CEO, JRG Securities
CEO, JRG Securities
Jul 10, 2012 | Closed
On sensex & the markets
Chat with CEO of JRG securities Anand Tandon On sensex & the markets at 4.30 pm this wednesday.
- What can be done to boost investment in stock market and mutual funds as the failing economy has taken a toll on IPOs and returns are negligable even in bluechip stocks Asked by: Hitesh
- The idea should be to boost the opportunities for business to grow. Investment chases opportunities. We dont need to boost investment. If the government makes policies which allow entrepreneurs to set up businesses quickly and cheaply, and not have to worry about a lot of red tape, investment will automatically return. Of the 4 factors of production, we have had no movement on land, or labour reforms. This forms the key. Short term incentives for investment are not likely to change that
- In how many years from now do you see the Sensex touching back the 20K mark? Asked by: Man Mohan (Nainital)
- Difficult to say. I can only hazard a guess - and I am guessing - that a new high will be made only after 2-3 years
- Do you feel that high crude prices can play havoc in Indian markets as India being biggest importer with 80% of its needs any sort of import requirement can send oil prices soaring as with the case of wheat and pulses in International market Asked by: Rij
- Depends on the range. We have many years where crude prices rise, and so does the sensex. Basically, it depends on WHY the crude prices are rising. If they are rising because the global economy is doing well, and so is India, then the economy is able to absorb the price increase and even then grow strongly. In such a case, there is no negative effect. If the crude price is high because of a supply shock, or because of geopolitical situation which increases prices, but subdues demand, the reverse may be true. I would suggest you look at the graph of the sensex and oil together over the past 15 years. You will see what I mean
- Why current a/c deficit and fiscal deficit affecting markets? Asked by: Ramakrishnan
- 1. Current account deficit means we are depending on the rest of the world to give us capital. Usually, this is not a problem in a growing economy. However, when it becomes very large relative to the size of the economy, or when a crisis elsewhere makes foreign investment scarce, it can lead to economic shocks. 2. Fiscal deficit means that the government is spending more than it is earning. It has to either borrow or print money. Again, it is an issue of quantum. If the amounts are relatively small, there is no problem. However, when investors are scarce, borrowing becomes a problem. Printing money leads to inflation. When we have both deficits together, we require large capital inflows, and domestic savings, while inflationary pressures may rise (something we are witnessing now). These are not good for the economy and therefore for the market
- Sir suggest some rules to interpret company to take a decision whether to invest in it or not? Asked by: a
- This is a complex question - I will deal with it briefly: 1. Look for a growth industry. Avoid niches (unless you are a professional investor). If the space to grow is large, companies will more likely be successful 2. Dont forget the supply side - growing industry does not mean that companies make money. What is the entry barrier and is that something that will last. Only then do companies have pricing power 3. Look for steady and consistent performing companies - management teams and processes do not get build overnight. Be suspicious of overnight success - if it is too good to be true, it usually IS too good to be true 4. Look for ethical dealing by majority shareholders/manangers - a bad reputation is usually well earned! 5. Pricing - buying expensive will not make money - so buy when cheap. When markets are boring, investors make money. Be clear - are you investing to make money, or gambling for the thrill.
- american slowdown,Eurozone crisis,greece & Spain with lot of pains,French going austere - - with West in so much difficulty China manages to stay afloat and USA needs Chinese support and does not mind Yuan ( RMB ) being kept at artificially boosted level while rupee is on a freefall.You expect any drastic measures fro GOI to arrest the trend.? Asked by: sundar1950in
- A falling rupee is not ALL bad. It provides and auto adjustment mechanism - imports become costlier and exports cheaper, thereby allowing trade to adjust. Drastic measures to control the rupee would be unproductive. Instead, the govt has to see WHY the depreciation of the rupee is needed to keep India productive. If for example, we could become more productive, we could export at lower prices, without needing a depreciating rupee. The trade deficit would not increase. This is not happening because of policies which INCREASE the cost of doing business in India. So the rupee is the symptom - the disease is elsewhere
- Sir,Do you agree sensex and nifty movement test the statistical knowledge of indiviual who bets and make money in option trade[calls and put] Asked by: Atul
- There are many ways to invest or trade in the market. Each has its own logic, and none are complete in themselves. Using statistics is a valid way of trading - provided the historical statistical relationships continue. They seldom do beyond a point. So like in other methods, you have to keep evolving
- Sir when GAAR or tax on Participatory notes will be introduced, will it affect Market very badly? Asked by: Neel Shah
- It depends on what is the shape of GAAR at the time of introduction. If the rules are clear, there will not be any issue. If the rules are such that it is left to the discretion of the assessing officer, we have a problem. This is true for domestic investors as well ! So pray for a sensible policy
- Sir is it right to say that investment in Share Market though Participatory notes is nothing but an idea of some of our corrupt politicians to generate income on Black money(just as interest on deposit)? Asked by: a
- All ideas can be used positively or in a way that was not intended. Nuclear power is good, bombs bad - technology is the same. The same is true for Pnotes. They have their plus and minus points. I would not attribute motives needlessly
- Sir kindly suggest few new IPO, which can give good return in short duration. Asked by: Mahesh
- Unless there is a company which is deliberately pricing its shares cheap, there is no reason to look at IPO's. Think about it, the IPO is the "insider" selling and the "outsider" buying. The only reason why the buyer would make short term returns is if the IPO is wrongly priced! Why not invest in the secondary market. Here, there are chances that you will find stocks that are mispriced because someone has sold in a hurry.
- Sir, Kindly suggest some good FMP for 1 year period? Asked by: Anu
- At this time, you may be better off investing in a short term debt fund. Since it is likely that interest rates will fall sometime in the course of the next 12 months, you will gain from the fall. In an FMP, the rate is fixed for now, and capital gains cannot accrue
- Sir I am impressed by quality of your answers, I am CA(final) & MBA student, I would like to work in your organization, can you provide me email address of your HR dept? Asked by: a
- Can you explain briefly how investment in retail can improve India's economy as that can only allure foreign ivestors for time being and how opening up of insurance sector can improve things as there is already too much of competition in the sector Asked by: Shailesh
- I agree with you entirely. In my view - which I have expressed in various fora, these are bogies. For a detailed explanation on my view on retail, pls look at my blog. Link below: http://blunderbussinmumbai.blogspot.in/2012/06/from-debate-to-spin.html
- Do you feel that lowering of ratings by credit rating agencies has any bearing on growth as there is lot of black money in Indian economy which does not tell the real story and data adopted by Govt is also not always accurate Asked by: Manav
- Two questions here: 1. Rating changes - these are backward looking - they usually tell you the story AFTER it has happened. However, since debt investors are often REQUIRED to use these ratings, they do have some adverse effect if they are lowered. 2. Black money - CHANGES in data are not effected by black money - assuming that the proportion of black money in the system has not changed. Base data may vary. However, most of the time, we are looking at changes in data (for example, growth in GDP rather than the absolute value of GDP).
- Sir is't also true people who have as good as zero knowledge but high greed to make money fast plays in market then only other indiviual knowning the stock market "s" makes money... :d Asked by: Atul
- It takes all kinds to make the world. Markets try to look at the future - therefore it involves making forecasts. Forecasts need not be correct - they are after all based on assumptions which will change over time. In a uni-direction market, not being cautious may result in large returns. However, for any success story you here, there are probably 10 times those who went in the markets without understanding, and lost their shirt. There is a "success bias" - one here's only from the winners not the losers. Like in all other endeavours, knowledge can help - but cannot guarantee success.
- Sir i can't understand, why market is affected by political changes? Eg. victory or defeat of political party. Is it that Politicians are having very huge investments in stock market? Asked by: Mira
- The job of the market is to estimate future cash flows of companies. In a country like India, where government policies can have large effect on corporate profits, it is inevitable that the swings will be large. Note that govt changes do not effect FMCG or IT companies too much - since these are less dependent on govt policy changes. Cunrrently, most industries have again become dependent on what the govt does - power, roads, even telecom.
- Sir what % of total market cap is captured by foreigners? Why our markets are badly dependent on their movements? Asked by: Mira
- There is a cap to FII investments in most companies. Stock prices are however determines at the margin - the last 100 shares sold determine the price. since the FII's make up the most active investors their actions determine near term movement. However, longer term movements have to depend on whether the companies are doing well or not.
- recession V they said no U and now they say no W . When will this X end for economy to bounce back ? Asked by: sundar1950in
- India is not in recession - we are just witnessing slow growth. The challenge is that policy makers need to allow business to work with some ease. This is currently lacking. However, dont assume that stock markets will go up only after the economy rebounds - in fact it will be the other way around. Markets rise, economy follows.
- The markets do not create an interest with not many IPOs in offing and perfomances of existing companies being ust OK. When will the market get back to the days when market watchers were there at all platforms. Asked by: sundar1950in
- For that to happen, we need a market in a frenzy. That is not likely for the next couple of years. However, a market in a frenzy is not good for an investor. You are left chasing prices. It is best to invest when most are away and when interest is low, and sell when the frenzy occurs.