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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
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
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
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
'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
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
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.
AUGUST 16- SPECIAL UPDATE ONGC
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 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
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
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
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.
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.
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.
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
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 %
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.
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
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
- The Indian Govt. successfully sold it's controlling stake
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
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.
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
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.
FEBRUARY 6 SPECIAL REPORT
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
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
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
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
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
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
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
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
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
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 :
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 sick
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
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
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.