Companies where P Note exposure is High !

Fallout of P Notes continues to haunt the markets

Following are some of the companies where the P Note exposure is considered to be relatively higher and investor should keep above in mind while dealing in these shares. These stocks can witness bouts of unwinding (though not necessary at same time) and hence investors should be careful while taking a decision to invest or otherwise.

India Bulls Financial Services



Bharti Airtel

Reliance Capital

Reliance Energy

Financial Technologies



Gateway Distripark



(Please note, this is not an exhaustive list) Read More!

Humpty Dumpty sat on an wall.......

Sebi circular on PN's drives sensex crazy

In my previous post I was talking about what could make sensex fall from these levels and what I could find was that something related to FII's could be the possible driver...gosh....and what I feared came true....SEBI's draft circular on PN's came to a big jolt to the market sentiments as the markets feared that it would lead to withdrawal of money by these investors from the markets.

We saw a drastic opening which led the markets to shut down for 1 hour. Leading stocks were seen down ranging 20% to 15% at a wafer thin volumes. Yes, it took just few seconds for the markets to reach the level which lead to a shut down for 1 hour...nobody got a chance to react... Our finance minister had to come out for a statement, but came from it was that he backed the SEBI's move and according to him the move is beneficial for the markets as well as the participants.

Everybody as waiting for correction

yes, the recent rally had really stunned the investors as it didn't allow most of them to participate in it in a big way. Investors were in a confused state as at every high level , they knew correction might come, but didn't knew when it will come and the sensex kept them waiting an when it came came like a storm what's new....nothing has changed for small investors state of for sure this sharp jerk would now make them think if this is the right time to buy.....

Understanding the PN story

Most of the investors have heard that the fall is due to some sebi circular on PN which is related to FII's mode of investing. Let me give you some clarity on it in simple words. There are 34 FII's and their sub accounts which are registered with SEBI and which can issue Participatory notes to the investors abroad. Sebi is worried about the source of these funds entering the markets as it does not have visibility into who is investing. Also these investors have been using the leveraging available through the derivatives segment and hence SEBi was of view that the recent market upsurge is due to the hectic trading that was been done by these participants using the derivative leverage.

If we see the data , the investment through PN's have increased from 10 folds in last three years and lot of hedge funds are using this mode of investment in the Indian equity markets.

Now SEBI wants to control the inflow of money through this channel and proposes to put a cap of 5% of the asset under custody of the FII's as eligible for issue of PN's. Sebi also wants the FII's should wind up their current positions within 18 months.

Now this may lead to redemption of funds by these investors and the markets are reacting to this possibility.

We will discuss this more in the upcoming posts.

Where is the market headed now ?

Today's correction can be termed as blessing in disguise for investors as they were looking for opportunity to invest. However, the jerk was strong enough to shake investor's confidence on how much it will fall before going up again. Well, the real implication of the PN story will unfold in few days and I believe it will have more impact on stock where the PN investors had large exposure. Stocks where the FII' holding through PN was not significant should not be affected and hence any correction is such stocks could well be an opportunity to invest at lower levels.

The FII investment may see a brake and this could bring in more rationality in the markets going forward. I personally welcome the move of SEBI as it is very important that we do not become puppets in hands of FII and have sufficient checks in place to monitor the investments coming through FII's. Read More!

Metals shines as Sensex climbs mount 19K

Sensex defies law of Gravity, bull run goes beyond Reliance Pack

Law of gravity says that everything which goes up, comes down. Looks like this doesn't applies for the Sensex !! What a day it was ! With sensex finally climbing 19000, it made sure that the cheers comes from across the board rather than only Reliance pack holders . Today was the day for metal stocks to shine brighter and make their presence feel in the march of sensex to glorifying heights !

The beauty of today's rise was that it was secular in nature (did I say secular , sorry Tech is out flavour still, can't help it). The rally spread across the large , Mid and small cap stocks.

Let's discuss some of the stocks that I have discussed earlier on the blog and see how they are doing. One of My favourites in metal pack "JSW Steel", rose around 13% to cross the 1000 mark. The stock had a spectacular run in the last one year. Sail also rose 16% to close at new high of Rs. 260. Skumars continued its run ahead of the demerger and closed at Rs. 125. Gitanjali gems continued its glitter to close at 368. I believe that the stock still has steam left given its focus on inorganic growth. Reliance Industries continue to rule strong. Investors are advised to maintain a hold on this stock.

CCCL had a sparkling listing today. Against the offer price of 510 , the stock closed at 800 a gain of 57 % !! Recently listed IPO have been quite rewarding given the huge demand and CCCL was no exception. Short term Investors can consider booking profits at a price above Rs. 860. Long term investors can continue to hold the stock.

So are you guys all set to see the 20000 mark ???? Wondering what to do ? Yes, one question that is hounding retail investors is that whether it makes sense to buy at current levels ?

There are no signs of a pull down, the only factor of political instability has also lost its power since congress seems to have dragged its feet back on the nuclear agreement issue. It's hard to give up the throne! Q3 results so far have not thrown any major negative surprise except that the rupee appreciation has been able to dent the growth rate of IT companies. But that has already been factored ! So the only reasons for markets to fall from here can be profit booking by the FII's and that can come anytime!

The advice here would be that conservative investors would be better avoiding buying into stocks at current levels. If you are already invested and see super profits on your investments, you would be better off booking profits on every rise. After all, its equally important to bring the profits in your home rather than being happy seeing your notional profits!

Parting thoughts that may give you some insights ....power grid is still languishing at 115 levels after a powerful debut. Will nagarjuna fertilizers become part of Reliance pack ...? Will Gitanjali's recent acquisition help it cross 400 levels ? Can Bharti's tower biz help it to attain all time high !

All the best! Enjoy the current bull ride , but safeguard yourself from the jerks that this bull can give. Invest in fundamentally good stocks. As always, do write to me if you have any queries! Read More!