Airline industry has been one of the worst performing sector in last 5 years on our equity platforms, but now i feel that one should be surely taking a risky bet from current levels for a long term perspective and it could be multi-beggar. KFA grounding and Spice Jet liquidity crunch has almost brought scare for investors for this sector but recent restructuring in Indian aviation industry has been quite promising. If we take about particular companies, then new management of Spice Jet has been successful in bailing out company from liquidity crunch and management has also shown confidence on future of the company. Spice jet seems to have place a good order for new plans which is also positive for the guidance. Talking about Jet Airways, after it Etihad stake and closing of its low cost domestic carrier has provide beneficial as of now on their balance sheet. And Indigo Issue too has been successful on the D-street. So my gut feeling for this sectorial investment is strong.
Now lets talk about some primary numbers:
- Revenue Passenger Kilometers
The RPK of an airline is the the sum of the products obtained by multiplying the number of revenue passengers carried on each flight by the distance – it is the total number of kilometres travelled by all passengers. So this numbers gives us a vague idea how air traffic has been in recent time. As in the graph, we could notice that last 3 years we have seen a increasing trend of RPK in india, which means more passengers have been travelling more kilometers which indicates sector revenue would have been increasing. This is surely a positive trend for the aviation markets and if we continue to witness such growth, we shall get improving results.
Load Factor can be simply defined as the capacity utilization of airline industry. Looking at the beneath graph, we could see that Load factor across indian aviation sector has been improving since 2014. Though in 2015 we saw some slump in mid-year but that is considered to be off-season for airlines. Last two months of the year which is generally season as NRI visit increases has seen load factor at the highest level in recent time.
This sums up saying that airline company’s next quarter results should be the best as Load factor and the RPK both have improved. Ofcourse there are many other factors to study before investing but a overview and mood seems to be improving in the industry and one should surely have atleast one of 3 listed airlines in portfolio for the long term!!
Disclaimer: This views are purely my research. Invest on my idea only after studying markets and stocks throughly. Take advise of your financial consultant before investing. And equity markets are subject to market risk.
Global economy scenario is a bit vague at current situation but this should be considered as an opportunity to invest for the long term, those who have liquidity. Am sure many of you are confused that where should we Invest? Answer is INDIA. It is not just because i am an Indian citizen but currently if we compare developed and developing countries, India has the most favorable factors to outperform in next 5 years. Now, you guys would say that if world economy is fragile, India would not grow too. But i am going contrary to this statement as i believe we have so many domestic factors that are going to lead our economy. I am trying to list down few points which i feel are positive points or may say booster to our economy.
- Government with Vision: NDA in center this time is most differential with all past government strongly on one point which is, it has vision for changing India. I am not politically against or for any government, but what i feel different about this government is that it has initiated many ways to change India at same time. Ofcourse previous governments too took steps to change india, but this time they are going with Digital world which is helping to reach out large pool of people at one time and also making work quit easy for departments to manage data. So biggest game changing for this government could be Digital India campaign, more than even any other change because it is connecting people and also its making information available to citizens easily. With Make In India campaign, government is trying to support all sectors of India and its also boosting on Exports. I may go down to write endless pages, if i mention all the points of visionary government but in short to say,if we see even 35% change than current situation, its going to change India in alot better way. So i have faith in this government!!
- Youth Population: As per the UNFPA’s 2014 report, India’s 25-30% of total population is Youth between 10-24 of age which i believe are going to spend the most in coming decades as they are going to be next work force who will earn. In terms of total population, India is the second highest and so a simple math would suggest that atleast we are going to stay in top 5 country to have youth population in next decade. Even as per CIA report 2015, India birth rate is far more than China, Australia, USA or say any other developed country. Considering this angle of economy, other factors remaining constant across countries, Multi national companies would surely choose India as its destination for manufacturing. To add to this, Indian Government, Led by Modi, has initiated a programme, SKILL INDIA to create a ecosystem to train labors across India through training partners. So am sure main blood for economy to prosper is always human and stats says India is going to be most preferred.
- Change in Workforce: It could be considered a continuation of above point but there were two things which i wanted to mention here which was China, who has largest workforce, is losing in numbers where as India has added 366 million in last decade as suggested by articles in leading magazines. This could be the biggest example that youth population of our country is joining skilled labor more than agriculture. So this is surely changing our demographic. Secondly, women workforce is increasing in India which could increase demand of various products in next decade as they would have purchasing power. Until recent or even still many families have tradition of housewives but now as more and more girls are completing their graduation, they prefer to stay working even after marriage. Though still many families doesnt allow to work but thought is changing at rapid pace. This will surely push more women in labor market. Now how this is positive for India? Its simple logic…As now women would earn themselves, they dont have to be dependent on Husbands to fulfill their demands for luxury products. This will raise demand for clothing, jewellery, cosmetic etc and the money will keep circulating in economy. So i Feel even this could play part in changing India.
- Untapped Rural markets: As per the census report of 2011, India’s approx 68.84% population stays in rural while just 31.16% are living in urban. That number has improved from previous 72.19% in 2001 so we can assume that this number could max be revised to 60% in coming census . Which means still more than half of India is going to stay in rural in next decade. That also concludes that halve of our population is dependent on Agriculture. But interestingly, if you guys notice around you, we are witnessing major change in vision of rural people. Until before 2 decades, it was by default assumed by a farmer’s son that his future is going to be farming, but now the scenario is different. Now 50% of farmers want their children to be a doctor or engineer or even a chartered account. What has brought this change? Awareness! Today Digitization has made it possible for information to be available at each and every corner of the world where there is Internet. As we are having largest pool of mobile users, even internet is reaching each part of India, which is bringing awareness in Rural India. People there are getting informed of Education, Products, Jobs etc. This is creating demand of each and every type of products and services in Rural. As Food inflation is rising so is income of rural india. This states that when urban people are into somewhat liquidity crisis, rural people have purchasing power as money has been transferred to rural india by the way of food inflation and real estate inflation. On opposite, they havent spent at the same pace as they earned because they were unaware of spending option until now. But now Internet have educated them. In next decade they would demand say Electric appliances, Education services, etc more than urban in term of sales growth. So untapped rural markets is biggest advantage of India currently.
This were 4 basic points which are creating biggest opportunity to invest in India for next 5-10 years. Ofcourse there are many other financial factors and commodity factors such as lower crude oil price which are also going to play crucial role for growth but that is common for many developing countries. While 4 points which i mentioned are unique advantages of India over developed countries and developing countries so i feel we should STAY INVESTED IN INDIA OR START INVESTING! Where and how should you invest within India, is upon you to decide. You may take advise of your financial consultant and work the best investment opportunity as per your goal. So my formula for next decade is I.I.I (Invest In India)
Disclaimer: All the views are personal and the actual figures may differ. I am not biased to any political view. Please refer to you financial consultant before investing on my idea. This is purely what i think.
Nifty had shown some high volatile characteristics last week but yesterday finally it did manage to close over 7205 which was acting as strong resistance throughout the week. Daily charts have seen a reversal confirmation BUT weekly charts havent given any strong chart pattern or candlestick pattern to show reversal except sustain 200 Weekly average at 6869. I have also redrawn channel from the highs indicating last one year between the same by index. I believe we should trade between this channel for some more time. But if we witness this channel breaking support than we could achieve retrenchment level of 61.8% of long term rally which is at 6680 but thats too early to say. Looking at the derivative data it suggest that base for this expiry is formed at 7100 while 7350-7400 is the resistance range where we could see Nifty expiring. So now next week remains crucial and we wish that we can get some confirmation on weekly charts next week. For now risky traders stay long on stock specific!!
Its commonly believed by a trader that a Higher inflation means bearish trend in the market. That may be true for a day or 2, but interestingly i noticed that we are wrong! Attached graph is a comparative study between CPI and Nifty for last 10 years on QoQ basis. Green line is Nifty while other one is CPI ie., consumer price index or you may say inflation. As you all can notice that both the lines are trending the same direction except near bottoms and tops which clearly states that Inflation and Nifty are directly related on broader time frame. So now may be we can workout that inflation to some extent is needed for the growth of economy. If there is inflation more money would be spent by consumer which means large sum in circulation. More and more circulation of money in the market would divert extra margin or say extra profits to equity markets so logical it fits too. If u take recent example, we saw Nifty high in last march and since than we have seen decrease in Inflation too. Interestingly now in January we saw marginal rise in inflation which makes us believe that nifty low too can be near by or say in this quarter. Investors can now atleast buy partial portfolio at CMP. Can this theory be true, will check after we complete this quarter in March. Till then lets wait and watch!!
Crude Oil has seen a great fall from its high last year and global crisis could be attached to this fall. A fight between oil producing countries had led to excess supply and over it now we will have Iran flowing its crude in the world by mid this year. Surely this is the best time for India as we import almost 75% of our oil requirements. But after the OPEC meeting this week, where they decided to hold oil supply, we could witness a relief rally on the WTI crude of almost 10-15% from here. But surely this would be considered only the relief rally and then we can expect crude to consolidate. As you all could notice in the chart, we have got a positive divergence with RSI which gives us a trade to buy. Secondly, crude was trading in the downside channel, but it gave a false breakout as it couldnt confirm three close below the same and we traded back on the channel which is positive. Thirdly, we have got a double bottom on the charts with that false breakouts. So overall, we could trade for a long targets for near time. Targets: $33 which is channel resistance as well as 50 day average above which we can get $38 which is 100 day average. Stop loss: $26