September, 2008 | Dalal Street

Mutual Funds Review

Discplined SIP a Must – Wealth Creation

September 2, 20082 min read

One of this blog’s reader / mutual fund investor asked me on if he should switch-out of HSBC Equity Fund and Reliance Growth Fund which have been downgraded by Dhirendra Kumar @ Value Research.

Well Dhirendra certainly is a Sr. Analyst but we differ from his frequent upgrading and downgrading of Funds. We are also seeing that HDFC Top 200 is back to 5 Star Rating so is HDFC Prudence fund. [They were at 4 Star for few weeks] This swift rating change has confused some investors. Please don’t be, continue to invest regularly despite difficult times and uncertainty in the market.

In one of the previous posts, I have written about HDFC’s process. The internal process in the AMC is designed & in place in such a way that the outcome to investors may not get the best in the industrybut you will certainly be in the Top-5 is my conviction.

Latest Return over Investment Reviews of,

Except for HSBC Equity, which is relatively new [6 years of track record] all the other funds have given higher returns for SIP investors. Questions, Comments and Critics can be sent to feedback @ dalalstreet dot biz.

Economy, Markets and Macro Views

India Trade Deficit – All time High

September 2, 20081 min read

India’s Trade deficit in July 2008 hit an all-time high of US$10.8bn. In the first four months of FY09, the deficit swelled to US$41bn, in contrast to US$80 bn for the whole of FY08. Of this, oil accounted for US$26bn and non-oil US$15bn. Exports rose 31.2% in July 2008 against YTD growth of 24.6% mainly on account of the weakening rupee helping the exporters. (more…)

Breaking Corporate India Earnings News

2 + 4 Wheeler Auto Sales for August

September 2, 20081 min read

Automobile dealer dispatches were mixed this month with strong dispatches in two wheelers (especially Hero Honda), and relatively weaker trends visible in the passenger car segment.

Impressive growth was driven by Hero Honda dealer dispatches (+27% Y/Y). Bajaj Auto’s domestic sales declined 7% Y/Y, whilst TVS’ domestic sales rose a modest 6% Y/Y. Hero Honda continues to build inventory levels ahead of the festive season. Sequentially, both motorcycle and 2 wheeler sales were up ~6% and 5% respectively.

Maruti Suzuki’s sales fell by 10% Y/Y due to a sharp decline in A2 (compact segment) sales. Retail offtake continues to be weak, given the adverse macro environment – higher interest rates and an erosion of wealth (in both property and financial markets)

Mahindra & Mahindra’s August sales rose 8% YoY; driven by strong tractor sales (+16% YoY). UV sales were muted (+2% Y/Y) as strong growth in non Scorpio sales (+12% Y/Y) was offset by weak Scorpio sales (-21% YoY).

Breaking Corporate India Earnings News

Indian Rupee New Low Vs Dollar

September 1, 20081 min read

The Indian Rupee has breached the 44 level and is weakening against the USD. The RBI is not really active in the market which is a blessing in disguise to the Exporters. Now, why is the RBI piling up USD ? Well, as an insurance cover 🙂

The March 08 international investment position tells that, US$297bn fx reserves not withstanding, India still owes US$100+bn. This is why, in Gov Reddy is so reluctant to use fx to appreciate against inflation – as some Delhi economists advise – or float a sovereign wealth fund – as another section proposes – to acquire strategic CIS gas fields. Recall he let the INR temporarily slip Rs46+/USD in mid-06 rather than run down fx reserves. This, of course, begs the question why we still expect the RBI to stem depreciation? Because this time’s different because of imported inflation.

You may also want to read the 50 factors that influence the value of USD.

Equity Research

Stock Price Valuation – Double Whammy

September 1, 20082 min read

Parak Parikh, CEO of PPFAS one of the well known Portfolio Management Advisers and relatively conservative broking house has beautifully written why stock price targets have been cut by as much as 50-60%. This is what he terms as the “double whammy” / double edged sword of lower profits and lower valuation. (more…)

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