Random Ones

1)
For Arshia,

I have been engaged in my business recently and travelling a lot. This is the reason I am unable to post anything right now.

I do not know about your two stocks - What is their full name?

Current market conditions are extremely bad. My broker told me many of his customers have not settled in full after the steep fall of 3000 points around 23 January, 2008

It is more like a choppy market where you will make money a couple of times. However, the market risk is tremendous. There will be severe fall after the failure of almost 4 to 6 leading banks in the world. I will not be surprised, if the market tanks to 8000. There is no limit to when the market falls globally or called Crash. The best you can do it to buy on dips and sell it on two rallies. Play only with the most liquid stocks. After a long time, I bought UCO (below 45), Abhishek Industries, NOCIL and GV Films. I have sold most of IFCI upto 65 level and have not bought back because finance sector is very weak. I have bought not because I am bullish, but to sell them within next two days to book the losses before 31/03/08 so that I do not have tax liability.

Oil Refinery stocks will perform better. ONGC should do better. I am holding them well. Other cash rich companies like Hindustan Lever, MTNL, ITC, and high tech companies like Infosys and Ranbaxy might do well. PLEASE NOTE that if the market falls steeply, all stocks will fall without exception. I still suggest holding 80% of cash level and wait silently for massive fall to re-enter again.

US Administration and also FED are in a Fix. They have no idea the extent of damage and how to come out of it. This is the reason the USD is sinking.

I commented earlier in this column that ICICI had very large exposure to the sub-prime related derivatives, They call it CDO or CLN (Collateralized Debt Obligations or Credit Linked Notes which is same.

These notes had basis of sub-prime only. These are highly leveraged instruments. If basic losses in sub prime increases just by 1%, these derivatives will lose over 10% to 20%.

ICICI Bank did not provide for it fully. further their losses were as at 31/01/2008 since when the losses have multiplied several times. This is the main reason that ICICI bank had been raising large amount of debt and Capital by right issue for over 6 months. This was done to conceal the losses. While they were losing money, and came out with right issue without disclosing their substantial losses, the investors in India were buying this counter left and right.

This is the reason that I mentioned in this column in January that ICICI bank is the most susceptible bank to fall in India. Although it is a private bank, not nationalized one, it should have on its own come out with full statement. There was no need for Minister to disclose their losses in the parliament belatedly - it was not their business. Thus, for all practical purposes, ICICI bank is actiong more like a nationalized bank.

There is no market for CDO or CLN now. Since ICICI ADR is listed on NYSE, they will be forced to provide fully according to US regulations, not according to Indian law of convenience. These are off balance sheet items - no one knows their real exposure (they pretend that they do not know - all these banks do know everything)

The fact that State Bank of India was forced to come out with rights issue for Rs 16000 crores (more than even Reliance Energy), it is obvious that they too have very large exposure to sub prime or related instruments - they just do not tell you because their big father Finance Ministry have asked them to keep their mouth shut until crisis is over. This crisis will not be over. After raising money, they will probably disclose their losses. SBI is also forced to fund the Corus deal of Tata Steel Ltd where almost all banks have dropped out - leaving big stone around the neck of SBI.

Kalidas, Hong Kong
5/3/08




2)

Jefferson County of Alabama state is on verge of bankruptcy and met the FED and Bush Administration for information (that is, they went for bail out)

The county's interest cost has soared to $250 Millions from $138 Millions on its sewer bonds. The interest cost has risen to over 10%

But when the county's revenue is so small, read their other exposures as under:

QUOTE (from Bloomberg today)
Jefferson County's financial problems have been compounded by $5.4 billion of interest-rate swaps with JPMorgan Chase & Co., Bank of America Corp., Bear Stearns Cos. and Lehman Brothers Holdings Inc. that were intended to shield it from higher borrowing costs
UNQUOTE

Read the numbers - $ 5.4 Billions for a county that could not pay even $138 million of interest cost?

And who sold them these swaps? The dirty foursome - JP Morgan Chase + Bear Stearns + Lehman Brothers + Bank of America

They bought the instruments they never understood - and now face a massive loss of $5.4 Billions!

Their collapse will set off chain reaction - 80% of Counties do not have money - so the whole country is going down the drain which has already clogged.

When sewer does not get cleared due to lack of money, what will happen to Americans who wash hands at every minute they touch some foreign object, even if it is clean. And when sewer overflows, they will feel that they are in Parel, or Curry Road or Chinchpokli in Mumbai.

Kalidas, Hong Kong
10/4/2008

3)
Reply to ysb on (10-Apr-08 21:49 )

You are seeing only rally - not the underlying quality.

In yesteryears, whenever Dow rose, US$ used to go up against major currencies like Euro, GBP, and YEN. That means that Investment houses in Euro Zone, UK and Japan were buying US stocks or bonds or treasuries, by buying US$ first and selling their own currencies.

Over last 4 years, the scenario has completely changed. The Dow is either rising or maintaining higher level whereas US$ is continuously plunging. That means, US market strength is dominated by domestic money and not foreign money.

FED has created so much paper money that the large investors have no other option but to invest in US stock market. They can not buy other markets, because they are already expensive by 20% to 60% in US$ terms, commodities are rising, Gold is not attractive to US investors, as they are fond of white metals like Platinum or jewellery made of diamond. They can not invest in property more because they are coming down very fast, with more falls to come. They are afraid of keeping money in banks because they do not know how deep they are in mud and when will they close down.

The bonds, main bastion of investment, is also falling due to sub prime related mess. Insurance companies are also showing massive losses.

So they are parking their money in stock market, based on Analysts report that the things are improving and these may be last days of correction, without realizing that most investments in this area is big ZERO.

US government never admits openly to support the falling market. It does ask major funds to invest mainly near close of the market so that the market ends up or recover the losses from day's low.

A day before CNBC reported that the volume has come down so dramatically that it is almost 33% of normal trading volume. Traders are shown yawning in their seats or supporting their forehead with their palms in exasperation.

If the market rise is not supported by rising volume, it is not a 'real rally' but a 'sucker's rally'

So do not read only figures - read the underlying quality to arrive at proper conclusion that helps in decision making. This is what I do all the time - reading behind newsline and scratching the surface to see what is inside!

Kalidas, Hong Kong
11-04-2008

4)
Reply to Guest on (11-Apr-08 14:55 )

Europe has even more trouble than US. When the FED pumped in $64 billion, Europe pumped in $ 900 billions in two installments - showing extraordinary problems down there.

Accounting standard is lax in Europe. Further, they being non-English speaking, not much is known to the investors in the world.

The losses are slowly emerging from Europe and Japan. One small German bank filed for bankruptcy only day before; Mizuo bank of Japan - second largest in Japan, declared today losses of $ 5.5 Billions, and banks like Deutsche reported losses over 4 billions, SocGen over $7.2 Billions etc.

Deutsche is most sensitive bank towards losses as they were almost second or third largest in the world as 'derivative operator'. Over 50% derivative issued in USA found their course to Europe, China, Japan, Singapore and Hong Kong, and also AustralAsia.

European Banks would have lost over $ 5 trillions - what is revealed is just tip of iceberg.

Kalidas, Hong Kong
11-04-2008

6)
Reply to chchch on (12-Apr-08 10:56 )

After a long time, I am seeing an intelligent question.

Right you are. ICICI yardstick apply to SBI as well. I had mentioned in my earlier posts that SBI may have had exposure of Rs 16000 crores or US$ 4 Billions.

If SBI really wanted hard cash, Government of India would not have given 8% + bonds in payment instead of hard cash. It is obvious that SBI wanted to shore up the capital base before losses are announced. If SBI does not raise the capital, it would not be meeting BIS norms (Bank of International Settlements) with regard to Capital requirements. Even rating agencies like Moody or S&P would have lowered the credit rating, thereby raising its borrowing cost.

Many private investors subscribed to 'right issue' on the premise that Government of India would have subscribed to SBI equity in same manner. However, Government of India did not give cash but paid them in kind. This clearly shows that they were not in the market for working capital - but to replace the capital lost same way ICICI Bank lost.

SBI, the largest bank in India, has BSE weighting of 5.2% and ICICI Bank, second largest, 4.4%. Between them they contribute 10% of index weighting. What happens when their actual losses are revealed?

SBI is 10 times safer than ICICI Bank. It is directly owned by Government of India under special charter. Losing 16000 crores will put a big hole into its balance sheet, but it is repairable.

Kalidas, Hong Kong
12-04-2008 Ref: 09-012R

7)

Reply to lion_king on (12-Apr-08 11:52 )

THANKS

Whenever some one says his portfolio is Rs 1 crore (or any damn amount), I presume that he is losing 80% and makes perhaps 20% - I call it as my own 80:20 rule. It is the tendency of any investor to book the profit and let the losses run. I am telling you from practical experience of 16 years as stockbroker.

Such investors, you included, having large exposure want to hear only positive news or events or analysis, so that they derive solace what they did was not wrong - it was just market.

Almost all investors are like that - even me included when I was in beginning of my career. But I learnt hard way that it was not to be. I am just sharing my experience with other boarders. Those with open mind will embrace it, and those who are not, will severely bounce on him because they do not want to hear anything bad about their portfolio. This is perfectly natural.

A prefessional investor is one who retraces his mistake, when known. Obstinate investor always lose money, often big times. What they earn is their own ego which ultimately prove self destructive

Kalidas, Hong Kong
12-04-2008

8)
Dear Victorjunior,

I know that you are reading my posts diligently, but it looks you have missed a few one.

I never said that ICICI Bank is or will be bankrupt. I merely mentioned that it has serious problems regarding CDO which it has not yet disclosed fully. This is why it is delaying filing of 10K/20F with SEC of USA. If my intention for ICICI Bank to go bankrupt was ever mentioned or understood, then I would not have given its share Price target to Rs 180, which I still maintain.

However, having known their problems, even on surface, leads me to believe to diversify savings to more than one bank. Never believe that ICICI Bank is not infallible - there was a run on this bank a few years ago during Ketan Parekh affairs, and it was saved by RBI by granting liberal cash line.

However, the present scenario is different. Its exposure to sub prime related debt, by whatever name called, appears to be extra-ordinarily large.

There is nothing wrong in having more than one bank account - everyone does have more than one account. I have accounts with 8 banks - 3 modern and 5 nationalized banks.

SBI is of course safer betm, but again its problems are still hidden and known to Government alone. Why should Government have given them Capital of over Rs 8000 crores ( even if it is in kind - like Bonds). Again, SBI is too large and has diversified income base. It was also floatd by the Act of Parliament and judging by its Balance sheet size, it can wither any storm.

So relax and do not panic. Open account with non-controversial banks who are more localized and may not have CDO type of exposures. There is nothing wrong in being cautious, so do open accounts with nationalized banks, and avoid so called modern banks until the controversy is set to rest by passage of time or by adequate and acceptable disclosure.

I will avoid so called 'Modern Banks' as quality of their MBA staff is very poor ( I have experienced personally) because lack of their exposure to real banking world. I was a banker for 19 years, and having worked at International centres like Hong Kong, can reasonably judge the quality of staff manned at various modern banks in India.

Kalidas, Hong Kong
15-04-2008

9)

The reasons for my success all through my life is my ability to discern the numbers churned out by various companies, media or even government. If all numbers we accept at their face value, there would not have been any LTCM, Enron, and present economic crisis.

The real trouble is not me, but my call for SELL and prediction that Indian markets are destined to fall to 6000 level, ICICI Bank to drop to Rs 180 level, which is not liked by many. Hundreds of boarders have admitted that they are sitting on mountain of losses. My own broker tells me that many of his clients have not settled their dues after steep fall in January.

This is why everyone wants to hear good comments about their portfolio, that the market will recover. They do not want to face the reality but want to dance in the dream world.

They simply have no idea the gravity of the crisis, where every bank, investment banks, insurance company come out with the losses running into billions of dollars, And when they announce that they will raise capital, the boarders and analysts believe those fake stories. Are you willing to lend even a cent to UBS or Citibank, Merrill Lynch and others after having known how much they lost? If not, who is willing to lend them billions of dollars? And how could you believe them? When CNOOC of China raised $ 10 Billions, they found tough going in spite of being an oil producer and making billions of dollars in profit.

Then, how come all these boarders believe that banks like UBS, Citibank, Merrill Lynch, Wacovia, Lehman Brothers, Morgan Stanley, Credit Suisse could raise nearly twice or three times the size of CNOOC from the market?

Do you have idea that they lost nearly 5 times the total equity capital of entire banking system in India and they will lose nearly 50 times what they have just disclosed?

A business friend of mine recently reported that UBS, Singapore suddenly withdrew his $2 Millions line of credit overnight without any reasons and in spite of his account being regular all the time with no default at any time in his credit history of over 8 years.

Except for Warren Buffet of USA (not in India) and Microsoft and number of Oil refineries, producers in USA, no other person has access to money. Banks have seen their coffers drying up, and that no bank in USA or London is willing to lend even a million dollar to their best clients easily. Even TATA was denied even s single dollar after his Corus deal.

I was therefore surprised to receive the call from many boarders to apologize to stroy tellers. What for? Why? I was not wrong - and I proved that beyond doubt. If they do not want to accept the reality, it is their problem.

The difficulty with boarders here is that they equate savings with investment. They do not know that stocks are heavily financed by the banks like HDFC, UTI, ICICI etc running into thousands of crores. These investments are result of borrowings, not absolute savings. In India, the people from their savings usually buy home first, gold next, then status symbols like car or scooter, then bank deposits, and the remaining portion in stocks, and that too by borrowing from banks or from brokers.

So, my apology - just forget it. It is unfortunate that even some knowledgeable boarders have fallen victim to those story tellers who believed figures that India has 24% savings rate and China 50%! It is just bullshit

Kalidas, Hong Kong
15-4-2008 Ref: 09-017R

10)
FED's folly and Beggar's delight

FED's folly, Beggar's delight, employees' nightmare

Announced today, that JP Morgan Chase (JPMC) will dismiss almost 9000 to 10,000 employees of Bears Stearns.

So FED who doled out $ 30 Billions to JPMC at 2.5% interest rate, to create more employment, more growth, finds it money going down the drain almost within a month.

So by giving JPMC - non-Recourse funding, that is JPMC does not have obligation to repay, FED created unemployment of 9000 people, and FED will have to pay unemployment allowance for next 6 months.

So FED's folly in giving beggar JPMC $ 30 Billions has become the nightmare of employees of Bear Stearns.

The Senators and even President Bush should ask FED - are you there to create employment or unemployment? The total wage bill of dismissible employees will be just $ 36 Millions per month. FED has to ask JPMC where you are going to spend $ 30 Billions when you are firing 9000 employees and send them over to FED to claim the "unemployment allowance" for next 6 months?

FED will also lose Tax @ 30% or $ 130 Million by letting tax paying employees of Bear stearns to go.

A question arises, why did then FED helped $30 Billions to save Bear Stearns? If bear stearns was saved, why do their employees to go - why not from JPMC itself?

Okay, you are not going to pay any interest, you are also under no obligations to pay even the principal, then why the hell are you firing BS employees and deprive FED of tax income from them? (BS Employees). It is more like "someone's dewali others' holi"

The real news is that FED did not save Bear Stearns BUT saved JP Morgan instead from complete disaster, using defamed Bear Stearns as cover. Why?

JP Morgan and Chase have highest number of derivative exposres compared to any bank. When I left stockbroking 5 years ago, JPMC reportedly had derivative exposure of over $ 30 Trillions.

The merger of JPMC and BS is similar to merger of UBS and SBC (Swiss Banking Corporation) when LTCM failed. Both UBS and SBC had derivative contracts outstanding against each other. If they did not merge, both would have become bankrupt. So they merged with each other, so that cross contracts could be cancelled against each other. It is more like Branch and Head Office accounting, where upon integration, cross entries of branch and HO gets cancelled out.

Same thing appear to have happened in merger with JPMC and BS. It is more than likely, and I am almost 100% certain, that both institutions have had cross derivative contracts outstanding against each other. By merging them, those cross contracts could be cancelled out, leaving only net postion to the outsiders.

It was FED who saved JPMC from disaster, not JPMC saved BS

Stupid FED - they lost $ 30 Billions, then it created unemployjment of 9000 employees, then it will pay them "unemployment allowance of $ 18 Millions per month or $108 Millions for 6 months (maximum period of unemployment allowance) and it also lost Tax revenue of $129 Millions (30% of annual salary of $ 48000 of BS employees x 9000 - that is number of employees fired)

Besides, it will also lose extra interest income of 3.5% (market rate 6% - FED loan rate on $ 30 Billions), that is $ 30 Billions x 3.5% = $ 1 Billlion per year or $ 30 Billions over 30 years (30 x $ 1 Billions)

In short, FED has written of entire $ 30 Billions by creative accounting or called fraudulant accounting. On one hand it gave $ 30 Billions, on the other it gave license to JPMC not to pay by way of obligations, and defintively lost extra interest income of 3.5% per year.

King does no wrong - so do the FED - the most venerable institution of United States.

And Americans go on believing that FED saved Bears Stearns. They do not know that FED has defrauded American tax payers by not disclosing the truth. Americans should throw rotten eggs and tomatoes on FED building to vent their anger.

Kalidas, Hong Kong
16-04-2008 Ref: 09-018

11)
My answer is still NO

It is always tempting to invest immediately when you know that your neighbor is making money, and that is what he tells you. No one tells how much they lost. When Merrill Lynch says that they provided for $6.5 Billions again this quarter, and that their revenues have fallen by 69%, that indicates that their customers are departing, and much larger is ahead. I have written elsewhere - Dying flames always shine at its brightest when little oil is left. Read last two days rally in this context.

Do not forget that Oil prices have reached record again at $ 114 and are still rising. All eatables are still rising at their fastest pace - wheat, soyabin, sugar, cotton, orange juice, milk etc. These are all signs of hyper inflation. When these commodities start rising, they are first leading indicators of major fall in market and speedy rise of interest rate in the market - which is the stock market's biggest ememy.

However, take your own decision whether you should re-enter it. I am still 100% cash, and I am not at all perturbed.

Kalidas, Hong Kong
17-04-2008

12)
STRONGER RUPEE THE ONLY SOLUTION TO OIL INDUCED INFLATION....

Current inflation is not demand induced or wage induced, but "Oil Induced". India imports "Oil" which constitute one of the largest import component. There are only two ways to reduce the import bill - Either lowering Import volume (which will severely affect the growth) OR reduce the import cost by allowing Rupee to rise to its natural level, without RBI's sterilization drive. The second option is growth oriented and also non-inflationary. It is most preferred choice.

Following of my comments appeared in Economic Times which may be of interest to the readers:

QUOTE
Article: Sensex falls to 2008 low; banks, realty plunge
(20 Jun, 2008, 1452 hrs IST, ECONOMICTIMES dot COM)
1
Kalidas,Hong Kong,says:

Regretfully, FM, RBI and SEBI lack imagination in managing India's economic affairs. The solution to India's current problems, including Inflation, lies in stronger rupee, that was hated by the Commerce Minister (who has nothing to do with the finance), RBI and SEBI, who ultimately brought in disastrous P-Note measures with a view to arresting rupee rise. They succeeded in driving out the foreign investor and weakening rupee from Rs 39 to Rs 43 (10%) with the result that India's oil import bill rose by Rs 8000 crores in a flash.

Now, they are wondering why FIIs are getting out of the country. When FII come, they say "you are not welcome" and when they go back home, they plead " Don't go away. Please stay in - you are always welcome".

While EURO rose from low of 0.84 to 1.55 or about 90%, in spite of low growth, Indian rupee rose merely 12% from Rs 48 to Rs 43, in spite of double the growth of EU.

Had India allowed Rupee to rise without intervention, Rupee would have been at Rs 31 at least or by 40% from current level, which would have reduced Oil Import cost by at least Rs 32000 crores. All problems related to oil subsidy would not have arisen had India permitted Rupee to rise to its natural level.

India persistently followed "weaker rupee policy" for over 60 years, allowing it to fall from just Rs 8 per dollar to Rs 43 now. It did not work, and still like obstinate persons, the FM/RBI/SEBI officials go on promoting the concept of weaker rupee.

Why not for a change allow Rupee to rise to Rs 31 or below and see its beneficial effects? On one hand, India is embracing "free market" principles, and in case of rupee, it just throws out of window same ideas.

Such fickle minded officials in FM/RBI/SEBI have to pave the way for new generation people with fresh ideas to mange the country's financial affairs.
20 Jun 2008, 1619 hrs IST
UNQUOTE (Some spellings have been corrected)

Kalidas, Hong Kong
21-06-2008 (Ref: 09-058)

13)
NUKE deal, India's credit rating......

United State's reminder to India to speed up the civilian Nuclear deal is a very serious warning having tremendous implications.

It may be noted that India's credit rating was upgraded to Investment grade only after Nuclear deal in principle. This caused exodus of US Pension Funds and other similar funds who are authorized to invest only in investment grade country.

If Nuke deal does not become a reality, there is serious risk to India for losing its investment grade status. If that happens, there will be mass exodus of Hedge and Pension funds from India. This will also push down Indian rupees to Rs 48 or further down, increasing the Oil Import bill by another 10%.

Indian growth story will be severely dented. It is important for all political parties to reconcile their differences and at least approve the deal so that catastrophe does not happen.

This will be the most important event. Watch for the early approval of the deal or rush to the exit gate to sell the stock at whatever the price. Recovery of stock market will be highly impossible, except for high tech stocks.

As hedge, stay with the high tech and BPO stocks. who will be least affected. Their fall from grace during such market meltdown will be the best buying opportunity.

Kalidas, Hong Kong
23-08-2008 (Ref: 09-061)

14)

for brb-1
Impossible scenario. You do not know the leftist. This party should be banned altogether as they are found to be undemocratic and totally destructive. They simply do not know what they want.

If BJP has any decency, and places the national interest ahead of politics (as they constantly beat the drum), then leftist will have no effect at all. Congress should unite with BJP and ditch the leftist to continue with the political stability and maintain the hard earned economic progress.

But the ranks in BJP like Advani are extremists. They like 'padyatra' more than the national interest. I used to be BJP supporter for long, but now consider them as totally useless and unprincipled organization. I would never vote them back to power.

I reiterate that if NUKE deal is not signed, forget the SENSEX - it can go down to any level. FII will simply get out en masse and India's FOREX reserve will go out of the country with big bang. Most of NRI may also withdraw from stock market, bank deposits and real estate due to powerful adverse effect on rupee. They burnt the finger once, and they will be hard pressed not to return to India again.

To me NUKE deal is extremely important matter, and I give priority even on inflation.

Kalidas, Hong Kong
24-06-2008

15)

for Blue Violet,

Thanks for taking pain to produce the message containing the views of the 3 prominent Atomic Scientists against the deal. Yes, I do respect Arun Shourie, former editor of Indian Express.

There are two issues. Science and Commerce follow parallel lines, but never meet like a railway track. Producing electricity via coal at cheaper cost is a good idea, but with coal prices rising at fastest pace, and India being a net importer of coal, the recurring cost is going to be very high, which may increase the cost of electricity.

Nuclear energy is one of the most efficient one where capital cost is high but recurring cost is low. Look at Japan and France (who has maximum nuclear reactors) who are able to supply electricity at much lower cost to their own industries. The very fact that Japanese goods are produced with best quality at cheaper cost underscores the fact that even high cost oriented Japan finds cost of nuclear energy acceptable proposition. Have you ever heard Japan complaining against Oil price rise affecting Japanese industries like steel or chemicals? It is due to availability of cheaper and continuous supply of electricity from its nuclear reactors.

Coal may be a good source, but it is highly pollutive and anti-health input. What use of electricity if it powers your home but fills up your lungs with smokes and toxic gases? Even coal fired locomotives are discontinued because they are pollutive.

You are 100% right in that we should have better bargaining strength in negotiating with US in finalizing the deal.However, please note that the agreement is only 'preliminary' and on 'principle'. Same principles are applied in case of Japan or France or Canada or even Britain who are all democratic and prosperous countries.

Last month I was in India at Amravati (in Vidarbha, near Nagpur) where MIDC (Maharashtra Industrial Development Corporation) has developed 5 star industrial estate admeasuring 5500 hectare or 11000 acres. It is just vacant. Even in old MIDC in the middle of the city, nearly 70% of units are closed.

Main reason is lack of adequate power. I saw city of 2.5 millions going without power for almost 6 to 8 hours a day. There can not be any hydro-electric, coal or oil powered stations, since the place is far away from raw input centers. Only Nuclear reactor can rejuvenate to make it vibrant industrial city creating thousands of employment.

Due to lack of job opportunities, and despite 26 universities around, the average wage earner makes about Rs 3000 to Rs 4000 per month which may be 50% to 75% below similar level in big cities like Mumbai.

When you are in growth stage with almost 1 billion people to take care of, you must be prepared to make compromises. Try to make Nuclear power stations without the approval of major powers like USA, and you will be outcast, not only that, a time will come when those powers may seek to destroy your facilities on military ground. Look at Iran which is a shining example. Saddam tried for Iraq and see the beautiful country of Iraq in a rubble state.

I agree with your other viewpoints. There has to be a very healthy debate, similar to one in Northern Ireland, who refused to honor Lisbon treaty and opted out of European Nation.

You have two choices - Growth or Poverty. Mere signing up of a nuclear deal does not deprive the nation of its sovereignty or its freedom. You are entering into agreement with a democratic country, where everything is done under open sky. You know more about America and its systems, politics, likes, dislikes etc only because their media is open and widely broadcast in India in English.

What the Government should do is to include some of those Atomic Scientists in its negotiating team so that interests of all are preserved. This is the right approach - not out of hand rejection on the basis of nationalism or false sense of insecurity.

Kalidas, Hong Kong
25-08-2008

16)

for rtoshniwal1,

Honestly, I do not know much about the stock you mentioned. In fact, I do not know much about IT stocks, because they are difficult to follow. They are more internal news driven and there is little to verify their information by public record.

I never bought any IT stocks nor I intend to except very large ones, such as Infosys & Wipro in severe correction.

Kalidas, Hong Kong
26-03-2008

17)


DISASTER: India's Credit Rating downgrade

Finally, my fear of Credit rating downgrade due to nuclear issue is finally coming true. Read my original article "NUKE deal and India's credit rating....." dated 23-08-2008. After 22 days, my fears"ditto" is coming true. The article is reproduced after a few Para.

S&P released today that it might reduce India's credit rating from Investment grade to Junk grade. This will cause mass exodus of money from India. All pension funds, retirement funds, hedge funds will run for the exit because they are not authorized to invest into non-investment grade country.

S&P mentions the deteriorating fiscal discipline as one of the cause. But these credit rating companies are goddamn "Opportunist" and have always political agenda. They go by the dictates of the United States establishments.

By terming as "non investment grade". what they are telling you is that you are not friendly to the US government. Nearly 1/3rd reserve of India is also not parked with the US government - it is outside USA. These are not friendly signs for them. These are all untold reasons. You have to read what they mean rather than reading it in strict literary sense.

FII funds flow, especially long term investment money from US Pension funds were the main reasons for SENSEX's meteoric rise.

"Easy it comes, Easy it goes" said Danny DeVito in one his witty movies - OPM (Other People's Money).

Now those of Indians who have false pride of patriotism, I want to tell them once for all - This is not a war that you have to display your patriotism - this is financial world where you have got to be "realist" like me.

Expect SENSEX to fall very hard, and Indian rupees to go to Rs 48 at least if not 60.

Government of India was "IDIOT" . When the SENSEX rose to almost 21000, it had the perfect opportunity to sell various Public Sector Unit's stakes, realizing more than 400,000 crores. It could have then give the Tax benefit to the citizens after 50 years of hard work. But no, even Manmohan Singh and P Chidambaram are not visionary. They are good people, but very dumb. If they can not capitalize on screaming opportunities , they lose their right to leadership, I really wanted to use much stronger word, but would not.

Those of you aspiring for SENSEX to rise to 21000 or 40000 within next 3 years, forget it. Forget India's growth story - you need the capital but the SEBI, RBI, and Government of India has killed that very source. Sooner these bad guys leave the throne, better it is for India.

Here is my old article:
QUOTE
Title: NUKE deal and India's credit rating.....

United State's reminder to India to speed up the civilian Nuclear deal is a very serious warning having tremendous implications.

It may be noted that India's credit rating was upgraded to Investment grade only after Nuclear deal in principle. This caused exodus of US Pension Funds and other similar funds who are authorized to invest only in investment grade country.

If Nuke deal does not become a reality, there is serious risk to India for losing its investment grade status. If that happens, there will be mass exodus of Hedge and Pension funds from India. This will also push down Indian rupees to Rs 48 or further down, increasing the Oil Import bill by another 10%.

Indian growth story will be severely dented. It is important for all political parties to reconcile their differences and at least approve the deal so that catastrophe does not happen.

This will be the most important event. Watch for the early approval of the deal or rush to the exit gate to sell the stock at whatever the price. Recovery of stock market will be highly impossible, except for high tech stocks.

As hedge, stay with the high tech and BPO stocks. who will be least affected. Their fall from grace during such market meltdown will be the best buying opportunity.

Kalidas, Hong Kong
23-08-2008 (Ref: 09-061)
UNQUOTE

Kalidas, Hong Kong
14/07/2008 (Ref: 09-078)

18)

Totally disagree.

What Ambani Brothers' disputes have anything to do with the market? Their stocks have fropped due to (1) overrating and over valuation and (2) worsening global market. RIL stock is not worth Rs 900 - where is the question of it rising above 3000 as before. It was just hyped up.

Ambani brothers are coming up with newer and newer company all the time and then pass on the begging bowl around to raise money. I never like companies that go on inventing newer and newer companies. That is the first sign of financial trouble. Their almost all other new ventures have failed - Retails (vegetables), real estate, infrastructure etc etc

Have you ever heard solid company like IBM to go on buying totally diverse companies, not related to their field. IBM has even stopped advertising. 10 years ago, the IBL logo was found on every bus stand, water tank, street lights and every where. Today, IBM without any non repated take overs, and without advertising, earns more than what is used to earn before. This is called a Company, not RIL

Take the example of Apple. These are all single focused company. These Ambani brothers have become multi focused companies, one day they want Newspaper, or TV media (TV Today), then movie business (Spielberg association) or Cricket sponsorship or selling Vegatables like Bhaiyaas, then power plants, then telcom, then airport building, then Metro building, then real estate development, now they are eying Bank (because money dried up elsewhere). It is written all over it that this group has started Count down for its failure. Such companies do not last longer.

LT is a kind of stock should not trade at over 8 times PE and it is trading at 33 times. This is the most expensive stock one would have. Those who hold it or buy it should be rated as Fools. Watch for its downfall, if yu disagree. I will not buy this stock unleess it has come down to less than Rs 600 prebonus basis.

When these biggies are going to go down heavily, they will tank SENSEX or NIFTY accordingly. Between them, they will bring down index by 1800 points

Both are USELESS stocks to own. They are too pricey and too much diversified. Both are less focused. This is why LT lost over Rs 1400 crores in Forex losses. They are losing control of their operation - this is a warning light.

Kalidas, Hong Kong
15/7/08

19)

for novice1000

I disagree. US is also a growing market. Only growing markets can have rising stock market. US is a mixture of Innovation and also Commercialism. If US is also the biggest consumer nation in the world. If there is no US, neither China nor India will have any growth - their domestic market is too poor to pay the kind of price one gets in US. If US stops buying from China, 80% of factories will close down.

There is demand supply gap all the time every where. Apart from supply, you have to look at the quality as well. Can India make a simple passenger plane like Boeing? Can India make a Rail car (Dibba) like the one made by France and Germany? Can India make a metro like British did in Hong Kong and in UK?

Low prices encourage producers to make shoddy goods. It is only the presence of US, UK and Europe that people have conscious of quality. EU picks up from what is left by USA

EXXON, Royal Dutch Shell, British Petroleum, Total (France) never felt urge any need for diversification inspite of reaching the size nearly 3 to 10 times of Reliance.

Dhirubhai Ambani was innovative and also single focused. He did forward and backward integration, never went for diversication. He was single focused, so he succeeded. His MBA sons will fail, because such things are not taught in business schools.

Diversification is a much abused word. When one can not expand through innovation or runs out of idea, he borrows the idea of others and go for that business of which they have little knowledge.

This is called speculation. They call it diversifcation. It merely says that \\

20)
For guest,

Normally I do not reply to unidentified guests. It seems that you are either new, never read anything about my posts, do not know my timings, or nothing at all. It was me who said in December to sell 70% of stocks before 16/1/2008, and Index slumped by 3000 pts in 2 days from 23/1, Again I told everyone to sell everything before 31/3 and remain 100% cash. On 31/12/2007 and 28/3/2008, the index position were as under:
Date......Open......High.....Low.......Close.......Volume Adj Close*
31-Dec-07.20,323....20,484...20,239....20,286......10,400...20,286
28-Mar-08.16,100....16,452...15,884....16,371..... 23,800...16,371
Current
15-Jul-08.13,067....13,067...12,607....12,676......30,000...12,676

Now tell me, my calls were much ahead than others. SENSEX is down by 40% from the date of my first call. and 33% from second call. Check the facts before passing angry remarks. Everyone is losing if they are still long,that includes you, otherwise you would not have been so angry.

And when you say that 'The market or stocks are down due to poor politics here, poor global cues, high crude oil rates & high inflation rates', then let me ask you which factor is left out?

Don't be so naive, and do not tie me up with others in the animal farm. Read properly before you vent out your feelings.

Kalidas, Hong Kong


21)
for guest,

Pick any Investment Bank. When they are in distress, they merge with others. you will get the best experience in such banks. After two years or so, when the things begin to stabilize, you may get better oppportunities.

Kalidas, Hong Kong
16/7/2008

22)
for karthik (Guest)

Please make your enquiries specific. You are asking one question related to US and other buying some agricultural properties - in India or USA

Agricultural property prices are not falling to my knowledge. Further, it all depends on location, water availability etc.

Generally speaking, the Agricultural property prices are rising except those near city which were bought by investors for speculation purpose.

In USA the Ag land prices are rising, not falling. In India too, they are rising near the center where I have lot of farm interest.

Kalidas, Hong Kong
17/7/2008

23)
for Ranbir Mehta(Vododara) Posted By Guest

Yes, It will happen everywhere. More than stock market crash, there will be precipitate bank failures where people may lost lot of money. In some countries, including United States, there could be even Civil War.

Take protective measures if you are living in independent bungalow.

Kalidas, Hong Kong
18/7/2008

24)

for Jayesh Mange (Guest)

It is not the time to buy property in Mumbai. The prices have corrected in Ghatkopar (I was borne in Ghatkopar and have my property interest there) - especially in new constructions. In old Ghatkopar or on Ghatkopar (West) near 60'/90' Road or Garodia Nagar. the supply of vacant land is very limited. You can get only resale flats. There prices may not have come down.

Near Vidyavihar, where Punjalal Dave built property, where my own brother has bought for Rs 33 lakhs (@ Rs 2800/sft), the rates were said to have gone to Rs 8000/sft

In neighboring location, where Neelkanth group is building the new complex where booking rate was over Rs 7500, they have scaled down to Rs 6000 or so, one of the investor having relationship with the builder told me recently.

The interest rates are too high, and stock market is still very high. There should not be any rush to buy the property at this point of time. Let the market drop by another 6000 points and 3 months after that you search for the property - you may get about 25% cheaper from current level.

You are right. One BHK flat used to cost Rs 35 lakhs. only in old buildings, you may get between Rs 25 lakhs to Rs 30 lakhs now or may be less (these buildings do not have lift)

Kalidas, Hong Kong
18/7/2008

25)
Banking License in USA - 2 yrs to 24 hrs

Financial times reported today (22/9/2008)the following:

Industrial and Commercial Bank of china,, state owned 2nd largest bank in China, known as ICBC, was disappointed with the American regulatory system.

It took 2 years for ICBC to get the license to open its first branch in USA

It took just 24 hours for Morgan Stanley to obtain the become a full fledged bank with full recourse to FED funds and retail deposits.

Debt is the King - China should have learnt by now. Do not be a bank to become a bank in USA - become bankrupt to be transformed into a bank in the United States of America

Kalidas, Hong Kong
22/9/2008

26)
No one is too big not to fall

Last few months' and a few years' events show that "No one is too big not to fail"

See the following list:
1. Baring Securities (Failed after almost 100 years of history due to rogue traders)
2. Bear Stearns
3. Lehman Brothers
4. Merril Lynch
5. Fannie Mae
6. Freddie Mac

Nearly Saved list:
6. Morgan Stanley
7. Goldman Sachs

Others in Parade:
8. UBS
9. Washington Mutual
10 Wachovia
11. Citibank
12. JP Morgan Chase
13. General Electric (GE)
14. General Motors, (GM)
15. Ford Motors
16 Chrysler
17. American Airlines
18. United Airlines
19. Delta Airlines

In UK
20 Northern rock
21 Royal Bank of Scotland
22. Barclays (on the way)
23. HSBC (on the way)

And last one in the parade:
24 United States of America

Those who say in India that Ambani, Tata or Birla are solid businessmen and are infallible, read above and judge yourself. Do not elevate them to the status of God.

There was a James Bond movie called " Never Say Never Again". does it apply to America?

Kalidas, Hong Kong
23/9/2008