25 Jun 2018

Market Outlook- short term

        Market index NIFTY failed to touch the all time high even after the recovery from March 2018 bottom.We have seen a consolidation phase between 10500 and 10800 in last two months and volume spurt  was not happened.Means,buyers are not active above 10800 level.Instead,profit booking is still going on.Foreign institutions are continuing net selling this year,though domestic institutions accumulate at discount situations.

       Like any previous election year,2018 is also uncertain for general index, although IT secor made a strong recovery recently.A High PE of 26.5 is a big concern for foreign institutional investors,as they search undervalued opportunities across the globe.US Market also trades at an over bought phase;but their dividend yield looks better than India.Rising non performing assets in banking sector affected the market sentiment badly.Major Public sector companies corrected more than 30% and still the bottom fishing not started.
     We have seen a trend channel break down in February.but,failed to reach the same in last four months.So,current consolidation level will be crucial in determining medium term trend for one or two quarters.A breakout above 10800 with volume spurt is required to maintain the revival towards all time high.Otherwise,market may remain weak and any adverse global or domestic news may lead the index towards 10450 level.If next Earnings season fails to improve substantially from current level,NIFTY may retest the next consolidation area of 10200-10000 again in upcoming quarters.

 Disclaimer:Above observation is based on Techno fundamental parameters of general market and not a recommendation.Consult your financial advisor before any investment decision.

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11 Jun 2018

Why we should examine Values of a corporate ?

Image coutesy: successstory.com
       Now a days, values are not prominent in life and business- people have forgotten it and same is the case of companies too. but, the real value creators will leave a legacy in the world. Great business men lead companies with ethical values and standards. Such businesses become steadily growing and financially strong in the long term.

     Few historical examples are: Infosys, the Tata group, Maruti.In 1990, N.R.Narayanamurthy came up with the IPO of his company Infosys and many people were reluctant to invest due to  the nascent stage IT sector in India. Infosys became one of the giants in IT industry, employing more than two lakh people, raising the promoters to billionaires.An investment worth INR 10,000 in the 1990s would have become INR 4 crores by now.Tata have faced many difficulties like huge debt accumulation in Tata Steel and Tata Motors, but managed to rise over all of them. Tata Motors acquired top automobile brands such as Jaguar Land Rover. Visionaries never aim to be the Number one provider of products or services. Their objective is to survive in the environment for the long term like many decades. 

    Two and half years back, stock price of Maruti had fallen from Rs.4700 levels to  Rs.3409. Now, the stock trades at 9000 levels. Pick ten cars on the road in random and you find that 6 are of the Maruti brand. The Maruti Swift Dzire is currently the highest sold passenger car in India, taking place the record of  Maruti Alto.The Key Reason behind their market leadership is created by ‘value-for-money’ proposition. The company embraced new technology and design in due time and surpassed previous leader Ambassador. Their satisfied customer base has referred more new customers too. If a company focuses on creating the best products and services,success will follow.

    In value based investing, we need to look deeply into the benefits of the products and services of companies. If the product/service looks exceptionally good than expected, it will massively attract consistent rise in aggregate demand.This will move forward the business to the next level of success and expansion. The Royal Enfield story is another perfect example. At a time when people flocked to Hero Honda and Bajaj showrooms to buy 100 cc bikes, Royal Enfield saw disappointingly lowest sales figures only. The company then innovated  their models to suit the youth and even made major tweaks. Sales then soared and reflected in the stock prices as well- a rise from about Rs.1500 in 2012 to 32000 levels in last 6 years.

Major thing to know the values of a company is to know the promoters and the top management.Their ethics and values- along with their experience in the industry will play a crucial role in creating the future. When a company has strong morale and ethics, it ensure value for money and satisfies customers, and grows in time without doubts.

(This Article is an illustration about the relationship between values and business success in few case studies,which is not an investment advice .You should understand the risks well before any investment decision.)

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