OCT 2013 OUTLOOK

• Second quarter earnings and US political uncertainty could dictate the trend..

• The next major trigger for the market is the second quarter corporate earning numbers which will start with Infosys on 11th of this week. A long straddle could be one of the trade ideas to play out this opportunity.

• On other hand investors are watching the political development in the US as the lawmakers fail to find consensus on the budget and health care spending bill. Warren Buffet commented that the US Politicians will go near the border of idiocy in this issue - but will not cross it. Experience speaks and let us hope what Warren Buffet says is true. This will bring in volatility for one or two weeks, then things will calm down. Again time for volatility play.

• In India, the government will unveil industrial production data for August 2013 on Friday, 11 October 2013. Industrial production rose 2.6% in July 2013 as against a contraction of 1.8% in June 2013.  With the help of supreme court (who indirectly banned mining), Govt (slow decisions, corruption), RBI (high cost borrowings), no wonder the industry production and overall demand looks sluggish. Whilst India's fundamentals are still strong, hope the recent change in RBI and other initiatives will revive industrial sector going forward.

• On 14 October 2013, data on inflation based on the wholesale price index (WPI) and the consumer price index (CPI), both, for September 2013, are due. The rate of inflation based on the combined consumer price index (CPI) for urban and rural India decelerated to 9.52% in August 2013 from 9.64% in July 2013. The annual rate of inflation, based on the monthly wholesale price index (WPI), accelerated to 6.1% in August 2013 from 5.79% in July 2013.

Decolight Ceramics

Decolight Ceramics came out with an IPO in 2007 promising growth and good returns on investors.
During 2007-12, the major growth drivers of ceramics - mainly construction activity was robust. Companies such as RAK Ceramics has grown so fast that they are planning an expansion.

It brings out the difference of players in the same industry. If you refer chapter 6 and 7 of the book 'Advanced Credit Risk Analysis & Mgmt' published by John Wiley & Sons, you find more details on why different companies operating in the same industry or sector and facing similar external challenges perform differently.

No wonder, Warren Buffet spends time to find companies run with exceptional management. RAK Ceramics is one of them. Although based in UAE, the number of indians working at all levels - including finance and strategy- has contributed enormously to take RAK Ceramics to heights. With production in more than 5 countries, it is reported to be the largest manufacturer in the world of ceramic tiles (in terms of square meters)

Indian companies must closely study RAK Ceramics and its reasons for success. Then companies such as Decolight Ceramics can contribute to the wealth creation of its investors. Right now the share price is around Rs 4/-, which is reported to be much less than the IPO price. This has resulted in wealth destruction of those who invested in this company at higher price! (probably, excluding the promoters?)

Expert Comments on Tata Power

On 8th Feb 2012, following was the comment by an expert on Tata Power (in moneycontrol.com)

• Short Tata Power , says Sudarshan Sukhani of s2analytics.com.

After two days on 10th Feb 2012, same expert gave a contrary opinion

• Sudarshan Sukhani of s2analytics.com is of the view that Tata Power is looking good.

Someone is wondering why the change of stance in a matter of two days! (There was no news nor any developments on the stock)

India's glory in Asiad and other sports

India is a 1 billion plus country accounting for more than 1/6th of the global population. But it did not won any Olympic gold medal in atlethics in decades. Why? over importance to cricket. And we suffer from their match fixings and super egos

Well silently, there are individuals who through their own sheer hardwork makes India and Indians proud. In the recent Asiad, indians won 64 medals by individuals. But none of them the reward an average cricket player gets. After IPL, the reward for domestic cricket has also gone up. Well, it is good that cricket get its due credit. BCCI is the richest cricket governing body in the world with billions of dollars in its coffers

However, they should contribute funds for the development of other sports in India, where Indian flags need to fly high.

Most of the individual medal winners in the Asiad has spent their own funds to come up without any significant corporate sponsors. Many come very ordinary or poor background. For instance, it is reported that Preeja Sreedharan who won Gold in 10000 metres do not have world class spikes!

Compare this to China and other nations, where their sportsmen are given highest regard and encouragement. Our medal winners in the Asiad require rewards and encouragement similar to rich cricketers.

Corruptions siphon money out of India and they want to tax NRIs!

What a joke! The political babus in Indian Govt are trying every rule under the sun to tax NRIs. What for? So that they can take out the money out of India. In that case let them tax NRIs in dollars or Euros. Then, the task is easier.

Based on a recent research think-tank Global Financial Integrity calculates that about $462 billion of Indian tax payers’ money has been stashed in private bank accounts of Indian politicians, etc. This amount almost equals half of Indian GDP.

And they want to tax NRIs to ensure that the Government has more revenue to deploy in Indian growth story. Well first of all, let them bring back the $462 billion and deploy them for the benefit of Indian economy, which needs houses for its masses, good roads & bridges and a host of industries to produce goods and services India needs.

What a pity. Indian democracy has really become democrazy. There is no logic in some of the actions.

NRIs work outside India and the income is earned outside Indian jurisdiction. Many NRIs have their family back home and work abroad to send back hard earned money to support family. There is a clear failure to provide adequate job opportunities back home and still they want to tax NRIs, who were forced to become expatriates. Had the $462 billion deployed in Indian economy, many NRIs could have stayed back due to the economic growth that could have been created by this staggering amount.

The unending saga continues. The spectrum corruption cost tax payers about $5 bn and the political drama is in action. Ratan Tata has recently revealed that some minister asked for huge bribery to award aviation license.

NRIs should resist in every forum the recent proposal to consider a NRI as 'Resident for taxation', if he resides in India for more than 90 days (from the current rule of 180 days) in a particular year.

This is pure absurdity. All absurdities must be fought.