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Indian economy is a growth story which can easily go on for a minimum 10 years at an annual growth rate of 7.5-10%. This period is an enormous opportunity of earning through investments in equities. An investor is primarily concerned about the safety of his investments and maximizing his returns. These two are contradictory to each other, for high gains go hand in glove with high risk. However, a return of 20-25% per annum on your investments in equity markets is a reasonable expectation at little or no risk provided one follows the basic principles of investment elucidated below:

• Invest in companies whose P/E lie within 50% to 150% of overall market P/E with EPS of Rs.5.00 or higher for the last three consecutive years and a market cap of at least 1000 crores.
• Always have a diverse portfolio of 4-5 sectors with 2-3 companies in each sector.
• Be with market leaders of a sector.
  

In a large list of sectors such as oil & gas, energy, engineering, textiles, information technology, sugar, construction, infrastructure etc., it is important to make the right choice of preferred sectors.

Presently avoiding IT, textiles, exports etc. because of likelihood of rupee appreciation and slowing down of developed economies, is advisable. Shunning cement, oil & gas, sugar, fertilizer stocks is sensible as they are subject to government controls.

Infrastructure, power, construction, capital goods are the engines of growth and should be high on list of preferences. Real estate sector has been lagging behind all these years and is due for a lot of catching up and will grow at a rapid pace.

With crude prices rising and limited resources of all conventional energy sources, alternatives like wind power, solar energy, ethanol etc. will be in great demand. Investments in virgin fields of Logistics, Retail, Healthcare and Health insurance have stupendous growth potential in the coming decade. Prosperity will fuel up demand for banking, consumer goods, hospitality, tourism, media and entertainment industries.

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Inflation jumped to a 41-month high of 7.41 per cent on Friday, seen as a deadly blow to the government and fanning expectations of more monetary tightening that would hit economic growth. Inflation has climbed steeply in Asia’s third largest economy from a trough of 3.1 per cent in October and is far above the central bank’s tolerance level of five per cent.

Terming soaring inflation rate as a global phenomenon, the government on Friday said it has no “magic wand” to bring it down immediately though it is taking and will take all possible steps to contain price rise. “Inflation is at a very high level in all emerging markets such as China (8.7 per cent), Russia (11.9 per cent), Argentina (7.3 per cent) and Turkey (8.1 per cent),” Kapil Sibal said.

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Yahoo’s response to Microsoft offer

Board of Directors of Yahoo! Inc. have rejected Microsoft’s offer in a letter sent to Steve Ballmer, Chief Executive Officer of Microsoft Corporation.

Board cited various reasons for this decision, which include “Yahoo!”’s global brand name, large worldwide audience, significant recent investments in advertising platforms and future growth prospects, free cash flow and earnings potential, as well as its substantial unconsolidated investments. The letter also said that Yahoo! continues to believe that the proposal is not in its best interests and those of its stockholders.

Finally, the letter concluded with this strong statement against Microsoft: “Contrary to statements in your letter, stockholders representing a significant portion of our outstanding shares have indicated to us that your proposal substantially undervalues Yahoo!. Furthermore, as a result of the decrease in your own stock price, the value of your proposal today is significantly lower than it was when you made your initial proposal. ”

The original letter addressed to Steve Balmer.. Continue Reading»

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Inflation numbers (at 7%) are still very much out of RBI’s comfort zone (of 5%) and show no signs of relenting. While the banking system is once again flooded with surplus cash flows, price levels too are rising to newer highs. CRR (Cash reserver ratio) hike seems to be next on the cards. This would help to reduce liquidity in the markets and hopefully in the process, lower inflation rates. Bad news for investors and retailers .. Stock markets may tumble further due to this news and the eventual liquidity crunch. Continue Reading»

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Investors mostly got a raw deal from the stock markets, with as many as 1,000 companies, including top five IT firms Infosys, TCS, Wipro, Satyam and HCL Tech, collectively losing over Rs 2,50,000 crore in market value in 2007-08. Infosys, TCS and Wipro lost Rs 18,000-42,000 crore, while Satyam, HCL Tech and Patni lost Rs 2,000-4,500 crore.

Tata Motors, M&M, Hindustan Zinc, Cipla, Container Corp, Dr Reddy’s, Tech Mahindra, i-Flex, Videocon, MTNL, Bharat Forge, Sobha Developers, United Breweries, Amtek Auto, Cadila, Wockhardt, Aventis Pharma, Ansal Properties, Aurobindo Pharma, Mindtree Consulting, Hexaware, Subex and NIIT Tech all lost between Rs 1,000-10,000 crore each.

Flagship companies of two Ambani groups, Reliance Industries and Reliance Communications, are among the five biggest losers in the Sensex market capitalisation league during the first three months of 2008. Among the top five companies which suffered the most, Reliance Industries, DLF and Reliance Communication are promoted by richest Indians, Mukesh Ambani, K P singh and Anil Ambani respectively. ICICI Bank and Reliance Communications lost Rs 51,425 crore and Rs 49,079 crore respectively. Continue Reading»

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Concerned at the ever soaring inflation rate, that touched a 13-month high of 6.68 per cent, the Government has decided to hold a meeting of high-level cabinet committee on Monday to take stock of rising prices, Finance Secretary D Subbarao told reporters. He also added that Friday’s inflation numbers were quite disturbing and attributed them partly to high global commodity price. Continue Reading»

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Ignoring higher than expected inflation figures and on account of heavy buying and strong European cues, the Sensex closed 350 points higher for the week.

Bombay Stock Exchange’s Sensex closed at 16,371.29, up 2.22 per cent or 355.73 points.

Day’s high: 16,452.08 & Day’s low: 15,884.45.

National Stock Exchange’s Nifty ended 2.31% or 112 points higher at 4,951.55.

Day’s high: 4,970 & Day’s low : 4,796.35.

Top gainers : Tata Steel (up 9.96%), Infosys Technologies (6.54%), Wipro (6.02%), Larsen & Toubro (5.95%) and BHEL (5.25%)

Biggest losers : HDFC Bank (down 2.77%), ONGC (1.31%), HDFC (0.96%), Tata Motors (0.95%) and Reliance Communications (0.92%) .

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Still standing tall..

The BSE Sensex today resurfaced above the 15K level by adding nearly 294 points on account of heavy buying in blue-chip stocks, particularly in the banking sector. The 30-share Sensex, in its straight third winning streak, added 294.57 points at 15,289.40 today after a long week-end and for a change, managed to hold on to the points added during the day. Continue Reading»

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Planning Commission Deputy Chairman Montek Singh Ahluwalia today said in Mumbai thatIndia was on target to achieve an average nine per cent growth for five years, despite a slowdown this year.

“Even if we are slowing down, the country can achieve an average nine per cent growth for five years,” Ahluwalia said.

Observing that there has been a lot of turmoil in global markets, Ahluwalia said this will have some impact on the country.

“Around the world, we have seen huge increases in fuel, food and commodity prices. Our performance has been better than others,” Ahluwalia also said.

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