Interesting point where we stand in today's market. Domestic triggers seem positive with a healthy saving rate, positive cues from the government about oil deregulation and disinvestment, strong balance sheets of good quality companies. We seem ready for the next phase of growth. Of course, caution is needed considering that the global economy is still struggling to find its feet with a major part of Europe to report GDP de-growth.
Oil demand has now fundamentally shifted to newer participants like Asia and China/India will lead demand once the economy properly recovers. Oil can be range bound between $60-$70 till such time. Exploration activity has shown signs of picking up but early days yet.
Valuations have undergone a dramatic shift across sectors, particularly for mid caps. Analysts are at a loss to justify fresh buys and mostly are going with the flow for the moment. Since markets have not stabilised and we are still in the transition phase, it becomes difficult to assign relative valuation measures to stocks. It becomes additionally difficult as global companies can not be strictly compared with domestic peers due to different growth and operational parameters.
Monday, June 15, 2009
Friday, May 22, 2009
Working out and more
I am fascinated by Craig Ballantyne and Rusty's approach to fitness. A few quick points which strike resonance with me:
1. Our bodies are designed to function with the right amount of muscle, so getting a Arnie or HHH kind of a physique, simply put, is unnatural and hard to sustain.
2. Low BF and the right amount of muscle gives you the GQ look. No girl likes going out with Val Venus but they would give an arm to go with Brad Pitt. Getting me?
3. Functional fitness is the key. What is the point of being all buffed up and yet panting while climbing a set of stairs?
I have been thinking, it has been close to 3 years since I started working out. When I lost weight and came down to 10% BF I felt more active physically. I had six pack abs and definition but not bulk. Then I consciously tried to pile on muscle and incrementally I have buffed up a bit in the upper body but I also have a spare tyre. In the process, I have lost my stamina and flexibility. Not worth it man. Go the Rusty and Ballantyne way. Strength training, HIIT and core workouts will make you functionally fit and happy. Yay!
1. Our bodies are designed to function with the right amount of muscle, so getting a Arnie or HHH kind of a physique, simply put, is unnatural and hard to sustain.
2. Low BF and the right amount of muscle gives you the GQ look. No girl likes going out with Val Venus but they would give an arm to go with Brad Pitt. Getting me?
3. Functional fitness is the key. What is the point of being all buffed up and yet panting while climbing a set of stairs?
I have been thinking, it has been close to 3 years since I started working out. When I lost weight and came down to 10% BF I felt more active physically. I had six pack abs and definition but not bulk. Then I consciously tried to pile on muscle and incrementally I have buffed up a bit in the upper body but I also have a spare tyre. In the process, I have lost my stamina and flexibility. Not worth it man. Go the Rusty and Ballantyne way. Strength training, HIIT and core workouts will make you functionally fit and happy. Yay!
Tuesday, May 19, 2009
Where will markets take us now? India is not totally decoupled from the world so I really do not know how much of that euphoria can translate into actual demand. Sentiment has given us a breather for the time being with desperate FIIs pumping in money and enhancing liquidity. Mid caps suddenly seem to be back in flavour and lot of bulk deals in the market seem to accentuate that.
On a different note, here is my take on why the Congress led UPA won:
1. When urban India was facing the heat from global recession rural India was shining thanks to loan waivers, employment guarantee programs, minimum price support etc. Rural voter turnout is higher than urban so they voted across caste lines and massively for the Congress
2. Rahul Gandhi campaigned extensively and reached out to the masses. He got a lot of grassroot support, something which the BJP missed
3. BJP went too right wing for the moderate Indian citizen’s liking. With Varun & Modi campaigning, they realized with these guys in power it would be a talibanised version of India.
4. Pro incumbency wave in emerging nations, this trend has continued in India as well
On a different note, here is my take on why the Congress led UPA won:
1. When urban India was facing the heat from global recession rural India was shining thanks to loan waivers, employment guarantee programs, minimum price support etc. Rural voter turnout is higher than urban so they voted across caste lines and massively for the Congress
2. Rahul Gandhi campaigned extensively and reached out to the masses. He got a lot of grassroot support, something which the BJP missed
3. BJP went too right wing for the moderate Indian citizen’s liking. With Varun & Modi campaigning, they realized with these guys in power it would be a talibanised version of India.
4. Pro incumbency wave in emerging nations, this trend has continued in India as well
Monday, May 11, 2009
Oil and more
People have been speculating and will continue to speculate about the future of Oil. No other commodity inspires such awe and is shrouded in the mist of uncertainty as this black gold is.
So what really is the future of Oil? Will Hubbert's peak oil theory continue to hold sway? Or does incremental supply come in? Fact is, since the last decade, there have been lesser oil finds and the newer oil finds are nowhere close to the discoveries of the seventies. Not surprising, because its the law of diminishing returns. The more you discover, the lesser remains.
So what are we looking at now? Taking cognizance of EIA's forecast of a drop in oil consumption by 1.35mn bpd, the current world consumption stands at 84-85mn bpd. Considering BP's estimate of global production averaging 31bnbpd and proven reserves (we really do not know how proven they are!) of 1,342bn bpd, we are looking at a stock of oil which will last us all of 44 years!
We cannot wish away the importance of oil. It continues to command 35% of world energy mix since the past 3 decades! Furthermore, world supply can be lesser than proven reserves since a lot of that can not be meaningfully extracted. Demand has slackened for the interim, but should pick up once the economy stabilises. Prices have nowhere to go but up!
Consider another thing...geopolitics. It does play an important role. Have a look at Iraq, Venezuela, Nigeria...all undergoing turmoil with Iran being another potential candidate. Saudi Arabia has its own set of protocol for production. The US has to depend on the Middle East and Africa for oil since with its current production, it might exhaust its resources by 11-12 years. In contract African supply can last for 3 decades and Middle East for ~90 years with their current production levels.
Why did prices drop? Or rather, why did prices go up that much? Well, to put it simply, it was demand catching up with supply which was restricted since the last 5-7 years. It was also aided by some robust speculation in futures. The crash was sudden as well since the economy went for a toss. But considering fundamentals, oil prices should rebound back, as at current levels, they do not meet the hurdle rate for deep sea exploration. No exploration = lesser supply = higher prices. Though its difficult to see prices reaching UDS100+ but USD75-80 seems fair.
Adios for now. Please do share your thoughts on this.
So what really is the future of Oil? Will Hubbert's peak oil theory continue to hold sway? Or does incremental supply come in? Fact is, since the last decade, there have been lesser oil finds and the newer oil finds are nowhere close to the discoveries of the seventies. Not surprising, because its the law of diminishing returns. The more you discover, the lesser remains.
So what are we looking at now? Taking cognizance of EIA's forecast of a drop in oil consumption by 1.35mn bpd, the current world consumption stands at 84-85mn bpd. Considering BP's estimate of global production averaging 31bnbpd and proven reserves (we really do not know how proven they are!) of 1,342bn bpd, we are looking at a stock of oil which will last us all of 44 years!
We cannot wish away the importance of oil. It continues to command 35% of world energy mix since the past 3 decades! Furthermore, world supply can be lesser than proven reserves since a lot of that can not be meaningfully extracted. Demand has slackened for the interim, but should pick up once the economy stabilises. Prices have nowhere to go but up!
Consider another thing...geopolitics. It does play an important role. Have a look at Iraq, Venezuela, Nigeria...all undergoing turmoil with Iran being another potential candidate. Saudi Arabia has its own set of protocol for production. The US has to depend on the Middle East and Africa for oil since with its current production, it might exhaust its resources by 11-12 years. In contract African supply can last for 3 decades and Middle East for ~90 years with their current production levels.
Why did prices drop? Or rather, why did prices go up that much? Well, to put it simply, it was demand catching up with supply which was restricted since the last 5-7 years. It was also aided by some robust speculation in futures. The crash was sudden as well since the economy went for a toss. But considering fundamentals, oil prices should rebound back, as at current levels, they do not meet the hurdle rate for deep sea exploration. No exploration = lesser supply = higher prices. Though its difficult to see prices reaching UDS100+ but USD75-80 seems fair.
Adios for now. Please do share your thoughts on this.
Tuesday, April 28, 2009
Truly Random...
I have been blogging for quite some time now, though hardly in a regular, disciplined fashion. Here is one more attempt at it, at a impersonal level, to delve into my insights on this quagmire called the Indian Equity Markets.
Result season chaos as usual. Results have been a mixed bag, with good and bad being a fair mix, though people have their guard up and have factored in downsides. Valuations in larger caps have fairly reflected that.
I will delve on results with sectoral insights once the season is fairly complete. For now, a small example which shows how markets have turned volte face over the last 4 quarters.
Aban Offshore is a case in example. A darling of the markets, largest domestic rig player, high quality assets, impeccable management resulted in stock price touching highs of Rs4300 and now its down to 10% of that value. It did everything wrong, plainly put. Right from acquiring Sinvest at the wrong end of the cycle with a high DER to miffing off E&P players which resulted in 4 of its rigs standing idle. With Q4FY09 numbers dissapointing (Rs93cr loss v/s consensus estimate of Rs130cr profits), it has a bleak outlook with 4 more rigs coming out of contract in the next six months. A $3bn debt does not help matters. To add insult to injury, a bullet repayment worth $1bn to Sinvest has to be paid off by December 09. How things have changed. The markets were valuing Aban in excess of 20x 1 year forward earnings are now reluctant to give it even 2x! Macro environment also is not helping out for the company. More on the same in later posts.
A health tip for fitness freaks: if its just one exercise you can do or have time to do...do this...the SQUAT! Contrary to popular perception, it does no just work your hams, it involves everything right from your core (abs) to shoulders, glutes and back. It really taxes you out. Try doing a barbell full squat with 50kgs on your back for 10 reps. I bet you can not on the first try! Take it easy, go slow, first with body weights half squats and graduate to full squats (ass to the grass!) and then with weights, preferably barbells because it is easier to balance on your traps. See your metabolism revving after that!
Result season chaos as usual. Results have been a mixed bag, with good and bad being a fair mix, though people have their guard up and have factored in downsides. Valuations in larger caps have fairly reflected that.
I will delve on results with sectoral insights once the season is fairly complete. For now, a small example which shows how markets have turned volte face over the last 4 quarters.
Aban Offshore is a case in example. A darling of the markets, largest domestic rig player, high quality assets, impeccable management resulted in stock price touching highs of Rs4300 and now its down to 10% of that value. It did everything wrong, plainly put. Right from acquiring Sinvest at the wrong end of the cycle with a high DER to miffing off E&P players which resulted in 4 of its rigs standing idle. With Q4FY09 numbers dissapointing (Rs93cr loss v/s consensus estimate of Rs130cr profits), it has a bleak outlook with 4 more rigs coming out of contract in the next six months. A $3bn debt does not help matters. To add insult to injury, a bullet repayment worth $1bn to Sinvest has to be paid off by December 09. How things have changed. The markets were valuing Aban in excess of 20x 1 year forward earnings are now reluctant to give it even 2x! Macro environment also is not helping out for the company. More on the same in later posts.
A health tip for fitness freaks: if its just one exercise you can do or have time to do...do this...the SQUAT! Contrary to popular perception, it does no just work your hams, it involves everything right from your core (abs) to shoulders, glutes and back. It really taxes you out. Try doing a barbell full squat with 50kgs on your back for 10 reps. I bet you can not on the first try! Take it easy, go slow, first with body weights half squats and graduate to full squats (ass to the grass!) and then with weights, preferably barbells because it is easier to balance on your traps. See your metabolism revving after that!
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