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BSE SENSEX closed today i.e. 1st Dec'03 at a bullish level of 5161 up 5.2 % from 31st Oct'03 level of 4907. The intra month high and low for the BSE SENSEX for the month of Nov'03 were 5167 ( three year high ) and 4737 respectively. The BSE SENSEX moved past the 52 week high level of 5150 which also is a major resistance level for the SENSEX. On the flip side it went below the R2 level of 4740 and tested 4737.
BSE SENSEX had a sharp correction in the third week of Nov'03 but the FIIs were again back in the Indian Equity Markets with a bang. The BSE SENSEX again was on the uptrend after this correction.
We predict that BSE SENSEX will be bullish for the month of Dec'03 also and two or three consecutive closings above 5150 levels will propel the BSE SENSEX further into a bull orbit.
The levels to watch for the month of Dec'03 are  
R1 5325 R2 5450
S1 5150 S2 5000 S3 4870
We are not recommending any new shares at these overheated levels of BSE SENSEX. Investors to book profits all levels of BSE SENSEX above 5150 levels.
A brief synopsis of a few our favorite and/or recommended Stocks.
- LARSEN : This engineering giant closed today at Rs. 412. This blue chip tested a new 52 week high of Rs. 429 in Nov'03. Book profits at around Rs 450.
- MRPL : This Refinery Stock now under the ONGC umbrella closed today at Rs. 47. It tested a new 52 week high of Rs. 51 in Nov'03. This is a 'turn around' stock and one of favorites. We are upgrading the price of this Stock from Rs. 80+ to Rs. 200+ within the next 12 months. This is our 'multi bagger' Stock for the year 2004. Watch this Stock soar to Rs. 200+ in the long term. Investors who have long term perspective can enter into this Stock at this level of Rs. 47. We repeat MRPL is our Stock for 2004.
- TISCO : It closed today at Rs. 370. It tested a new 52 week high of Rs. 381 in Nov'03. We are upscaling the price prediction for this Steel Blue Chip from Rs. 400 to Rs 600 in the near future. This Stock is on a roll after it's 2 million CR Mill has started producing EDD Grade CRC for automobile applications. Investors to book partial profits at Rs. 450+ levels.
- ONGC : It closed toady at Rs. 622. We stick to our predictions that this is a Rs. 900 Stock. Book partial profits at Rs. 750+ in the near future.
- NALCO : This PSU Aluminium major closed today at a new 52 week high of Rs. 165. Aluminium at LME breached past the all important level of US $ 1540 pmt. In addition Alumina prices are nearly double than what they were twelve months back. Calcined Alumina in Hong Kong quotes at US $ 360 pmt. China Factor - There is a huge shortfall of both Alumina and Aluminium in China. This is driving the prices of both Alumina and Aluminium Metal upwards. NALCO could test Rs. 250+ in the near future. A good trading buy with a stop loss of Rs. 148.
- TATA MOTORS : It closed today at a new 52 week high of Rs. 426. Book partial profits at Rs. 450+. We are upscaling the price target for this blue chip Auto Stock to Rs. 600+ in the medium term.
- RELIANCE : It closed today at Rs. 491. It tested a new 52 week high of Rs. 504 in Nov'03. We think this Stock is fully priced at Rs. 500+ and hence advise investors to exit from this Stock at Rs. 500+ levels.
GOLD tested US $ 400+ in Hong Kong on 19th Nov'03. We feel GOLD will rise further and that a price of US $ 450+ is already factored in the GOLD Refining Stocks listed on NYSE and LSE. GOLD looks to be a very good hedge in the medium term. We also highly fancy Crude Oil futures. Crude could again test US $ 40 pbbl in the near future.
BSE SENSEX closed today i.e. 31st Oct'03 at a level of 4907. Up 7.8 % from Sept'03 closing level of 4553. As predicted BSE SENSEX was bullish but could not breach the all important level of 5000. The intra month highs and lows for the month of Sept'03 were  4951 and 4552. BSE SENSEX corrected by 350 points after testing 4951 levels. We had predicted that this sharp correction would be between 5000 to 5150 levels.
We expect BSE SENSEX to be bullish for the month of Nov'03 also but again caution investors to stay away from the Stock Markets and not to put fresh funds into Indian Equities. BSE SENSEX could again react sharply after breaching 5000 levels.
The levels to watch in Nov'03 are as below :
R1 5000 R2 5150
S1 4850 S2 4740 S3 4600
We advise investors to stay away from the Indian Equities. This is the time to take profits home.

We just briefly would like to give comments on our favourite and/or recommended stocks ;
- LARSEN : Tested a new 52 weeks high of Rs. 411. It closed today i.e. 31st Oct'03 at Rs. 406. Please book profits between this level and Rs. 450.
- RANBAXY : It closed today at Rs. 984. This is a high dividend yield stock. Hold this in your portfolio for all times but book profits at a level of Rs.1200.
- MRPL : It closed today ar Rs. 37. Long term investors to hold this Stock for a year or so. It is Rs. 80+ stock.
- TISCO : Our favorite Steel Stock is performing well. Q2 2003-04 net profit was 100 % higher than Q2 2002-03. It tested a new 52 week high of Rs. 363. It closed today at Rs. 358. Please book profits at Rs. 400 levels.
 ONGC : It closed today at Rs. 596. Q2 2003-04 net profit was
25 % higher than Q2 2002-03 levels. We stick to our predictions of the levels indicated in the Oct'03 forecast.
- NALCO : It tested a new 52 week of Rs. 160. It closed today at Rs 137. The current Indian Government has put brakes on the Disinvestment Programme due to political compulsions. The next General Elections can be held anytime between Feb'04 and Nov'04. Till then, the Disinvestment Programme is on hold. Exit from this Stock. We will advise re-entry again when the Disinvestment scenario is clear, if any next year after the General Elections.
- HPCL It closed today at Rs. 329. Exit from this potential Disinvestment Stock. We will advise re-entry again, if any as explained above.
-TATA MOTORS : It is on a roll ! Tested a new 52 week high of
Rs. 394. It closed toady at Rs. 375. Book profits around Rs. 450 levels.
- RELIANCE : Tested a new 52 week high of Rs. 497. It closed today at Rs. 486. Book profits at Rs. 600 levels.
GoI's Fiscal Deficit is still a matter of concern. This issue is not being addressed properly by the GoI. The figure could be alarmingly high for this fiscal as compared to last fiscal year as per estimates by some leading Economists. We hope this issue is handled by an Iron Hand !
The BSE SENSEX breached R3 level of 4800 on 13th Oct'03. This was a very important level to be breached. The next bull trigger of 4930 has also been breached as of today i.e.17th Oct'03. FIIs have pumped in approx. US $ 3.6 Billion into the Indian Equities in calendar year 2003 so far. This figure was only US $ 700 million for the calendar year 2002. The FIIs are upbeat about the Indian Economy after a bumper monsoon in India this summer. Annual GDP Growth may cross 5.7 % this fiscal as per GoI's estimates.
Some economists are predicting this figure to be 6.0 %. These figures are bringing FII money into the Indian Equities in large numbers.  
We expect the BSE SENSEX to hit 5000 mark in Oct'03 itself and maybe it tests 5150 level also. The BSE SENSEX is giving clear signals that it is heading towards the magical figure of 6150. We revise our prediction for BSE SENSEX now. Yes we also feel that BSE SENSEX is heading towards the figure of 6150 in the near future. Yes there could be a very sharp correction at 5000+ level.
We advise investors to book profits and sell substantial part of their holdings when BSE SENSEX is between 5000 to 5150 levels.
Keeping in view of the above we are raising the target price of TISCO to Rs. 400+
Rest price targets are unchanged.
The closing reference date for the month of Sept'03 has been taken as 3rd Oct'03. This was the weekly closing at BSE. The BSE SENSEX closed today i.e. 3rd Oct'03 at a new three year high of 4553 up 5.3 % from 4325 as of 1st Sept'03. As predicted the BSE SENSEX was extremely bullish but with a sharp 300 points correction during Mid-Sept'03. The Intra-Month high and low for BSE SENSEX for the month of Sept'03 were a whopping  4557 and chopping 4126 !!
The BSE SENSEX easily breached a very important " Bull Trigger" R3 level of 4500 on 3rd Oct'03 and closed at 4553. On 18th Sept'03  BSE SENSEX tested a low of 4126, below S3 level of 4150. The undertone was extremely bullish there after as FIIs pumped in huge funds into the Indian Stock Markets. Over the past two months the FIIs are chasing a few select Indian Stocks ( Auto and Auto Components,Indian Pharma Cos, Oil and Gas Sector, Petrochemicals and Telecommunications ) in preference to Stocks in other Asian Markets. Hot FII money is chasing a dozen or so Indian Blue Chips in the sectors mentioned as above. To add 'Cherry to the Cake' - FDI has started looking towards India in preference to China in the field of select Manufacturing Sectors and Financial Services with BPO focus.
India is far far behind China in attracting FDI with no basis of comparison. Just an example - China's FDI target for calendar 2003 is US $ 60 Billion where India would be too happy to cross a FDI target of US $ 3.0 Billion in fiscal 200-04.
These two factors as above plus Q1 2003-04 GDP Growth of 5.7 % were the main drivers of the BSE SENSEX into a 'confirmed' Bull Market for the months to come. The Charts indicate the BSE SENSEX to be extremely bullish in the next six months or so. Pundits are talking about BSE SENSEX to be around 5150 in the next six to eight months and around 5800 to 6000 levels in the next twelve months. I have my reservations. There is no doubt in my mind that the BSE SENSEX is extremely bullish over the next six to eight months but I feel that BSE SENSEX will take a breather at 5150 levels. At these levels I would advise investors to completely exit the Stock Markets and re-enter at much lower levels.
For October'03, the BSE SENSEX looks to be on a one way upward journey without any knee jerk corrections. The levels to watch are :
R1 4600 R2 4740 R3 4800
S1 4500 S2 4450 S3 4360
We do not recommend Investors to enter the Indian Stock Markets at these overheated levels of 4500+. Investors should book profits and be liquid.

Our advise to Investors for our favourite Stocks and a couple of other market Stocks is as below :
1. LARSEN : It closed today at Rs. 342 - a new 52 week high. Up from Rs. 305 as of 1st Sept'03. We advise investors to book profits at these levels but are now revising the target price of this Engineering Giant to Rs. 450+. If the BSE SENSEX reacts - Investors who do not hold this Stock in their portfolio can enter afresh into this stock at around Rs. 280 - 300 level.
2. RANBAXY : It tested a new 52 week high of Rs. 1075 on 9th Sept'03. It closed today at Rs. 969 against a level of Rs. 1027 as of Sept'03. This is a Stock for all times and our favourite amongst the Indian Pharma Stocks. Book profits between Rs. 1200 -1500 levels.
3. MRPL : It closed today at Rs. 37. Lower from Rs. 44 as of Sept'03. This is our 'Multi Bagger' for 2003-04. Target price Rs. 80+. Stay invested.
4. TISCO : It closed today at Rs. 283 - a new 52 week high. Book Profits. We are revising the price of this Stock to Rs. 320+ in view of the Bull Market predictions for BSE.
5. ONGC : It tested a new 52 week high of Rs. 695 on 9th Sept'03. It closed today at Rs. 607 lower than Sept'03 level of 656. We predict ONGC to be Rs. 900+ in the next three months and to test 1200+ by March'04. Remember we had recommended this Stock at Rs. 130 levels 12 to 15 months back !!
6. NALCO : It closed today at Rs. 126. The Reforms and Disinvestment Programme of GoI has hit serious roadblocks. NALCO is a Disinvestment Candidate with " Transfer of Management Control" . This process is on hold due to political compulsions but we feel it is only a matter of time before the said Programme of GoI will see the light of the day. Stay invested.
7. HPCL : It closed today at Rs. 360 sharply lower than the Sept'03 level of Rs. 418. The Disinvestment of this Stock has been scuttled by the Apex Court of India. But we feel that in the due course of time the GoI will be successful in Privatization of HPCL. Stay invested. Fresh investors can enter at a level of Rs. 300 to 320 if the BSE SENSEX corrects. We stick to our prediction that HPCL is a Rs. 900 to 1500 Stock close to its privatization bid.
8. EXCEL : It closed today at Rs. 116. We advise investors to exit from this Stock.
9. GTN TEXTILES : It closed today at Rs. 32 lower from Rs. 37 as of Sept'03. We advise the investors to exit from this Stock.
We had not recommended TATA MOTORS and RELIANCE to our Investors. We feel these Stocks are worth a special mention.
TATA MOTORS closed today at Rs. 320 - a new 52 week  high. We were bullish on this Stock since June'03 but the debt on this company's balance sheet was a bother for us. Anyway this 'Engineering Marvel' from India is on a 'brisk canter'. This Stock can touch levels of Rs. 450 to 600 in the next one year or so. TATA MOTORS is on a roll with its passenger Car Division. If the BSE SENSEX reacts and TATA MOTORS tests Rs. 280 - Investors are advised to buy this Stock.
RELIANCE - This Petrochemical Giant is on a song ! The prime mover is its foray into Crude Oil and Gas Sector. It closed today at a new 52 week high of Rs. 450. We expect RELIANCE to test Rs. 600+ in the next six to eight months. Investors who hold this blue chip should stay invested.
On the Macro Level the Indian Annual GDP Growth is on a recovery path. The figure of 6.0 % annual GDP Growth looks a reality this fiscal with bumper monsoon this summer. India's Forex Reserves are close to US $ 90 Billion and this figure is expected to touch the magical figure of US $ 100 Billion by the end of the current fiscal. Yes Fiscal Deficit is still a problem. It looks like for the time being the FIIs and FDIs are overlooking this old malaise in the Indian System !
The BSE SENSEX closed today i.e. on  1st September'03 at a whopping level of 4325. Up 11.3 % from July'03 close of 3884. We had predicted a bull market for August'03 but the BSE SENSEX overshot our expectations by miles. FIIs were very heavy buyers of Indian Equities in preference to markets in Taiwan, Thailand and Hong Kong.
The intra month high and low for BSE SENSEX for August'03 were 4330 ( new 30 month high ) and 3842 respectively. BSE SENSEX zoomed past the R1 level of 4000 and also breached past next unmentioned resistance levels of 4150, 4260 and 4300. The BSE SENSEX was in very firm grip of bulls with no major corrections except on 25th Aug'03. We feel the BSE SENSEX is an 'over bought' zone as of now and a very sharp correction is due.
We expect the BSE SENSEX to be bullish for the month of September'03 but investors are advised to be very careful as we feel the BSE SENSEX will correct sharply and then move up again. Investors are advised not to enter the Market at these levels.
The levels to watch are :
R1 4350  R2 4430 R3 4500
SI 4300 S2 4260 S3 4150
No new Stocks are being recommended. Investors are advised to book profits as recommended below:

1. LARSEN : It closed today at Rs. 305 - a new 52 week high. Up 9 % from July close level of 280. Investors are advised to sell 80 % of their current holdings at this level of around Rs. 300.
2. RANBAXY : This Indian Pharma Major closed today at a new 52 week high of Rs. 1027. Sell 80 % of your current holdings at this level of around Rs. 1000. Balance at Rs. 1200+
3. MRPL : Our 'Multi Bagger' of 2003-04 closed today at Rs. 44, a new 52 week high. Up whopping 63 % from July close of Rs. 27. Sell 30 to 40 % of your current holding. Balance at Rs. 80+ in the next nine months or so.
4. TISCO : The Steel Major closed today at Rs. 254 up 8.5 % from July close of 234. It tested a new 52 week high of Rs. 266 on 19th Aug'03. Stay invested and exit at Rs. 280+ levels.
5. ONGC : Bravo ! The level we have been mentioning for a year or so was tested finally. It closed today at Rs. 656 ( new 52 week high and an all time high ) up 24 % from July close of Rs. 528. Sell 30 % of your current holdings. Balance at Rs. 750 to 900+.
6. NALCO : Another of our old favorites. It closed today at Rs.132 up 6 % from July close of Rs. 124. It tested a new 52 week high of Rs. 142 on 28th Aug'03. Stay invested. Medium term target Rs. 220. Long term target Rs. 450+.
7. HPCL : Old favourite. It closed today at Rs. 418, up 15 % from July close of Rs. 354. It tested a new 52 week high of Rs. 450 on 29th Aug'03. Stay invested. This Petroleum Giant will be privatized. Target price of Rs. 1200 to 1500+.
8. COLGATE : It closed today at Rs. 147. We advise investors to exit from this Stock.
9. EXCEL : It closed today at Rs.121. Stay invested. Target Rs. 180.
10. GTN TEXTILES : It closed today at Rs. 37, up marginally from July close of Rs. 33. Stay invested.
We are again concerned about the same two macro parameters of the Indian Economy that we have been talking about for two years now - High Fiscal Deficit and Govt's Domestic Borrowing. Now our views have been corroborated by the Governor of India's Central Bank - The Reserve Bank of India. I quote him verbatim ' High Fiscal Deficit and low credit offtake were impeding economic growth '. This statement coming from the Governor is a cause of concern and gives a signal that the Indian GDP may not grow by 6.5 % this fiscal as estimated by the Indian Government. GoI must put it's house in order failing which GDP growth will be lower than projected for the current fiscal.
The August'03 has been delayed by a week as the BSE SENSEX trend was unclear on 1st August'03. The trend is clear now.
As predicted the BSE SENSEX was bullish in the month of July'03. BSE SENSEX breached past R2 level of 3760 convincingly. It also breached past a very important 'bull trigger' level of 3850. We did not mention this level in the July'03 update.
The BSE SENSEX closed today i.e. 8th August'03 (ref closing date of July'03) at 3884 up 7.8% from 1st July'03 closing level of 3604. The intra month high and lows for BSE SENSEX for the month of July'03 were 3884 and 3594 respectively. The BSE SENSEX at 3884 is at crossroads for a further jump but maybe with a sharp correction. Investors are not advised to enter the Stock Markets at these levels. We advise re-entry or a fresh entry at 3760 levels, if any. 
The BSE SENSEX was in the firm grip of bulls with 'Old Economy' Stocks in the limelight. Steel, Cement, Commercial Vehicles, Oil and Natural Gas, Pharma and Petroleum Stocks were in good demand by the FIIs and also domestic investors.
We predict a bull market for August'03 if the BSE SENSEX can close for two/three consecutive days above the all important level of 3850. We are then heading for a very important level of BSE SENSEX of 4000 !
The levels to watch are as follows :
R1 4000
S1 3850 S1 3760.
We are not recommending any new Stocks for the month of August'03. We are also not recommending that investors should enter the Stock Markets at these overheated levels of 3880+.
Our recommended Stocks are doing well. Our comments are as below. Investors must book profits as suggested below :
- LARSEN : It closed today at Rs. 280 up 16 % from Rs. 242 as of 1st July'03. It tested a 52 week high of Rs. 285 in July'03. We suggest investors to sell 75% of their holding of this Stock at current levels of Rs. 280+. Balance at Rs. 300+ levels.
- RANBAXY : This domestic Pharma major is going great guns. It closed today at Rs. 815. Stay invested. Target price Rs. 950 to 1200 for the next three months.
- MRPL : It closed today at Rs. 27.10, a new 52 week high. Up smartly from Rs. 23.60 as of 1st July'03 (Up 15%). Stay invested for a year or so. MRPL is Rs. 80+ Stock. Multi-Bagger of 2003-04 !
- TISCO : As per our predictions or rather better than our predictions, this Steel Giant is Rolling ! It closed today at Rs. 234, a new 52 week high, up smartly from Rs. 170 as of 1st July'03 (Up 38%). Investors are advised to sell 50% of their holdings at these levels of Rs. 230+. Balance at Rs. 280+. We expect TISCO to hit Rs. 280+ in the next three months.  
- ONGC : Our old favourite is again on the upswing after recovering from the correction mode. After correcting to a level of bleow
Rs. 440 during July'03, it closed today at a new 52 week high of
Rs. 528, up smartly from the 1st July'03 level of Rs. 483. The GoI agreed to a nominal 12 % price increase for Natural Gas produced by ONGC. The price increase was 'ad hoc' from Rs. 2850 per mscm to Rs. 3200 per mscm. This is a step in the right direction. We congratulate the Hon. Minister of P&NG, GoI for putting his foot down and fighting for a price increase for the Natural Gas. The price needs to be increased further by about 35% to bring it on the 'import parity' levels. Anyway this nominal price increase was greeted by the investors and ONGC tested a new 52 week high as mentioned above. We advise investors to stay invested. We stick to our claim that ONGC is a Rs. 600 to Rs. 750 Stock in the medium term. Long term ONGC is Rs. 900+ Stock.
- NALCO : Our old favourite is up and about inspite of hindrances in the 'Disinvestment Programme'. It closed today at a new 52 week high of Rs. 124, up smartly from 1st July'03 level of Rs. 111. We advise investors to stay invested in NALCO. It is Rs. 220+ Stock prior to a simultaneous domestic IPO and an ADR on NYSE. The IPO + ADR are planned for Nov-Dec'03. We feel later the winning bid during the privatization process would be in the region of Rs. 450+. Long term investors are advised to stay invested. We stick to our earlier prediction which have been repeated above.
- HPCL : Our old favourite and a proposed 'multi-bagger' closed today at Rs. 354. It tested a new 52 week high of Rs. 370 during July'03. There are some delays in the GoI's 'Disinvestment Programme'. The Socialists and the Communists are trying to block the Privatization and Disinvestment Programme of GoI. We feel finally these elements will fail and the companies like HPCL and NALCO will be Privatized. It is only a question of time. We still stick to our estimate that the winning bid during the privatization process in the near future for HPCL Stock would be in the region of Rs. 1200 to 1500. We advise investors to stay invested. HPCL is a
'multi-bagger' Stock and one of our old favourites.
- COLGATE : The market leader in Oral Care Segment closed today at Rs. 148. We advise investors to stay invested.
- EXCEL : This pesticides company closed today at Rs. 117. It tested a high of Rs.132 in July'03. We advise investors to stay invested.
- GTN TEXTILES : This Cotton Yarn Major closed toady at Rs. 33. It tested a new 52 week high of Rs. 39 in July'03. We advise investors to stay invested.
The Indian Stock Markets are in bull phase but we are still concerned about the 'Domestic Debt' of GoI and the ever burgeoning combined 'Fiscal Deficit ( Federal and State's put together). Now the World Bank and IMF are also sounding alarm bells for India for these two parameters - GoI's Rupee Debt from the Central Bank and Combined Fiscal Deficit. This Fiscal Deficit is estimated to cross 10 % of GDP level for this fiscal 2003-04. Some Economists estimate the Fiscal Deficit would be at 11.6% of the Indian GDP for the current fiscal year 2003-04. This is alarming.

We were proven wrong for a change ! The SW Monsoon was a bumper monsoon covering the entire Nation with wide spread rains. The BSE SENSEX was in firm grip of the bulls on account of the good monsoon and attractive fund inflows by FIIs into the Indian Equity and Bond Markets.
The BSE SENSEX closed today i.e. 1st July'03 at 3604 up 9 % from a level of 3303 as of 6th June'03. The BSE SENSEX has gained approx. 20 % in the month of May and June'03. The intra month high and lows for BSE SENSEX for June'03 were 3281 and 3633 respectively. This level of 3633 is a new 15 month high for the BSE SENSEX.
The BSE SENSEX breached R4 level of 3600. This level is a very strong resistance level for BSE SENSEX. The BSE SENSEX now has a strong bullish undertone. The 200 DMA level for BSE SENSEX is 3170 and 30 DMA is 3300. The BSE SENSEX is far too high from the said DMA levels and shows no signs of re-tracement to even the 3300 level on the charts technically.
We feel a 100 points correction is due in the BSE SENSEX. The Q1(April to June'03) results from Indian Software Majors - INFOSYS, WIPRO and SATYAM will be announced in Mid-July'03 onwards. If the guidance is poor for the future in 2003 - then we might see a sharp fall in prices of INFY etc. This will bring the BSE SENSEX dragging down for the short term. 
In addition to the bumper SW Monsoon - FIIs poured in nett funds in excess of US $ 2.0 Billion till date into the Indian Equities and Bonds. We are only six months into the calendar year. This is the fourth time since the last ten years when the nett fund inflows from FIIs have exceeded US $ 2.0 Billion per annum. FIIs have also poured substantial funds in other Asian Markets - Thailand and Taiwan. The Stock Market indices for these Asian Markets are also near their 52 week highs.
We feel the BSE SENSEX would be bullish for the month of July'03. Investors to stay invested in ONGC, NALCO, HPCL, MRPL, LARSEN and TISCO.
The levels to watch for BSE SENSEX are as follows:
R1 3675 R2 3760
S1 3510 S2 3430
The closing prices as of today for old favourite stocks are as below :
- ONGC : This 'multi-bagger' is in correction mode. Closed today at Rs. 483. Hold it with a stop loss of Rs. 450. Long term we still stick to our prediction of a price of Rs. 750 to 900+. It all depends when will the Ministry of Petroleum and Natural Gas(MoP&NG), Govt. of India, starts dismantling the administered price of Natural Gas. Today ONGC gets about 50 % of the free market price of Natural Gas. The day ONGC gets free market price of Natural Gas i.e. Import Parity Landed Price of Natural Gas from Middle East ( Qatar, Oman etc) - ONGC's nett profit will zoom by an additional 15 % as per our estimates. This is a political decision as Natural Gas is used an energy input by a few large Urea producers in India. The Urea prices will have to be hiked substantially if Natural Gas prices are doubled. Hiking Urea prices is a politically sensitive issue due to 'farm sector' vote bank considerations. We feel MoP&NG, Govt. of India will effect the price hike of Natural Gas in phases. This will happen as subsidies cause havoc with Federal Fiscal Deficit.   
- HPCL : Closed today at Rs. 344. Up smartly from Rs. 314 as of June'03. It tested a new 52 week high of Rs. 358 in June'03. Please stay invested. We stick to our prediction of a price of Rs. 950+ in the next 12 months.
- NALCO : Closed toady at Rs.111. Please stay invested. It is a Rs. 220+ Stock post IPO and ADR. Post 'Strategic Sale with transfer of 'Management Control' - It is a Rs. 450+ Stock.
- TISCO : Closed today at Rs. 170. Please stay invested. Medium term target Rs. 220+. Exit at these levels.
- LARSEN : Closed today at Rs. 242. Up from Rs. 214 as of of June'03. It tested a new 52 week high of Rs. 254 in June'03. The Cement Division will be de-merged and spun off into a separate company as predicted. We are revising the target price downwards to Rs. 280+. Investors to exit LARSEN at this price of Rs. 280+.
- TELCO : Although not recommended, it closed today at Rs. 200, a new 52 week high. Up smartly from Rs. 180 levels of June'03.
- RANBAXY : Closed today at Rs. 799. Up smartly from June'03 level of Rs. 680. Please stay invested. It will breach past its 52 week high level of Rs. 950 and maybe settles at Rs. 1200. Book partial profits at Rs. 950+ .
- MRPL : There is no stopping this Stock. It closed today at
Rs. 23.60. Up smartly from June'03 level of Rs. 19.40. Please stay invested for the next 12 months or so.
We missed the bus on the Automobile Component Stocks viz - BHARAT FORGE, SUNDARAM FASTNERS, SUNDARAM CLAYTON, UCAL FUEL etc.
We are bullish on the Indian Cotton Yarn and Pesticide Sector. We are recommending two additional stocks as below, as 'Trading Stocks' :
a) EXCEL INDUSTRIES - This Pesticide Company belongs to the Shroff Group which also controls M/s. United Phosphorus Ltd. We had recommended UPL a few months ago. We recommend EXCEL at around today's closing price of Rs. 118+. Medium term target is Rs. 180+.
b) GTN TEXTILES - This is a Cotton Yarn Major based in South India and produces one of the best quality of Yarn in India. GTN exports its Yarn to EU Nations. It closed toady at Rs. 36. We recommend buying this Stock at Rs. 36. Medium term target is Rs. 48+. Needless to remind investors that for 'Trading Stocks' please follow the cardinal 'stop loss' principle strictly.
We are as usual concerned about Federal Fiscal Deficit. This Govt. also does not have a clue to control it. The Govt. spending is going northwards, tax collection is poor and GDP Growth figures are not encouraging. This malaise in the Indian Economy is taking a shape of a monster. Someone has to control it.

The June'03 forecast has been delayed by a week as we wanted to be sure of the progress of South West (SW) Monsoon in India. India is an agrarian economy with 25 % of its GDP coming from Agriculture. In most parts of India the agriculture is dependent on rains and SW Monsoon rains in particular. Generally the SW Monsoon hits the western coast of India in Kerala State on or around 1st June every year. For the past decade or so India has had a favorable SW Monsoon and bumper foodgrain production since the last five to six years. India has been exporting surplus Wheat and Rice for the past two years in the world market.
The Met Deptt. has announced that SW Monsoon would be normal in India will hit the Kerala Coast on 8th June'03 - late by one week. This led to a sharp bull rally in the Indian Stock Markets. The BSE SENSEX shot up by 200 points in the last six trading days.
For start of the month of June'03 the reference date has been taken as 6th June'03 on account of the Monsoon data. BSE SENSEX closed today i.e. on 6th June'03 at high of 3303. Up smartly by
11.3 % from the 2nd May'03 close of 2967. The intra month High and Low for BSE SENSEX were 2935 and 3313 respectively.
BSE SENSEX was bullish firstly on account of good results from the Old Economy Sector - Steel, Cement and Automobiles.
Secondly the DJIA at 9000+ and NASDAQ at 1600+ added sheen to frontline Indian IT Companies - INFOSYS, SATYAM and WIPRO. FIIs who had dumped these IT Shares a month back
re-entered aggressively as their ADRs were up substantially at NASDAQ. These three IT Shares have a fair weightage in the BSE SENSEX. Add to that announcement of a normal SW Monsoon by the Indian Met. Deptt. Bulls started building up positions in the Stock Markets.
The Indian Govt. once again pushed the 'Disinvestment Programme' against all odds. Unlisted Automobile Giant - M/s. Maruti Udyog Ltd, a 50:50 JV between the Indian Govt. and M/s. Suzuki Motor Co. of Japan would be privatized. This will be a a big ticket sale of Indian Govt. Equity through a Domestic IPO Route. IPO Size is
Rs. 8.3 Billion ( US $177 Million ). Maruti Udyog is the largest manufacturer of passengers cars in India with a market share of more than 50 %. There are about a dozen other MNC car manufacturers in India with the likes of GM, FORD, HYUNDAI, VW, MERCEDES etc rubbing shoulders in a very competitive marketplace. The Maruti IPO opens in June'03.
The Disinvestment Minister indicated that NALCO and BPCL IPOs will follow suit after the Maruti IPO. This bought cheers in the Stock Market. BSE SENSEX was firmly in the grip of bulls with all the above positive news.
FIIs turned heavy and consistent buyers in old economy shares as mentioned above - Steel, Cement and Automobiles. FIIs and FIs were net buyers in select PSU Shares and PSU Shares in the Oil and Natural Gas Sector. NALCO, SCI, IOC, BPCL, HPCL, GAIL, MRPL, BONGAINGAON and ONGC showed handsome gains.   
We somehow have a feeling that the SW Monsoon will be below normal this year or will fail miserably. There will be a severe and unprecedented drought in India (June through September '03 ). This is contrary to what the Indian Met. Deptt. has predicted. The SW Monsoon reaches North India by end June'03. If our prediction comes true the BSE SENSEX will come crashing down by 200 points or more in the month of June'03 itself. Failing which BSE SENSEX will be in firm grip of bulls for the month of June'03.
The levels to watch for BSE SENSEX for the month of June'03 are :
R1 3350 R2 3400 R3 3480 R4 3600
S1 3250 S2 3180 S3 3050 S4 2980
Our recommended PSU Shares are galloping. The closing prices are as of 6th June'03 :
1. ONGC - My favorite stock and now a 'proven' multi-bagger ! Yes ONGC breached Rs. 450 as predicted and tested a new high of
Rs. 503. It closed today at Rs. 483. We advise our patient and loyal investors to sell 50 % of their holdings at this level of around Rs. 480. Balance hold. We expect ONGC to touch 600 to 750 in the next six months.
2. NALCO - Tested Rs. 100+ and settled to close today at Rs. 97. We advise investors to stay invested. Domestic IPO will be followed by an ADR at NYSE. This should be done and over within the next six months. Our target is 220+ post IPO and ADR. The 'strategic sale' is a thorny issue. This would result in NALCO being privatized in the real sense as the management control would pe passed to the highest bidder in a 'Open Global Bidding Process'. So far the coalition partners of the BJP led NDA Govt. in the India are opposed to this 'strategic sale' of 24 % of NALCO's Equity with transfer of management control to the strategic partner. Post this sale, GoI will only hold 26 % equity in NALCO.If the Disinvestment Minister, Govt. of India(GoI), can make this happen - NALCO could be anywhere between Rs. 350 to 450+. We are sure that NALCO will be privatized. Investors to stay invested till the target price of Rs. 220+.
3. HPCL - The Privatization of HPCL is a political issue. HPCL closed today at Rs. 314. It quotes currently at a P/E of 9.0. We feel HPCL privatization will happen as GoI is badly cash strapped. We feel it is a matter of time and will happen. Long term investors can make 'mega bucks'. HPCL can be another IBP story - From Rs. 100 to Rs. 900 in about 12 to 15 months. Nine times your money with IBP !  Fiscal Deficit needs to be addressed. HPCL Disinvestment can contribute significantly. One Foreign Brokerage House operating in India recently mentioned that with the privatization of HPCL i.e. Strategic Sale of GoI's 34% Equity in HPCL with transfer of management control - GoI could rake in Rs. 200 Billion ( US $ 4.26 Billion ). This translates to a price of Rs. 1600 per HPCL Share by the 'highest bidder'. This price is realistic keeping in mind that HPCL controls 20 % of India's Retail Oil Marketing Business.It is neck to neck with BPCL. But BPCL is being disinvested through a domestic IPO route.
At a price of Rs. 1600  per Share for HPCL, the P/E Multiple would be 45. Investors should remember that P/E of IBP shot up from 5 to 60 when the disinvestment of GoI's Equity was successfully done in 2002 through an Open Global Bidding Process.
If not Rs.1600 we feel HPCL is a Rs. 950+ Share. Investors to stay put with 'stop loss' of Rs. 265.
We had recommended three Old Economy Shares :
1. TATA STEEL - The largest private sector Steel producer in India is also the world's lowest cost producer of Steel. It closed today at Rs. 162. At approx. 3.2 Million tonnes of Steel produced per annum by TISCO - the profits for fiscal 2002-3 were astounding. They were in excess of Rs. 10 Billion ( US $ 213 Million ). Target price is 240+ in six to nine months.
2. LARSEN - Cement and Engineering Giant. It closed toady at Rs. 216. Target price is Rs. 380 to 400 in nine months.
3. RANBAXY - The largest Indian Pharma MNC. It closed today at Rs. 680. This is a true Indian MNC. We fancy RANBAXY. Target price Rs. 900 to 1200 in nine to twelve months. This is a Stock to have in one's portfolio for all times !
AUTOMOBILES - Although we did not recommend any Scooter/Motorcycle or Truck/Car manufacturer's Stocks, TELCO deserves a 'special' mention. We fancy India's largest manufacturer of Commercial Vehicles - TELCO, which has had a successful foray into passenger Cars too. TELCO closed today at Rs. 180. We feel the debt on TELCO's balance sheet is a drag. But all said and done TELCO is an 'Enginering Jewel' in the Indian Crown. It is one of the few companies in the world which has designed a car from scratch and put it on the road successfully without any foreign help. TELCO's small car - 'INDICA' has been a runaway success. Hats Off to Mr. Ratan Tata ! It was his dream project. TELCO invested Rs. 17 Billion ( US $ 360 Million ) six years back and 're-invented' the Wheel ! Instead of paying for the technology from an established small car giant - RENAULT, TOYOTA, FORD, VW etc. in the world Mr. Ratan Tata - Chairman TELCO, took a gamble of Rs. 17 Billion to build a small car from scratch. We once again salute the great visionary - Mr. Ratan Tata !
We are recommending two additional Shares :
a) MRPL : It closed today at Rs. 19.40. The 52 week high and low are Rs. 21.70 and 6.40 respectively. MRPL now a 51 % owned by the Oil and Gas Giant - ONGC with management control. It runs a  loss making 9.0 mmt Refinery on the west coast of India near Mangalore port. We are very confident that ONGC will 'turn around' MRPL in a years time and MRPL's balance sheet will have 'cash profits'. Net profit scenario could be two to three years away. Stock Markets discount the future. MRPL is recommended for long term investors. Buying target price - Rs.18+. Target price in one year - Rs. 45+.
b) COLGATE - The toothpaste and oral care giant got a beating in the marketplace for a few years from the likes of LEVER, DABUR etc. It closed today at Rs. 148. For this Stock the 52 week high and low are Rs. 150 and Rs. 118 respectively. There is some activity in this Stock suddenly. We see a short term target price of Rs. 180+. Medium term target price Rs. 220+. Investors can start buying on a correction a around Rs. 135+.    
c) Automobile Component Stocks : Market pundits are forecasting that after the IT revolution in India the next big story for "Outsourcing from India" - would be Automobile Components for Passenger Cars, Vans and Light pick-up Trucks for the North American Market. We agree with the pundits. This business could be US $ 10 Billion per annum by 2007 as per some experts in this business. We agree with these figures. India has the skilled manpower in this sector and has some world class companies already supplying auto components to the likes of GM in North America. We fancy Stocks like - BHARAT FORGE, SUNDARAM FASTENERS, SUNDARAM CLAYTON and few other Stocks in this sector. We shall submit a detailed analysis and our recommendations, if any, for Stocks in this sector shortly as a "Special Update">
The above 'buy' recommendations are based on the fact that the SW Monsoon will be normal. If this fails as per our predictions, investors should hold their purchases of recommended stocks till the Monsoon Factor is totally discounted by the Stock Markets i.e. a correction of 200 to 300 points i.e. a level of 3000 to 3050 for BSE SENSEX.
We hope our prediction about SW Monsoon is totally wrong !
BSE SENSEX closed today i.e. 2nd May'03 at a level of 2967, down 2.7% from the closing level of 31st March'03 of 3049. The intra month high and low for BSE SENSEX for April'03 were 3222 and 2904 respectively. We had predicted a bearish trend for April'03.
The BSE SENSEX could not breach the R3 level of 3250. On the flip side it breached S1 and S2 levels of 3000 and 2940 respectively.
The 'bull rally' was spoiled by poor guidance for the next year by Software Giant - INFOSYS. This was followed by poor guidance as well, from other two Indian Software Majors - WIPRO and SATYAM. The BSE SENSEX nose-dived from a level of 3222 to 2900 levels (approx. 10 %) over a period of about ten trading sessions in April'03. FIIs dumped these three frontline Software Companies Shares. This spoilt the overall sentiment and Stock Markets turned bearish.
In Bearish Markets good news are discounted like in  Bull Markets bad news are discounted. The Markets discounted the 0.25 % basis Interest Rate Cut by India's Central Bank - Reserve Bank of India. The Interest Rates stand at 6 % now, after the cut was announced by the Hon. Finance Minister. The CRR for the Indian Banks was also lowered to a level of 4.5 % by the Hon. Minister to inject additional liquidity into the financial markets to the tune of Rs. 27 Billion ( US $ 560 Million ). Some other positive news were also discounted by the Stock Markets - Indian Exports were up for the FY'02-03 at US $ 53 Billion. Cumulative Forex Reserves were also up for the same period at US $ 77 Billion. These were encouraging numbers but the same failed to enthuse the Stock Markets. We think the prime reasons are - Fiscal Deficit, Slow Pace of Reforms and De-railed Disinvestment Programme of Indian PSUs. The Indian Government is tying very hard to address these three impediments. We hope the BJP lead coalition Govt. in New Delhi will succeed in its efforts. Failng which - the Indian Economy will be left behind.
Please note that we had advised investors well in advance in Jan'03 to exit from INFOSYS at Rs. 4800+ levels. This Stock crashed to a level of Rs. 2600 in April'03, down whopping 46 % !
We hope Investors did get out in time from INFOSYS as advised. INFOSYS closed on 2nd May'03 at Rs. 2915. The story was similar with WIPRO and SATYAM. In any case, we never recommended WIPRO and SATYAM to our Investors. We only recommended INFOSYS to our Investors in Aug'02. 
It is learnt that FIIs have churned their portfolios in a big way and have limited their exposure the frontline Indian Software Stocks - INFOSYS, WIPRO and SATYAM. The second tier Software Stocks were also badly hit but there were on or two exceptions. We learn that FIIs and Indian FIs have entered Steel and Cement Stocks in a big way. We also fancy these Sectors including Indian PHARMA Major - RANBAXY.
We feel the Indian Stock Markets may test a level of 2850 in May'03 and this would be the right time to partially enter into already recommended Steel and Cement Stocks i.e. TISCO and LARSEN.
In addition Investors who missed the Bus on our old PSU favourites - NALCO, HPCL and ONGC, can partially enter at this level of 2850.
Closing Prices on 2nd May for the above Stocks were :
a) TISCO - Rs. 132. We recommend investors to start buying at around Rs. 120+. TISCO's 52 week high and low are Rs. 164 and Rs. 104 respectively. Target price Rs. 220+ in six months.
b) LARSEN - Rs. 203. Start buying at around Rs. 185+. LARSEN's 52 week high and low are 220 and 146 respectively. Target price Rs. 380+ in six months.
c) HPCL - Rs. 279. Start buying at Rs. 265+. Target price Rs. 750 to Rs. 900. HPCL is a 'Disinvestment Candidate'. Time frame six to nine months.
d) NALCO - Rs. 86. Start buying at Rs. 78+. Target price Rs. 220+.
Also a 'Disinvestment Candidate'. Time frame as above.
e) ONGC - Rs. 353. Start buying at Rs. 340+. Target price Rs. 600 to 750+, when the Natural Gas Prices are based on 'Import Parity' i.e. Linked to the International Prices. As of now ONGC does not get free market prices for it's Natural Gas. The prices are 'Administered' by the Ministry of Petroleum and Natural Gas, Govt. of India. The way APM was dismantled for Crude Oil, Gasoline and Diesel in April'02, we expect Natural Gas prices to be out of the Administered Price Mechanism (APM) in a few months time. ONGC will shoot to anywhere between Rs. 600 to 750. 
The BSE SENSEX would be range bound but with a 'bearish undertone'. Investors to watch the following levels :
R1 3000 R2 3080 R3 3150 R4 3250
S1 2900 S2 2850
Investors to kindly note very carefully that if the BSE SENSEX breaches 2850, then we are headed for a 150 to 200 points fall. This can happen if the Indian Monsoon Forecast is 'Negative' by the Indian Met. Department or for some reasons. Investors are advised to be very careful and should exit and book losses on their purchases of the above five recommended Stocks. That is the reason we are advising Investors to 'partially invest' in the recommended Stocks at or around BSE SENSEX of 2850. We hope this level is not breached as there would be 'blood bath' at the Indian Stock Markets. Investors have just 'burnt their fingers' with merciless pounding of INFOSYS etc. 
One factor needs a special mention - IRAQ Factor. The Bush Administration has declared victory over Iraq and the American Stock Markets were up in April'03. But one basic question remains unanswered - Where are Iraq's Weapons of Mass Destruction ? This whole Iraq story smells of Black Gold i.e. Crude Oil. After Saudi Arabia, Iraq has the largest deposits of Crude Oil and Natural Gas. The American logic of invasion of Iraq to topple Saddam Hussein regime is not justified as far we are concerned. We thought the Americans were pretty sure about Iraq's stockpile of WMD. We feel that CIA and other Intelligence Agencies aiding America have failed miserably. Some heads should roll in Washington but this may not happen as Bush Administration is rejoicing on toppling of Saddam Hussein. This Iraq Invasion can only be justified if the Americans can find WMD on a 'threatening scale' in Iraq. 
SARS so far has not hit India. If it hits we can expect the Stock Markets to be bearish as it will spread very fast in India and will impact the economy.
1. The BSE SENSEX closed today i.e. on 31st Mar'03 at 3049 down
7 % from the level of 3284 which was closing level on 28th Feb'03. The intra month high and low for BSE SENSEX for Feb'03 were 3312 and 3009. BSE SENSEX sank on account of US lead attack on Iraq. We had predicted that Bush Administration would attack Iraq in Feb or March'03 to topple Saddam Hussein and get rid of Iraqi stockpile, if any of WMD.
American forces attacked Baghdad on 19th March'03 and started the military campaign - 'Operation Iraqi Freedom' to liberate Iraq from Saddam Hussein. The Stock Markets worldwide rallied for a couple of days after the initial attack on Iraq by USA and UK on hopes of an early victory for the coalition military forces. The Stock Markets reacted substantially later as the Iraqi resistance was not a 'cake walk'.
We had predicted two days into the Iraq War that Bush Administration has incorrectly assessed the grit of the Iraqis and a swift end to this conflict. We mentioned that the war could drag on till end May'03 or beyond. This could be disastrous as during this period in the Gulf the temperatures during the day time are as high as 40+ degree centigrade. Imagine American and British ground troops fighting a ground offensive in Iraq in May'03 with their full NBC Suits on. God Bless the coalition ground troops !
We stick to our predictions as above that this Iraq War - 'Operation Iraqi Freedom' could well be a 'Waterloo' for the mighty Americans and the British. It will drag on for a couple months if not more.
"If no evidence is produced to the world of Iraq possessing WMD on a 'threatening scale' by coalition forces, then both Bush and Blair deserve to be finished politically, no matter what else happens in Iraq - says, Prof. Jeffery Sachs at Columbia University, USA."
We agree with Prof. Sachs comments. This shows that the intelligentsia in USA is very sensitive to developments in Iraq.
Today - 12th day into the Iraqi War, there are so many contradicting statements coming from different departments of Bush Administration. Questions are being asked by the Media and Public worldwide about the 'War Plan' of Gen. Tommy Franks. Serious concerns are being raised about :
- Stretched Supply Lines in the battlefield in Iraq.
- Number of Coalition Troops on the Ground in Iraq.
- Iraqi Resistance.
The Americans and the British have no concrete answers to the above issues. Infact contradicting statements are being given by the military top brass and soldiers on the ground regarding the above three serious issues. This does not augur well with financial markets globally. An early end to 'Operation Iraqi Freedom' will bring cheers to the global stock markets failing which stock markets will be bearish in the short term.  
2. We predict very turbulent times till End May'03 in the Global Stock Markets including the Indian Stock Markets. The best bet is to stay away from the Equities till the Iraq issue is settled by the Americans.
In India the BSE SENSEX will take cues from the global markets and we forecast a bearish trend after a short technical rally. Investors to use this rally to exit or book profits accordingly. The levels to watch in April'03 for BSE SENSEX are as follows : 
R1 3080 R2 3150 R3 3250
S1 3000  S2 2940 S3 2850

3. The Indian Macro Level Parameters are now being raised by the Indian Finance Minister. "Fiscal Policy untenable" - says Indian Finance Minister. I further quote the Minister "Of our revenue, 50 pc is swallowed by paying of just interest on (govt.) debt. Another 20 pc goes on subsidies and 25 pc on defence. What am I left with ?"
Hon. Indian Finance Minister stated these facts to the Upper House of Indian Parliament called the 'Rajya Sabha'.
We have been talking about Indian Fiscal Deficit problem for more than a year now. The only answer is a collective political decision cutting across all political party lines. Our views are endorsed by the Hon. Finance Minister. He said " Either we sit down and collectively decide what to do about our Fiscal Policy or we can keep playing political ping-pong". This statement coming from the Indian Finance Minister is alarming. The fact is that Indian Fiscal Deficit is around 10 % of its GDP since the past decade or so.
*Worldwide Fiscal Deficits are rising. The fiscal deficit is, simply put, the gap between government's expenditure and receipts, which has to be filled either by borrowing or by printing money. Japan had a fiscal deficit of 7.1 % of GDP in 2002. Germany had a deficit of 3.7% of GDP in 2002. EU member countries are supposed to remain within  3% of GDP as regards fiscal deficit. Countries in South East Asia - Malaysia, Hong Kong, Taiwan, Philippines, Thailand etc have their fiscal deficits between 3 and 6 % of their respective GDPs as of 2001. Fiscal Deficits in India have continued at a higher level for longer period than other developing countries. Among major countries, Turkey has a fiscal deficit higher than India and for the same reason - 50 % of their Central Govt. spending in 2001 was towards interest payments.
In India the subsidies also play havoc with the fiscal deficit apart from government borrowing as mentioned above by the Hon. Finance Minister. ** The total annual subsidies for 2002 are in the region of US $ 30 Billion. Of this, US $ 5.6 Billion goes on Food or is Agro-Related. Another US $ 2.6 Billion is on Fertilizers. These add upto US $ 5.6 + 2.6 = US $ 8.2 Billion, which the Finance Minister has to live with, as these are 'vote bank' related and cannot be cut. So what does the poor Hon. Indian Finance Minister do ?
Simple - Like all his predecessors he plays political ping-pong till in Office and then passes the baton to his successor in the new Government !
This issue of subsidies in the Farm Sector to the tune of US $ 8.2 Billion cannot go on for ever. As said earlier all the political parties in India must address this issue in a collective manner. Failing which the Indian Economy may not grow at estimated levels due to lack of funds for investing in critical areas like Infrastructure.
Chinese example may not be fully appreciated by the Western Economists but the robust economic growth by China in the last decade is an example to the Asian Economies. Let us forget about human rights violations and no legal framework etc. in China. *Fact is that China's Fiscal Deficit was under 3 % for 2001 and its foreign exchange reserves exceed US $ 120 Billion. China has attracted US $ 20 Billion as FDI in the last three years i.e 2000-02.
Let us face it - Political System has failed to deliver in India over the last three decades. We lack the political will to take the necessary actions.*** Ghana and Cameroon have overtaken India in terms of 'per capita income'. Reforms are slow to implement. Regulators are inefficient and lack the power. Fiscal Deficit is uncontrollable. One can go on and on.
We would like to conclude that it is not that India has degressed, it is that other countries have progressed faster.
* Source : Economist and Asian Development Bank.
** Source : Indian Ministry of Finance.
*** Source : IMF.
For the Indian Stock Markets to be healthy in the long term - Macro Level parameters as above need to be addressed by the Governments in power in New Delhi.
The BSE SENSEX closed today i.e. 28th Feb'03 at 3284 up nearly 1.0% from close of 3250 level as on 31st Jan'03. The intra month high and low for BSE SENSEX for Feb'03 were 3322 and 3218.  The BSE SENSEX could not breach all important 'bull trigger' level of 3400. This is a very important level - 3400 and any convincing close above this level will propel BSE SENSEX into a short term bull phase. But this fails to happen. 'Macro Level' indicators of the Indian Economy for which we have been talking for months now have now surfaced in the Markets and are glaring.
Indian Govt. announces its Budget for the next year on 28th Feb every year. The Budget for the next fiscal i.e. 1st April'2003 to 31st March'2004 was announced today as usual. The Budget failed to cheer up the markets although there were some positive factors which have a direct impact on the Equities :
- Dividend Tax is abolished. Hence the investors will not have to pay income tax on dividend incomes from equities they hold w.e.f. 1st April'03 thru 31st March'04.
- Long Term Capital Gains on Equitities also is abolished. Same time period as above.
These two important sops for the equity markets are a big plus as per our understanding, but the BSE SENSEX came off it's high on 28th Feb'03 - 3317, to close at 3284. No cheer in the Stock Markets.
The details of the Union Budget are available on Ministry of Finance's official website. The Budget was a balanced and gave some tax breaks to salaried class people. On an overall basis the Budget raises important questions on a few 'Macro Level' parameters of the Indian Economy, regarding which we have been worried over the past nine months or so.
They are as follows::
- Annual GDP Growth this fiscal i.e. 1st Apri'02 to 31st March'03 will only be 4.4 % against a targeted figure of 5.5 %. This is as per the figures released by the Govt. of India. A very sharp fall in the GDP Growth this Fiscal. The major factor is 'Drought' in India in the summer of 2002 as per Govt. for India sources. It may however be noted that Agriculture Income now only constitutes 25 % of the Indian GDP. This figure was close to 75% three decades back.
- Fiscal Deficit is a major problem. This coalition Government has also not been able to stem this rot. The Govt. of India estimates that the combined Federal and States Fiscal Deficit for the current Fiscal year will be whopping 10 % of the GDP, as in the past. Fiscal Deficit is not manageable by the current Government also. Subsidies have to be abolished in the Farm Sector and the Petroleum Sector. These are politically very sensitive sectors as these are 'vote bank' linked.
No Indian Government in the past three decades or so, has been bold enough to completely abolish these subsidies. The current Government has taken some bold steps in the past two years on the issue of the said subsidies but was forced to partially 'roll-back' the subsidies due to political compulsions.
We feel like the UTI issue was handled by the current Govt. in 'one stroke' by biting a whopping US $ 1.0 Billion approx. this Fiscal - These subsidies issue in the Farm and Petrolem Sector should be addressed in 'one stroke' by the Govt. of India. It will be a very tough decision but the problem will be solved once for all. It is better to take a hit one time rather than postpone the liabilties to the next fiscal and then to the fiscal etc. We feel this is difficult to implement in India but if political will can prevail to forget 'vote bank' politics - The issue of Fiscal Deficit can be handled. All Indian Politicians will have to join hands 'only once' and tell the Indian public that 'Subsidy Regime' is over and only "Market Forces will decide prices of Agricultural Power, Fertilizer, Kerosene, Diesel , Cooking Gas(LPG) etc.
These two important parameters - GDP Growth and Fiscal Deficit have cast a shadow of gloom on the India Stock Markets. The Union Budget was balanced and gave a boost to the Equity Markets but the Indian Stock Markets failed to move up. We feel the FIIs are 'not pouring money' into the Indian Stock Markets as these 'two macro level' parameters are a big negative.
Tested a level of US $ 388.50 pto on 5th Feb'03. A new seven year high. Our prediction of US$ 390+  was a close call !
Crude Futures nearly touched US $ 39.99 pbbl on 27th Feb'03 in New York. These levels are close to the Oct'1991 high of US $ 40.10. We predicted Crude Oil to test US $ 38+ pbbl.
We advise investors to completely stay away from the Indian Stock Markets as we stick to our prediction that America and its allies will attack Iraq in March'03. We had predicted that America will attack Iraq on or around 22nd Feb'03. We hope, we 'are off by a few weeks' only. America is determined to finish Iraq's arsenal of WMD once for all. We strongly back the bold American position.
Reference date for end Jan'03 is 31st Jan'03. This is weekly closing at BSE. BSE SENSEX could not breach a very important resistance level of 3400 inspite of some good corporate Q3 results from RELIANCE, ONGC etc. PMO finally confirmed big ticket disinvestment of GoI's Equity in PSUs. The cheer brought about in BSE SENSEX was short-lived because of 'Iraq Factor' and some negative indicators regarding Indian Economy's 'Macro Economic' situation. We will briefly dwell upon the above later as below.
BSE SENSEX closed today i.e. on 31st Jan'03 at a very important support level of 3250 - down 3.2% from the level of 3357 which was closing level for end Dec'02. The intra month high and low for the BSE SENSEX for the month of Jan'03 were 3388 and 3199. As mentioned above the BSE SENSEX could not pierce an all important 'bull-trigger' level of 3400. On the downside SENSEX was perilously close to testing the existing 200 DMA level of 3180.
We forecast an attack on Iraq before or around 22nd Feb'03 by US led coalition and hence advise all Indian investors to completely exit from Equities, even if investors would have to book losses on some Stocks. Repeat - Investors are advised to completely exit the Equity Markets and wait till the Iraq situation is completely under the control of Bush Administration. We are extremely bearish on the BSE SENSEX till the time 'Iraq Factor' is fully discounted. We will advise investors to re-enter the Equity Market accordingly. As of now run for cover !
Anyway, no one can predict 100 % about future events and hence the levels to watch for BSE SENSEX are as follows :
R2 3400
S1 3250 S2 3180 S3 3054 S4 2850

S2 is a very important support  as 3180 is a 200 DMA level. S3 is a very strong technical support at 3054. If this level of 3054 is broken convincingly, then we can safely assume that we are in for a
'six month' bear phase for BSE SENSEX.
DISINVESTMENT : GoI finally cleared all doubts about it's Disinvestment Programme and Reforms. Good news after much delay. NALCO and HPCL would be privatized with 'transfer of management control'. Due diligence is already in progress for NALCO by the prospective Bidders. Now they can re-start plant visits. The GoI would however would keep a 'veto vote' in HPCL post disinvestment, due national security reasons, as Crude Oil is a sensitive commodity. Fully justified. These two companies will be sold through 'Global Bidding' process - the best transparent route. SCI and EIL would also be privatized. All these four important companies will be privatized in the next six to nine months. There was a temporary cheer in the Stock Markets after these very important announcements.
BPCL will not be privatized. There will be a domestic IPO for this PSU Oil Major. ONGC and IOC will not be a part of the Disinvestment Programme of GoI, as of now. Nor can ONGC bid for HPCL. This is not good news for ONGC. GoI has other plans for ONGC to make it a total Petroleum Company. ONGC may take managment control of sick 9.0 million tonne Refinery Compnay i.e M/s. MRPL on the west coast of India. ONGC has already bought out AVB's 37.5% equity stake in MRPL. ONGC might be given a nod by GoI to buy the 37.5 % equity stake of HPCL in MRPL and then gain management control of MRPL. It will thus be a vertically integrated and supply Crude Oil to its own Refinery - MRPL.
FULL FLOAT OF INDIAN RUPEE :  GoI announced some landmark changes which are a clear signal towards 'Full Convertibility' of the Indian Rupee(INR). As of now INR is partially convertible on 'Capital Account' and is however fully convertible on 'Current Account' transactions. This was done on account of comfortable foreign exchange reserves with India's Central Bank - RESERVE BANK of INDIA (RBI). India's Forex Reserves are close to US $ 73 Billion. The details of relaxations announced on 'Capital Account' transactions for the INR are available on Indian MoF's Website. This bought cheer to the Stock Markets in India but the same was again short-lived. Another indication of nervousness in the Markets. When good news is discounted by the Stock Markets, we follow the old cardinal principle - 'Bear Market is in Sight'.
UTI MESS : Another landmark decision was taken by the Indian Finance Minister for which we wish to congratulate him. He addressed the problem of India's largest Mutual Fund - UTI, once for all. He decided to get to repeal the UTI Act. in the Indian Parliament and end the UTI mess. UTI will be split in two parts :
a) 'UTI I' : All Non-NAV based schemes with assured returns including the doomed flagship 'US 64' will be transferred to this splinter. GoI will honour it's commitment made to 'US 64' investors for redemption at promised rates alongwith returns to all investors under the other 'Assured Returns Schemes' of UTI.
b) 'UTI II' : It will come into effect w.e.f. 1st Feb'03 and is being sponsored by three cash rich domestic PSU Banks and State owned Indian Insurance Giant - Life Insurance Corp. of India Ltd.( LIC). This splinter will manage all the 43 NAV based schemes of UTI.
The Indian Finance Minister has done a commendable job. He has sorted out the problem with India's largest MF in one master stroke. Although this will cost the GoI, close to US $ 1.0 Billion, as mentioned earlier.
Two other major macro-economic parameters are a major cause of serious worry for the GoI and we hope the current Finance Minister will take some bold steps and arrest the rot.
First - The ever growing 'Domestic Debt'. Foreign Debt is manageable on account of healthy forex reserves. The major worry is the combined Federal and State's INR Debt. S & P - reaffirmed Indian local currency (INR) rating a notch below the Investment Grade at BB+. Reason - Indian Federal and State's combined local debt is a whopping 70 % of India's GDP. This figure is too high to compare the likes of developing countries like Malaysia, Philippines and Taiwan etc. The Federal Govt. and State Govts. resort to borrow Rupees from RBI but fail to return the principal amount. This will lead to compounding of interest rates and a national disaster if the Govt. spending goes unchecked and unabated. There is too much of 'leakage' in the financial system and this has to be addressed by the Finance Minister. We are afraid as he has little choice as populist programmes announced the Federal Govt. and various State Govts. gobble up huge funds which are borrowed ! Who will bell the cat !
These populist measures are vote banks for the politicians. Federal Govt. at center in Delhi can resort to printing of Indian Currency i.e. 'Indian Rupee' in bulk and retire the Federal Debt. But, then what about inflation ? God only can help as per our understanding !
Second - Low Foreign Direct Investment (FDI) flows into India. This FDI is not 'hot money' which can be remitted back at short notice. This money in US Dollars or Euros is brought in by MNCs to set up base in India or the host country. India is losing out on the FDI front to South East Asian rivals viz Philippines, Malaysia, Taiwan and China due to better investment climate in these countries. Dragon China leads the pack in terms of FDI. Indian FDI is not even US $ 3.0 Billion per annum on an average for the past couple of years. FDI into China was in the region of US $ 20 Billion for the past two years. China's Forex Reserves are close to US $ 200 Billion.
Top three challenges which India must tackle in the next six months to attract higher FDI as per economists are :
- Simplification of Tariff Structure. This needs rationalization.
- Reduction of Fiscal Deficit. This Deficit is alarming in India.
- Reduction of 'Unplanned' Govt. Expenditure.
We feel that India can put it's act together and all it needs is the 'Political' will. Subsidies and all other populist measures must be axed, GDP growth should be enhanced and Govt. expenditure should be controlled so that Fiscal Deficit is under control. As of today cutting across all the political party lines, it is fair to conclude that this Deficit both Federal and States put together is around alarming 10 % of GDP for the past decade or so. Every Govt. barring a one or two countries, spends more than it earns but various Indian Govts. in the past two decades or so are not able to manage this figure which now stares and glares at a whopping 10 % of Indian GDP around US $ 540 Billion. From where will these funds come into the GoI's Treasury to bridge the Fiscal Deficit ?  God only knows ! Our politicians have no answer as to them 'vote bank' is more important than this monster called 'Fiscal Deficit'. But if there is a strong political will, this issue can be addressed like the UTI mess is now settled once for all.
GOLD had it's dream run. It touched a new high on 27th Jan'03 at US $ 372.50 pto. Platinum also touched a new 16 year high.  
Let me repeat - Sell all your Equity holdings asap as we predict a US led attack on Iraq to overthrow Saddam and get all WMD in safe hands for destruction under UN supervision. This attack will shatter the global equity markets. 


We wish all investors and friends a prosperous 2003 !
For the month of Dec'02 we have taken the closing date as 3.1.2003 as it was the weekly closing at BSE.
BSE SENSEX closed today i.e. 3rd Jan'03 at a level of 3357 - up 2.6 % from the the close of 3270 level of 2nd Dec'02. The BSE SENSEX was bullish as predicted. The Intra Month high and low for BSE SENSEX for Dec'02 were 3414 and 3189. The SENSEX could not close above the crucial resistance level of 3400, even for a day in Dec'02. Prime reason being 'Non-Clarity' on the time frame for the GoI's Disinvestment Programme and the 'Iraq Factor'.
The Indian Prime Minister announced that Disinvestment Programme would be on course and Reforms are here to stay. But on ground there are slippages on the time frame for Disinvestment of almost all the 'big-ticket' companies - NALCO, HPCL, BPCL, SCI, EIL etc.  The GoI would not be able to meet it's Disinvestment Target of Rs. 120 Billion ( US $ 2.5 Billion) by 31.3.2003 - which is the end of the current fiscal. GoI so far has not even achieved 25 % of the above target by way of 'Actual Disinvestment'. Regrettable and sorry sate of affairs.
There are a lot of stories doing rounds in the marketplace regarding how the GoI would bridge it's burgeoning Fiscal Deficit, in event of the Disinvestment Target not being met ?
We feel the GoI has no option but to follow the 'Milch Cow Syndrome' - The Indian Finance Minister wishes to milk ONGC, IOC and GAIL by way of 'Special Dividends' before 31st March'03 to makeup partially for the shortfall in the Fiscal Deficit. This should be stopped. These giant Oil and Gas PSUs have cash reserves but are not meant as 'freebies' for the Finance Ministry. These three companies have huge expansion plans in the pipeline. Their growth will be seriously effected, if they are 'Milched'. Some estimates are that the Indian Finance Minister will prevail upon the Indian Petroleum and Natural Gas Minister and these three companies - ONGC, IOC and GAIL will 'fork-out' Rs. 30 Billion (US $ 625 Million ) as 'Special Dividend' to the GoI before 31st March'03.
GoI owns close to 90 % equity in ONGC and IOC. Hence, majority of the proposed 'Special Dividend' declared as above will go to it's Coffers.
We strongly resist this 'Milch Cow Syndrome' and the FIIs also do not appreciate this stripping of 'cash rich' companies. FIIs sold Stocks towards the 3400 level of BSE SENSEX as this news of the 'Syndrome' came into the marketplace. We feel like most of the economists that GoI should privatize even ONGC, IOC and GAIL - so that there is nothing to 'milch' and no dispute between the Finance and Petroleum Minister. The GoI is right now not in favour of privatizing ONGC and IOC. These could be the compulsions of 'coalition politics' in India and Petroleum Minister's reservations on the issue. But the FIIs do not bother - they will invest in better emerging markets and dump the likes of HPCL and ONGC !     
We also feel that the way GoI 'completely milched' State Owned Communications Giant - M/s. VSNL, by way of 'special dividend'  last year before privatization, a similar story will be partially repeated this fiscal with ONGC, IOC and GAIL. It may be noted that these three companies are not being privatized but still will be 'partially milched' as per our understanding to the tune of Rs. 30 Billion in total ( US $ 625 Million ) to somewhat bridge the Fiscal Deficit. It is a shame to follow this track by the GoI. This is no way to bridge the Fiscal Deficit. GoI should enhance enhance annual GDP Growth, Cut it's extra expenditure, Raise direct tax collections etc. rather than loot and strip assets of PSUs. 
Our old favourite Stock  - ONGC is the most effected as it has huge cash reserves of Rs. 75 Billion ( US $ 1. 56 Billion) as of date. This is inspite of ONGC already having paid to the Finance Minister
Rs. 100 Billion ( excess of US $ 2 Billion) by way of 'Special Dividends' and 'Cess on Crude Oil' in the last 24 months. How will ONGC raise Rs. 450 Billion ( US $ 9.4 Billion ) over the next five years to fund it's domestic and overseas expansion operations, if GoI 'milches' it and allows it to graze on barren lands ? This must stop not only for ONGC but for IOC and GAIL too - who also have huge expansions plans over the next five years.
Privatization of NALCO, HPCL and BPCL has been confirmed by the highest office in the Nation - PMO (Prime Minister's Office). This does not send a very positive signal to the potential investors in India and overseas.
1. NALCO would be privatized as per earlier plans with GoI only keeping a 26 % stake. The management control will be handed over to the 'strategic investor' who will be the highest bidder. We feel this exercise will not over by 31st March'03. GoI sticks to this date officially so far.
2. HPCL - No clarity on how much equity will be sold, when and to whom and at what terms ? There are a lot of rumours doing rounds in the corridors of power in the North Block and the Disinvestment Ministry. We also have done some homework and have learnt from confirmed sources 'on condition of anonymity that ONGC has received an informal nod from North Block and Ministry of Petroleum to Bid for 25 % Equity of HPCL with Management Control. The ONGC's bid will be very aggressive as HPCL has about 4000 retail outlets nationwide for sales of Gasoline, Diesel and Lubes etc. Please refer to our 'Special Update' on ONGC as of 16th August'02 ! Our forecasts seem to be on track !
The likes of SHELL and RELIANCE also value these outlets spanning the entire Indian Nation. The Bidding process is still not clear - will it be an Open Tendering System like IBP was privatized or will the Bidding Process be a 'Semi-Open' type wherein only a few players are invited by the GoI ? The Disinvestment Ministry wants an Open Global Tendering Process whereas the Ministry of Petroleum wants ONGC, GAIL and other Indian Companies ( viz.  RELIANCE etc. ) to Bid for the 25 % of HPCL's equity with Management Control. The successful bidder will have to make an additional 'Open Offer' for 20 % of HPCL's equity to the general public as per the SEBI's 'Takeover Rules'. 
See ONGC and HPCL soar in 2003 ! Just like IBP in 2002 !
3. BPCL - This PSU Oil Giant will not be privatized. This is done to keep the 'Socialist Partners' happy in the Coalition Government in India. This does not augur well with FIIs and other Global Investors. There are plans to offload 35 % of BPCL's equity in the domestic market by way of an IPO. Time Frame not known.
We feel with the GoI's Disinvestment and Reforms Programme on a slow gear the Indian Stock Markets will be range bound 3250 to 3400 in Jan'02 :
R1 3400 R2 3600
S1 3300 S2 3270 S3 3250

Investors are advised to stay invested in NALCO, HPCL and ONGC in the PSU Sector. These Stocks Closed at Rs. 93, 291 and 363 respectively as of 3rd Jan'03.
Investors are advised to book profits in INFOSYS at around Rs. 4800 to Rs. 5000 levels. INFOSYS closed today at Rs. 4800. This leading Indian Software Giant has surpassed our estimates.
We feel and predict that Bush Administration will attack Iraq in
Mid or End Feb'03 and push for a regime change. The Americans may also be forced to attack their close ally - Pakistan, during the same period, as this is the hot-bed of breeding terrorism. The Americans are aware of this by now and one is learning from the media that there are some problems with the American troops and the Pakistani Army along the Pak-Afghan border.
Global Stock Markets will slide down with Crude Oil testing
US 38+ pbbl and a bear phase will persist in the Global Stock Markets till America has achieved it's mission in Iraq.
Please refer to our Update of Dec'01. We advised HNWIs to switch from Equity to Standard Gold. That time Gold was quoting
US $ 254 pto. Gold touched all important level of US $ 354 in Dec'02. An appreciation of approx. 40 % in 12 months ! We predict Gold to test US $ 390+ by September'03.
We advise equity investors in India to keep an eye on the 'Iraq Factor' and exit completely from the market if there is any strong indication of this development. Speculative Investors can also exercise 'put options'.  
We are not recommending any additional shares as we feel markets will crash worldwide including India due to 'Iraq Factor'. We will then recommend new shares in the Indian Banking and Software Services Sector. We are bullish on these two sectors in the Indian Economy. We have plans to enter this segments after the 'Iraq Factor' is discounted.
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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