Do it yourself

Thought for the day “The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane.” -           Marcus Aurelius (Greek, 121-180 ) Word of the day Ennoble (v) To elevate in degree, excellence, or respect; dignify; exalt: a personality ennobled by true generosity. (Source: Dictionary.com) Shri Nārada Uvāca With PMO now out in open without any shield and SP also preparing to distance itself from Congress ahead of general elections next year, what business you expect to be conducted in Winter Session of Parliament? Reality check @Nifty 6200 Growth GDP growth is likely to remain in 4.5-5% range in FY14 and pick up only marginally in FY15. Most forecasters, other than government of India, have GDP growth forecast ranging between 4 and 5% for FY14 and marginal pick up in FY15. In the last policy statement, RBI had categorically stated that...

Thought for the day “Republics decline into democracies and democracies degenerate into despotisms” -           Aristotle (Greek, 384-322BC) Word of the day Exiguous (Adj) Extremely scanty; meager. (Source: Dictionary.com) Shri Nārada Uvāca Is Modi focusing too much on the Gandhi family in his discourse? In case he wants to veer the traditional Congress voters away from the Family, he should set a positive socio-economic agenda to which Congress Party cannot reply. What he is doing will only strengthen the bond between the Family and the loyalists. Flock of black swans on the horizon When we boldly suggested that QE is here to stay not going anywhere in May 2013 , we were criticized by many for being unnecessarily contrarian. The analysis during most of July-September quarter was debating the extent of moderation in Fed’s bond buying program (“tapering”). Estimates ...

Thought for the day “Apparently there is nothing that cannot happen today” -           Mark Twain (American, 1835-1910 ) Word of the day Pinion (n) A gear with small number of teeth. (Source: Dictionary.com) Shri Nārada Uvāca Naming Ex Coal Secretary Parekh in Coalgate is to save PM’s skins or first step in process of implicating him? The caged parrot perhaps is taking its revenge in Godfather like manner. Remember "Revenge is a dish that tastes best when it is cold". Prefer low beta to domestic growth The result season has started on the expected lines. So far, the exporters, Infosys, TCS, HCL Tech, RIL and Bajaj Auto, etc. have exceeded the expectations on account of weaker currency as well as better external demand environment. Financials HDFC Bank and, AXIS Bank have indicated weaker domestic demand environment, rising stress on asset quality and margin pressure. ...

Thought for the day “There are people who want to make men's lives more difficult for no other reason than the chance it provides them afterwards to offer their prescription for alleviating life;” -           Friedrich Nietzsche (German, 1844-1900 ) Word of the day Hector (n) A bully (Source: Dictionary.com) Shri Nārada Uvāca Praise Narendra Modi and get CBI on your tail. What are we celebrating? “Clearly, the ineptitude, brazen populism and lack of appropriate policies from the government is the largest part of the problem. You really get a feeling that no one is in control, and the markets are responding to that.” ---- 28 August 2013, Surjit Bhallla, Oxus Investments "The new RBI governor has market credibility. For now, he's saying all the right things." -           15 October 2013 Geoffrey Kendrick, Currency and rat...

  Friendly banker who likes to have more “likes” on facebook Raghuram Rajan in his first interview after taking over as RBI governor had proclaimed that “The Governorship of the Central Bank is not meant to win one votes or Facebook “likes”.” But in Washington last week, he did try to earn some “likes”. His efforts so far have provided much needed stability to the currency and soothed many ruffled feathers. He has taken many “popular” measures that have earned him votes of foreign investors. The recent proposal to liberalize the regime for foreign banks is also a step in that direction. Otherwise, the fact is that in past one year many foreign banks have indeed scaled down/exited their Indian operations. The banks which are there in India since many decades have mostly remained an urban phenomena and are not exactly known for their good practices. The foreign banks contribute nothing positive to the objective of financial inclusion. The negative contribution ...

The equity markets globally have been unusually buoyant past couple of trading sessions. Except for somewhat easier liquidity and stable INR noting seems to have changed in domestic economy. Chinese export data suggests that Asia in general might have further deteriorated. Recently all global agencies, e.g., IMF, World Bank, European Commission etc. have warned that emerging markets, mostly BRICS, present greater risk to the global economy now, as compared to Europe and US couple of years back. US political impasse US political impasse is only worsening from midterm perspective and offers no sustainable solution. Even if they agree to enhance the debt ceiling at the 11 th hour and government starts working again, there are enough indications that the US may continue to witness many recurrences of stalemate in the remaining term of Barack Obama. Anyways, in 2011 episode of debt ceiling break below supports that led to accelerated losses in the equity markets ac...

Core Portfolio (67%) In our view, the core portfolio should be constructed with the longest possible timeframe and expectation of returns better than other asset classes, e.g., fixed income, gold, and real estate. We call it “Generational Portfolio” signifying that these are stocks are such that could be passed on to next generation comfortably. Strategy Accumulate by buying 10-15% quantity in each month beginning November 2013. Hold till the investment theme remains valid. Rebalance for any major change once in a year   (Alternatives: Nestle, Britannia, Asian Paints, Dabur, ) Tactical portfolio (33%) The tactical portfolio should have a time perspective of next economic cycle (normally 3-5yrs) with a relatively higher return expectation. Strategy Accumulate by buying 10-15% quantity in each month beginning November 2013. Hold for 3-5years or more. Rebalance for any major change once in a year. (Alternatives: Tata Steel, Eicher, Glen...

It is a common perception among countrymen that the Congress Party and therefore UPA government is controlled by the Gandhi family, mostly Mrs. Sonia Gandhi and her son Mr. Rahul Gandhi. It is also a popular practice for the Congressmen to publically ascribe all successful endeavor of the government or the Congress Party to the Gandhi family and all the failures and delinquencies of the government and Congress Party to others. The paradox however is that when someone conforms to the said perception and practice usually no one believes him/her. For example, when a Congress spokesperson ascribes the loss of Congress party in last UP election to the local Party unit rather than Rahul Gandhi – not a soul in the country believes him. The spokesperson fully knows that no one will likely believe his statement, but still he/she makes it. Similarly, the government’s media campaign claims credit for MNREGA, Food Security, Aadhar, RTI, Bharat Nirman, but Congress spoke...

Constructing a model Indian equity portfolio is somewhat similar to electing members for Indian parliament. Investors like electorate have limited choice. As suggested yesterday , there are not more than 100 companies that have demonstrated capabilities to remain relevant over many business cycles due to their product, market and technology leadership, strong financial position, lower beta to macro fundamentals, and proven managerial capabilities. Only 80 odd companies have given consistent good positive return over past 10years, 5year and 3year time horizon. We took three approaches to identifying companies for our model portfolio. Firstly we applied a slight variation of the classical investment approach. We looked at value of various companies and short listed the companies which have been, still are and will likely remain relevant in Indian and global economic conditions. However, since there are just a few of these businesses are available in India, these comp...