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Information Bite

by Prahasi Paper Pvt Ltd - [private circulation. Weekly Newsletter] - email: information.bite@gmail.com

Opportunity is missed by most because it is dressed in overalls and looks like work. --T. Edison
VOL. 1 ISSUE 30 Weekly
Story of the Week 15th March, 2008 Change

Has the stock market bottomed out? 15761 q 215

International credit markets are in a crisis and


4746 q 26
the stock markets have been shaky. Nobody is in
a position to react to the big macro issues such
as where the dollar is going, what is the likely Inflation rose to over 9-month high at 5.11 % for the
GDP growth of US or China, and so on. For every week ended March 1, Vs 5.02%, due to rise in prices
of some manufactured items and aviation turbine fuel,
smart person on one side of the question, there is
dashing all hopes of interest rate cuts by the RBI to
another smart person on the other side. boost the sagging industrial production.

As far as the valuations are concerned although


the Indian markets are now trading at 14-15x
FY09E, and a large part of the froth generated is In May, the focus will be on the Monsoon forecast.
now out of the system, the sustainability of any In June - July, may be the talks of election and
upward move in the market clearly depends on subsequent impact on economic policies will keep
global factors. the market guessing. All these unpredictable
events are pushing sellers to sell aggressively and
We feel that the markets are trading closer to buyers to trade cautiously in the market resulting
fair fundamental value but a minor down-move is in a sharp fall. The market is facing a crisis of
not ruled out in the short term. One key deciding confidence rather than shortage of cash.
factor for the Indian markets will be FII liquidity,
which seems to have completely dried up and However, unfortunately, while investing in equity,
unless this revives substantially way, we may retail investors tend to take a short-term view
continue to see volatile and choppy markets for and look for almost instant gains. This short-term
another 3-4 months, followed by a noticeable approach needs to be curbed and equity, as an
recovery that could start from September ’08 asset class, needs to be considered by the investors
onwards. However, even this will be subject to for long-term deployment. If this approach to
the forthcoming general elections, which now investment is followed, the current market scenario
look scheduled early. is ripe for retail investors to enter for making
substantial long-term gains. (Editor)
We will recommend investors who have invested
into the market to hold tight and bear the
pain. For fresh investment we will recommend
investors to grab opportunities that may be Do you Know?
available in the market around current levels in
the next few months. Investors should also not
expect recovery to be fast and V shape. That
kind of fairy tale would happen only if all the The shortest English
events turn positive. While investing also do
not put all the money at one go. It is equally word that contains the let-
important that investors do not chase prices on ters A, B, C, D, E and F is
their way up. Expect market oscillation to give
you an opportunity to enter at appropriate levels.
“feedback”
Most importantly have faith in Indian growth
story which has lot of way to go notwithstanding
current turmoil.
to nail your
stocks

STOCK SUPPORT 3 SUPPORT 2 SUPPORT 1 CLOSING RESIS- RESIS- RESIS-


TANCE 1 TANCE 2 TANCE 3
Nifty (Spot) 4448 4575 4672 4746 4855 5110 5228
REL capital -- 1207 1297 1332 1500 1618 --
RPL 139 146 154 164 166 176 190
L&T -- 2660 2740 2918 3265 3370 --
RIL -- 2120 2255 2325 2463 2644 --

In this section we have chosen the volatile scripts to give you good momentum.
We will also try to keep the stocks same so that we can extract maximum benifits from them as
our focus will be on a limited number of stocks.
This is still in its beta phase and we recommend caution while trading.

A famous landmark marking this place is a statue of George


Washington which stands at the spot where he stood to take oath as President. Which place?

a) Oxford Street b) Times Square c) Wall Street
Tickle Your Brain
Following in China’s
News footsteps:
bite
The Sensex finally breached its 22 January
lows on Thursday, but it’s still well above the
depths it plumbed last August when the markets
first woke up to the credit crisis. The Sensex
had plummeted to a low of 13,779 points at that
time. The Indian market had been one of the last
to crumble, overshooting way beyond the “fundamentals” on the upside.
A similar overshooting on the way down is also very likely.
Going the Same Way (Graphic)
One of the comparisons often made to justify our valuations a few months ago was to point to the
Chinese market, which was even more wildly overvalued. How do our markets compare now, after having
been beaten black and blue? Well, China’s Shanghai Composite Index has fallen 35.2% from the highs it
reached last October. In contrast, the Sensex is off 27.6% from its January highs. We seem to be faring
better, but then we were less outrageously valued.
However, we’ve also been falling faster since January, making up for lost time.
Recall how equity strategists said our markets would continue to command a premium because the Chinese
market commanded a higher one? Well, as the valuations came off the Chinese markets, so did ours, albeit
with a lag. The Shanghai Composite Index currently quotes at a price-earnings (P-E) multiple of about 36, while
the Se-nsex trades at a historical P-E of 19.4. That’s a big fall for the Shanghai index, which was at a multiple
of 52 in October. In contrast, the Sensex valuation has fallen from 28.5 in January to 19.4. The coincidence is
that both the markets have maintained about the same relative valuations—the Shanghai index having a P-E
multiple of about 1.8 times the Sensex— both during their peaks and at present. Perhaps that’s because they
face the same headwinds—global turbulence, slowing growth and inflation.

one million jobs in the offering this year:


There is good news for Indian students who are going to pass out from the
college very soon. There is going to be one million new jobs in India this year. This
is also great news for people who are interested in changing their job profile. One of
India’s biggest HR consultancy firm, Ma Foi has predicted in his Ma Foi Employment
Trends Survey (METS) that there is going to be a 3 per cent increase in employment in
2008.
In our opinion, the majority of new jobs would be generated by hospitality
sector, which by the way is riding high with the tourism boom in India. In terms of city, Ma Foi has predicted that
Mumbai will generate the highest number of jobs, followed by Delhi, Chennai and Kolkata.
Apart from hospitality sector, health sector and education training sector will also generate quite a bit of new
jobs this year. According to experts, India is all set to have around 40 international hotel brands by 2011. The pivotal
factor here is that the boom in the tourism industry has had a cascading effect on the hospitality sector, which was a
result of the increase in the occupancy ratios and average room rates.
Information technology (IT) and information technology-enabled services (ITES) sectors will also create new
jobs this year but it will not be that high as compared to hospitality and health sector. The Indian health services sec-
tor is estimated to be around Rs 75,000 crore and is all set to grow by 170 per cent by 2012.
Slowdown in the Indian economy will not affect the employment growth of the country. According to Ma Foi,
demand for freshers is more than 30 per cent in sectors like hospitality, energy generation and supply sector, ITES,
and mining and extraction.

We came across this very interesting article and decided to share it with you:
Capital suggestion --By Dr Farrukh Saleem
Indians and Pakistanis have the same ancestry and share the same DNA sequence.
Here’s what is happening in India:
The two Ambani brothers can buy 100% of every company listed on the Karachi Stock
Exchange (KSE) and would still be left with $30 billion to spare. The four richest Indians can buy up all
goods and services produced over a year by 169 million Pakistanis and still be left with $60 billion to
spare. The four richest Indians are now richer than the forty richest Chinese.
In November, Bombay Stock Exchange’s benchmark Sensex flirted with 20,000 points. As a conse-
quence, Mukesh Ambani’s Reliance Industries became a $100 billion company (the entire KSE is capital-
ized at $65 billion). Mukesh owns 48 percent of Reliance.
Mukesh is now building his new home, Residence Antillia (after a mythical, phantom island some-
where in the Atlantic Ocean). At a cost of $1 billion this would be the most expensive home on the face
of the planet. At 173 meters tall Mukesh’s new family residence, for a family of six, will be the equiva-
lent of a 60-storeyed building. The first six floors are reserved for parking. The seventh floor is for car
servicing and maintenance. The eighth floor houses a mini-theatre. Then there’s a health club, a gym
and a swimming pool. Two floors are reserved for Ambani family’s guests. Four floors above the guest
floors are family floors all with a superb view of the Arabian Sea. On top of everything are three heli-
pads. A staff of 600 is expected to care for the family and their family home.
In 2004, India became the 3rd most attractive foreign direct investment destination. Pakistan
wasn’t even in the top 25 countries. In 2004, the United Nations, the representative body of 192 sov-
ereign member states, had requested the Election Commission of India to assist the UN in the holding
elections in Al Jumhuriyah al Iraqiyah and Dowlat-e Eslami-ye Afghanistan. Why the Election Commis-
sion of India and not the Election Commission of Pakistan? After all, Islamabad is closer to Kabul than
is Delhi.
Imagine, 12% of all American scientists are of Indian origin; 38% of doctors in America are In-
dian; 36% of NASA scientists are Indians; 34% of Microsoft employees are Indians; and 28% of IBM
employees are Indians.
For the record: Sabeer Bhatia created and founded Hotmail. Sun Microsystems was founded by Vi-
nod Khosla. The Intel Pentium processor, that runs 90% of all computers, was fathered by Vinod Dham.
Rajiv Gupta co-invented Hewlett Packard’s E-speak project. Four out of ten Silicon Valley start-ups are
run by Indians. Bollywood produces 800 movies per year and six Indian ladies have won Miss Universe/
Miss World titles over the past 10 years.
For the record: Azim Premji, the richest Muslim entrepreneur on the face of the planet, was born
in Bombay and now lives in Bangalore.India now has more than three dozen billionaires; Pakistan has
none (not a single dollar billionaire).
The other amazing aspect is the rapid pace at which India is creating wealth. In 2002, Dhirubhai
Ambani, Mukesh and Anil Ambani’s father, left his two sons a fortune worth $2.8 billion. In 2007, their
combined wealth stood at $94 billion. On 29 October 2007, as a result of the stock market rally and the
appreciation of the Indian rupee, Mukesh became the richest person in the world, with net worth climb-
ing to US$63.2 billion (Bill Gates, the richest American, stands at around $56 billion).
Indians and Pakistanis have the same Y-chromosome haplogroup. We have the same genetic sequence
and the same genetic marker (namely: M124). We have the same DNA molecule, the same DNA se-
quence. Our culture, our traditions and our cuisine are all the same. We watch the same movies and
sing the same songs. What is it that Indians have and we don’t?
Indians elect their leaders.
FOR THE RECORD: The author is a Pakistani journalist!

With year ending near, some TOP RATED mutual funds you can invest in to save TAX:

Mutual Funds Top 5 Companies invested in:


• Reliance Industries
• Allied Digital
DSP Merrill Lynch Tax saver Fund • Aban Offshore
• Cairn India
• ICICI Bank
• Reliance Industries
• Larsen & Toubro
SBI Magnum Tax Gain Fund • Welspun Gujrat
• Reliance Communications
• Jaiprakash Asso
• JM Financial
• Reliance Industries
Principal Personal Tax Saver Fund • Sterlite Industries
• Sintex India
• Reliance Capital
• Reliance Industries
• ICICI Bank
Sundaram BNP Paribas Tax Saver • IDFC
• Larsen & Toubro
• BHEL

Answer to TICKLE YOUR BRAIN: c.

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