holdyourthoughts

My trading call on Kalindee Rail turned out to be a stunner, even to me. It has gone up by over 50% in the last 3 trading sessions. I suggest you take some profits off the table. Also, for Orbit Corp that I had recommended earlier, please use a trailing stop to lock in your gains. I am looking at a few stocks for trading in the next few months and hopefully will be able to have an update in the New Year.

My yesterday's recommendation of Kalindee Rail Nirman flared up 20% and was locked on upper circuit. I am expecting another 10-15% jump today. If it comes through, it might be prudent to take the gains off the table. If you are getting 30% returns in 2 days, you need to take some money. Look at buying Essar Oil today. It closed at 301 yesterday. Short term target is close to 390-400. Also, with Reliance moving up yesterday, a position in Bongaigaon Refinery may not be a bad idea today.

I was looking for a decent mid-cap stock in an exciting market segment and stumbled across Bartronics. The company operates in the niche segment of bar codes, smart cards and RFID. With the huge growth of organised retail in India in the coming years, Bartronics with its market leader position is well placed to capture the opportunity. The company has had very strong growth in the last few years. The company has no significant long term debt. Mar ‘07 Mar ‘06 Mar ‘05 Mar ‘04 Mar ‘03 Sales 63.52 29.04 18.06 12.58 8.31 Operating Profit 17.21 7.52 4.61 3.25 1.16 Net Profit 13.46 5.34 2.40 1.35 0.14 EPS 7.52 3.60 2.74 3.09 0.33 RoE 10.89% 7.81% 25.08% ...

At the closing of 2007, let me leave you with a few stock picks for the New Year. The main theme here is the infrastructure development. However, the below mentioned three stocks are mainly in the railway infrastructure space. With the thrust on railways and the upcoming rail budget, these stocks should give decent returns. 1. Kalindee Rail Nirman 2. Texmaco 3. Kernex Microsystems You can buy/hold these with an outlook of 3 months to a year. Statutory Warning: Please consult your financial advisor for your personal financial advice. I may have a vested interest in all stocks I comment on.

Here is the link to the article that was published in ET: http://economictimes.indiatimes.com/articleshow/2589891.cms

The ET CEO Cookout was supposed to start at 7pm and was held at ITC-The Sonar. For some unknown reason, ITC seems to have changed the name of the hotel from ITC-Sonar Bangla to the current one. Is it ITC believes that Bangla isn't Sonar (made of gold) anymore??!! It was a unique experience for me to be amongst so many luminaries of the business world. Jairam Ramesh, YC Deveshwar and Percy Siganporia were all there. There was a lot of anticipation for the arrival of Buddhababu. He came in at around 7:45pm and that paved the way for the start of the evening's proceedings. The ET executive director (missed his name) started off the proceedings with a short speech and introducing the guests. Buddhababu followed him with his thoughts on India's infrastructure deficit. Although, Buddhababu claimed that he had not time to prepare, it was pretty evident that he had a lot of information on it. The way he was rattling off data about infrastructure spends in India vis a vis China indi...

Yesterday's post was my entry to the Economic Times' ET CEO Cookout contest and got me a place in the winner's list. So, I am getting a chance to meet have dinner with Buddhadeb Bhattacharjee (Chief Minister, West Bengal), YC Deveshwar (Chairman ITC), B Muthuraman (MD Tata Steel), Percy Siganporia (MD Tata Chemicals) and Jairam Ramesh. I will post an update on the event after tomorrow.

India's infrastructure deficit is centered around three problems: 1. Funding 2. Regulatory Framework 3. Land Acquisition Instead of looking at the problems, let us try to look at the possible solutions. For funding, it is obvious that the Indian government does not have the required funds to meet the infrastructure needs of the nation. One theory doing the rounds is to utilize a part of the ever-burgeoning foreign exchange reserves to fund infrastructure spends. Another way is for the government to float infrastructure bonds and provide tax breaks for people who invest in them. Also, dedicated companies can be floated (on the lines of Power Finance Corporation) that will be vehicles for long term capital for companies building/operating infrastructure projects. Another aspect which is not focussed on much, is maintenance of infrastructure projects. Annual maintenance contracts should be awarded to companies with very strict performance criteria. The performance should be monitored ...

Early this week, on Monday, Josh, a dear friend called me and asked me for some investment advice. He has just become a father and wants to create a fund so that it takes care of his daughter's education. Now, this is a kind of call that I keep getting regularly. Most of my friends (and friends' friends) ask me for investment advice thinking that I am an expert in the field!! I have got numerous offers to start a private (equity) fund from a few of my friends where they will "outsource" their headache of managing their savings. What I fail to explain to them is that there are no experts in the world of investments. Everyone is as good (0r bad) as the next person. But this call got me thinking about investment advice and advisers in general. Apparently, my friend had been approached my a few financial advisers who had advised him to buy into certain mutual funds. Typically, these advisers are associated with financial brokerages and make money from commissions when peo...

I was reading an article recently in BusinessWeek which quoted some senior HR leaders across industries saying that employees join companies and leave managers. I have heard that statement in all the people management workshops. But, I am not sure I completely agree with the statement. It may be true in more mature labour markets like US, UK etc, but in emerging markets like India, the scenario is not really true. In my experience, employees decide to leave because either a "push" or a "pull" effect. Let me explain. A "push" effect is when a person is 'pushed' away because he/she does not get sufficient opportunities, salary, job role etc in his existing job. Push effect is a demonstration of employees leaving managers rather than companies. A 'pull' effect is when a person is 'pulled' away by opportunities,salary,job role etc that is available in other companies. What I have seen is that in emerging markets like India, the 'pu...

What is the difference between leadership and management? This is the question our group of managers were mulling over last week. Everyone had their own take on it. My view on this is that the difference is essentially in the inputs available for decision-making. To me, a manager is a one who is in a position to work in an environment where one's work related information is easily and completely available and a leader is one who needs to work in an environment where that information is not available. This subtle difference creates a world of difference. A manager then merely becomes a person who performs transactional duties, whereas a leader needs to make choices where a whole lot of skills are required. Since, information for clear decision-making is not available, it makes a leader more dependent intuition, "gut-feeling" and risk taking abilities. Most of us are leaders only at times and managers the rest of times. The focus should be to become more of leaders than man...

Well, about 6months back, I was really bullish on Aztec Software. It was a company that was really growing fast and had 2 consecutive years of 100% growth. I looked at the numbers and made forward projections based on past record. I also had at that point in time made reasonable trading profits from Aztec (bought at 75 and sold at 95, bought again at 90 and sold at 120). So, I guess I was biased in my point of view. And I made two fundamental errors. 1. I projected 100% growth based on only 2 years record. The problem with that is it becomes increasingly more difficult to grow as the growth increases because of the increasingly larger base effect. 2. I had assumed a PE expansion based on increased growth. The learning from this transaction is 2 years data is too less to make future projections on. Also, if growth is not as expected PE instead of expanding actually shrinks and creates a double whammy!! So, its better to be much much more conservative in projections and look for a margin...

Indians were treated to another episode of the great Indian circus - the great spectacle of managing the Indian cricket team by BCCI. BCCI, once again ascertained their position as the numero uno clowns of cricket management in the world. Greg Chappel's comment that we cannot run our cricket like the Zimbabweans and expect results like the Australians is spot on. Unfortunately, there are two many skeletons to hide and even more vested interests that prevent sane decision making. Let us take a look at what these clowns are upto. 1. Induct young blood in the Indian team. The selectors should be trying to get the best 11 players in India to represent the country, not creating reservations based on age!! But, I guess, as the BCCI is run more by politicians, this is what we have to live with. 2. Have Ravi Shastri as Team Manager This smacks of underhand dealing. Ravi Shastri's credentials are completely unknown as a manager. Moreover, during his playing days he was as unruly...

Indians were treated to another episode of the great Indian circus - the great spectacle of managing the Indian cricket team by BCCI. BCCI, once again ascertained their position as the numero uno clowns of cricket management in the world. Greg Chappel's comment that we cannot run our cricket like the Zimbabweans and expect results like the Australians is spot on. Unfortunately, there are two many skeletons to hide and even more vested interests that prevent sane decision making. Let us take a look at what these clowns are upto. 1. Induct young blood in the Indian team. The selectors should be trying to get the best 11 players in India to represent the country, not creating reservations based on age!! But, I guess, as the BCCI is run more by politicians, this is what we have to live with. 2. Have Ravi Shastri as Team Manager This smacks of underhand dealing. Ravi Shastri's credentials are completely unknown as a manager. Moreover, during his playing days he was as unruly...

After the 600 pt drop yesterday a lot of people are wondering what will happen to the Indian equity markets. In one of my previous blogs I had mentioned that this year it seems that the Sensex is going to oscillate between 11500 and 14500. That was before the RBI hiked the CRR and repo rates. With this in view, the future does not look all that bright right now. With a squeeze on liquidity and other inflation-fighting measures taken up the government, it is just a question of time when the growth of the economy slows down. Add to it back-door price controls being brought back in cement, steel and pharma (3 very very important sectors for the market), and the short term future for the equity market does not look good at all. Although the market may have some 100-200 point relief rallies from time to time, my personal feeling is that we are over with the bull market for now. This phase of correction (or bear market) may be deeper and last longer than most people are anticipating at this...

Why do people write blogs? Does anyone actually read others blogs? These are questions whose answers I have not been able to cook up!! I don't know of anyone who actually goes and reads someone else's blog without getting a mail or hearing about it from some other source. Is it because blogs usually don't feature in the usual search engine results? Some people are working on technologies that will help people get connected to blogs on similar subjects based on the tags & keywords that are used. Maybe then it will more interesting and rewarding for bloggers.

"In the long run we are all dead". "Time in the market is more important than timing the market". Two absolutely divergent views on investing, based on individual perspectives - long term and short term. I was reading,thinking about the two diverging approaches to investing, namely fundamental and technical analysis. Fundamental analysis is the study of companies based on the its balance sheet, profit & loss account and cash flow statement. It also looks at other factors of the company to assess whether one should invest in it. It focuses on the business of the company and the profits its generates. The people who practice this tends to have a longer term view. The greatest example of this is Warren Buffet and Peter Lynch - two of my all time favorite investors. Technical analysis on the other hand is a study of the market dynamics. It presumes that the market reflects all the information about a company's valuation. As any market, it focuses on supply and d...

I just came back from a three day campus interview tour. The campus was really beautiful and the placement cell people showed great hospitality to our team. The students were average in terms of academic quality but most of them had good spoken English. What was appalling though was that the majority had awful writing skills. We had an essay that the students had to write and most of them wrote pieces that were not comprehensible. Some observations… The students were very focussed on the salary package, as if salary was the end of the world Not a single student had any in-depth knowledge of their subjects they were studying. In fact, at other times, most of them would find it tough to get a job at all. A college official told me that the average cost (all-inclusive) that a student needs to spend in 4 years is around 11~12 lakhs. That means there are a lot of parents who would spent a lot of money to educate their children. Our company does a very poor ...

I just started reading “Reminiscences of a Stock Operator” by Jesse Livermore. It is another of the investment/stock market classics and tracks the trading life and fortune of Jesse Livermore, arguably one of the most famous stock operators in the world. Its interesting times in the stock markets worldwide. They are very volatile. The Indian markets witnessed a sharp fall in the last one month. The finance minister did not help matters as his endeavor to control inflation was seen in some quarters as a move back to the price-control days. One definite area of concern is the inflation in both WPI and CPI. This has resulted in RBI (Indian Central Bank) to increase CRR and reduce liquidity in the system. This in turn has pushed interest rates upwards. So, now Indian businesses are faced with a double problem. One, of increasing cost of capital and two, of reducing earnings growth. Unless the interest rate stabilizes I think we may be in for a period of under-performance for the Indian mar...

I have been reading Freakonomics and Intelligent Investor together. Those who invest in stocks and have not read the Intelligent Investor should do so immediately. Started reading Freakonomics as it was very highly recommended by a few of my friends. But, somehow I did not find it greatly interesting. Its just a collection of research papers distilled for people with non-economics background.