Category Archives: My View

CLOUDS WOULD DRIVE IT SECTOR AT HEIGHTS:-

Clouds can be classified as public, private or hybrid. Cloud computing is about renting processor power and data storage capacity from infrastructure–as–a– service providers such as Amazon. This means the whole services and information data of a company is stored at one place and from where we can take information stored in any device connected to it whenever we need it with the help of cloud.
Cloud computing has been around for a quite some time, and goes as far as the birth of e mail. With the help of this cloud computing software the companies have started renting servers and storage instead of purchasing hardware and running at huge costs. And with more organizations – especially those that rely on India’s outsourcing infrastructure – transferring some of their IT work onto the cloud and this has helped companies to facilitate that shift and have positioned themselves as enablers between owners and renters. It was published in a survey on IT sector that in India alone the market for cloud based services will rise by a third to $557 million this year, and more than triple by 2018.
Infosys has been actively growing its cloud based services business, using its cloud-based services business, using its Cloud Ecosystem Hub. This could well be the heart of its future. In its June quarter results, Infosys announced that its cloud and big data business has executed more than 260 engagements, and has won 20 contracts in the last quarter itself.

With the use of cloud, the companies can conduct their operations at an ease and can provide services also at low cost through internet. This will help the IT sector to boom at its best and develop with a friction of time. Hence, we are bullish on IT sector companies – Infosys, HCL Info system, and Infinite Computer Solutions.   

BUDGET POSITIVE FOR CEMENT SECTOR GROWTH:-

Cement sector is one of the core industries which plays a pivotal role in the growth and development of a nation. One of the world’s largest and fastest growing cement industries, the Indian cement industry has been expanding significantly on back of rising infrastructure activities, increasing demand from housing sector, and construction recovery. There is a scenario which will likely lead to increasing demand of cement. The government is positive on infrastructure through development of Smart cities and industrial corridor development including new ports which will give boost to the cement industry. The focus of the government is on rural housing and irrigation schemes, general housing (housing for all by 2022 and additional tax exemption on Housing Interest payment raised from Rs.1,50,000- 2,00,000).
Recently, the Indian cement industry has witnessed significant consolidation. Any steps taken by the government to push infrastructure spending and give impetus to real estate projects will have a positive impact on demand of cement. Therefore meaningful recovery in cement demand is expected to take place from 2015-16 onwards. Our fair value estimate is based on the assumption of an eventual return to more normal conditions as the business cycle improves, and as the Indian government steps up infrastructure spending.

SPECIALTY CHEMICALS TO DRIVE THE GROWTH STORY OF INDIAN CHEMICAL SECTOR

Having survived the stormy market conditions over the last few years, the Indian chemical industry is now poised for next big wave of growth. The industry is at the verge of rapid growth, with the Government of India (GoI) providing an atmosphere of care and support. Indian Chemical industry is worth of $ 108.4 billion is the 6th largest in the world and the 3rdlargest in Asia, after China and Japan. The chemical sector accounts for about 14% in overall index of industrial production (IIP) and adds around 11% in national exports. The industry is on a high growth trajectory. In the base case scenario, with current initiatives of industry & government, the Indian chemical industry could grow at 11% p.a. to reach size of $224 billion by 2017.

Indian chemical industry substantially contributes to the economy; however the slow economic growth in 2013 has impacted the demand for chemicals. Nevertheless, the industry which is witnessing considerably slow is betting big on specialty chemicals that are expected to show considerable growth. Specialty chemicals include adhesives, additives, antioxidants, and biocides, corrosion inhibitors, cutting fluids, dyes, lubricants and pigments. Specialty and knowledge chemicals which form about 35-40% of the total chemicals industry, has been witnessing a double digit growth over the years due to increasing penetration and growth from a lower base. The specialty chemicals sector is characterized by requirements for high-value products, high-volume requirements with expanding customer base, a product-driven market, and addition of new participants at various levels of the value chain.

Moreover, Indian specialty chemical manufacturers have a strong presence in the export market, too. Active pharmaceutical ingredients and colorants, including dyes and pigments, are some of the key products exported. India exports specialty chemicals to Asia-Pacific countries and also to Europe and US. With a potential to grow to $70-$100 billion by 2020 from the present $23 billion, the specialty chemicals market has plotted a strong growth at 14 per cent per annum over the last five years and is expected to be the key driver for India’s chemical sector’s growth story. 

A ROADWAY TOWARDS DEVELOPMENT IN TEXTILE SECTOR:-

With the announcement of the BUDGET on 10th July, 2014 Mr. Arun Jaitley has taken a great step keeping in mind the various sectorial problems and has made arrangements accordingly in order to give them a boost.
This is a boost to the textile sector, the Budget has announced “duty-free” entitlement for import of trimmings (all types of decorative laces), embellishments (different types of work used in dresses and sarees) and other specified items to 5% of the value of exports from the current 3%, which will help to increase the exports and is a good boost to industry.
The government has fixed $ 50 billion textile export target for the current year. Nearly 40% of this is readymade garments. The move will also help Indian manufacturers to compete with other countries in getting more orders from global souring entities, such as Wal-Mart. This move will help to bring down the cost of readymade garments meant for export by 2-3%. The government also removed basic custom duty on specified inputs for manufacture of spandex yarn, from 5%.
Export opportunities could also be opened with the announcement of 6 mega textile clusters at Bareilly, Lucknow, Surat, Kutch, Bhagalpur, Mysore and one in Tamilnadu, the budget provides       Rs. 600 Cr for this. The minister has allocated Rs. 50 Cr for a trade facilitation centre and crafts museum to promote handlooms and to set up a Hastkala Academy for preservation, revival and documentation of the handloom and handicraft sector, in a public-private partnership with the allocation of Rs. 30 Cr.

Hence, the measures have been taken to develop the textile sector, and hence the textile companies will see a boost in the coming years. So, we are positive on Himatsingka Seide Ltd.   

Infra Sector Get Boost

Ahead of the budget there was a very high expectation from the government to boost Infrastructure Sector, even in the speeches of PM Narendra Modi we were hearing about boosting Infrastructure Sector. The Issues that this sector is facing Pre-budget was Project order inflows due to slow down in industrial activity, Delays in project execution due to delays in land acquisition and environmental clearances, High interest costs and overcapacity.
The measures taken by government in the budget are Well-Defined. The actions taken by government are as follows:-
    •         Allocated Rs 37,800 Cr to NHAI for roads and Rs 14000 Cr for rural roads, plan to award 8500 KM road projects this year.
    •          Government allocated Rs 7060 Cr for 100 Smart Cities.
    •          16 new projects to be awarded this Year.
    •          SEZ to be revived.
    •          Airports I tier I and tier II cities to be developed via PPP Model
    •          Setting up Infrastructure Investment Trust for attracting long-term funds
    •          Reduction in customs and excise taxes to boost
    •          Single-window customs clearances at Indian ports.

We believe that these steps will help to boost Infrastructure spending as new orders will flow in. New and better roads will boost logistics industry. There will be spurt in demand for capital goods and heavy engineering.  So we are positive on Cement sector as starts of industrial and real estate projects. We are also positive on Infrastructure stock as well as Capital Goods Stocks.

GOVERNMENT ON DRIVE- INVESTMENT IN GREEN ENERGY:-

The government is showing its concern towards reducing fossil fuel reserves. The government is taking up initiatives to invest in solar and wind power projects in order to give a boost to the power sector and resolve electricity problems, in fact the government has started working on unexplored potential lying in the desert regions- Thar in Rajasthan, Rann of Kutch in Gujarat, Lahul & Spiti in Himachal Pradesh and Ladakh in Jammu & Kashmir. The plan could include an investment of Rs. 2 Lakh Cr by 2022.

The use of solar power is a “GO GREEN” approach taken up by the government to reach the increasing demand for power. The government’s goal is to produce 10 gigawatts of solar power by 2017; already the country has 2.8 gigawatts of the technology installed, enough for 6 million homes in the nation of 1.2 billion people. Hence the government is going great on investments in the power sector and I can see growth in this sector. So, we are bullish on companies which are in solar and wind energy in power sector.

Why we are Bullish On Equities!!!

“GOLD”, when this word is heard anywhere around india, the speaker gets attention of all the ears around him. Gold is consider to be one of the preferred investment of savings in India. Gold Jewellery is highest consumed in India. Whenever i ask my elders what to of the savings, they would reply “Buy Gold”. I am sure many of my friends and colleagues would be facing that. Arent we creating some bubble in gold?? On the charts i was bearish and i am bearish on Gold since it hit 34000+ in last January and i did even post it on this blog. Second thing to gold is “Real Estate”. Last ten years inflation in India was majorily due to real estate prices. People became rich unexpectedly faster due to doubling and tripling of Land price in even less than a year of buying the property. A survey by a renowned agency said that saving in financial market droped from 8% from 2008 to just 2% in 2013 of total saving i.e., rest of saving is in either gold and Real estate. Buhh!!! arent we smelling a bubble in real estate??? It my view that when more than 80% of public is bullish in any asset of investment than we can expect a big move in prices on either side. Since we have seen a continuous upside in real estate segment, we can be bias on downside of the prices. On other side Gold is treated as a just a mere investment option in US. I just came across of the article of Ex. member of FED Mr. Randall S Kroszner who stated to our indian Journalist that they wont give more weightage to Gold at this level as their economy is recovering but yet not inflating. Gold is just the hedge against inflation for them. So we can make out that Gold demand in global market will decline so is the case India. On other side Equity has very less portion of ones saving in India, which gives huge opportunities on upside in the Equity. Technically, Gold has strong resistance at 28000/30350 where current rally could hault. Therefore, looking at inter asset analysis, Equity is the underperformer and  we are bullish on it for LONG TERM 

The Indian Power Sector

The Indian Power sector includes – coal, lignite, natural gas, oil, hydro and nuclear power to other viable non-conventional sources such as wind, solar, agriculture and domestic waste.
Currently, if we have a look at the Indian Power sector, the country is facing a deficit of 8.7% in 2012-13 and the peak power deficit was 9% indicating a huge gap between demand and supply of electricity due to the shortage of coal, problems regarding power plants and inefficient use of resources.
We believe that Indian power sector can be improvised if the government allows privatization in the coal mining, production processes and the coal plants are facing shortage of coal so if the government take measures to make the supply flow smooth then there will be increase in the production of electricity. Hence if the new government works on these issues and allows more share of private then there will be fast developments seen and the power sector will boom in the coming years by FY 2020. So we believe that it is the right time to invest in this sector.

Sectors With Possible Upside

As the markets are at all-time high, the valuation of nifty and sector has been stretched. So in the current situation which is the sector to invest were we still able to see upside is the question in everyone’s mind. To answer that question we have done simple analysis on the basis of PE. We have compared the Nifty PE with other sector’s PE. PE is valuation ratio of a company’s current share price compared to it’s per share earnings in other words it let us know whether it is currently overvalued or undervalued.

Nifty is currently trading at PE of 20.52 as compared to it CNX Pharma is trading at multiple of 40.45, CNX Media at 34.94, CNX FMCG at 34.22, CNX Auto 31.56, CNX infra 21.83, CNX IT at 20.97, CNX PSU Banks at 12.49, OIL and GAS at 12.65, CNX Energy at 14.01 and  CNX Metal at 16.51. If we compared the Sector PE with Nifty PE, CNX IT, media, infra, pharma, auto and FMCG has been fairly value. We believe that Investors should look invest in CNX PSU Banks, Oil and Gas Sector, Energy Sector and Metal Sector were still upside is left.

The Indian Education Sector:-

The Indian Education Sector plays a very important role in the life of an individual. The government is taking effective measures in order to develop Education Sector. The Indian education sector has been recognized as a “Sunrise Sector” for investment in the recent past. It is the third largest in the world. We believe that the education sector will grow more than 16% over the next 5 years.
If we have a look at the present Education sector:-
·         The government is taking measures in order to educate more and more people and so education is also provided online these days.
·         The education sector is developing and measures are taken to educate the poor children in the rural areas as well, so this is a very good step taken by the government.
·         Development of education and many new institutions are opened up to provide education.
·         Measures are taken in order to reduce cost.

Hence, the government is taking measures to provide education and also making development in this sector but the government still needs to work more on this sector and it needs to cut down the cost so that it is affordable to the middle class and low class people as well.