- Foreign investments (FII, FDI) have made high returns from investments in Indian companies.
- USA which was in recessionary pressure till 2010 have now manged to move out of recession and so foreign investors who had invested in Indian cos will now withdraw investments and invest in US cos.
- This is how FII withdrew investments form Indian cos few weeks back and Sensex made a bottom of 18900 aprrox from 20000.
- Do this investors find a better investment scope in US cos, Yes because their stocks were undervalued till now and so can expect higher returns than investment in Indian cos.
- Also India is facing high inflationary pressure so the prices of raw materials will rise and that is a threat to manufacturing sector as they have to pay more for raw materials and also control the cost price of the product in the mkt, So what happens they have to compromise on profit margins. and so the scope of returns on stocks of these cos reduces.
- This is the correct time to remove all your investments from stock mkts.
- FII & FDI never invest for long term they are always short term money makers because they are concerned about the world economy as a whole where they find more opportunities for better returns.
- India will grow for long term but Chinese economy seems a threat in 2011.
- MFI are those who lend money to borrowers who are into small business. These are village women’s, farmers etc for small business.
- Now these borrowers have failed to pay the interest amt since few months and also the repayment of principle amount is not seen.
- Since Oct 2010 MFI have been seeing a shortfall in interest income and cash. That was the first hit, now Jan 2011 i.e. the next quarter MFI will face the new hit: provisioning for bad loans.
- This happened because borrowers went on borrowing to pay previous loans and so borrowers were left with multiple loans now they know that they are not able to repay, also they were not allowed to take further debt from MFI and have stop paying previous debts.
- So whose at the loss finally, the MFI’s.
- Can some go and insure these debts or bail out them, No this will not happen because nobody will buy such toxic assets.
- So MFI’s are to extinction they include – Spandana Spoorthy Financial, Micro credit ratings, Trident micro fin, Star Microfin service etc.
- Whose going to get affected the most after collapse of MFI they are banks who get affected the most because banks have lended Rs. 20,000 Cr to MFI’s this collapse of MFI’s shall bring a small downturn in SENSEX because the banking sector will get affected the most
- PE firms to exit investments this quarter
- Food inflation soaring to 18% approx and yet to rise the reason being bad kharif output due to uncertain rains in oct & nov can govt really control inflation pressure no how can thay they can only console.
- Since bad kharif output the food inflation is expected to rise to approx 24% and india will have to import food items.
- So govt will have to sell Rs and buy $ to pay for trade this will create demand for $ and so $ will appreciate.
- Since prices of commodities are rising due to inflation gold 7 silver being safest hedge against inflation prices of precious metals will also rise gold seen sm where around $ 1450 an ounce (Rs 22K per 10gms) silver to cross Rs. 55K per kg.Also the IIP nos worried investors in mkt so they shall shift to investment in precious metals and so demand increases and prices will rise.
- Crude to hit $ 110 in few quarters.
KULDEEP
njoi makin mone
