On CRR hike .....says Economists

So long as economy is growing and GDP has not shown declining nos for even one quarter, there was no reason to panic and resort for monetary measures such as CRR rate hike to combat inflation. In 1992 when Mr Manmohan Singh was the Finance Minister we had a GDP
growth of 4% with inflation in double digit. But now due to huge inflow of funds and liquidity the economy is on roll and has taken off very well. We require bold reforms which can accelerate the pace of investments as well as FDI which can in turn lead to higher cycle of
GDP.

It is also argued that the inflation of 6.5% is in fact could have been 9% had Govt not resorted artificial curbs on steel, cement, sugar, fuel etc. Why is then Govt doing this even at the cost of
serious impact of slow down due to the reduction in credit expansion....?

The ruling Govt failed miserably in the recent elections in two states and chances that it may not fair well even in Uttar Pradesh in coming elections. SP has a strong hold irrespective of Hon'ble Supreme Court's direction to CBI to investigate assets of Mulayam Singh. SP
are the front runners. SP has a strong backing by India's leading corporate house and India's no 1 brand ambassador.

Only 2 years are left for election at the center and if inflation is not controlled then there could be big set back for the ruling party. This is simply because in India majority of the voting community is below poverty line and they do not understand growth, FDI, globalization, high standard of living etc. For them ROTI KAPDA aur MAKAN are three essentials of life and inflation has direct nexus with all these three elements. BJP lost last time only due to the single factor of wrong campaigning of FEEL GOOD FACTOR and holding the election in May where water played crucial role. Even Chandababu Naidu who created Cyderabad which is respected even by Washington got lost to this sole factor.

Naturally going forward, it can safely presume that political motto has taken over the country motto and therefore high priority has been assigned to inflation.

It is also asserted that the timing of this CRR rate hike is really a matter of debate...? Few economists say that Govt could have differed this CRR rate hike by at least one quarter to see the monsoon effect.
If monsoon is good once again then probably the inflation could have been tackled by higher agricultural produce. This is also due to the fact that this could be the last CRR rate hike and for Govt to raise further CRR rate is too difficult.

RBI is exhausting the monetary measures speedily which will leave Govt to take other measures.

How far this will impact market....?

The immediate reaction has to be knee jerk reaction as the timing was really unexpected. The banking stocks will be largely affected due to CRR shock whereas manufacturing sector could pass on its impact due to strong demand pattern.

However going forward, it will have neutral effect on the market for one that this could be the last rate hike and market always likes certainty.

One more aspect ought to have been taken into account is that Govt had already sucked Rs13000 crs couple of months back and now Rs 15000 crs but at the same time allowed to use 5 bn USD from foreign exchange reserve which is equivalent to the liquidity already sucked and hence can be a neutralizer.

The factors which are likely to govern market in coming days are monsoon, UP election, corporate earnings, central election and pace of fresh reforms. Most of the funds have increased their exposure to cash from 7% to 20% odd percentage.

Sectors to outperform are realty, pharma and steel. Mid cap and small cap will be on invent trajectory and will catch valuations of peers whereas A gr shares where FII ownership is large will be more or less capped or have limited upside due to portfolio churning.

Volatility will rise further in most dangerous way due to divided opinion of experts on market which could kill large retail clienteles indulging in speculation. The only way to survive will remain to educate yourself ...........

Chamatkar - SSDL

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Kal Phir Aayega

Not my views .. I only post their views.. There are followers of Chamatkar .. this is for them.. if you don't follow them .. just ignore ..

There was nothing wrong in the market which made market operators to create this kind of V share (to be realized) correction. Correction is over and come what it may market will cross previous high in next 30 days. Once again I am telling bolding that markets will cross 16 K before Dec 07. My conviction is based on certain factors which our economist shows to us and also with my reading of the market. I am sure it is not easy bullet to digest at this given point in time.

CRR hike is really positive and market drivers used this trigger to create an ideal platform for Wave 3 rally starting from tomorrow. It all started with RBI which killed the entire lending industry against shares which in other way saved millions of retail investors who were deprived of this facility. This was factored in by the big operators. They even did not like Cairns getting valuations 4 times better than RIL an Indian MNC. Third important factor is the under leveraged positions and funding was available to only HNI and big drivers for whom 1000 points correction is digestible and therefore we have not seen any stains of blood on retail investors especially who are trading in B gr. Sanguine still takers though RIL, ACC and SBI lost 20% each in less than 3 days. This will prove once again that we should not trade intra-day as well as in derivatives. The only way to make money is B gr shares. Fourth important factor is the community of arbitrage (FII) started selling cash because the difference in cash stock and futures stock started rising beyond 1% which is a good spread. Rs 20000 crs is the arbitrage position which can vitiate any market on a given day and for FII manipulation becomes easy. Simply sell in cash in huge quantity which will confuse the best in the industry and buy in futures. The reversal will have reverse impact with cash stock prices rising. This will also explain why they FII cash plus and futures minus.

Only one thing I will repeat again is that correction never comes when you want it and when come you can't buy it. Ever since 12500 FII wanted correction of 1000 odd points not because correction was due but simply they were feeling the heat of left out in the second wave too. However at 14 K they echoed that if you talk of correction Sensex target 20 K and no correction Sensex target of 30 K and suddenly the correction started. Its not a great deal that market has corrected. Market is taking U turn because now sellers are afraid to sell fresh at 12800. Who bell the cat first is the situation for all the funds because all fund managers are alike and lack the skill and dynamism our Indian operators like KP, RJ and AK possess. This is the precise reason only few funds like RIL MF are known as most prolific and dynamic funds.

When we were chatting on market and I was suggesting a bottom of 12800 to one of FII fund manager, he disagreed and passed a joke…"Some Big FII wanted to invest in India but had condition to enter at 10,000. He approached; FM said no problem Dear….. we will bring in 7 days flat and rest is in front of you." Well as far as my opinion is concerned market has bottomed out and the recovery will be equally sharp.

I kwon lot of investors must have criticized us including me for our failure to predict market movement. We believe your next door neighbor should always be a critic especially if they belong to a category which has no identity of their own. Hawa me taash ka GHAR nahie banta, Rone se bigda mukkaddar nahi banta, Duniya ko jitney ka hausala rakho yaro, Ek jit aur haar se koi sikkandar ya faqir nahi banta. KAL PHIR AAYEGA……

Best picks in U turn are Bajaj Auto, RIL, Sterlite, IPCL, Tisco, Tata Motors, Maruti and ACC till budget. I expect fireworks and only after 2 week or as and when market crosses earlier top of 14 K investors will realize my version. Please save this article till the time I will come back to you


Thanks Vinit

Bears on rampage ....

When it was thought that market will take it forward beyond 14K market tanked and yes it was victory of bears on a given day. I doubt whether they will succeed again on Monday with the same veracity. At least for the day my reading flopped and I expect weak opening on Monday with another 100 points downside as there was no short covering at all till the end of the day. It is very clear that if operators wanted to reverse the game with the word go on Monday then short covering had to happen today. Even if US market goes by 3% today our market will correct further on Monday. Therefore avoid buying on Monday morning even if Sensex open on plus side and wait for correction of 100 odd points on lower side for fresh buying. At the same time do even think to go short because Bulls want only that too happen……

RIL, SBI, ACC and Tisco will remain my focus stocks where I will bet blindly irrespective of the fact these stocks are momentum stocks (except SBI) and will remain volatile with Sensex movement. Monday Cairns issue is opening and RIL and ONGC will get re-rated. Today's movement should not even be considered as major correction though majority of traders echoed that view.

We have initiated a buy call on a large cap company though the price is like a small cap. Apple Finance Ltd. the beleaguered Atul Nissar co having huge property besides the diamond plaza at BKC where the current rates are Rs 30000 per sq ft. Co plans to sell around 2.4 lac sq ft at an estimated selling price of Rs 25000 per sq ft raking in revenue over Rs 600 crs. Costs could be Rs 48 to 50 crs whereas tax outgo could be close to Rs 100 crs. Debt is around Rs 200 crs after OTS which could leave around Rs 250 crs with the co the value of which comes to Rs 45 per share. It is not sure how much money will come to the co and how much will be out of books is anybody's guess. Even if that is discounted I think there is fair chance of making at least 200 to 300% returns is not ruled out. Permanent Magnate is another realty story in Mumbai where operators are active and could flare up like a rocket. A cartel close to Enam and T Rowprice has accumulated enough shares over last one year and now just started the price movement. Earlier at Rs 84 we had initiated buy call on Elnet which is never known for its realty. Today when broke this story to a leading fund the stock hit upper cct of 20%. It has huge land which was earlier outskirts of Chennai and now has within the city limits. Stock has potential to become 10 baggers from here.

The buzz is not getting over here….the biggest ever Kolkata realty story is yet to be unfolded in market is Gillander Arbuthnot. Co has reported net profit of Rs 8 crs on equity of Rs 11 crs for Sept quarter out of its tea, construction and real estate business. On merits alone stock should get valuation of Rs 200 plus. Its property is running into millions of sq ft which co is going for development post de-merger of realty division. I would rate this stock as one of the best stock in Indian terrain and suggest all investors to have at least 500 to 10000 shares with a vision of 1 year where value unlocking will happen.

Please bear in mind whichever stock we had chosen from illiquid belt has become liquid in a short span of time. Binani, Crest, Century ply and Josts all went on to become rocket. The supply is coming from the fund whose wish list is that the Gillander should go below Rs 100 where they want to make some deals then rig up the price. At the same time there is a smart investor whom I know personally has accumulated over 1 lac share so far and in a mood to acquire another 3 to 5 lac shares between Rs 100 to Rs 125. Therefore every time this stock goes to a level of Rs 100, value buying starts. Once this crosses Rs 150 level the desperate fund will come forward for buying.

"The three great essentials for achieving anything worthwhile are hard work, "stick-to-it" ingredient, and common sense." If you follow the same in investing in stock may be you too make tons of money like all intelligent market wizards do make. Buy when nobody is interested and no volume and in bulk with conviction and sell when market demands it. All big men earned big money doing this…..

Thanks Vinit

Chamatkar - Chakry - Rollover in process....

Microsoft picked 10% stake in TCS China which was followed by Tata Investment stake sell. In short RNT is for stake sell in TCS en route India, China, US or Mauritius on order to meet the Tisco costs. End of the day Tisco debt component will become manageable and analysts will be compelled to re-rate Tisco. I personally believe that Tisco has potential to cross Rs 800 in next 6 months. Sterlite, Hindalco and Tata Motors along with MTNL will remain our best picks.

Market corrected a bit because market was expecting big B kind action from RNT in Tisco board meeting which was a bit disappointment and speculators unwinding RIL positions once it failed to cross Rs 1290 decisively second time in 2 days. Well, we remain bullish not much worried about rollover though OI has crossed all time high at Rs 55000 crs. It includes Dec figures of Rs 9000 crs and options of Rs 19000 crs which was hitherto never crossed Rs 15000 crs. In May 06 it was Rs 15000 crs. The gross stock future is just Rs 25900 crs which is well below the May 06 figure and therefore I do not think so market is overbought though figures suggest artificially so. Manipulation of KEY nos is the history geography and science of Indian stock markets whether it is in term of nos or disclosure requirements. E g Exchanges requires small and retail investors to disclose all traders above .5% whereas FII buys bindhast without any disclosers because the penalty is just Rs 5000 for the same which are they are ready to pay on each trade and every day. Double standard is dangerous as well as against the interest of retail investors. Operators always manipulate various loopholes in law and take retail investors for ride such as the cash settlement is the derivative segment instead physical settlement which still proves that we will require another 20 odd years to match the global standards in reality though on paper our speed of globalization is largest. D mat scams, banking scams are happening here where penalty of Rs 116 crs is levied by the market regulators and going by past experiences the quantum of revenue loss could be at least 100 times bigger than the penalty figure. We have no option to carry on like this.

B gr stocks were smart movers today especially operators driven where the luring effect is quite large. At Chamatkar we have adopted the approach of bottom up stocks so that retail investors should not get stuck. We will continue to avoid all market friendly daily rising stocks which will correct over 50 to 100 pc once market loses its steam. In fact, few of old recommendation such as Uttam Sugar, Kothari Sugar etc have collapsed vertically though fundamentals do not suggest so. This is going to happen the end of every Bull Run and will not be an exception even this time. Therefore always try to exit as and when suggested by MB team.

Thanks Vinit