Moolyankan Unitvalue - 1 Aug'08

Moolyankan Unitvalue 113.89 (Returns Since 10th Sept'07 - 13.89%)
Sensex Returns - (06.39)% ; () denotes -ve returns
Sensex today - 14657 (Sensex 15593 - 10 sept'07)

Corpus Size - Rs 202,650
Total Number of Units - 1779.33

Hedging the Moolyankan cash portfolio

We have started hedging our cash portfolio by buying some puts in F & O segment. It goes without saying these are troublesome times and you need some protection against the wild swings of the market.

In layman's language by buying puts your portfolio gains when market falls. When market falls obviously the value of your cash portfolio reduces and to protect it from free fall you need the comfort of some instrument through which you can gain when market falls.

As if now we have bought the Nifty 3700 PE July series Put. Considering the present scenario we feel it is a must since in the present circumstances we are not looking at the relative returns compared to sensex. We are already outperforming the sensex by a margin of 20%, but we strongly believe it makes no sense to say our returns are -5% since sensex has gone down by 25%. It is time to look for absolute returns and we are going to ride puts unless the market condition stabilizes.

Today again inflation figures were bad and has increased to 11.89% and we think RBI would be further increasing the key policy rates soon. We are in a election year and government would want the inflation to reduce at any cost even of GDP growth. In high interest rate scenario there is only a point up till which companies can pass on the cost increase to the customers after which there is a elasticity of the demand comes in and it contracts. This affects the margins of the companies.

It seems there bad news just keeps pouring in. Industrial production growth has slipped to 3.8% -its lowest levels in last 6 years. It makes the job of policymakers even more difficult with high inflation at one hand and slowing growth on the other hand.

Earnings season has started and Infosys came out with a good set of numbers for Q1 FY-09 along with revised guidance of 99.34-101.06 for the full FY-09. Biggest contributing factor to the revised guidance is the rupee depreciation. There are concerns on the deals coming from the BFSI vertical which is the main reason Infosys tanked despite good set of numbers and revised guidance. But we believe there is some scope of rerating in the stock and in the next 3-4 months it should outperform the sensex and nifty. We are definitely looking at buying into the IT stocks.

Oil continues to boil and has crossed its previous high of USD 145.85 per barrel on July 3. Supply side concerns from strike in Brazil, violence in Nigeria and geopolitical tension in Iran continue to provide fuel to the oil price rally. We can't comment how is the present price is due to speculation or genuine supply side concerns but we believe the world has entered into a phase where it is continuously going to see higher prices.

Moolyankan Unitvalue - 12 July'08

Moolyankan Unitvalue 107.71 (Returns Since 10th Sept'07 - 07.71%)
Sensex Returns - (13.61)% ; () denotes -ve returns
Sensex today - 13470 (Sensex 15593 - 10 sept'07)

Corpus Size - Rs 191,652
Total Number of Units - 1779.33

So......finally left...

So..Finally left withdraws support from the UPA govt after long drama over nuclear deal.
Does it really affect market ?

Answer to this question lies in the fact that market recovered after the news formally came out today afternoon. Market never like uncertainty and in a way it is good with the general election due next year march, so it hardly matter whether elections happen 3-4 months before scheduled time. We believe markets have already discounted the news.

Right now there are far greater issues before the market - earnings slowdown, high oil prices, rising inflation.
Although market valuations have down from the peak in January this year and now trades at PE multiples of 14 (Sensex EPS - 950).

Can the market go lower from these levels ?

In the near term it seems market has formed some strong support near recent lows of 3830-3850 (Nifty) but another rally in oil prices or further spurt in inflation can break all these support very easily and nifty could slide to further lower levels (In general 1 pt change in nifty results in 3 pt change in sensex, although there is no written rule).
Oil has cooled off today to US$ 136.7 from its recent highs of US$ 145.85 per barrel on July 3. Along with oil prices of many commodities has cooled off from there highs. With slowing economies across the world and resulting slowdown in demand the prices of many commodities are bound to come down including oil. But if there is any new geopolitical development such as Israel attacking Iran price of oil might flare up.

Slowing economies coupled with high inflation (Stagflation) beyond the comfortable range is giving headache to most central bankers across the world. ECB recently raised the interest rates by 25 bps to counter inflation in the Euro zone and situation is same across the world. In India inflation is expected to rise off further before high base effect of last year kicking in.

From this friday extremely important earnings season will start with Infosys declaring the result. If there is any nasty surprise from the companies than it is no-brainer market will go down significantly lower from here.

Moolyankan Unitvalue - 27 June'08

Moolyankan Unitvalue 111.25 (Returns Since 10th Sept'07 - 11.25%)
Sensex Returns - (11.48)% ; () denotes -ve returns
Sensex today - 13802 (Sensex 15593 - 10 sept'07)

Corpus Size - Rs 197,951
Total Number of Units - 1779.33

Moolyankan Unitvalue - 25 June'08

Moolyankan Unitvalue 113.46 (Returns Since 10th Sept'07 - 13.46%)
Sensex Returns - (8.81)% ; () denotes -ve returns
Sensex today - 14220 (Sensex 15593 - 10 sept'07)

Corpus Size - Rs 201,879
Total Number of Units - 1779.33

Moolyankan Unitvalue - 24 June'08

Moolyankan Unitvalue 113.12 (Returns Since 10th Sept'07 - 13.12%)
Sensex Returns - (9.53)% ; () denotes -ve returns
Sensex today - 14107 (Sensex 15593 - 10 sept'07)

Corpus Size - Rs 201,280
Total Number of Units - 1779.33

Moolyankan Unitvalue - 9 May'08

Moolyankan Unitvalue 129.00 (Returns Since 10th Sept'07 - 29.00%)

Sensex Returns - 7.33%

Sensex today - 16737 (Sensex 15593 - 10 sept'07)
Corpus Size - Rs 229,535

Total Number of Units - 1779.33

Moolyankan Unitvalue - 2 May'08

Moolyankan Unitvalue 133.66 (Returns Since 10th Sept'07 - 33.66%)
Sensex Returns - 12.87%
Sensex today - 17600 (Sensex 15593 - 10 sept'07)

Corpus Size - Rs 237,834
Total Number of Units - 1779.33

Moolyankan Unitvalue - 30 April'08

Moolyankan Unitvalue 132.35 (Returns Since 10th Sept'07 - 32.35%)
Sensex Returns - 10.83%
Sensex today - 17287 (Sensex 15593 - 10 sept'07)

Corpus Size - Rs 235,488
Total Number of Units - 1779.33

Moolyankan Unitvalue - 25 April'08

Moolyankan Unitvalue 130.63 (Returns Since 10th Sept'07 - 30.63%)
Sensex Returns - 9.83%
Sensex today - 17126 (Sensex 15593 - 10 sept'07)

Corpus Size - Rs 232,442
Total Number of Units - 1779.33

Moolyankan Unitvalue - 23 April'08

Moolyankan Unitvalue 130.03 (Returns Since 10th Sept'07 - 30.03%)
Sensex Returns - 7.09%
Sensex today - 16698 (Sensex 15593 - 10 sept'07)

Corpus Size - Rs 231,368
Total Number of Units - 1779.33

Moolyankan Unitvalue - 22 April'08

Moolyankan Unitvalue 129.52 (Returns Since 10th Sept'07 - 29.52%)
Sensex Returns - 7.64%
Sensex today - 16784 (Sensex 15593 - 10 sept'07)

Corpus Size - Rs 230,455
Total Number of Units - 1779.33

Moolyankan Unitvalue - 21 April'08

Moolyankan Unitvalue 127.47 (Returns Since 10th Sept'07 - 27.47%)
Sensex Returns - 7.35%
Sensex today - 16739 (Sensex 15593 - 10 sept'07)
Total Number of Units - 1779.33

Moolyankan Unitvalue - 17 April'08

Moolyankan Unitvalue 125.87 (Returns Since 10th Sept'07 - 25.87%)
Sensex Returns - 5.69%
Sensex today - 16481 (Sensex 15593 - 10 sept'07)
Total Number of Units - 1779.33

Moolyankan Unitvalue - 16 April'08

Moolyankan Unitvalue 124.48 (Returns Since 10th Sept'07 - 24.48%)
Sensex Returns - 4.17%
Sensex today - 16244 (Sensex 15593 - 10 sept'07)
Total Number of Units - 1779.33

Moolyankan Unitvalue - 15 April'08

Moolyankan Unitvalue 123.78 (Returns Since 10th Sept'07 - 23.78%)
Sensex Returns - 3.6%
Sensex today - 16154 (Sensex 15593 - 10 sept'07)
Total Number of Units - 1779.33

Moolyankan Unitvalue - 11 April'08

Moolyankan Unitvalue 122.56 (Returns Since 10th Sept'07 - 22.56%)
Sensex Returns - 1.38%
Sensex today - 15808 (Sensex 15593 - 10 sept'07)
Total Number of Units - 1779.33

Weekly change (4 April - 11 April'08)

Moolyankan Unitvalue - 3.25 (119.31 - 122.56)
Sensex - 3.03 % (15343 - 15808)

Moolyankan Unitvalue - 10 April'08

Moolyankan Unitvalue 121.82 (Returns Since 10th Sept'07 - 21.82%)
Sensex Returns - 0.65%
Sensex today - 15695 (Sensex 15593 - 10 sept'07)
Total Number of Units - 1779.33
plz note number of units have increased.

Interaction with Fidelity MF

We are planning to hold Telephonic interaction with Fidelity MF. Fidelity MF was one of our recruiter last year. The topic for interaction would be - How investment research is carried out at Fidelity MF ?
Date has not been finalized as yet. The telephonic interaction would be held at Conference room, DoMS. It can accommodate only limited number of people.
So if you are interested than plz write the same in the comments.

Moolyankan Unitvalue - 9 April'08

Moolyankan Unitvalue 121.87 (Returns Since 10th Sept'07 - 21.87%)
Sensex Returns - 1.27%
Sensex today - 15791 (Sensex 15593 - 10 sept'07)
Total Number of Units - 1779.33

BL Club Article on Investment Workshop

http://www.thehindubusinessline.com/2008/04/07/stories/2008040750841500.htm

Moolyankan Unitvalue - 8 April'08

Moolyankan Unitvalue 120.86 (Returns Since 10th Sept'07 - 20.86%)
Sensex Returns - (0.03)% ; () denotes negative returns
Sensex today - 15588 (Sensex 15593 - 10 sept'07)
Total Number of Units - 1775.33

Investment workshop article

With a yearning for more knowledge and insights into the evaluation of firms for investment, DoMS IIT Madras, in conjunction with the Business Line Club organized an Investment Workshop and invited renowned investment advisors Mr. Rajat K. Bose for insights into Technical Analysis and Mr. S.P. Tulsian for imparting wisdom on Fundamental Analysis of stocks.

Mr. Rajat K. Bose is a well known technical analyst in Indian equity markets. He is a member of the online panel of global executives for The McKinsey Quarterly, the quarterly journal of venerable McKinsey & Co. and participates in the surveys conducted by The McKinsey Quarterly. Currently, he appears exclusively on TV18 India Ltd. group channels such as CNBC TV18, CNBC Awaaz and CNN-IBN. He also regularly contributes to http://www.poweryourtrade.com/ with daily calls and writes articles on market outlook on http://www.moneycontrol.com/. Mr. Bose has appeared on several Indian channels like NDTV-24x7, NDTV Profit, Zee Business, Sahara Samay and several other regional language TV channels. He has also written for The Economic Times, Kolkata edition and The Statesman, Kolkata.

Mr. S.P. Tulsian is a name to reckon with in the Indian investors fraternity. Mr. Tulsian was a member of the National Stock Exchange (NSE), right since the time of its inception in 1994. He started a hugely popular and respected weekly tabloid, Premium Investments as its Editor and Publisher and still runs this successful initiative to protect investor interest and give truthful advice. Mr. Tulsian is often seen on prominent business televisions channels like CNBC, CNBC AWAAZ and CNN-IBN. His articles appear in most of the leading financial newspapers in India, like Economic Times, Business Standard and Financial Express.

Mr. Rajat K. Bose helps unravel Technical Analysis

Mr. Rajat K. Bose started the first session by admitting the fact that while student community is getting increasingly fond of technical analysis, it doesn’t guarantee profits even to great technicians. Knowledge of stock markets is the key to success and emphasis should be on managing trading risk while technical analysis can provide controlling handle on the things. Most people assume that mathematics is the technical aspect in technical analysis. Initially when technical analysis started, very elementary school level mathematics was used but later on engineering mathematics also found application. Since 2000 there has been a de-emphasis on mathematics part because at the end of the day people are only concerned about making money and not using fancy mathematical fundamentals.

Talking about the history of technical analysis, Mr. Bose quoted Benjamin Graham and his role in the separation of technical and fundamental analysis in 1960s. Mr. Bose defined technical analysis as study of markets or company performance on price charts. Price and Volume of transactions are the basic raw data required for the analysis. Talking about the philosophies of technical analysis, Mr. Bose said market action discounts everything which is a direct inference from the Dow Theory. Technical analysis is like a chess board where everything is open while Fundamental analysis is like a cards game where many things are hidden. One of the basic assumptions of technical analysis is that history repeats itself. Many people consider it crazy but analysis has proved that it is possible to come up with price projections based on historical price movements. On one hand fundamental analysis stresses on causes of market action while technical analysis on the other hand focuses on the effects of these market action.

Getting deep into technical analysis, Mr. Bose explained three types of market trends i.e. uptrend, downtrend and sideways movement. These trends must be adequately supported by the volume data. The very essence of momentum trading is the fact that a trend is assumed to be in effect until it gives a definite signal that it has reversed. But it has a possible pitfall also because who knows if you are the last bull on the bourses. Another important philosophy of technical analysis is that averages must confirm each other. The averages here generally refer to the Dow Jones industrial average and the Dow Jones transportation average, both should move together. China in 1995 reported a flat transportation average while the GDP was reported very high; at this people suspected the figures.

Mr. Bose explained the fundamental concepts of support and resistance. Support is the level at which demand exceeds the supply and resistance is the level at which supply exceeds the demand. Basic concepts of price gaps and trend lines were then explained with the help of several examples on patterns. Mr. Bose then moved to the topic of managing trading risks. If you put an intelligent guy in a group of fools, he no longer remains intelligent and looses all his intelligence. This is the condition prevalent in the market today, where people do not behave rationally but irrationally as opposed to the efficient market hypo thesis. People generally get trapped in belief that trend will continue forever and in the process make huge losses.

Mr. Bose gave few guidelines that should be followed while trading in the markets. Trade what you see, not what you believe. People need to keep aside their belief and preconceived notions and trade the markets. Selection of counters to trade is based on many parameters like risk averseness of the investor, size of risk capital (money, on loss of which an investor would not lose his sleep), liquidity of the counter in question, volatility of the scrip and the lot size. People should never average a loser. Many investors indulge into buying falling scrip but caution must be exercised on the extent to which one can buy falling scrip. Investors need to decide the stop losses level in advance and it should be strictly followed. Last but not the least, judgmental biases should be avoided. Many investors become adamant at my-current-trade-investment-must-be-a-winner. Such biases should be avoided and the losses should be minimized in this case. In the end Mr. Bose concluded the session by emphasizing on the risk management rather than following any analysis blindly.

At the end of the session, Prof. Rahul Marathe presented a memento to Mr. Rajat K. Bose and thanked him for providing profound knowledge on the topic of Technical Analysis.

Mr. S.P. Tulsian expounds on Fundamental Analysis

The second session at the Investment Workshop was addressed to by renowned investment advisor Mr. S.P. Tulsian. He held forth on Fundamental Analysis and various aspects that can help investors in valuing a company and decide on its investment worthiness.

Mr. Tulsian commenced by saying that he was very happy for Moolyankan and impressed by the fact that the future torch-bearing managers of India were doing a good job of making prudent investment decisions. He said that during the session he would be looking at the objective and subjective factors as well as components that help decide on investments in companies, in addition to 4 case studies of different companies.

Taking up the topic of objective factors that helped in investment decisions and are applied as liked by an investor, Mr. Tulsian enumerated the following important ratios and indicators:
· Enterprise Value (EV)/Earnings before Interest, Depreciation, Taxation and Amortization (EBIDTA)
· Discounted Cash Flow (DCF)
· EV/Sales
· EV/ Profit after Tax (PAT)
· EV/EBIT
· Price to Earnings (PE) Multiple
· Break-up value of Assets
· Dividend Yield
· Book Value
· Replacement Cost

Mr. Tulsian maintained that EV/EBIDTA is a very strong indicator of the core strength and stability of a company. For this purpose, he broke down each component of EBIDTA viz. Interest, Depreciation, Taxation and Amortization and explained that each of them must be discounted for the purpose of zeroing in on the true profitability of the company. Describing further, he said that EBIDTA margins are important benchmarks and companies with high EBIDTA are good investment avenues. However, one might look at firms with lower EBIDTA only if their future prospects and projects seem to be bright and profitable.

Speaking on DCF, he professed it to be an important indicator and said that one needs to discount the profitability of current as well as future projects of a company.
Pointing to the EV/Sales ratio as a valuable indicator of enterprise value, Mr. Tulsian said that in comparison market capitalization was a weaker parameter for measuring the enterprise value. The reason behind this is that market capitalization doesn’t consider the debt component of the company while EV does. However, the EV/Sales ratio is more applicable to industries such as services, technology, and entertainment, where proprietary technologies and innovations will be used in future projects for profitability.

Saying that today EV/PAT was not a very popular ratio today, Mr. Tulsian said that it was so 25-30 years ago. This is so because earlier there was really no difference between a company and the projects it undertook. However, with the entry of MNCs into India, each project that a company now takes is evaluated individually. He still emphasized that EV/PAT was still relevant as it was ultimately concerned with the bottom-line.

Focusing on the EV/EBIT ratio, he said that the ratio indicates how many times the market values the operational result of the company. A low ratio suggests poorly efficient use of a company's resources, even if its profit margin is high.

Mr. Tulsian described the PE multiple as a very important indicator of the health and operations of a company. But valuing the company so would require us to only consider its operations one year forward as the future was really uncertain and looking too forward rosily might attach some risk with our decisions.

Break-up value of assets is the value realised when they dismantle assets or discontinue operations. Valuing companies on this parameter is a good idea as it values a company on the basis of all assets the prices they can fetch, stressed Mr. Tulsian. He revealed that a healthy break-up value of assets permitted many companies to have high stock prices despite a lacklustre performance.

Mr. Tulsian stressed that the Book Value or rather the Price\Book Value ratio as a valuating parameter is important to sectors such as the banking sector as well as the purposes of acquisitions.

The final component of the objective parameters was Replacement cost which is a parameter relevant more to infrastructure projects and companies as the profitability for them is not initially high but increases as the project progresses.

Next, Mr. Tulsian explained the subjective factors which include the following:
Promoter
Sector
Size
Geography
Project Engineering
Growth prospects

Taking up the effect of a powerful and influential promoter on a stock’s value, he said that the Reliance Power Limited’s (RPL) IPO euphoria was fuelled because of the image of Anil Ambani attached so strongly with the ADAG. However, with its fiasco people now don’t have the same faith in RPL. He explained that those companies whose promoters have a clean image, who follow all corporate governance norms have higher valuations.

Mr. Tulsian said that different sectors have different PE multiples. Currently capital goods, retail, infrastructure, power and entertainment sectors enjoy a high PE multiple. This lot keeps on changing depending on the boom an industry is experiencing.

The size of a company does matter in valuation, he said, emphasizing that bigger companies get valued better through their sheer breadth and multiplicity of projects. Here he gave the example of Kingfisher-Deccan merger, comparing them to Jet, as a result of which its valuations are decent considering the fact that the venture has still not posted any profits.

Indicating the importance of geographical location of a company and its operations, Mr. Tulsian said that because of favourable governmental rules and regulations and lower transportation costs from fields, sugar industries in Karnataka and Orissa would be valued much higher than those in Uttar Pradesh.

Similarly, project engineering and related efficiency and capabilities of a company was important, considering the fact that refining companies which can’t process light crude are valued much lesser than those which can. In the same vein, growth prospects of a company play an important role in its valuation.

Mr. Tulsian then went on to describe how components such as fundamentals, liquidity, sentiment at the market and its listed or unlisted status swayed the price of a company’s stock.
Fundamentals were extremely important for a stock. This is the factor, which if strong, should keep the long-term investor invested in a stock, accentuated Mr. Tulsian.

He considered liquidity of a company as important as its fundamentals as that is the factor that drives the market. This was in effect particularly for the period of August 2007 to January 2008, when the Sensex really spiralled ahead.

The fundamentals and liquidity for a company would only change in a period of 1-3 years. However, the sentiment at the market could change within 1-3 days and thus imparted volatility to the market as well as to a stock. He stressed that this was what was happening today at the market when the fundamentals as well as the liquidity of companies were in good shape.

A listed company attracts much more valuation than an unlisted one. On an average, an unlisted company would receive 25-40% less valuation than a listed one and thus a listed status for a firm matters.

After explaining all such factors, Mr. Tulsian took up the case of 4 different companies: TCI Industries, Reliance Industries Ltd., GMK Infrastructure and Parsavanath Developers Ltd. In each case he dug deep to help the audience understand how each factor discussed previously helped the company value better.

Finally at the end of the session, Mr. Tulsian answered questions ranging from how the Sensex was a true indicator of the growing economy, the current volatility in stocks, the case of efficient market hypothesis and how much a retail investor knows really, why Tata Motor’s stock price dropped on buying out Land Rover and Jaguar to the outlook on the banking sector.

Presenting a memento to Mr. S.P. Tulsian the students of DoMS, IIT Madras thanked him for taking time out and his effort to explain the intricacies of fundamental analysis as well for igniting their interest in it.

Moolyankan Unitvalue

7th Apr'08
Moolyankan Unitvalue 120.58 (Returns Since 10th Sept - 20.58%)
Sensex Returns - 1.05%
Total Number of Units - 1775.33

Moolyankan Unitvalue

4th Apr'08
Moolyankan Unitvalue 119.54 (Returns Since 10th Sept - 19.54%)
Sensex Returns - (1.6)% ; () denotes negative returns
Total Number of Units - 1775.33

Market Biggest worry - Inflation

Inflation figures of 7.07% for the week ended march 22 triggered major sell off in the Indian markets. The latest surge is partly on account of a jump in metallic mineral prices. The primary articles sub-index, which has a weight of 22.02 per cent in the WPI, rose 1.8 per cent over the previous week on account of a steep 38.2 per cent rise in metallic minerals, a 4.9 per cent surge in vegetable prices and a 1 per cent increase in oilseeds. Metallic minerals refer to commodities like iron ore, manganese ore, bauxite and chromite. The manufactured products sub-index, with a weight of 63.75 per cent in the WPI, rose 0.2 per cent over the previous week due to higher prices of food products, non-metallic mineral products (up 0.9 per cent).
Now apart from the global factors, host of domestic factors such as Inflation, price control, GDP growth, recent guidelines from ICAI on forex derivatives have started affecting Indian markets.
But clearly Inflation remains the biggest concern of the market and government since we are in the pre-election year and Indian public is unforgiving on Inflation - increasing prices front. Although inflation is not just the biggest worry for India but most of the countries across the world. Government has started acting at various levels to control Inflation. In its desperation to control inflation government has taken some inspector raj measures such as price control on steel, cement. A host of other measures such as reduction of basic customs duty on crude edible oils to zero, and on refined oils and vanaspati to 7.5%, Maize imports under tariff rate quota of 5 lakh tonnes at zero duty, non basmati exports has been banned. Government is even ready to sacrifice growth for controlling inflation. Global commodity prices might come down in weeks ahead. Historically equity and commodity prices move in tandem. Equity prices have already come down substantially in the last 2 months and commodity prices have gone up. With US economy also going into recession sooner or later this divergence will correct.
Even RBI Governor Dr. Y V Reddy has said recently 'Inflation is unacceptably high and RBI is ready to take appropriate action if required'. Inflation is now ruling above the RBI comfort level of 5% for the fifth straight week. It is clearly evident that RBI will hike CRR (the amount of cash the government requires banks to deposit with the central bank) by 50 bps to shore up some liquidity from the market at or before its annual monetary policy review on April 29. CRR hike impacts the bottom line of the banks since they have to park more money with RBI on which they will not earn any interest. But monetary intervention would not produce immediate results as the current spike in inflation is driven by supply constraint and not demand-pull inflation.

Moolyankan Unitvalue - 3 April'08

Moolyankan Unitvalue 121.16 (Returns Since 10th Sept - 21.16%)
Sensex Returns - 1.54%
Total Number of Units - 1775.33

Moolyankan Unitvalue

2nd Apr'08
Moolyankan Unitvalue 120.98 (Returns Since 10th Sept - 20.98%)
Sensex Returns - 1.00%

Moolyankan Unitvalue

31th Mar'08
Moolyankan Unitvalue 120.78 (Returns Since 10th Sept - 20.78%)
Sensex Returns - 0.33%

Investment Workshop

Moolyankan and DoMS, IIT Madras are organizing Investment Workshop on 29th March'08.
The workshop would be graced by renowned Fundamental Analyst Mr. S. P. Tulsian and Technical Analyst Mr. Rajat K. Bose.

The workshop is absolutely free of cost and no registration is required.
Your takeaways from the workshop:
1. Basics of Stock Valuation.
2. Basics of risk managment in volatile markets.
3. Techniques used by professional companies to value stocks and invest in the stock market.
4. Foudation for becoming a good investor in future.

Details:
Investment workshop
Date: 29th March 2008
Time: 10:00 am
Venue: Media Resource Center(MRC), Central Library, IIT Madras

For further details contact:

Ankush Jain : 9962089630
Salil Akolkar: 9962363536
Amit Tiwari: 9962364678

Will the rally continue ?

Million dollar question !!!

But there is no easy answer to this question. Today's rally was triggered by good global cues and than by short covering. Although todays rally was not only big points wise but also in terms of advance decline ratio also. Monday rise in sensex was limited to large caps and market breadth was highly negative.
We don't know where all proponents of decoupling theroy have gone ? It seems this relief rally will continue for some more time across the world markets.
U.S. consumer confidence fell more than forecast in March as Americans' outlook for the economy dropped to the lowest level since Richard Nixon was president.
We expect news like this will continue to come from the US economy front. But there are many opportunities in the mid cap space (Indian markets) which have come at mouth watering levels after correction.

Moolyankan Unitvalue

25th Mar'08
Moolyankan Unitvalue 120 (Returns Since 10th Sept - 20.0%)
Sensex Returns - 4%

Moolyankan Unitvalue

14th Mar'08
Moolyankan Unitvalue 125.10 (Returns Since 10th Sept - 25.10%)
Sensex Returns - 1.08%

Moolyankan Unitvalue

10th Mar'08
Moolyankan Unitvalue 125.49 (Returns Since 10th Sept - 25.49%)
Sensex Returns - 2.12%

Where will market stop ?

Sensex tumbles by 934 pts.

Sensex falls by 10% in last 4 days.

These are the kind of headlines all of us are seeing for past 4-5 weeks.
Not just Indian stock Markets but Global Markets are falling.
When we started Moolyankan 6 months back, Sensex was at 15593 and yesterday it closed at 15924. Just a casual look would tell us most of the stocks are below their Jan lows.

Suddenly all the positive triggers have dried up and everyday we hear some bad news regarding US economy, Indian companies.
Larsen and Toubro recently announced that they would incur Rs 150-200 crore hedging loss.
If we look at just 2-3 quarters back than most of the companies were reporting significant increase in other income due to forex gains.

Where will all this stop ?
We don't know whether the makets will stabilize at 12000 or 14000, but it is obvious that there is further downside from here. The way Indian markets fell 10% in last 4 days was worrying sign. Stocks are falling 5-10% on very low volumes and this is dangerous since it indicates no body is buying. There is total apathy of buyers in the markets. Some of the stocks might have come at mouth watering levels fundamentally and it might seem they will stop falling at those levels, but stocks rarely trade at their fair value. When we went up there were excesses and now on the downside way we again have excesses.

How long all this will continue ?
Again difficult to say, because our bear market is just 4-6 weeks old and if all the indications coming from US economy, Global markets are factored than we are in for a longer bear market.

Moolyankan Unitvalue

4th Mar'08
Moolyankan Unitvalue 130.02 (Returns Since 10th Sept - 30.02%)
Sensex Returns - 4.79%

Expectations from Budget

Just like every budget there are bound to be some expectations from every section from the society. But from Stock Market perspective we don't want increase in short term capital gains tax and STT(Securities Transaction Tax), reintroduction of long term capital gains tax. Overall Stock Market is fine and we want status quo from Finance minister(FM).

It is obvious that being the last budget of the present UPA government there are bound be some populist measures. Although its impact will be muted on the FRBM targets because of the strong Tax collections. Apart from this inflationary pressures are something which will be at the back of FM mind while announcing the populist measures. But we want FM to increase allocation to public health and education as part of inclusive growth, since these are part of soft infrastructure and are as important as hard infrastructure. There will surely be some announcements in terms of tax sops for the export oriented sectors.

Sectoral expectations:

• Auto - Presently 24% excise duty is levied on cars above 4000mm and 16% for the rest. So there might be rationalization in terms of excise duty. It would reduce pressure on margins for OEM's
• Banking - Presently term deposits of 5 years or more qualify for deduction under section 80C of IT Act which might be reduced to 3 years in line with other eligible investments. This would facilitate growth in term deposits at competitive rates. Positive for all banks.
  
• Capital goods and infrastructure - Presently excise duty on power equipments is 16% which might be reduced to 12.5%. Countervailing duty is 16% for non project import which also might be reduced to 12.5%. Rural Infrastructure Fund size might be increased. Positive for all power equipment and infrastructure companies.
  
• Cement - Last year some tinkering was done with excise duty structure depending on the price per bag for cement companies. It might remain same.
• Metals - Presently excise duty is 16% which might be reduced to 12.5%. There has been upswing in some metal prices internationally so import duty might be cut on those metals to offset the price increase.
• FMCG - ITC has been the favorite whipping boy of every FM. Every year there is increase in taxes for cigarettes, so we don't expect this year to be exception. VAT on biscuits might be reduced from the present levels of 12.5% to 4%.
• IT Services - There might be extension of tax holiday beyond FY 09 for IT companies. This move might be positive for IT companies which are fighting on rupee appreciation
• Telecom - Presently telecom companies pay around 24-30% of revenues to Government in form of service tax, spectrum charges, license fees, USO, ADC etc. So there might be some rationalization and simplification. Positive for all telecom service providers.
• Real estate - There might be some development on timeline regarding conversion of draft guidelines into formal notification. Presently this forcing developers to list their subsidiaries on Singapore stock exchange. REIT's would allow developers to accelerate cash flows.
• Pharmaceuticals - Presently excise duty on formulations is 16% which might be reduced to 8%. Custom duty on API might be reduced from 12.5% to 10% or even to the asean levels of 5%. Tax breaks might be announced for the pure research companies.
• Oil & Gas - Tax holiday might be announced for city gas distributions for new pipelines.

About Moolyankan Diversified Fund

The Indian stock markets are in the midst of a secular bull run. The Sensex has gone up from 4000 levels in 2004 and touched 21000 levels in just a span of 4 years. Over 100 Indian companies now command a M-cap of over $1 billion. There has been a huge spurt in M&A activity and Indian companies are on a global acquisition spree be it Tata Steel or Hindalco or Suzlon energy. The booming stock markets have put KP Singh of DLF and the Ambani brothers on the Forbes - World Richest People list.

Hence as MBA students and future investors we felt the need to have a platform to apply our theoretical learning into practice. With this idea we created “Moolyankan” which is a student driven mutual fund at DOMS - IIT Madras. The whole spirit of Moolyankan is to learn about the Stock markets and evaluate companies based on the knowledge gained in the classroom. This way we can stay abreast of the business happenings across the globe and also get a chance to invest in the India growth story.

Once the idea was conceptualized we started working on the structure of the fund. Since we believe in the India growth story we decided to invest in growing sectors like Telecom, Realty, Power, Media etc. We decided to stay away from sectors where there is Government policy intervention like Sugar, Cement and Oil Marketing companies.

v Moolyankan started with a corpus of Rs 135,000 on 10^th Sept 2007.

v The initial unit value was Rs 100 (Total units - 1350). Present Units - 1756

v As of 27^th Feb 2008 the corpus stands at Rs 244,127 (Present Unit Value - Rs 139.02)

v There is an investment team to decide allocation to various sectors on the basis of inputs provided by the sectoral analysis team.

v The task of the sectoral analysis team is to keep a track of the happenings of the particular sector and the companies in it.

v At present the investments are based on fundamental analysis of companies but going forward we also plan to use technical analysis for investment decisions.

v Going forward we would also like to learn various hedging strategies using F&O to hedge our holdings against market fluctuations.