Swiss Bank Robbery

Swiss bank is the term which we hear at the time of elections and no one talks about it once the elections are done. But this time BJP seems to be bringing up this issue in a big way. Advani had earlier written about this to PM but didnt get a proper reply. So now he seems to have advised all the state government CM's where NDA sthe government to write to PM to make him talk about it in the G20 summit.

So what is in a Swiss bank system and how is it affecting us? There are plenty of Swiss banks like UBS and Credit Suisse that operate under the Swiss law with bank secrecy policy. Swiss secret accounts are like any other accounts except that no one other than the account holder has access to the account.

Especially, the government of the country wont have access to it. Specifically the laws of the swiss banks are defined so as to attract black money. Since there is no tax on the income and government wont have access to it, nobody will get a sniff of the money deposited there.

Swiss banks take away wealth from us and therefore they have to be penalized for investing into our markets. That is just common sense. The question to be addressed is why the government has given the FII status to these banks? By approving aren’t we encouraging more citizens to invest in Swiss banks, which is like our competitor? Providing FII/FDI status to Swiss banks is like slapping our own face. We are letting our own wealth to enter through back door.

Since the issue is raised by political parties now its left to us citizens and mainly the media to keep the issue alive and bring back our money back to our country.

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Future of Telecom - Reliance Communications

RCOM added 3.4 million subscribers in February 2009, maintaining the lead in monthly net new subscribers post its GSM launch in January 2009. February additions indicate strong momentum for RCOM . The GSM launch had seen a huge surge in the subscribers over the last two months and this is expected to continue in the coming months. Also, the MNP implementation also should help the company although it may take some time to be launched.
This is expected in CY09 will open up the GSM post-paid market for new GSM operators like RCOM.

The valuation of the scrip now is very attractive now. The scrip is down by over 70% in the last one year. RCOM is currently trading at 20-40% discount to Bharti.

deflation staring at India

India is staring at negative inflation. The last week inflation ended at 0.44% indicating that in a few weeks India might see disinflation. So the question in everybody's mind is why is it bad? We all know that high rate of inflation is very bad so why is it that when we see negative inflation it is considered bad. After reading this article you will get to know the reason.

As all other things, anything extreme is bad. This is the same with inflation. If the inflation is high or if it is in negative it is bad. First, lets see what is inflation and how is it calculated.
Inflation measures how the index for a particular week looks vis a vis what it was exactly a year back for the same week. For eg: 0.44% inflation means prices for 1st week ending March 7 2009 rose by only that percent compared to that of March 7 week of 2008. It is a common misconception that decreasing inflation means that the prices are decreasing. This is not the case because inflation is the value by which the value has increased while compared to previous year. So if you want to see the prices falling then it would be the case when there is negative inflation.

Another term that is normally used along with disinflation is deflation. But both are completely different, even though one of them might lead to another. Disinflation is negative inflation. But deflation is even more dangerous. Deflation means falling economy. Disinflation only means falling prices, however the economy is still running but with a slow pace. Presently India is staring at disinflation and not deflation.

Anyway prolonged disinflation may lead to deflation. This can happen because when there becomes a predictablity of falling prices then everyone would like to postpone their investments as they would get the same at the lesser price by delaying it. This will start hurting the economy. So even though everyone may be rejoycing that soon the prices would be falling, smiles will be short lived. If the same continues we may be staring at deflation and if it doesnt then again its isnt good news.

Potential stocks - Reliance Natural Resources Limited

This is very good stock for traders. This is one of the companies owned by Anil Ambani, others being reliance energy, reliance capital and reliance power.The share price of the company is very less in the range of 40's now. The company is engaged in gas based energy which it gets from the Reliance Industries. This has been a issue between the two Ambani brothers as to at what price this will be lent to RNRL. The operations of the company is yet to start in full swing. Therefore this stock blindly follows the share market. So this makes RNRL one of the best safest stock for traders. I wouldn't recommend this for investors because once the company starts its operations it may not live upto the expectations that are seen in the stock market.

The earnings of the company is mainly on papers. Hence its very tough to predict the actual value of this. Yet the public believes in all reliance stocks. That's the reason why this company is commanding a very high PE ratio of over 100 for a company that is yet to start operations. Yet this is a wonderful stock for traders. Since this blindly follows the share market the risk involved in trading in this stock is very less. For short term investors this is sure to give very good returns.

Best bank of India - State bank of India

State bank of India. The largest nationalized bank of India. The price of this stock has come down significantly along with all the other stocks. But the price of this stock is very attractive now. At current market price of Rs 952, the stock trades at less than its expected FY09 book value of Rs 965 and at 7 times its trailing one-year earnings.

At this time, when the stock market looks like it has almost bottomed out its better to invest in large caps stocks and whats better than nationalized banks. Surely this is not a time to go with private banks as nobody would like to take the risk on taking a loan from them. However, for traders this may be a very good option. Banks like ICICI will give very good returns in a short time whenever the market is up and vice versa. For long term investors its better to invest in SBI.

SBI has grabbed the first mover advantage in reducing lending rates. Having pegged its home loan rates at 8 per cent for the first one year (loans less than Rs 20 lakhs), it also cut rates on SME, auto, farm and other loans.

Other state banks like SBM, SBT are being brought under the same umbrella SBI. This would further help the bank in the coming months. Decision to merge all these has already been taken and its a matter of time before it would be merged.

IBM to buy satyam

13-3-09: After getting the approval find a strategic partner of 51% shares of satyam the bidding process for this share has begun. The Expression of interest in buying needs to be filed before 20th of march. With the start of this process many suitors have already expressed their interest. But what has surprised many is the interest shown by PE firms in this bidding.

As of now rumors say there are already about 70 firms interested but many of them may not be serious. They are just there to be a part of it. With the increasing numbers has become very difficult for the satyam and its board members to answer all the questions filed along with their interest. Many firms have come up with a huge list of questions that needs to be answered before they go ahead with the bidding process. All this may take a lot of time if the number of bidders increase. Already, many customers have withdrawn their projects from satyam looking at their state of affairs. With time the value of the company will get eroded so its really very tuff to say the number of serious bidders. Publicly only a few companies like Larsen and Turbo, spice, Tech Mahindra and hinduja group expressed their interest in buying these shares. Companies like IGate are into it only because they dont want to be left out in the race.

It is really very tuff to put a value on the shares before any of the information about the financial in the last quarter is released. The board has said that all the prospective bidders will get the information about all these soon. Only after this can anyone put a proper value on the company.

20-3-09: Today IGate exited from the race of bidding for satyam. IGate seems to have exited after learning that the entire process of bidding would last for another 2-3 months , not knowing about the financials of the company and continous erosion of the company value day by day.

As of now there seems to be three serious bidders for this company L&T, spice and Tech Mahindra.

3-4-07: Spice dropped out of the race saying that the bidding process is not transparent enough. One of the serious bidders (Spice) dropping out for this reason has affected the complete process. This has forced the board members to take some steps towards making this more transparent. Meanwhile, IBM and Ross also emerged as new bidders for satyam.

newsletter 14 march

With strong global cues today the share market gained over 5%. The market gained 412 points to end up at 8756. This is one of the strongest sessions in recent times.

During these times its better to stay invested on Large caps especially the shares that are included in the sensex. This is mainly because to attract investors artificially these shares are inflated. Also Large caps are a safe bet during these times because of its sound fundamentals.

In today's share market the main gainers were the Large caps. Mid caps and small caps didn't see much of rise in their shares however they may see the same on Monday if things are positive.

Inflation was seen at a seven year low at 2.43%. RBI had predicted saying that the inflation would be seen below 3% before the end of the financial year i.e. March 31 but this week itself it went below 2.5% to beach seven year lows. Last week inflation was close to 3%. Globally even UK expected their inflation to fall to a four year lows. With inflation rates falling everywhere these are seen as an indication for good times ahead.

Satyam announced the start of the bidding process for the sale of its 51% shares of which 20% is to be bought from the market though an open offer. This is seen as an opportunity for the investors hence the shares saw a surge by over 30% in the last two days. However today it was struggling to keep up its value today. However, it would be better to stay away from this stock. There has been no minimum bid for the buying of these 51% shares by the possible suitors. Hence it would be difficult to predict the exact value these shares would fetch. Many of the suitors may be in the fray only because there is no minimum bid.

satyam bidding

Globally Citibank announced 19 dollars revenue in the first two months of this year. This has been seen as a surprise after the bank has been seeing huge losses and receiving two federal bailouts in the last few months. This is perhaps an indication of the revival of the economy though it may take sometime to recover. This economic slowdown was created due to the US banks and now if those banks are recovering from their bad times then its good for the global economy.

This is the reason, the lows seen now in the sensex may not last long. It would be better to invest at this point of time, but only in stages as it has to be seen for how long the market would be bullish. My picks for investing now would be RNRL, RELCAPITAL, SBI, IBREALEST, LNT(in case its not successful in the bid for satyam this would see a sudden surge in its value).

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news 6 march

Share market fell very badly in the last few days and today it bounced by raised above 150 points. This was mainly led by finance, banks, IT sectors and real estate.

Satyam got the nod to sell 51% to a new partner. Hearing this news the shares rose by 19% by the end of the day to reach 42. It might rise further if there is a strong contender for buying this share. Anyway, it will be a risk now to buy these shares as the value of the company has degraded a lot in the last couple of months.

Following the RBI rate cuts, SBI today reduced interest rates by quarter percent. This is likely to be followed by other banks. The shares of SBI are available at a very low price of 925-950. For long term investors is a very good time to invest in shares like SBI. This bank has very good potential and is one of the biggest banks in India. Recently SBI also overtook citibank in the amount of deposits the bank has. All the banking stocks are available at a low price now after their stocks started falling continuously in the last one week.

Inflation as low as 3.03%

Inflation reached an 7 year low today to reach 3%. However, this had little affect on the share market which seems to be reaching new lows everyday. Today, it dropped another 250 points to reach 8150. Though it may recover in another couple of trade left in the day but it seems like investors have lost the faith in Indian companies.

This can also be seen in the value of the rupee. Rupee also reached an all time low of Rs.52 per dollar this week. This is even after RBI dropped key interest rates by 50 basis points.

This may be a good time for investors but they would be advised to invest in a staggered manner. My strategy would be to wait for the day when it would raise for a single day atleast before I start investing cause the market is decreasing everyday by a huge amount in a consistent manner.

stocks to pick 4th March

The stock market is at an all time low and is also expected since the election time is back again. Day by day the stocks are available at a cheaper price. So it would be better to wait for a day for the stocks to raise before buying it. Election dates are announced and it will be conducted during the time of april and may. 5 phase elections is to be conducted.

This is a good time for the investors to invest in stocks as they are available at a very good price. Some of the stocks are even available at PE ratio of less than 2 which is a good pick at this point of time. Ofcourse, you need to check if that company is going to survive the next few months or not.

Here are my list of hot stocks

SBI
RNRL
L&T
TATASTL

RPL RIL merger swap ratio

Mukesh Ambani's reliance has now announced the swap ratio for the merger of RPL and RIL. Swap ratio would be 1 share of RIL to be equivalent to 16 shares of RPL.
Current prices of these shares

RPL : 76.2
RIL : 1,265.05

RPL * 16 = 1219.2

The new merger is going to be effective from 1st march

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weekly newsletter 1st march

This week is the only week before the election dates are announced. So therefore you can expect the stock market to move up tremendously this week. Not because of the announcement of election but mainly because none of the political parties cannot announce any new schemes after this. So whatever has to happen it should happen this week.

So this week is going to be the best week for all the investors. You can think of making a quick buck. Almost all of the stocks are going to gain. Probably you should start buying at the start of this week and you can hold the stocks till the time elections are announced.

My picks for this week would be:-

RNRL
RIL
SBI

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Multibaggers

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