One can see the celebration of three years of bull run on CNBC TV18 all day long these days. The BSE sensex has continued to rise at a scorching pace, the growth rate has been faster than most of its foreign counterparts. While I have been following the markets since I was a school kid, my interest in the stock market grew when I started reading Economic Times daily. At that time, virtually every IT stock was sky rocketing. Some clever companies got themselves renamed and got the word "Software" to pose as IT companies even if none of their employees hadn't even seen a computer. What a time it was! Fast forward to the year 2006 and I am begining to get the feeling of Deja Vu - the only difference this time is that the game is not limited to the IT sector, new sectors like Capital Goods, Sugar and Real Estate have supplanted IT. While I'm by no means an expert in this field, I have been watching the stock markets very closely for some time now. It was amazing to see every stock with sugar attached to its name soaring to new heights, all the capital goods companies trading on unrealistic valuations.
As if that was not enough to amaze me, certain stocks like Bata and Ceat have started soaring now because of re-valuation of their assets (read real estate). The boom in the real estate sector has been primarily due to FDI. In yet another reform move to deepen the economic liberalization process, India had threw open the country's property and housing sector doors to foreign investors by allowing them to establish wholly-owned subsidiaries to construct housing projects without having to seek government approvals. Post that, the growth rate of infrastructure stocks has been exponential. Take a look at the yearly price chart of Ansal to get a better idea of what I am talking about:
Now, DLF (another big company) is coming out with its IPO and that too is expected to move in a similar fashion. Smaller companies like DS Kulkarni too are also taking advantage of this mad rush and have come out with their IPOs, while there is no doubt that their IPOs will be fully subscribed, valuations seem a bit unrealistic to me. But then, at this stage, if my friendly neighbourhood Tikkiwaala comes out with an IPO, even that will get oversubscribed ;) Small investors like you and me would be better off investing in Mutual funds as their fund managers are much more knowledgeable and have much more experience.
Even as I type this post, I can see CNBC TV18 speculating that the government would allow 49% FDI in retail soon (Multi-Brand, /Multi-Product now). Looks like it's Pantaloon's turn to soar now.
Happy Investing!
As if that was not enough to amaze me, certain stocks like Bata and Ceat have started soaring now because of re-valuation of their assets (read real estate). The boom in the real estate sector has been primarily due to FDI. In yet another reform move to deepen the economic liberalization process, India had threw open the country's property and housing sector doors to foreign investors by allowing them to establish wholly-owned subsidiaries to construct housing projects without having to seek government approvals. Post that, the growth rate of infrastructure stocks has been exponential. Take a look at the yearly price chart of Ansal to get a better idea of what I am talking about:
Now, DLF (another big company) is coming out with its IPO and that too is expected to move in a similar fashion. Smaller companies like DS Kulkarni too are also taking advantage of this mad rush and have come out with their IPOs, while there is no doubt that their IPOs will be fully subscribed, valuations seem a bit unrealistic to me. But then, at this stage, if my friendly neighbourhood Tikkiwaala comes out with an IPO, even that will get oversubscribed ;) Small investors like you and me would be better off investing in Mutual funds as their fund managers are much more knowledgeable and have much more experience.
Even as I type this post, I can see CNBC TV18 speculating that the government would allow 49% FDI in retail soon (Multi-Brand, /Multi-Product now). Looks like it's Pantaloon's turn to soar now.
Happy Investing!
2 comments:
Your blog now needs some dollars for expansion ....
how about Blogs IPO ?
Think about it !!!
49% FDI in retail..?
Gr8 news buddy, i should now start planning about my net jump.. form Pantaloon to Wal MArt...!
Well on the serious side... Govt. has been lobbying hard along with the left to make it happen but as we are.. it will take some time before foriegn retailers can step in to Indian territory.. No doubt, sooner it happens, better would be for the econmony and consumers..
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