Market Matrix of IT Sector as on 25 Feb 2008

By krsna Khandelwal – A veteran market analyst

Friends,

IT sector saw the heady days in 2000 when its discounting at 95 PE and made me then particularly uneasy . It was the handy work of Ketan Parikh and the story is well known to you all. The same IT sector has now been given a discounting of just 8 PE. Its share in total market capitalisation has come down to 11% from the high level of 25%. This is when the IT companies have been seeing an steady rise in profits and top line as well. In the process this sector has become one of the ordinary sectors and has hardly any risk if invested in. Only point of caution to be exercised it to keep company of the leading companies. In fact the leading companies have been investing in real estate over all these years in order to house their expanding work force , both for work and for living. This investment itself has appreciated in real value terms due to astronomical rise in the value of real estate in the cities where they have their major presence. This may be seen as an stabilising factor for these companies and works as entry barrier for the new entrants. The sector still has lot of room for growth. So, three cheers for IT sector.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market

HCLTECH @ 265 as on 6 Feb 08 after q3 results

HCLTECH @ 265 (06/02/08) gets 954 panch-tattva points and may be bought on declines for long term.

Previous Recommendations:

@605(22/12/06) :975-You may get out of this on surges without looking back.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market

Market Matrix: Current Economic News Analysis

By krsna Khandelwal – A veteran market analyst

Friends,

Information Technology Department has drawn mega-city plans which are identified as investment regions for hardware an software companies.Land acquisition and development of the region will be done by the states. The IT sector is preferred child of govt , no doubt.

Govt suggested to oil PSUs to issue bonus shares who have in turn declined to do so on the pretext of under-recoveries which will make it difficult to maintain yield post bonus issue. Both parties are have reasons but I have many a times brought before you the requirement of a firm predetermined policy regarding oil pricing rather than whimsically acting in that direction. This is one area that should be immediately paid attention to.

IOC want govt to raise petrol prices by Rs 8-9 per litre to meet Rs 120 cr deficit per day, a tall order either way. In West Bengal , petrol at refinery gate is Rs 20.39 per litre while motorists have to pay Rs 46.86 per litre at pumps.

Singur is abuzz with activity and the Tata Motors would change the face of region without doubt and would establish West Bengal back as an important automobile manufacturing state.

Four Indian banks , namely, SBI,ICICI,BOB and BOI have to book mark to market losses for exposure in US Sub-Prime securities. BOB has however clarified that it may not have to do it.

Licensing for banks may be done away with in India . RBI says there is now no need for it as the banks are opening branches in rural and semi-urban area on their own initiative. The license free regime for the banks will be hotting up competition in profitable centres and thereby will affect profitability of banks.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market

Market Matrix: IT Sector and BRIC nations

By krsna Khandelwal – A veteran market analyst

Friends,

Most of the incremental demand is coming from BRIC and more particularly from India and China in respect of commodities and manufactured goods. Now, IT sector would also be seeing demand for IT services coming from these two countries. The point is that India may take care of its own needs, what about China. Will it have to look towards Indian IT firms for its IT solutions. Indian IT firms have to find means to serve these two nations and also be able to set right their dollar related problems.

It should be IT next and I think accumulation is going for the pace in IT stock trading is very gainful.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market

Market Matrix: Economic News and Market Analysis as on 28 Nov 2007

By krsna Khandelwal – A veteran market analyst

Friends,

Limited Partnership Bill would soon be cleared. This is a step in right direction and would open possibilities of partnership between people with common business vision but no personal history of mutual trust. Another important feature is that the stepping in shoes of outgoing partner would be easier and the continuity of business will not break.

RPL share price movement has been such as to give rise to doubt of manipulation. Price went up in a frenzied manner and than came down to under 200/- per share after scaling high of beyond 290/- in a short time. The Reliance management sold off big chunks at an average price of around 230/- per share and enriched the company by over Rs. 3000 crs. There has been enrichment of some at the cost gullible investors. I expect the price to touch still lower levels before the production starts.

Dedicated eastern and western freight corridors would entail investments of over Rs.28000 crs and the plan has been given a green signal by the cabinet. Eastern corridor will take about five years to complete and would begin at Ludhiana and pass through Saharanpur, Khurja and Allahabad in U.P. The western corridor would cover the distance between JNP (Mumbai) and Delhi. On completion, a useful link in fast movement of goods will be established.

ONGC would have to absorb Rs.7448 crs of subsidy burden during first half of current accounting year. The jump in the crude oil prices by about $6.67 per bbl translates in to $1.88 per bbl gain to ONGC (roughly by 28%).

RBI governor says that any disorderly adjustment in global financial markets will result in sharp rise in interest rates. The local banks would face greater threat of defaults in loan portfolios.

FM says that the state owned banks will not be allowed to have lower than 51% holding by the govt. and this poses a problem fore the banks to get adequate funding while the expansion business takes place. This needs to be amended in an era where the competition etc has gone up and the funding requirements of the banks has increased enormously.

Some 2.22 million D-Mat accounts have been frozen in India for want of PAN particulars. I think there is case for defreezing these accounts; however, as an incentive to give the PAN numbers some extra charges may be levied up to the time the PAN particulars are supplied. Further, the transfer of the holding may be allowed in to an account, which has the PAN particulars.

Income Tax dept. want a levy in shape of ‘Capital Transaction Tax’ on property deals based on circle rates to take care of under reporting of the value of transactions. As per an estimate 40%, payment in these transactions is settled through cash payment out side of books. In 2006-07, the number of real estate deals worth over Rs.30 Lacs went up by 40% to 109000 transactions across India.

The attrition rates in IT sector is climbing inspite of measures by the companies to keep it in check.

Today Nifty closed at 5617 after the slide for the second consecutive day. This is after a surge in US markets yesterday and has actually not shown a linkage with the world markets after a long time. The month of December will be seeing the liquidity tighten due to last but one advance tax installment for the accounting year 07-08. It may now be expected that the range bound trading in stocks will have downward bias at least till the end of December.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market

SATYAMCOMP @ 461 (23/10/07) Post Result

SATYAMCOMP @ 461 (23/10/07) gets 955 panch-tattva points and may be bought straight away, add some more on declines.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market

Market Matrix: Future of Indian Stock of Market

By krsna Khandelwal – A veteran market analyst

Friends,

Robert Shiller, an economist with Yale University, developed some thing called ‘cyclically adjusted PEs’ (his book’s name is ‘Irrational Exuberance’) which foretold the bursting of the tech bubble in 2000 in USA with reverberation back in India. The method applied to 1929 gave the same conclusion when the whole world faced a bad sort of recession for some years. Not aware of the Shiller theory, I had too predicted the fall and continuous fall in share prices of IT sector companies in 1999-2000. It so happened that more than 70% values were lost by 2003. I had concluded in 2000 that the market cap of Infosys Technology that time was enough to buy the whole stock of residential accommodation at the then prevailing rates in Mumbai. It seemed to me a very far-fetched valuation for a company as young as Infosys Technology and with as little investment actually made as was done by Infosys Technology. till then. I had been harping on the high PE tune but with less of conviction due the enormity of IT scope and the growth rate of the company but this too always remained at the back of mind. At that stage, I even invited ridicule by friends and other market participants but the mental calculation about the economic and other scene were not allowing me to moderate my statement about the impending disaster for the IT sector investors. Things are pretty much the same way in India in respect of host of sectors today, namely Housing and Construction, Infrastructure, Oil and Gas, Capital Goods, Metals, Banks and many PSUs. I have again stuck my neck out to say that the markets would have to pass through 18 to 30 month period without giving returns, at least not as much as would be earned by way interest on the equivalent investment and then only the base would be ready for the next jump of the Nifty to cross the magic 10000 mark in a swift manner, provided of course the economic world order is not altered in a very material way (this will have to kept a watch on).

Please excuse me for the strong opinion, which may unnerve the ordinary investor, but I hope this works as a warning signal too and save their skin, if not the pant and shirt. I may clarify that this has been said not entirely as a hunch but has a solid basis and complex calculation also at the back of it. The flavour of which will be found in my ‘Panch Tattva Teknik’ based stock specific analysis.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market

ROLTA @ 582 (22/10/07) Post Result

ROLTA @ 582 (22/10/07) gets 1009 panch-tattva points and buy on declines and sell on surges.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market

Market Matrix: Indian Stock Market as on 5 May 2007

By krsna Khandelwal – A veteran market analyst

The Nifty closed at 4117 (lower by 53 points) and seems still in an uncertain territory. The times right now require the nerves of steel to deal effectively in market. The hit and run should work well as strategy until the trend is noticed. At such junctures, survival is the most coveted goal.

Most listed companies are finding their shares being picked up by the founding fathers; it is only the IT sector, which has seen dilution in promoter stakes. You may recall that on account of this possibility I had told you to be out of IT sector inspite of the robust numbers generated by them, let the dust settle before you get back in to IT scrips. Globally IT companies are seeing more consolidation. Microsoft Corp. may buy ‘yahoo’ for around $50 billion.

Many companies (around 240) have been found to be flouting the listing norms on account of public holding of at least 25% (10% where the M/Cap is over Rs 1000 crores and/or not less than 2 crore shares have been issued). I think that there should be at least 35% shares in public hands for the companies to qualify for the concessional corporate tax (lower by 5%) and to make matters more in favour of the public, the dividend distribution tax should be done away with where the public holding is not less than 51%. These two measures will impart depth in markets, increase public participation and save the ordinary investors from the machinations of the greedy promoters and operators. This will also make public more inclined to invest in risk bearing instruments and thereby hastening the pace of industrialisation and better organisation of the companies.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market

Market Matrix: Indian Stock Market after recent correction

By krsna Khandelwal – A Stock Market Vedic Theory proponent

Market is up by half a percent and is consolidating, if this phenomenon goes on for some time, the stage will be set for the upward move for about three months. Cement stocks have now stabilised and may see some quick strides upwards when the profits may be booked. The IT sector is giving very tough times to investors and are behaving in an out of character manner. One may reduce stake in this sector. The banking sector is OK for the time being . Pharma sector seem healthy as also the FMCG. The auto sector requires some breathing time to adjust to new reality of the higher interest rate regime. About the telecom sector I am not too certain right now, it has to be watched for some time coming to conclusion.

There is increasing interest amongst the public to invest in equities as they perceive markets at normal level and expect better returns over the coming year. The younger amongst the public are less risk averse too. This is a good sign as ultimately Indians in general have to have better participation in the equity markets, we have looked at the FIIs for direction for far too long and 2007 is different than 1997. There are many more decent income families now as well as the awareness about the market has increased and on top of every thing the convenience to invest and trade is perfect. MF industry has matured enough and corporate governance as well regulation of markets is far better today so after a lull the new thrust is naturally expected.

Hari Om

BIRDINFO Stock Rx – A Vedic Prescription for stock market