G_B_ Posted August 24, 2015 Posted August 24, 2015 and the way i see if Jaitley is really letting the side down. The first move i would have made is recapitalised the banks so as to boost lending. You get a feeling the government are forced into a rights issue because Jaitley wants to keep fiscal balance yet at the same time needs money for recapitalising banks etc. Extremely poor skills at reading the room.
amiret Posted August 24, 2015 Author Posted August 24, 2015 Its hardly a bubble in India dude. I think at about 26,000 the market is fairly valued. Long term IMO the capital from china will find its way to India. i have not claimed indian indices are in Bubble territory , however we need to remember that we just went through an earning downgrade last quarter . I believe (based on reading and hearing other analysts ) we will see Earnings downgrades for the next 2 quarters as well. Based on the research reports i have read , i find the FY 16 , 17 EPS estimates to be overly optimistic for most cyclicals and industrials. FII's turned net sellers in May , June , +ve in July , and -ve in August again . But we have RECORD Indian mutual fund flows into the market in these months .
G_B_ Posted August 24, 2015 Posted August 24, 2015 i have not claimed indian indices are in Bubble territory , however we need to remember that we just went through an earning downgrade last quarter . I believe (based on reading and hearing other analysts ) we will see Earnings downgrades for the next 2 quarters as well. Based on the research reports i have read , i find the FY 16 , 17 EPS estimates to be overly optimistic for most cyclicals and industrials. FII's turned net sellers in May , June , +ve in July , and -ve in August again . But we have RECORD Indian mutual fund flows into the market in these months . Whats the forward PE of the sensex as a whole? Yes i know there are issues with corporate earnings.
amiret Posted August 24, 2015 Author Posted August 24, 2015 Most of my profits have been wiped out .....but at least i have ICF......for now :((
Kalia_Test Posted August 24, 2015 Posted August 24, 2015 Whats the forward PE of the sensex as a whole? Yes i know there are issues with corporate earnings. The estimates of FY16 and FY17 earnings are continuously downgraded :hysterical: For FY16 - The estimates as on April 2015 were about 1780 and now ( as of August ), the consensus estimates are about 1520 :(( So if I take spot Sensex as 25970 - Forward P/E ( based on FY16 estimated earnings ) is 25970/1520 ~ 17.08 The Sensex EPS estimate trend in page 2 of the link below paints a pathetic picture http://www.sharekhan.com/Upload/NewsLetter/Specialreport.pdf
randomGuy Posted August 24, 2015 Posted August 24, 2015 thats exactly what retail investors like me will do. There is nothing fundamentally wrong with the Indian economy. If anything on the economic side this low commodity prices are just going to aid the CAD get smaller. Modi manages to pass the GST in a special session markets will be back with a bag. Same as you i.e stay put but will try and tweak portfolio a bit going forward with the below facts/assumptions :- - Chinese Economy ( hugely export oriented ) is declining fast and its voracious appetite for commodities like Steel,etc to build largely unproductive Infra is slowing down - China has to / is trying to devalue its currency so that it will be more competitive in its exports and somehow stabilize Economy. This has already triggered a devaluation cycle ( read how other countries that compete with China in exports are devaluing their own currency too ). This will be a vicious cycle. - For India, obviously Yuan devaluation might mean dumping of more stuff from China and hence impact on local companies + we might have to devalue ourselves. However, I feel India has more to gain overall with lower commodity prices in view of Chinese slowdown. I will go slightly more overweight on local consumption stories, select pharma, robust NBFCs ( HFCs mainly ), private Banks and will not touch any metals/mining/Infra. India has great competency (low price and skill-wise as well) in pharma (that china doesn't have), world is getting old, more people medically insured, generic drug sales are rising(where indian cos. excel), Euro/dollar appreciating against Rupee (hence margins for pharma cos. increase), few drugs getting off patent (drugs that have market of billions of dollars)... These are my reasons to stay put in pharma...(which constitute 60-70% of PF)
amiret Posted August 24, 2015 Author Posted August 24, 2015 Whats the forward PE of the sensex as a whole? Yes i know there are issues with corporate earnings. "Motilal Oswal Securities expects Sensex EPS to grow 18 per cent to Rs 1,605." . Which would put the Forward P/E at around 16.2 . However this 18 per cent growth seems to be too optimistic. This article sums it up very well . http://www.business-standard.com/article/markets/street-sees-19-earnings-growth-in-fy16-115060800008_1.html Adjusted profits of the 30 Sensex companies declined 2.2 per cent in FY15 as sales grew an anaemic 2.3 per cent. In April last year, analysts had projected a profit growth of 15 per cent. And, hold your breath, they are now building in a 19 per cent profit growth for Sensex companies in FY16. This is despite the fact that nothing much has changed on the ground and most sectors continue to battle weak demand.
G_B_ Posted August 24, 2015 Posted August 24, 2015 So i think 25,000 appears to be a fair valuation of the sensex which i think is a fair value...
amiret Posted August 24, 2015 Author Posted August 24, 2015 LIC is being forced to buy IOC OFS . :haha: Basically Govt is taking money out of one pocket and placing it in another pocket.
Kalia_Test Posted August 24, 2015 Posted August 24, 2015 India has great competency (low price and skill-wise as well) in pharma (that china doesn't have), world is getting old, more people medically insured, generic drug sales are rising(where indian cos. excel), Euro/dollar appreciating against Rupee (hence margins for pharma cos. increase), few drugs getting off patent (drugs that have market of billions of dollars)... These are my reasons to stay put in pharma...(which constitute 60-70% of PF) While I agree on the general theme, the China aspect in not correct. China is the Global leader in API manufacturing and exports in the world. India itself is heavily dependent on China for its bulk drugs ( if China decides to stop its bulk drug eports to India - we are doomed ). Even in Contract Manufacturing ( CRAMS ) or Contract Research ( CRO ), there is heavy competition with China. Check on Wuxi Pharma Tech - it is world leader in CRO space. I agree that even now, China is at the relatively low-end of Pharma value chain but then so is India - We are there in APIs, formulation, Fixed dosages and certain bulk drug manufacturing. In CRO - We only have Syngene of note ( recently spun off from Biocon ) and another big player GVK life-sciences was banned by EU. In all these areas, China is much much bigger. And with Yuan devaluation, they will be more price-competitive.
randomGuy Posted August 24, 2015 Posted August 24, 2015 While I agree on the general theme, the China aspect in not correct. China is the Global leader in API manufacturing and exports in the world. India itself is heavily dependent on China for its bulk drugs ( if China decides to stop its bulk drug eports to India - we are doomed ). Even in Contract Manufacturing ( CRAMS ) or Contract Research ( CRO ), there is heavy competition with China. Check on Wuxi Pharma Tech - it is world leader in CRO space. I agree that even now, China is at the relatively low-end of Pharma value chain but then so is India - We are there in APIs, formulation, Fixed dosages and certain bulk drug manufacturing. In CRO - We only have Syngene of note ( recently spun off from Biocon ) and another big player GVK life-sciences was banned by EU. In all these areas, China is much much bigger. And with Yuan devaluation, they will be more price-competitive. These are top generic cos. (has no chinese co.) http://pharma.about.com/od/Generics/a/Top-Generic-Drug-Companies.htm Last I checked top 15 generic cos.(dont have the source atm) , there were 3 indian cos (Sun, Ranbaxy, Lupin, Drreddys - Sun + ranbaxy r now one as u now) My understanding is that China may have a hold in unregulated markets but when it comes to regulated markets (US, Europe) it is no match for India and has much larger percentage of import bans and much lower percentage of approvals for their plants. From one source - 10. China is not a threat yet? China is a manufacturing powerhouse in sectors like Textiles, Metals and Commodities, where it derives significant cost advantage through economies of scale. By its very nature, pharmaceutical manufacturing is a batch-process industry, wherein economies of scale are relatively less important and do not result in significant cost advantage. Though China’s labor costs may be less than India’s, the latter enjoys a lead over China in critical determinants like chemistry skills, compliance to strict international regulatory norms, scientific skills, MNC comfort, etc. For instance, India has the largest number of US-FDA approved facilities outside USA, while China has very few such facilities. India accounts for 25-30% of global DMF filings while Chinese companies contribute a minuscule percentage. Hence, we do not expect China to be a major threat to India in the CRAMS space in the next five years despite having the advantage of lower labor costs.
The Outsider Posted August 24, 2015 Posted August 24, 2015 LIC is being forced to buy IOC OFS . :haha: Basically Govt is taking money out of one pocket and placing it in another pocket. Bnhaaiyonn aur Bnhennon issn sarkaarn ne woh kar dikhayann hain Jo pehle nahin huan bechne waala bhi team India kharinndaar bhi team India.
diga Posted August 24, 2015 Posted August 24, 2015 Bnhaaiyonn aur Bnhennon issn sarkaarn ne woh kar dikhayann hain Jo pehle nahin huan bechne waala bhi team India kharinndaar bhi team India. LIC has been doing that since time immemorial.. nothing new.
The Outsider Posted August 24, 2015 Posted August 24, 2015 Just came across the fact that India is trading at 18 times the forward earning estimate. Even developed countries usually trade around 15 or so and emerging markets around 10-12.
Kalia_Test Posted August 24, 2015 Posted August 24, 2015 These are top generic cos. (has no chinese co.) http://pharma.about.com/od/Generics/a/Top-Generic-Drug-Companies.htm Last I checked top 15 generic cos.(dont have the source atm) , there were 3 indian cos (Sun, Ranbaxy, Lupin, Drreddys - Sun + ranbaxy r now one as u now) My understanding is that China may have a hold in unregulated markets but when it comes to regulated markets (US, Europe) it is no match for India and has much larger percentage of import bans and much lower percentage of approvals for their plants. From one source - I don't think I was clear in my earlier post. China is the global leader in APIs and India heavily depends on Chinese imports for its APIs. Now APIs are the raw material for generic manufacturers i.e companies like Sun, Lupin,etc take APIs from China ( of course some APIs are made locally too ) , convert to dosages and sell in global markets. China has a few generic manufacturers too but no single big company i.e they are scattered and many companies focus on just 1 or 2 generics. A couple of years ago, there were 2000 odd APIs in the world and China had capability to manufacture about 1600 of them. India was 400. India relies on China for 90 per cent of drug raw materials http://articles.economictimes.indiatimes.com/2014-10-29/news/55559092_1_essential-drugs-bulk-drugs-apis Imagine a situation where an Indian soldier's medical kit is running out of essential drugs on a battle front. This may sound like a figment of imagination, but given India's acute dependence on China for key ingredients (active pharma ingredients) for several essential drugs including several antibiotics, the prospect of such a scenario isn't all that remote. India depends heavily on imports — over 90% — from China for many key raw materials (mostly intermediates and some active pharma ingredients) that go into the making of at least 15-odd essential drugs A glimpse of just what could go wrong was evident during Beijing Olympics 2008, when China closed down many of its API plants to cut environmental pollution. "This led to an immediate price rise of around 20% in some bulk drugs which were being sourced solely from China. We had no alternative since China has a near monopoly in several APIs," said Ramesh Adige, a pharma expert who was formerly an executive director with Ranbaxy Labs. Leading Indian drug makers 70% of their total raw material (mainly intermediates) requirements from abroad. Total imports of APIs and advanced intermediates have grown steadily at a compound annual growth rate (CAGR) of 18% over the last ten years, from $800 million in 2004 to $3.4 billion at present. China alone accounts for 58 of these imports by value. In volume terms, China's share of imports stands at about 80%. Anyway - I think we are going off-topic. Portfolio deep in Red :((
The Outsider Posted August 24, 2015 Posted August 24, 2015 On IOC: Market sources said most of the bids in the non-retail segment was from LIC and state-owned banks, while foreign investors participation was minimal. http://www.business-standard.com/article/companies/market-carnage-indian-oil-s-10-stake-sale-hits-rough-weather-115082400146_1.html
randomGuy Posted August 24, 2015 Posted August 24, 2015 I don't think I was clear in my earlier post. China is the global leader in APIs and India heavily depends on Chinese imports for its APIs. Now APIs are the raw material for generic manufacturers i.e companies like Sun, Lupin,etc take APIs from China ( of course some APIs are made locally too ) , convert to dosages and sell in global markets. China has a few generic manufacturers too but no single big company i.e they are scattered and many companies focus on just 1 or 2 generics. A couple of years ago, there were 2000 odd APIs in the world and China had capability to manufacture about 1600 of them. India was 400. India relies on China for 90 per cent of drug raw materials http://articles.economictimes.indiatimes.com/2014-10-29/news/55559092_1_essential-drugs-bulk-drugs-apis Anyway - I think we are going off-topic. Portfolio deep in Red :(( yar you are talking about intermediates which are very very cheap and the low end product. intermediates are used in making APIs(APIs are also called bulk drugs) and APIs are used in making the actual drug. There is no approval required for intermediates . This is important. intermediates are freely and cheaply available. FDA approvals are required and are a must for APIs and for the actual drug. Indian cos. excel in APIs and generic drugs. Infact its a good thing for our cos. that Yuan is depreciating coz raw material(intermediates) will become even more cheap for us.
CG Posted August 24, 2015 Posted August 24, 2015 LIC has been doing that since time immemorial.. nothing new. Yup.Wonder why they let the market fall so much today.With oil prices at such Lows markets should not have fall so much.I believe tomm after initial fall we might see a bounce back.
amiret Posted August 24, 2015 Author Posted August 24, 2015 Yup.Wonder why they let the market fall so much today.With oil prices at such Lows markets should not have fall so much.I believe tomm after initial fall we might see a bounce back. It is not LIC's job to protect a tiny %age of Indians from free market corrections . Though it has often been misused by different govts to do exactly that . LIC made sound investment decisions by buying low in 2013 and selling when nifty was at 9000 levels.
amiret Posted August 24, 2015 Author Posted August 24, 2015 Dow Jones drops a record 1000 points down to 18 month lows Though China correction was expected , I don't recall many people predicting the US markets to drop like this 1-2 months ago . :hmmm:
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