Sunday, March 23, 2014

What will happen if Modi comes to Power

I want to start by saying that am an AAP supporter – and I believe that we need a "change in the system"  - and the existing system is represented by BJP and Congress.

However I see a wave coming – a wave that will get Modi to power

Chetan Bhagat put it well in his column in TOI yesterday . I am quoting a part of this blog verbatim below

he represents practicality. Most Indians know that while it is good to remove corruption, nepotism, dynasty, oppression of women and a million other wrongs, it isn't easy. Things change, but slowly and over time. The leader many Indians seek is not idealistic, but someone who can do a fairly good job despite the muck in our society

As an investor, I have to remove my personal bias (for AAP in this case) and see the writing on the wall.  If I can forecast correctly, my investing decisions will be better.

The markets are already betting on a stable govt  - that means Modi, as AAP and Congress cannot provide stable govt in these elections. Most brokerages have upped their Nifty targets to 7000 to 8000. FII’s are starting to pour in money and the Rupee is starting to get stronger – it has strengthened  from Rs. 62.02 to Rs. 60.9 in the past one month.

If Modi comes to power, I expect the FII’s to pour in more money  and the  Rupee will get stronger (in the range of Rs. 58 by year end),

If that happens, it will impact our export sector. Our export industries - IT and Pharma, that are currently doing very well, will slow down a bit.  

If Rupee gets stronger, Gold will not do well -it was anyway not in favour this year.

If Modi comes to power - what will happen to Public sector banks? They are in bad shape now – but with economy picking up will they get back? SBI has gone up from 1490 to 1707 in the past one month (a 14.5% increase).

If Modi comes to power  - will Infrastructure sector do well?  L&T has gone up from Rs 1051 to 1219 in the past one month (a 15.9% increase)

What about Modi’s favourite sector – Tourism? Should we invest in Cox and Kings and Thomas Cook?

I do not have the answers – But I am searching. I Will surely share as I make up my mind and invest ahead of the curve in the coming 3-4 weeks.

I would love to hear from you in the comments section below – please do not make this a political forum of BJP vs Congress Vs AAP. Please comment on where to invest if Modi comes to power.

Friday, March 21, 2014

An invitation for session on "How to get rich and retire early"

Friends - I am doing a session on "How to get rich and retire early" tomorrow (22nd March) between 4 pm and 5.30 pm at:

Clovermark Property Advisors;
No 15, 100 feet road, JP Nagar 4th Phase;
Bangalore - 560078

It is open to all  - also please pass this message to any of your friends in Bangalore who may be interested.

It would be nice if you could call Varun Rajaratnam at 99459 50109  for registrations in advance - it would help my hosts in managing their logistics.

Friday, March 14, 2014

Time to sell Noida Toll Bridge

Friends - Today, March 14th  is the record date for dividend payment.  The stock price is currently at Rs. 24.35 as I blog. On 15th, post the dividend record date, the price is expected to go down by Rs 1.50 - to Rs. 23.00.

Obviously the price did not meet our expectations of Rs 26-30. If you bought it at around Rs 22 - two weeks back - then you have made a tax free dividend of 6.8%. Assuming you sell it at Rs 23.00, then you have made a pre tax capital gain of 4.5%.

This is far below what we had hoped for - but a 10% return in two weeks not bad.

I am going to exit this stock tomorrow -  But I will keep an eye on it.
Remember, this is an interim dividend and the company may pay one more smaller dividend (I think 5% or Rs 0.5 per share) in June.

However, I do not recommend holding on to the stock - this is election time and there have been issues in toll collections in Maharashtra ( and in Gurgaon ( Plus Noida is in UP (that says it all)

So I am exiting this stock with a 10% gain - and I would recommend that you do the same.

Tuesday, March 4, 2014

When to sell Noida Toll Bridge

Selling a stock is trickier than buying a stock.
There are no clear guidelines.
And so here are my thoughts on Noida Toll bridge exit.
If you have bought the stock at Rs 22 or below in the past week – you have already earned a Rs. 1.5 dividend that is tax free (6.8% tax free returns on a purchase price of Rs. 22). 
For getting this dividend, you will need to stay invested till March 15th.

The key question now is - Will the share price go up to around Rs 25- 30 keeping in mind that the dividend payout now is Rs 1.5 and not Rs. 1?

Well I believe it will happen – just give it time. 
I would recommend that you give it three weeks (at least till 20th March) and then take your call. This is where the market may act logical (and give it a price of Rs 30) or may act illogical (and stay at around Rs 20-22). So we need to be patient and watchful.

I will anyway share when I am selling this stock.