The impact of delayed South-West Monsoon Rains over Central and Northern India on Indian Economy is well judged by the Indian Government now. Delay in Monsoon Rains causes havoc with Agriculture and Water Resources in India. For the past decade,India has been having good SW Monsoon, leading to bumper crops. This year the SW Monsoon over India has failed to deliver in Central and North India, so far. A large part of Indian Agriculture is still dependent on Monsoon Rains. 25 % of Indian GDP still comes from Agriculture.
We had predicted that BSE SENSEX would be bearish in July'02 and that the BSE SENSEX would find support at 3150 level. The BSE SENSEX breached this important level and the next support level of 3050. It even broke the next major support level of 2950. The major reasons attributed to this bearish tone could be - SW Monsoon Delay, Weakness in US Markets and Global Markets. 
We feel that BSE SENSEX could be in for a brief 'technical' rally but would be range bound in August'02.
For August'02 :
R1 3050, R2 3150 and R3 3300.
S1 2950 S2 2850.   
We feel that BSE SENSEX is nearing its bottom and the following additional Shares can be bought keeping in view the time frames specified against the same as below :
Long Term Investments ( next 12 to 15 months ) :
1. "TATA STEEL" also called TISCO in the Stock Markets. We fancy this integrated Steel Producer at around Rs. 120+. Target price Rs. 180 to 240+.
2. "LARSEN and TOUBRO" also called L & T. Instead of recommending  stand alone cement companies in India i.e. ACC or GUJRAT AMBUJA, we fancy Engineering and Cement Giant - L & T at around Rs. 160+ as a better bet for long-term investors. We feel that India has a great geographical advantage in this region for supplies of Heavy Engineering Equipment. There is no better company than 'L & T' in India in the field of Heavy Engineering Equipment. Global Engineering Companies based in USA, Japan and EC can 'sub-contract' - Heavy Engineering Equipment Supplies to L & T in India. This is a world class Engineering Company in India and can reap rich dividends in South Asia by undertaking diverse Turnkey Engineering Projects. Target price Rs. 240 to 320+.
3. INFOSYS - Indian Software Giant. 'INFY' is the best managed Indian Software Company. We highly appreciate their professional and transparent management style. It is really a jewel in the 'Indian Investment Crown'. Due respect to this great company - we feel that the right price to enter this Stock at BSE or NSE is around
Rs. 2850+. It is currently trading at around Rs. 3100. We feel that the further weakness in NASDAQ in US Markets in August'02 will lead to a fall in price of 'INFY' listed at NASDAQ. As a consequence the prices would fall in the Indian Stock Markets. NASDAQ Composite Index looks further bearish in the near term. We feel we can buy INFOSYS Stock at BSE or NSE at around Rs. 2850+ in the near term. Target price Rs. 4000+.
4. INDIAN PHARMA STOCKS. We feel that the exports of Indian Generics is still a 'Good Story' in tandem with a huge domestic market. We fancy REDDYS LABS at around Rs. 830+ and RANBAXY LABS at around Rs 600+ (Ex-Bonus Price). Target price Rs. 1500 and 900 respectively.
5. FMCG Sector. In this sector dominated by LEVER in India, we fancy and recommend 'HENKEL SPIC INDIA'. This Indian Arm of the German FMCG Major HENKEL Gmbh. is on a growth path. We recommend purchase at around Rs. 25+. Target price Rs. 80+.
6. LIQUOR and SPIRITS Sector. We strongly recommend an Indian Liquor Major - 'McDowell & Co.' The recommended purchase price is around Rs. 45+. Target price Rs. 150+.
Medium Term Investment (next six to eight months) :
We strongly recommend an Indian Pesticides Major - 'United Phosphorus Ltd.' We recommend buying at Rs. 115+. Target
Rs. 180 to Rs. 200+.
Our old favourites are holding their ground in the bearish markets. BRAVO ! We still stick to our predictions on NALCO, ONGC and HPCL as mentioned earlier. Investors who missed the bus can still enter afresh in all these three stocks at market prices when the BSE SENSEX bottoms at around 2900 levels. These are Multi-Baggers for the year 2002-03, like IBP was in 2001 !
We are preparing a detailed note on ONGC and will present as a 'Special Update' on 15th August'02. There is a lot happening in this PSU Oil and Natural Gas Giant, which itself could be a Disinvestment Candidate this fiscal alongwith IOC and GAIL.
JULY 2002

BSE SENSEX closed on 1st July'02 at a level of 3289 up 3.9% from the closing of 3rd June'02 at 3161. The BSE SENSEX was range bound for the month of June. The intra month high and low were 3378 and 3176. BSE SENSEX breached the 200 DMA level of 3290. It could not go past the major resistance level of 3400.
We were correct in our prediction that India will attack terrorist training camps in PoK. As per the Bush Administration - India would have attacked PoK around 15th June'02. This was admitted by the American Ambassador to India a couple of days back. The Indian attack was stopped by American intervention. President Bush rushed his envoys to Pakistan and got a commitment from President Musharaff that he will put a permanent end to cross border infiltration of militants into the Indian Territory. Ground level activity needs to be seen now - Can President Musharaff deliver his promise or there are some elements within ISI in Pakistan who are not in control of the Military Dictator ? Will this cross border infiltration be stopped by Pakistan ? We have very serious doubts on the same.
We are doubtful that all is well in Pakistan and that President Musharaff can deliver what he has committed to the Bush Administration. It is our understanding that anytime situation can get out of hands in Pakistan and President Musharaff could be thrown out of power. There could be a radical Muslim Cleric who could head Pakistan with his hands on the 'Nuclear Button'. The American Administration does not want this to happen at any cost. We feel that the months ahead are turbulent in this region and one should stay away from the Indian Stock Markets. We repeat - we expect turbulent times ahead in this Sub-Continent. For this reason, we are bearish for the Indian Stock Markets for the month of July'02.
We had predicted a few months back that Indian Finance Minister would lose his job. He lost his job as the Finance Minister on 1st July'02 and was made External Affairs Minister. Following are primary issues which the former Finance Minister could not attend to and was relieved of his responsibilities by the Indian Prime Minister :
a) Fiscal Deficit could not be contained. The shortfall in the revenues was covered by raising prices of LPG and Kerosene. Also, Income Tax for salaried middle class was raised. These measures are not  popular with masses. Rapid Economic Growth is the best solution to contain Fiscal Deficit. This is the famous "Chinese Principle". The Finance Minister could not ensure robust economic growth inspite of liberalization of the economy in the past 30 months since he took over the reins of the Indian Economy. Banking, Telecom and Insurance Sector Reforms were implemented by the Minister but the economy is still sluggish with flattish GDP Growth. No concrete steps were taken to spur growth in the sluggish Indian economy.
b) UTI continues to have its share of troubles. Since 1964, UTI has never skipped dividend on its flagship scheme - "US 64". UTI did not declare dividend as of 30th June'02 on the "US 64" Scheme. It skipped the dividend on its flagship scheme for the first time. India's largest mutual needs huge funds to stay solvent. In order to stay afloat UTI is borrowing Rs. 15 Billion ( US $ 300 Million) from Indian Public Sector Banks. UTI Fiasco could not be contained by the Minister. The Indian Government may bail out UTI in the near future by injecting fresh capital. We feel the Government will have no other short term option. This is a big negative for the Stock Markets.
c) Rollback of subsidies on LPG, Kerosene and Urea. One should not squarely blame the Finance Minister for these rollbacks. This is on account of political compulsions of a running a coalition Federal (Central) Government in India. The irritant was inconsistency in the implementation of policies regarding adhoc rollbacks on the prices of the above sensitive items.      
Indian Stock Market pundits predict a bull rally in the Indian Stock Markets in the near future. The sectors which are attractive as per their views are Cement, Steel and MNC Pharma. Due respect to these established pundits - we feel the time is not right to enter the Indian Stock Markets.
We fancy Steel Sector but would like to enter this sector when the BSE SENSEX is around 3150 or lower. The stock has been identified by us - TATA STEEL, which is currently quoting at around Rs. 140 per Rs. 10 paid up Share.
The BSE SENSEX is currently close to its 200 DMA of 3290. We feel that BSE SENSEX will test the important support level of 3150 in July'02. This is an important support level and we hope this level is not  breached. If this level is breached, then we will see a sharp fall to 3050-3070 levels. There is a major support at 3050-3070 levels.
On the resistance side, BSE SENSEX will face a major resistance at 3400 levels. This level is no where in sight as per our predictions.        
Let us keep our fingers crossed and pray that all is well in Pakistan in the near future. The situation in Pakistan is precarious both on economic and political front.

JUNE 2002

The BSE SENSEX was range bound in the month of May'02. BSE SENSEX closed at 3126 on 31.5.2002, down 7.5 % from the 3rd May'02 closing of 3381. The intra-month high and low for BSE SENSEX for May'02 were 3478 and 3098 respectively. The undertone was bearish after mid May'02 due to the uncertainty of a Indo- Pak war. 
We predict that India will soon attack the terrorist training camps in Pakistan Occupied Kashmir (PoK). Hence we advise all the investors to completely exit from the Stock Market as we do not know what will be Pakistan's reply to such an attack. Pakistani President is threatening India that they will use  Nuke Weapons, in case they are cornered. America's long term ally - Pakistan, is not able to contain  infiltration across the Indo-Pak border and these terrorists create mayhem in the Kashmir valley.
How long can Indian Government wait ? Thousand of innocent lives have been lost since 1990. These Pak trained terrorists are Pakistani Amy Regulars and foreign mercenaries who cross the Indo-Pak border in the Jammu & Kashmir State to kill people. Even the American Administration admits now that Pakistan has not been able to stop cross-border infiltration as promised in Jan'2002.
American Govt. has recently issued instructions that their citizens should not travel to India. There are plans to evacute the American Staff from India, who are working at the Embassy and various Consul General Offices in India.  .
Our recommended Shares have had a mixed run, as follows :
- NALCO closed on 31.5.2002 at Rs.102. Up 12 % from close of  Rs. 91 as on 3.5.2002.
- ONGC closed on 31.5.2003 at Rs.320. Same price as on 3.5.2002.
- HPCL closed on 31.5.2002 at Rs. 259 down 8.8 % from the close
of Rs. 284 as on 3.5.2002.
We recommend selling all your Stock holdings in the Indian Stock Markets. As per us the Indo-Pak war is imminent. Markets will crash if the war breaks out. We do not know the level at which Stock Markets will bottom out. BSE SENSEX has broken the 200 DMA of 3290 convincingly and the undertone looks bearish.
We will re-enter the Stock Market once the war clouds have receded. 
MAY 2002
BSE SENSEX was range bound for the month of April 2002. The intra month high and low were 3538 and 3300 respectively. BSE SENSEX closed on 3rd May 2002 i.e. end of weekly T+5 settlement on BSE at 3538 - up marginally at 1 % from the close of 3500 level on 1st April 2002.
BSE SENSEX breached the important support at 3400 level in April'02 and tested the 200 DMA level of 3300. This 200 DMA was a major support. BSE SENSEX was not able to go past the important resistance of 3600 level.
We feel that for May 2002 there are again no 'Bull Market Triggers" in sight. Individual PSU Stocks and some select Stocks viz Scooters and Motorcycle Company's etc. will be "Bull Phase". The PHARMA Sector has shown a reversal of investment pattern. The investments have shifted from Domestic Pharma Majors viz. DR. REDDY'S LAB, RANBAXY, CIPLA etc. to the MNC Pharma Stocks in April'02 - GLAXO, PARKE DAVIS, AVENTIS etc. We are studying these MNC Pharma and Crop Sciences Stocks. There seems to be some promise. We will post our comments in the due course of time.
The BSE SENSEX will again be range bound in May'02 between 3400 and 3600 levels. The levels to watch in May'02 are as follows :
Support : 3400 and then the 200 DMA at 3290.
If BSE SENSEX breaches the 200 DMA level, as above, then expect a sharp fall to 3150 level. A good level to buy select PSU Stocks.
Resistance : 3600 and the 3800.
We are not very bullish for the BSE SENSEX in the medium term. The Macro Level indicators for the Indian Economy are not very bright as yet. Federal Fiscal Deficit is still a problem. The Indian Govt.'s Disinvestment Process is a key for the markets to be bullish in the short term and PSU Stocks will be outperformers. The BSE SENSEX may be rangebound as all the Disinvestment Candidates are not a part of the BSE SENSEX 30 Share Index.
The Disinvestment Minister is doing a great job. Substantial part of Govt. Equity in Stocks like NALCO, BPCL, HPCL, SCI, CONCOR, EIL etc. will be sold to FIs, FIIs and Strategic Partners between June'02 to September'02.. The Disinvestment Minister has  announced an ambitious target of generating US $ 4.5 Billion by the end of December'02, via the Disinvestment route. This will be a commendable job and will substantially help the Federal Fiscal Deficit.
However there are some causes of concern, as per our understanding of the Indian Markets, as below :
- The Finance Minister rolled back US $ 225 Million by giving Tax Breaks for the middle classes and small investors, as the Budget was perceived to be harsh to these sectors. Compulsion of Coalition Politics. But the Finance Minister did not give in to any further demands of the political parties which support the BJP led Govt. at the Centre. The Subsidy on the Fertilizers was not rolled back, Dividend Tax at the hands of the recipient was unchanged and a host of other demands were rejected by the Hon. Minister.
We feel the Finance Minister is doing a good job as he knows that the economy is in recession and he has to stem the Fiscal Deficit. He knows he has to pump-prime growth in the economy. He is not even popular even amongst his BJP colleagues, let alone other 20 odd political parties who form the National Democratic Alliance (NDA) which is running the Govt. in Delhi. We predict that the Finance Minister will lose his job soon. He may be replaced by a soft politician who will not take tough steps and let the Macro Level indicators down the negative path. Market may look up temporarily but long term effects will not be positive for the economy. This will discourage FII investment into India.
- The Governor of the Indian Central Bank - Reserve Bank of India cut the CRR for the Banks by 0.5 % to inject liquidity in the market. He admitted that the credit off-take is low from the Banks.This is a indicator that economy is still in recession as supply of funds exceeds demand from the companies and other borrowers. The Governor still predicts a GDP Growth of 6.5 % for the current fiscal i.e April'02 to March'03. We have our doubts over this figure.
- UTI, India's largest Mutual Fund still has its share of problems as we have been mentioning for the past few months. UTI admitted that there will be shortfall of approx. US $ 700 Million for the 13 MIPs which are due to mature between April'02 to April'05. Add to this the assured dividends which UTI has to pay on these MIPs maturing by April'05. Over the next three years UTI admits that there will be an "Asset to Liability" mismatch to the tune of  whopping US $ 2.2 Billion.
This is a shocking figure. The only way UTI can stay afloat till April'05 is that it borrows heavily from the Banks or Domestic FIs against the Securities it holds for paying dividends and then finally redeeming the MIPs by April'05. The current Finance Minister has put his foot down and will no longer inject public money to bail out UTI. He has conveyed to UTI that it has to manage its own affairs. We really appreciate the Minister's stance on the politically sensitive UTI issue.
- The "Labour Reforms" are not at all moving. The coalition partners
of the NDA Government are not allowing these reforms to move ahead. There is a sort of an 'impasse' on this issue. The MNC are keenly watching this development. The "Right to Fire Policy" is the need of the hour in today's dynamic business environment. Unfortunately there is no positive development on these 'Labour Reforms' in India. This will lead to decreased FDI into India. The capital flows to the most preferred destinations.
We again believe that money can be made in the Indian Stock Markets in the next few months in PSU Shares. The investors have to patient. We were early birds who spotted the "PSU Opportunity" about 18 months back. Those who missed the bus can enter again but when the BSE SENSEX reacts to 3290 to 3300 levels or when the individual PSU Stocks react.
We are still bullish on our old favourites and advise investors to be patient. Returns will be huge as in the case of IBP.
- ONGC. It closed on 3rd May'02 at Rs. 346. Marginally up from
Rs. 328 as on 1st April'02. The Chairman of ONGC announced that ONGC will be a Debt Free Company by June'02. It will repay the World Bank and Asian Development Bank a total of US $ 500 Million by end June'02. This will enhance the EPS of the ONGC Stock. There is hectic lobbing going on by ONGC's Management with the Ministry of Petroleum and Natural Gas regarding the "Cess" to be rolled back to Pre-Budget levels of Rs. 900 per tonne of Crude. In the Budget the "Cess" was doubled to Rs. 1800 per tonne of Crude Oil. If this rollback is cleared the profitability will soar for this Stock. Investors are advised to hold on to this Stock till further advise. It will be "Multi Bagger" for this year.
-  NALCO. It closed on 3rd May'02 at Rs. 91. Up by 9.6 % from
Rs. 83 as on 1st April'02. NALCO is our old time favourite and will be another Multi Bagger for the year 2002. We stick to our indicated price level of Rs. 200+ by Sept/Oct'02.
- HPCL. It closed on 3rd May'02 at Rs. 284. Down 10.7 % from
Rs. 318 as on 1st April'02. The reason for the drop in this share and also for BPCL was that the Ministry of Petroleum and Natural Gas has postponed the Disinvestment by six weeks. The issue of "Reserve Price for HPCL and BPCL" and some other issues need to be sorted out between the Ministry of Petroleum and Natural Gas and the Ministry of Disinvestment. Investors are advised to stay invested in HPCL.
We advise investors who bought other PSU Shares like EIL, BEL, BEML, BHEL, SCI, CONCOR etc. to book partial profits as these Shares have flared up substantially and are due for a major correction. Some of them like BEL and BEML are not even Disinvestment Candidates. They have appreciated because of the "PSU Stocks P/E Ratio Re-Evaluation" phenomenon in the Indian Stock Markets after successful disinvestment of IBP and VSNL in Feb'02. 
APRIL 2002
The APM for Gasoline, Diesel, Crude Oil and Natural Gas came into effect on 1.4.2002, as promised by the Indian Government. The market forces will determine the prices of these products from today. The Indian Petroleum Ministry will put a regulatory body in place shortly to keep a watch on the prices of the above four de-regulated products. The proposed regulatory body may interfere only when there is an emergency. India imports 70 % of it's Crude Oil requirements and hence the need of this regulatory body.
This a "Golden Day" in the history of India. For the first time the prices of these products as above have been de-regulated. Congratulations to the Indian Petroleum Minister !
The Indian Government will provide limited subsidies for Kerosene and LPG at a flat rate of Rs. 3.00 per liter and Rs. 90 per 15 Kgs. Cylinder respectively. This is a political compulsion of running a Coalition Government in India. These subsidies will be abolished by 2005. 
The Indian Commerce Minister announced the Export-Import Policy for 2002-2007 as per schedule on 31.3.2002 which comes into effect from 1.4.2002 for the next five years. The detailed EXIM Policy is available from the Ministry of Commerce or other outlets. We also feel that the EXIM Policy is reforms oriented and intends to give a boost to the sagging Indian Exports which are currently only US $ 46 Billion. Targeted Indian Exports by 2007 - US $ 80 Billion per annum by 2007. We find this figure very ambitious as India needs to develop Infrastructure in a big way and cut Red Tape to attract FDI. The Indian Government needs to invest huge amounts of money in Warehouses, Cold-Chain for Processed Foods, Roads, Mechanized Ports, International Standard Highways etc. to give a fillip to Exports. We feel that FDI is the need of the hour in Export Sector for various industries including Agriculture to achieve these ambitious export targets. The export target is challenging but not impossible if the above bottlenecks are addressed in time by the Indian Government.      
Highlights of the EXIM Policy for 2002-2007 as below :
1. India abolished export curbs on virtually all items and announced steps to boost agricultural exports to raise its share of global trade to one percent from present 0.67 percent by 2007. As per the Indian Commerce Minister, focus on agricultural exports would lead to a rise in rural incomes and spur economic growth. We agree with the Hon. Minister. 
 Quantitative restrictions on exports have been removed under the new EXIM Policy as above barring a few items such as Iron Ore.
2. Reducing red tape by ending the need to register export consignments before dispatch and scrapping packaging requirements for wheat, wheat products, coarse grains, groundnut oil and butter exports.
3. Government will provide transport assistance for export of fresh and processed fruit products, vegetables, floriculture, poultry and diary products, wheat and rice products.
4. Foreign branches of Indian Banks will be allowed to be set up in "Special Economic Zones (SEZs)" to provide credit to exporters at international rates. Indian credit rates are much higher than the international credit rates.
5. Income Tax concessions to exporters in SEZs to be announced by the Finance Minister shortly.
6. Exporters in SEZs have been allowed to make overseas investments freely and hedge commodities.
7. Import duty on uncut diamonds abolished with the aim of making India a major international diamond-cutting center. India's largest export item is "Gems and Jewellery" in Dollar terms.
8. 50 Million Rupees have been allocated to promote handicrafts sector exports for this fiscal i.e. 1.4.2002 to 31.3.2003.
9. Exporters have been allowed to repatriate earnings within 360 days against current 180 days to increase global competitiveness.
10. India to continue Latin American Export Promotion Scheme for another year and will launch a drive to sell to African Continent.
We feel that the EXIM Policy is a very bold step by the Indian Government as for almost three decades there were restrictions on Exports of Agricultural Commodities and a few other items. India is an Agrarian economy and farm produce is abundant. Indian exporters should export value added Food products to meet the above export targets.
A few more developments need a special mention :
- Telecom Sector Reforms are encouraging. International Long Distance Telephony(ILD) has been thrown open to Indian Private Companies. The monopoly of VSNL in this sector has been abolished w.e.f. 1.4. 2002. Internet Telephony has been allowed from today in India. The Telecom Regulatory Authority of India - TRAI, has announced new slashed rates for International telephone calls from India. TRAI has announced a 30% cut in ILD calls w.e.f today. Also TRAI has announced guidelines for legalizing Internet Telephony.
- The Indian Govt. successfully sold it's controlling stake in
M/s. Hindustan Zinc Ltd. - a Mining and Metals PSU, to an Indian Indian Company, which was the highest bidder. Disinvestment Schedule is on course. Congratulations to the Indian Disinvestment Minister, Govt. of India !
- Now some bad news ! A major cause of worry is India's Debt. As per Mr. Onkar Goswami - Chief Economist, CII, India faces a prospect of a "Debt Trap". Total Indian Debt has been rising 15.4 % per year since 1991-92 and none of the Governments had succeeded in stemming the Debt. The Central Government's public debt has increased to 42.5% of the GDP in 2001-02 from 32.1 %  in 1991-92. The interest payments as a percentage of revenue receipts will swell to 50.5% in 2002-03 from 41.9% in 1991-92. It is evident that with spiraling public debt and ballooning interest burden the situation could be precarious.
BSE SENSEX closed on 1.4.2002 at 3500, down by 4.9% from close of 1.3.2002. The intra month High and Low for BSE SENSEX were 3758 and 3454 respectively. BSE SENSEX did not break the all important level of 3800.
We forecast the BSE SENSEX to be rangebound for the month of April 2002. We do not see a "Bull Run Trigger" even as we are close to the announcement of Q1 2002 results from IT Majors viz INFOSYS, SATYAM, NIIT etc. We expect flattish bottomlines from these Indian IT Majors for Q1 2002.
The levels to watch are as follows for BSE SENSEX :
Support - 3400 and then close to 200 DMA i.e. 3300.
Resistance - 3600 and a major resistance at 3800.
We feel that the BSE SENSEX will find support at 3400 levels in April'02 and will be range bound between 3400 and 3600 levels. We do not recommend investment in any new stocks. Our old favourites are galloping now !
ONGC - Closed on 1.4.2002 at Rs. 328, up 37% since 1.3.2002. We have a target price of this Share between Rs. 500 to 600. We advise some profit booking at Rs. 350 levels.
NALCO - Closed on 1.4.2002 at Rs. 83, up 14% since the same period as above. We stick to our target price for this Share at Rs. 200+ in the next six months. Some profit booking is advised at
Rs. 120 levels.
HPCL- A Disinvestment Candidate. It closed today at Rs. 318. We recommend investors to hold this Stock for the next six months. Target price - Rs. 450++.
TELCO - Investors are advised to exit from this Stock.
MARCH 2002
The Union Finance Budget for the next fiscal year 1.4.2002 to 31.3.2003 was announced by the Indian Finance Minister on 28th Feb'02 on schedule. The Budget was more or less Reforms Oriented but Corporate Sector and Individual Investors are not happy with the Budget. The complete details of the Budget are available from the Indian Govt. Publication and also on Ministry of Finance's Web Site.
We just would like to highlight the major issues of the Finance Budget very briefly as below :
1. Fiscal Deficit continues at unsustainable levels as per the Finance Minister also. The Govt. estimates this Deficit to be 5.7 % of the GDP for the current fiscal which ends on 31.3.2002. The Budget provides for partial measures to curtail this Deficit. All most all the Governments in the world spend more and earn less, barring a couple of countries. Indian Govt. is no different. But the problem is that our fiscal deficit is not being managed properly. Indian Planners should follow the Chinese example to curtail this Deficit. Chinese focused on higher economic growth since the Eighties.
2. Indian annual GDP Growth this fiscal is estimated by the Govt. at 5.4 % - much lower than the targeted growth of 6.5 % . Global recession and 911 Event also have a bearing on this figure.
3. Dividend Income from Stocks and Equity-Oriented Mutual Funds will be taxed now at the hands of the recipient. This is a major negative for the Individual investors. Earlier there was no Income Tax on Dividend Incomes.
4. Partial Financial Sector Reforms have been announced to help the sick PSU and State level Cooperative Banks. Administered Interest rates will now be pegged to average yield of Govt. Securities. This is a direction towards softening of interest rates in the times to come. The first example is that the Interest Rates on Small Saving Income Schemes has now been cut by 0.5 % in the Budget. This is not a good news for senior citizens who live on interest income.
The Indian Rupee has been made more "Capital Account Convertible". The Indian Currency today is totally convertible on 'Current Account Transactions' but is still not fully "Afloat" like the THAI BHAT etc. The Budget is moving closer to the "Full Capital Account Convertibility" of the Indian Rupee. Some major policy initiatives in this direction are -  Ceiling on FII Portfolio Investments have been removed, Curbs on Indian Companies' overseas investment have been eased, Domestic Mutual Funds can now invest abroad etc. 
5. Direct Taxes - Income Tax Surcharge has been raised by 5 %. All Corporates will have their bottom lines effected. More Services especially Banking and Financial services will now be covered under the 5 % Service Charge Net.
6. An Increase in Infrastructural Spending is envisaged in the Budget - A hike of 20 % in the total outlay for the Infrastructure Sector has been recommended. A very positive move.
7. Administered Price Mechanism (APM) will be dismantled for all Petroleum Products except LPG and Kerosene w.e.f 1st April'02. As a first step prices of Gasoline and Diesel were slashed by the Govt. w.e.f. 28th Feb'02 by Rs. 1.00 and Rs. 0.50 respectively. There is a blow for ONGC - Country's largest producer of Crude Oil and Gas. The APM does not spare ONGC for the time being. The monthly "Cess" has been doubled.
Subsidies have been cut on LPG and Kerosene with immediate effect. A 15 Kgs. LPG (Cooking Gas) Cylinder will now cost additional Rs. 40 per cylinder. In India still 97 % of Cooking Gas is supplied in 15 Kgs. LPG Cylinders. Only a few cities in India have LPG supplied by pipelines to the domestic households. Subsidy has also been cut on Kerosene (poor man's fuel). It will now cost additional Rs. 1.50 per litre. These are very bold steps taken by the Finance Minister. In a time frame of a few years there will be no subsidy on LPG and Kerosene. Kudos to the Finance Minister !
Post Dismantling of APM for Petroleum Products, the Indian Govt. will issue Oil Bonds to the PSU Refining Companies like IOC, HPCL, BPCL etc. Govt. has no cash which it owes these Oil Companies. Hence it is issuing Oil Bonds. Some relief for these PSU Oil Majors some of which are Disinvestment Candidates next fiscal. 
This hike in LPG and Kerosene prices has the Socialists and Communists in the Parliament and Indian Polity fuming. They are demanding immediate roll-back of the hikes in LPG and Kerosene prices. Finance Minister has refused any roll-back.
8. The Budget has focused on Agricultural Growth. India is an Agrarian Economy. Major Agricultural Sector Reforms have been announced to be implemented in phases. Major one is that - Restriction Orders inhibiting Storage, Selling and Movement of Food and Agricultural Products are being removed. This will lead to a Countrywide Integrated Market for Food and Agricultural Products.
There is one blow to the Indian Farmers. Subsidy on Fertilizers - Urea and DAP is being cut. The Fertilizers will cost more. But this is a good step towards Market Economy. Farmers are 'up in arms'.
9. Labour Sector Reforms have not been announced due to political compulsions. Some effort is although underway regarding laying off workforce without Govt.'s approval in a Private Company or Corporate Body having less than 1000 workers. Even this is finding difficulties in the Parliament.
Although the Finance Minister has announced cutting 12 000 jobs in the Central Govt. in the next fiscal. This is again a bold move.
10. There is nothing in the Budget which will 'Stimulate Private Investment'. This is a negative issue in the Budget.
11. Custom Duties have been rationalized. Import Duty on Foreign Liquor and Cigars has been marginally slashed. Good for Tipplers !
Hotel Industry has been given some Tax Breaks. Some Industries have been De-Reserved i.e. Knitwear, Auto Parts etc. Earlier these industries were Reserved for Small Scale Sector and given protection. Now large industrial houses can invest in these industries.     
12. Excise Duties have been cut on Shampoos and Cosmetics. The Finance Minister has  taken care of the weaker sex also !
The Union Budget runs into hundreds of pages and we have just highlighted some of the major policy changes and issues as above.
The BSE SENSEX closed on 1.3.2002 at 3679 up 10.3 % from closing of 1.2.2002. The BSE SENSEX crossed the important resistance of 3600 level during Feb'02. The intra month low and high for BSE SENSEX for Feb'02 were 3290 and 3757. BSE SENSEX was bullish as predicted but went beyond our predicted levels of 3600 on account of Indian Government's very successful Disinvestment of two Big Ticket Companies - IBP and VSNL.
The Markets were very buoyant in Feb'02, after the successful Disinvestment of IBP and Telecom PSU Major - VSNL in the first week of Feb'02. PSU Blue Chips in diverse sectors such as  - Electronics, Defence Automobiles, Heavy Engineering, Oil Refiners and Retailers, Shipping etc. touched new 52 week highs. Some of these Blue Chips are not Disinvestment Candidates viz. ONGC, BEL etc. The sentiment was bullish and also the P/E Ratios of these PSUs are very low as compared to their counterparts in the Private Sector.
We predict that the BSE SENSEX would be range bound but with a bullish undertone again for March'02. There is a minor resistance at 3757 level and a major resistance at 3800 level. We think for the month of March'02 this level of 3800 may not be breached. This level may be breached in April'02.
There is a correction due in BSE SENSEX any time in March'02. There is an important support at 3538 level. If this support of 3538 is convincingly breached the next support is too low which is close to  the 200 DMA level of 3290 to 3300. This will cause some tremors in the Indian Stock Markets.
We feel that BSE SENSEX could test 3538 level and then be range bound between 3400 and 3600 levels Testing the 200 DMA level as above looks a bit improbable but in Stock Market Analysis nothing can be ruled out. If this happens it would be very good buying opportunity for buying some new Stocks as below :
a) We recommend a PSU Oil Refiner cum Retailer which is a Disinvestment Candidate for the next fiscal - HPCL. Its 52 week High and Low are Rs. 302 and Rs. 94. It closed on 1.3.2002 at Rs. 294. Recommend buying at around Rs. 280 with a stop loss of Rs. 260. Target price is Rs. 450 close to its Disinvestment in a few months.
This is a medium term investment.
b) We recommend India's largest manufacturer of Commercial Vehicles - TELCO. Its 52 week High and Low are Rs.154 and Rs.58.
It closed on 1.3.2002 at Rs. 144. Recommend buying at Rs. Rs. 135 with a stop loss of Rs. 120. Target price Rs. 180. Short term investment.
Our old favourites have been hit by the Union Budget but still are our favourites for long term investment -till Sept/Oct'2002.
- NALCO closed on 1.3.2002 at Rs. 73, up 26% from Rs. 54. It touched a new 52 week high of Rs. 85 in Feb'02. The Budget has dealt a minor blow to NALCO. The import duty on Aluminium Ingots has been cut by 10 %. NALCO is the country's largest producer of primary Aluminium Ingots and also country's largest exporter of Primary Aluminium. The prices of Aluminium Ingots may have to reduced by NALCO to keep pace with imported Aluminium Ingots. Profitability could be effected. The positive side to NALCO is that it has set up in-house down stream value added Aluminium Products Manufacturing units. NALCO will soon start producing Aluminium Rods, Foils and Alloy Wheels etc. Plus it is a strong Disinvestment Candidate. We predict that the French Aluminium Giant - PECHINEY would aggressively Bid for Govt.'s 26 % Equity Stake in NALCO's Disinvesment Process. We stick to our prediction that NALCO is a Rs. 200 ++ Share.
- ONGC closed on 1.3.2002 at  Rs. 241 up 56 % from Rs. 154. It touched a new 52 week high of Rs. 286 in Feb'02. ONGC is hit hard by the APM Dismantling w.e.f. 1.4.2002. It would sell its Crude and Gas at Market Prices but it will have to pay a "Cess of approx. US $ 41 Million ( Rs. 2.0 Billion) per month to the Indian Govt. if the price of Crude falls below US $ 20.00 per Barrel. If the price is above this level then the "Cess" is to be paid as per some formula entailed in the Budget. This is not free market dynamics. Profitability will be lower. Keeping in view of this doubling of "Cess", we are reducing the target price of ONGC to Rs. 600 +.
Anyway we are still bullish on ONGC as it has been allowed to Bid for PSU Oil Refiners like HPCL, BPCL which are Disinvestment Candidates. If ONGC is successful, it will be a totally vertically integrated Oil Company. It produces about 30 Million Tonnes of Crude per year. It will refine about 40 % of it's own Crude if it bags HPCL in the Disinvestment process. On top of it - it will retail its Gasoline, Diesel and Lube Oils through HPCL's 4000 retail outlets in India. The valuation of ONGC will grow by leaps and bounds. Today the P/E is just 9. We see a P/E of at least 20. The discounted EPS on account of doubling of "Cess" is say around 25 - The Share price should be Rs. 500. Add to this the bagging of HPCL !
The tensions on the Indo-Pak border are reducing as America is  physically present in the Region. America will see to it that Pakistan does not attack India or vice a versa. But one thing is for sure - America cannot afford to let slip "Pakistani Nuclear Arsenal" into "Jihadi Hands". Even if means that Americans have to attack and wipe off Pakistani Nuclear Assets and Arsenal completely. The situation in Pakistan can quickly change because of its internal problems. This could impact Stock Markets in India as any major event in Pakistan like the above will have it's fallout on India.
The Indian Govt. sold 33.58 % Equity in IBP to the highest bidder in the Disinvestment or Privatization Process to M/s. IOC at a whopping price of Rs. 1551.25 per Share on 5th Feb'02. The second highest bidder was MNC - M/s. Royal Dutch Shell at a price which is around 50 % of IOC's price. IBP's price today was Rs. 900+ on BSE as predicted earlier above.
As per SEBI Guidelines for "Takeover Code"  - IOC will make an 'Open Offer' to the Public for additional 20 % Equity in the next two months at a price of Rs. 1551.25 per share to get the 'Management Control' of IBP from the Indian Govt.
In view of this announcement on 5th Feb'02, we anticipate that the price of IBP will rise to Rs. 1500 or so on BSE in the next couple of months. Investors are advised accordingly not to sell all their IBP holding at Rs. 900, as suggested earlier. Investors are advised to sell majority(75%) of their current IBP holding at Rs. 900 and balance
(25 %) between Rs. 1200 to Rs.1500 at their discretion.
Majority of the PSU Stocks were very buoyant today as two big ticket Disinvestments by the Indian Govt. on 5th Feb'02 were highly successful - IBP and VSNL. Investors are advised to hold on to their NALCO and ONGC holdings till further advise.

The BSE SENSEX closed on 1st Feb'2002 at 3334, up 2.7% from the 1st Jan'2002 closing of 3246. The intra-month High and Low for Jan'02 were 3466 and 3237 respectively. BSE SENSEX surged past the important resistance level of 3400 a few times but closed below this level as above on 1st Feb'2002.
We have been focusing our investment strategies around PSU Stocks which are undervalued and/or Disinvestment Candidates for the past few months now. IBP has been one of our favourite Stocks in this sector.
IBP closed today at Rs. 615 at BSE. We recommend investors to sell at least 50 % of their holdings at these levels. Balance 50 % they can sell around Rs. 900 during the month of Feb'2002. IBP's Disinvestment will be done by the Government of India in Feb'2002. We had predicted a price of Rs. 600 to 900 for IBP almost a year back. Time has now come to cash in ones profits in this Stock. We stick to our prediction of Rs. 900 for IBP in the month of Feb'2002. Investors who are holding this Stock should completely exit at around Rs. 900 level.
We feel that BSE SENSEX will again be range bound in Feb'2002 with a bullish undertone due to the forthcoming Union Budget to be announced on 28th Feb'2002. The BSE SENSEX could move past the crucial resistance level of 3450 and may find the next resistance at 3600 level. BSE SENSEX will find a major support at 3150 level. The investment community expects a good Budget from the Indian Government with some tax breaks and announcement of some relief measures for the Farm Sector. In India the financial year is from 1st April to 31st March. We advise investors to sell in the Pre-Budget Rally, if any and book profits in the frontline TMT and PHARMA Stocks.
We continue to have some reservations on the Indian Economy contrary to the views of the leading economists. Some 'Macro-Level' parameters are still disturbing. Forthcoming Union Budget can have some harsh measures.
Indian Federal Fiscal Deficit is still a cause of worry. Indian Government explains that this is on account of poor revenue collections due to the sluggish Indian Economy. We feel that the Indian Government is not efficient in Fiscal Management. It has to better its act and forget about political compulsions due to a Coalition Government in Delhi.
Subsidies in Farm Sector and Petroleum Sector should be substantially scaled down soon. We understand that Farm Sector subsidies cannot be completely abolished. But Petroleum Sector subsidies can be completely abolished and let the free market forces rule the Petroleum Sector. LPG and Kerosene are still heavily subsidized.
Annual GDP Growth may around 5% for the current fiscal year, down 1.5 % as compared to earlier estimates during the start of current fiscal year 2001-02.
FDI figures are still flat for India. China's FDI in calendar year 2001 was around US $ 20 Billion, whereas India's FDI was only around US $ 2.7 Billion. Indian FDI was US $ 2.3 Billion for the year 2000 also. China's FDI in the year 2000 was again close to US $ 20 Billion. The Indian Government has to cut the 'Red Tape' and change the mind-set of sloppy and corrupt Bureaucracy. The largest Indian private FDI in India to the tune of US $ 1.0 Billion from US Energy Giant - ENRON to set up Dabhol Power Company(DPC) in Western India has failed. This was prior to ENRON filing for Bankruptcy in USA. Failure of DPC will have a negative impact of FDI inflows  in India. Apart from ENRON which has a majority Stake in DPC - M/s. GE and M/s. BECHTEL of USA have minority equity stake in DPC. This company - DPC is now up for sale in India and investors might not even get 50 % of their original equity investments in this Power Company in India. A very sorry state of affairs as regards ENRON promoted DPC is concerned. 
India's largest Mutual Fund - UTI has still its share of problems. This fiscal year 2002-03, UTI faces redemption of approx. Rs. 58 Billion (US $ 1.21 Billion) on account of ten close ended schemes which are set to mature this year. These are seven schemes under
"MIP 97", "MEP 97" and two schemes under Institutional Investor's category under "IISFUS 97". Investors are losing faith in UTI because of "US 64" fiasco. The Indian Government came out with actual amount which it arranged for UTI to bail out the flagship
"US 64" Scheme. This figure is Rs. 69 Billion (US $ 1.44 Billion). This amount is much more than the earlier estimates of Rs. 50 Billion ( US $ 1.04 Billion ) as indicated in the Jan'02 forecast. UTI is collecting less fresh funds and has large redemptions as above. It is on a very slippery ground. UTI must stand on its own feet without any Government assistance. It must hire 'Market Savvy Fund Managers' and must weed out corruption from its ranks.      
FIIs this year in Jan'02 have only poured in Rs. 4.23 Billion (US $ 88.0 Million ) into the Indian Equity Markets. This is as compared to Rs. 40.5 Billion (US $ 844 Million) invested in Jan'01 by FIIs in the Indian Equity Markets. Roughly one-tenth investment by the FIIs in India in Jan'02 as compared to Jan'01. It seems, India is losing its sheen as a preferred destination for foreign funds. FIIs are watching South Korea very closely. India might lose to this destination as far as FIIs allocation is concerned. The prime reason attributed by the FIIs is that the Indian Software Sector does not look too bright in the near future.
The Indo - Pak stand-off continues as India is sticking to its tough stand regards Pakistan sponsored terrorism on Indian soil in Jammu and Kashmir (J & K) State. In Jan'02, Tony Blair and Collin Powell rushed to India to cool off Indian tempers. India was preparing to attack terrorist training camps in 'POK - Pakistan Occupied Kashmir'  and put a stop to cross-border terrorism once for all. These leaders from UK and USA prevented an offensive from India. Pakistan is continuing Shelling in some border villages in India and under this fire terrorists try to sneak into India to create mayhem. But with the Indian Amy now deployed all along the
Indo-Pak Border the infiltration of terrorists is not that easy. It is being limited due to the presence of Indian troops. The situation along the Border also has an impact on the Stock Markets. If the Stocks Markets have to be bullish, Indo-Pak relations should be normalized soon.
The Global Markets also have an impact on the BSE. Japan's "N225" NIKKEI Index closed on 1.2.2002 at 9791 its lowest since 1985. This is not a good news for Asian Stock Markets. US Markets are also range bound. As per analysts recovery is a few quarters away in the US Economy. We must watch NASDAQ at 1865 level. Below this level we will enter a mid-term bear phase in US Markets.
Keeping all the above in view we recommend investors to put their funds into our old favourite PSU Stocks :
- NALCO. This Aluminium PSU Major closed on 1.2.2002 at Rs. 58. This will be another Multi-Bagger like IBP, which we identified at Rs. 120. We strongly recommend this Stock as it is a undervalued PSU Stock  and is a Disinvestment Candidate.
- ONGC. This is Crude Oil and Natural Gas PSU is grossly undervalued. This is not a Disinvestment Candidate as of now but will benefit from the dismantling of 'APM - Administered Price Mechanism' for Crude Oil and Natural Gas w.e.f. 1st April'2002. The Indian Ministry of Petroleum and Natural Gas had announced last year that this APM will be dismantled from 1st April'2002. ONGC will be free to sell its output of Crude Oil and Natural Gas at open market prices. Currently it sells these products at Govt.'s Administered Prices which are lower than market prices . Profitability of ONGC will be enhanced in our view. It closed on 1.2.2002 at Rs. 154. This will also be a Multi-Bagger Stock as per our estimates.
Indian Pharma sector looks good but not at these levels. We recommend DR. REDDY's LAB. when the Stock Market reacts. It looks a good investment at  around Rs. 800. Currently it quotes at around Rs. 940. This has the potential to rise to Rs.1200 in six month time frame. Entry should be around Rs. 800 level.

1. BSE SENSEX closed on 28th Dec'01 at 3184, down 3.13 % from End Nov'01 close of 3287. Intra-Month High and Low were 3500 and 3100 respectively. Sharply lower from the high of 3500.
We predict the BSE SENSEX to be range bound, but with a bearish undertone for the month of Jan'2002. It will face minor resistance at 3250 and a major resistance at 3400 levels. On the downside it will find support at 3150 levels. If this level is breached the SENSEX will find its next major support at 2850 levels.
2. UTI continues with negative reports. The NAV announced for a Rs. 10 paid up "US 64" Unit was as low as Rs. 5.81 as on 28.12.2001. UTI will re-deem a maximum of 5000 Units under this Scheme, under a special window to small 'Individual Investors' at prices of Rs.10. To tide over this difference of price between NAV and redemption price, UTI has borrowed huge funds from Public Sector Banks. Indian Finance Ministry came to its rescue and allowed UTI to borrow funds to save it from bankruptcy.
Reliable estimates put this borrowing at Rs. 5000 Crores (US $ 1.04 Billion). This borrowing will be deducted from the Total Value of Assets of UTI's Balance Sheet. UTI manages other Monthly Income Plan (MIP) Schemes. UTI also dabbles in other Financial Instruments in the Market including Debt Instruments and Govt. Securities. "US 64" is UTI's flagship scheme which is sinking and Govt. has decided to bail it out. The question is for how long ?
UTI will face tremendous pressure on payments under the MIP Schemes to the individual investors in the near future. This would have a negative impact on the BSE SENSEX.     
3. We feel that Indo-Pak relations will touch a new low after the deadly terrorist attack on Indian Parliament in Delhi on 13th Dec'01, by Pakistan sponsored Militants. The terrorists failed in their mission to blow up the Indian Parliament in Delhi. Thank God !
We feel that Indian Government will attack Pakistan based terrorist camps in Pak Administered Kashmir in January 2002. This is contrary to what the Defense Analysts and Politicians are saying but we feel that India will this time take a decisive action and reach to the root of Pakistan Sponsored Cross-Border Terrorism in India.
The Pakistan sponsored terrorism is focused especially in the border Indian State of Jammu and Kashmir since 1989. The Pakistan State's Intelligence Agency - ISI is behind the terrorist activities in India since the last decade. ISI is now slowly spreading its tentacles all over India.
We feel that India cannot tolerate this Pakistan State sponsored terrorist activities anymore after the dastardly suicide attack on the seat of Indian Democracy - India Parliament in Delhi on 13th Dec'2001.
If India attacks Pakistan as mentioned above the BSE SENSEX will test its existing 52 week low of 2600 and may go even lower.
Investors are advised to stay away from the Markets for Jan'2002.
In our view sell your majority Stocks and wait for the BSE panic bottom. The Indo-Pak War, if it happens, will not last more than two weeks. Good time to pick up Blue Chip Stocks as mentioned in Dec'01 forecast and other PSU Disinvestment Stocks like NALCO and ONGC.

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 Nov'01.
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 levels.
We recommend the following as purely Trading Stocks in their respective sectors :
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 sick banks.
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.
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.
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