Posts Tagged ‘India

31
May
12

Soniaji presents UPA-2 achievements and Rupee hitting fresh new lows..

Rupee at a fresh new lifetime low kind of sums up congress led UPA 2 rule at center. PM and FM keep on harping about challenging global macroeconomic environment which is resulting sharp Rupee decline. Every time we hear the same reason – Eurozone crisis is impacting our growth. Yes, to a large extent Eurozone troubles are impacting all EM currencies. But INR is outperforming every other currency on downside on account of twin deficits. Without any major shock and FII outflows, Rupee is above 56.

It is difficult to believe that a man of  such stature is doing nothing but just holding onto his PM post. May be the center of power is somewhere else and he has no choice but to be a rubber stamp. Few days ago, PM commented that “Policy paralysis perception can be corrected by reality”. I wonder if he is still in real world or in the paralyzed world of congress. Sometime back,  Soniaji also commented that it is fashionable to criticize government. It just shows the state of mind this government. Intellectuals at the center are still not willing to accept that much of India’s misery is a result of our own doings rather than the outside world. Suddenly after parliament session got over, the government increased petrol prices sharply by Rs. 7.5/Lt. Everybody including myself thought that the center has become hyperactive and we might see slew of decisions in coming days, especially diesel, LPG and kerosene price hike.  But everything is back to normal in the paralyzed world. Petrol is to a large extent deregulated and its subsidy share is like a drop in the ocean of overall subsidy bill. Petrol hike should have been managed better in terms of its quantum and rather diesel, LPG and kerosene prices should have been hiked moderately. But now the government has shot itself in the foot and is finding difficult to increase prices.

Rajeev Malik wrote an article in BS: http://www.business-standard.com/india/news/rajeev-malik-seeking-divine-intervention/473775/. It kind of sums up the frustration with this government.

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13
Jun
11

Opportunity: Maruti dealers have inventory for 28 days

As soon as I opened today’s BS newspaper and saw the headlines http://www.business-standard.com/india/news/slowdown-clouds-darken-over-india-inc/438865/, I sensed my new opportunity.

New Index of Industrial Production (IIP) series figure released last week, Q4 FY11 GDP figure, May Auto sales figure, HSBC Purchasing Managers Index (PMI) – all point in one direction of slowing economy. All auto-makers were struggling with margin pressure on account of rising commodity prices, but with rising interest rates, signs of demand destruction are also quite visible.

Passenger car segment in India is highly competitive. Today country’s largest car maker, Maruti Suzuki’s chairman Mr. RC Bhargava said, “company dealers have inventory for 28 days”. It clearly shows that the company is struggling with sales growth and consumers are deferring the decision to buy a car. As if, all of this was not enough car-maker is also struggling with strike at its Gurgaon plant for past one week, leading to several crores of loss every day. Given all the concerns around automakers in general and Maruti in particular, I don’t expect stock price to cross 1300 level in a hurry. In case RBI does not increase repo rates in its 16th June review, there might be some rally in rate sensitives including Maruti. I have sold 1350 call and looking to sell 1300 call for June series, just waiting for the RBI meet…

08
Jun
11

Why Congress government rocks..

Yesterday, I read an article on Kirtan’s blog (http://www.insearchofnirvana.in/) on politicians. Sometime back, I used to share same level of frustration about politicians but not anymore. As an option writer Indian government is my best friend because they allow me to play on time decay. They will never be able to take any decisions and even if they will, it would be too late in the day. As per congress government, it is extremely difficult to decide on what is of  national interest in Cairn-Vedanta deal. After several months of delay, they are yet to decide on the deal with ball moving from GOM to CCEA and back. I could easily sell Cairn India 320 Put in April with confidence that government won’t take any decision soon.

The Government is too busy with Baba Ramdev and they don’t have time to decide on diesel price hike. One can easily create short strangle in Oil marketing companies. I haven’t done that, since my plate is currently full with Sun TV, R Comm, Tata Motors. After destroying investors wealth in Oil marketing companies, government is all set to do the same with ONGC by increasing its subsidy share just before Follow-on Public Offer (FPO).

They still cannot decide on the best way to dilute stake in Public Sector Units (PSU’s). FPO has become a dreadful word which, if associated with any PSU, becomes target of bears and option writers like me. I don’t think FPO is the best way to dilute stake in PSU’s with government not getting best possible value. I made money by selling SAIL 180 Call in May, 160 Calls in June. I missed the chance in Power Finance Corporation (PFC).

When UPA got clear mandate in 2009, market gave it a big thumbs up by rallying 10% plus. Market thought, with comfortable mandate, government would be able move faster on reforms. After 2 years, we are still waiting for any kind of reforms with many important bills pending. With BJP ruled states opposing, one important tax reform Goods and Services Tax (GST) can’t find its way. GST has the potential to add several bps to India‘s GDP growth. Next 1-1.5 years is the best possible window for government since as they go into the election mode.

Our Finance Minister(FM) still says investors should not be negative on India. I agree, but that would be because of private companies and not the government. I wish the government was a listed entity then one could have entered into Pair Trade (Short government, Long private corporations). Congress government rocks!!!…please keep adding some more scams to your already long list!!!!




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