morning thoughts...
The markets traded in the positive zone and achieved our logical targets of 8050 on the nifty front
Infrastructure is one sector which is the biggest beneficiary since Narendra Modi came to power this May. The ease of doing business increased dramatically after the elections. Not only that, even the financial condition of these firms has improved quite a bit. As an article in Business Standard points out, the combined debt to equity ratio of the top 17 infra companies has declined to 3.5x in FY14 from 3.7x in the previous year. Fund raising and non-core asset sales have helped these companies improve their financial health.
PSUs however don't seem too pleased with the idea. They see this as nothing but pressure tactics to force higher targets and then demand higher dividends if the targets are not met. In fact a PSU Chairman has even gone to the extent of saying that steep targets could force some firms to take undue risks.
The June quarter has seen the Indian economy grow by 5.7%, which is the highest in over two years. This has led to the rally both on the Sensex as well as the Nifty, both of which were already inching upwards riding the Modi wave. So will this rally continue? It all depends on how the growth in corporate profits pans out.
Technically one metric to determine this is the ratio of profit after tax (PAT) to nominal GDP. The mean of the last decade has been around 3.3%. And the last three years has seen the ratio hover below this mean. Indeed, it has especially been worse in the last two years. Will the coming years see a reversal in this trend? It all depends on what kind of structural reforms the Modi government puts in place so that stalled projects are revived and the investment climate is made easier and friendlier.
Well, while we certainly don't want such a situation to arise, the hoarding of cash by PSUs is also not the most optimal use of capital according to us. They should therefore make an attempt to put the excess capital to use in a way that enables them to earn more than the cost of capital in the long term. If they can't do this, then the excess money should certainly be returned to shareholders in the form of dividends.
Tuesdays calls sent
Sell Gold gave 123 rs
Sell Silver gave 290 rs
Buy copper gave 3 rs
Buy crude hit stoploss
Buy nifty have 67 points , bank nifty gave 118 points
Fo sun pharma gave 20 rs
Cash Welspun gave 7 rs
Double bumper bharti airtel 390 ca tripled
The markets traded in the positive zone and achieved our logical targets of 8050 on the nifty front
Infrastructure is one sector which is the biggest beneficiary since Narendra Modi came to power this May. The ease of doing business increased dramatically after the elections. Not only that, even the financial condition of these firms has improved quite a bit. As an article in Business Standard points out, the combined debt to equity ratio of the top 17 infra companies has declined to 3.5x in FY14 from 3.7x in the previous year. Fund raising and non-core asset sales have helped these companies improve their financial health.
PSUs however don't seem too pleased with the idea. They see this as nothing but pressure tactics to force higher targets and then demand higher dividends if the targets are not met. In fact a PSU Chairman has even gone to the extent of saying that steep targets could force some firms to take undue risks.
The June quarter has seen the Indian economy grow by 5.7%, which is the highest in over two years. This has led to the rally both on the Sensex as well as the Nifty, both of which were already inching upwards riding the Modi wave. So will this rally continue? It all depends on how the growth in corporate profits pans out.
Technically one metric to determine this is the ratio of profit after tax (PAT) to nominal GDP. The mean of the last decade has been around 3.3%. And the last three years has seen the ratio hover below this mean. Indeed, it has especially been worse in the last two years. Will the coming years see a reversal in this trend? It all depends on what kind of structural reforms the Modi government puts in place so that stalled projects are revived and the investment climate is made easier and friendlier.
Well, while we certainly don't want such a situation to arise, the hoarding of cash by PSUs is also not the most optimal use of capital according to us. They should therefore make an attempt to put the excess capital to use in a way that enables them to earn more than the cost of capital in the long term. If they can't do this, then the excess money should certainly be returned to shareholders in the form of dividends.
Tuesdays calls sent
Sell Gold gave 123 rs
Sell Silver gave 290 rs
Buy copper gave 3 rs
Buy crude hit stoploss
Buy nifty have 67 points , bank nifty gave 118 points
Fo sun pharma gave 20 rs
Cash Welspun gave 7 rs
Double bumper bharti airtel 390 ca tripled
