Investonomics-ManFina-Series 6

Markets Round up-

Nifty cheered 4875 in today’s session and sensex crossing 16200 mark clearly signaling a good pullback as mentioned in my Series-4 on 26^th December 2011.Especially the value buy proposition paid much more. Stocks in mid cap have moved up significantly (20-40%) as compared to 26^th Dec rates. This pullback can last up to 5250(200DMA for Nifty). At these levels we need to be cautious as further trends will be decided by the news and events prevailing at that time.

Expectations from Finance Minister Pranab Mukherjee will also start building up by the end of Jan 2012 along with the much expected Interest rate cut by RBI. I feel that these events will more or less keep Stocks in India to behave in a more resilient manner than in world. Also Govt of India’s plan to raise funds from pledging shares has also subsided short term liquidity problems faced by Government and due to which 10Yr GOI rates has gone down to 8.3% from 8.8%. This has also generated Positive returns to the investors who have started investing in G-Sec as per my recommendation in Series-4. Also I feel investment in Long term G-Sec papers to yield better risk/reward returns going forward as ample liquidity available in World markets. Majorly, I feel these money will chase more of Debt(G-Sec`s) across world as compared to riskier asset class like commodities or Equities, but one cant rule out rally in Equities , only question is how much rally and till what time?

The fundamentals of our economy remains as it were when I cautioned about India’s burgeoning Fiscal Deficit. The only good thing that has happened in last few days is Govt of India has been able to raise funds & since it has given free hands to banks to give NRIs the highest ever FD rates, it has for a while stopped dollar outflows from the country which has brought down Rupee to 51+ levels. I have indicated the same in my blog earlier in Series 4 itself. This whole exercise is of short term in nature and we cant say that everything is alright.

Results Season-What to expect from Corporate India?

January will be the season of results of Q3 from Corporate India. The results will be no different that you can expect as for the last few months we have been noticing Negative IIP, so not much expected as well, a dollar there and a pound here! Only some Fund managers work will be left as they will be churning their portfolio quoting some or the other reason. Q4 being the budget season as well, markets will start building unwanted expectations from the budget & RBI. This has happened many times and it happens every time. You may find some Rail Stocks and Fertilizer stocks going up.

The problem of plenty, The problem of NIL-Brain Re-gain!!

Unemployment in EU & US has caused unemployment in many countries, rather I will not blame EU or US but it is the sectors dependence on each other in Globalization that creates or destroys Outsourcing. Many Indians have settled abroad in last decade mostly in Middle East(as it was a tax haven and many companies invest in India through these Countries) and Some in US & Europe. Now since all the EU countries including the US has put a control on outsourcing, I think in a year or two we will be finding plenty of Indians will be returning back to India along with whatever money they have earned and more interestingly this is not because they want to come down to India but because they will not be left with any option rather that to come back to India.

Now this will be an opportunity for the us if taken in right earnest, but alas, do we have Infrastructure support to handle these elite traffic? Nay or NIL

I have found in some recent readings that this will not be a reverse brain drain rather we should call this as Brain Re-gain, but my little mind asks a simple question, whether we will be able to handle this Brain Regain efficiently or let these Brains go in Drain? A Trillion Dollar opportunity with a Billion Dollor Investment!! Is India ready to take this?????????