USDvsINR Charts - DENIP Consultants - Dewang K Mehta

Dear All,

Following are the 2 charts for the USD VS INR. One is the daily chart and the other is the weekly chart. 

We at DENIP Consultants believe that the inverted hammer candlestick on the Daily charts will be significant enough and should lead the dollar higher. Its time that traders start buying the dollar again and book profits on the short USD/INR trade.

Thanks,

Dewang K Mehta

DENIP Consultants Pvt. Ltd.

Disclaimer Post Applies

Nifty View - DENIP Consultants - Jan 2012 - Dewang K Mehta

Dear All,

The down trend that started on the Nifty since November 2010 from 6300+ levels on the Nifty is under significant threat.


I, have highlighted the tops with the help of a black trendline in the chart below.

We at DENIP Consultants believe that if we see a close above the 5220 mark on the Nifty we could see this downtrend end. A close above 5220 would definitely indicate the beginning of a major up trend which could last at least a year/ year and a half.

However for the short term traders, it would not be a bad point to initiate some speculative shorts. We would advise investors to start deploying cash into banking and metal stocks provided we see a close above 5220.

Do feel free to post your comments / views on the Nifty & get in touch with us in case you need to create a portfolio to encash this rally.

Thanks,
Dewang K Mehta
DENIP Consultants Pvt. Ltd.
Disclaimer Post applies.

Outlook 2012 - Fixed Income Investments

Hi,

Thank God that 2011 is getting over! 

It was a painful year for both investors and businesses. Policy uncertainty, higher cost of money, sticky inflation and global risk aversion created a toxic mix for risk takers. Equity investors struggled through the year with unprecedented volatility. Businesses were struggling with all the pain of directionless government, rising input, personnel and capital costs. No asset class managed to beat inflation, though fixed income came very close to protecting the purchasing power of your savings. 2012 holds better promises, particularly for fixed income. Most probably, it will beat inflation hands down and earn you real returns over next 1-2 years. However, investors have to evaluate the fixed income assets space a bit more rigorously.

Before you get lost in translation, here are the  key economy forecasts for 2012:

• 1.       Indian economy will grow at near 6.5% in calendar year 2012.
• 2.       Inflation (both WPI and CPI) would average at 5.50%-6.5% in this year.
• 3.       Effective monetary easing of 100 bps will materialise in this year, starting with April Policy. RBI will cut CRR by more than 2% during the year, bringing liquidity to near neutral in second quarter of the year.

Why would economy slow so much? For that, lets understand the actors which drove growth in our economy after the 2008 crisis. Massive fiscal and monetary stimulus were given to our economy as world was facing the financial crisis of 2008. Government spending shot up, taking our fiscal deficit to near 10% from 2.5%. Most of the incremental spending by the government went to the wallet of a common man, whose propensity to consume is very high.  Sixth pay commission, farm waiver, NREGA and various such schemes unleashed the consumption boom. Your uncles and aunts splurged. Life looked easy. Pundits concluded that India had decoupled from the rest of the world.

Alongside, there came a huge asset price boom.  Everyone in this country had a story to tell about how his friends and relatives became millionaires by buying some parcels of land. An already ‘earning more’ Indian got a booster dose of wealth effect. He was suddenly, richer too. And property price rise wasn’t the only reason for it.  A typical Indian is over owned in two asset classes, gold and real estate. At one end, government spending and loose monetary policies did magic to real estate prices and on the other, gold prices rallied for non-Indian reasons (Largely, driven by the chase for an alternate currency, as confidence in global currencies sank). Gold which is typically bought as an insurance by an average Indian, began to appear as investible surplus. Gold loan companies flourished as people began to leverage their gold holdings. So both gold and real estate price boom added fuel to the consumption boom.

But the times are different now. Both wealth effect and income effects, which drove consumption growth are fading. Property prices have stopped rising in most of the country for past 6 months. Gold prices too have come off (optically, they still look high due to currency depreciation) and are likely to come down secularly through 2012.

There are potentially three levers which can pull out the economy from cyclical slowdown i.e. government spending, exports (for that rest of the world should do well) and lower rates. Unfortunately, government spending, which is most potent of all doesn’t exist given that our government is already running very high fiscal deficit. Markets are punishing governments who borrow recklessly, and that’s why our Government bonds in India are trading at such high levels (near 8.30% right now) despite a significant risk of slowdown.

We struggle to forecast any optimistic growth scenario for most of the developed world and China, thus export is unlikely to prove as a major stimulant for domestic economic growth. The only good thing, in generally abused INR depreciation of last 3 months is that it will yield competitive advantage to our exporters and that will help reduce our current account deficit next year. We think current account deficit in 2012 will be less than1.5% vs near 3% at the moment. Rate cuts appear to be the only stimulus that will come over next few months produced by our central bank. Thankfully, RBI has a lot of room to cut rates…

But many argue that until inflation comes off significantly, its difficult for RBI to cut rates. We agree. But we find it difficult that inflation’s legs won’t break over next few months. Fundamentally, there are three key drivers of inflation, domestic demand, international commodity prices and domestic supply side. The most important driver, empirically, has been domestic demand which explains more than 60% of inflation moves in our country, is going to turn disinflationary. A growth of 6.5% in 2012, is 100-150 bps lower than our potential and this itself should break the legs of inflation. World growth for 2012 will be at least 100 bps lower than last decade’s average and that itself should be benign for international commodity prices. Even China, which has been the key driver of commodity demand is likely to slow down quite rapidly. China commodity consumption is likely to peak in this decade and more importantly, its likely to climb down secularly over next many years. We are still not sure of commodity prices coming down secularly, but we assign a good probability that 2011 saw peak commodity prices for next few years. The third driver of inflation, Indian production/supply side has been the most frustrating reason of inflation for all of us, as its reason lied in our poor planning and policy inertia.  Unfortunately, there is no great news on this front, as India remains supply constrained economy. The only silver lining is that capacity utilisation has come down by at least 7-8% over last 4-5 quarters in aggregate terms and that should bring down the pressure on inflation. Net, net all three drivers of inflation are likely to be either absent or less potent. So I believe, inflation would oscillate between 5.5-6.5 during 2012.

With low growth and low inflation, what does RBI do? It will cut rates and ease liquidity conditions. How will Gsec/Corp bonds behave? We predict:

• 1.       Corporate spreads for Good quality AAA bonds will narrow by 20-30 bps, falling to near 50 bps from current 80 bps.
• 2.       10 year Gsec will average at 8% through the year, but its likely to see some very low levels during the year (This one is the most difficult to predict, but may be closer to 7.5% during Q2/Q3 of the year, unfortunately it will not be permanent adobe for it given the state of our profligate government )
• 3.       1 year CD rates, which are currently trading at near 9.9% should get priced 100-125 bps lower over Q2/Q3 of 2012. Two or three year bonds too should get priced lower by 50-75 bps. Curve should bull steepen through 2012.

So what should you do? For those details get in touch with us over a personal meeting, phone call or email us. You can get in touch with us on 022-40156688/99 or dewang@denip.in / nimesh@denip.in.

Thanks,

Dewang K Mehta

DENIP Consultants Pvt. Ltd.

BAD Equity SIP Returns VS FD Returns

Dear All,

This is an interesting read by ET Wealth. I think during such troubled times they're trying to educate investors to stick with their SIP's instead of stopping them and to have faith in the Equity Markets over the long term. 

I totally support this process and believe that investors should show a little more faith in the time frame and the performance of the fund manager. Although the short term / near term for the Equity Market looks to be terrible, over the long run your Systematic Investments will work out just fine. 

A 27% return CAGR over 10 years is pretty impressive where clearly Rs. 1.2lakh was returned as Rs. 12.79lakh. 

Our view at DENIP is that we anticipate at least a 10% - 15% fall in the indices (BSE Sensex & NSE Nifty) over the next 1 quarter. We believe that all long term investors should look to add a Gold SIP to their Equity SIP portfolio as a hedge to the oncoming fall since in the worst case inflation linked returns around 6% will  persists and during such turbulent times (2008 crisis, 2011 EU crisis) higher returns to the tune of 20%+  can be expected. Following is an email we had sent to a client on the 31^st of October 2011 who had started investing recently:

Scheme Name	Folio No.	Amount Invested	Current Value	No. of Units	Current NAV	Profit / Loss	P/L %
HDFC Top 200 Fund	7228258/61	15,000.00	14,099.14	73.953	190.650	(900.86)	-6%
Reliance Regular Savings Fund	404120184465	5,000.00	4,744.64	171.952	27.593	(255.36)	-5%
DSP Black Rock Top 100 Equity Fund	2496587/94	10,000.00	9,298.50	102.142	91.035	(701.50)	-7%
Kotak Gold Fund Growth	1913261/95	10,000.00	12,415.69	959.859	12.935	2,415.69	24%
	Total	40,000.00	40,557.97			557.97	1%

The whole portfolio was saved only because of investments in a Gold fund. If you work on proper asset allocation, the return game changes completely.

Do get in touch with us if you're interested. You can call us on (022)40156688/99 or 9320496699/9320196699.

Thanks,

Dewang K. Mehta

DENIP Consultants Pvt. Ltd. 

Nifty View- October 2011 - DENIP Consultants - Dewang K Mehta

Dear All,

We have been bearish on the Nifty since July 30th 2011 and we even booked profits once around the 4750 levels. At the current levels of 5118, and with today's red tick in the market we are bearish on the Nifty again with a target of 4750. 

Following is a zoomed out version of the Nifty chart which clearly shows that we are in a range bound zone in a falling trend market.

The following chart of the Nifty is the zoomed in version of the range bound trade. Next Target on the Nifty is 4750. We need to wait and watch if 4750 is breached this time or do we find support and continue this range bound trade.

Thanks,

Dewang K Mehta

DENIP Consultants

Disclaimer Post Applies

Recession / Great Depression and Opportunites to Invest - Dewang K Mehta

 The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s. It was the longest, most widespread, and deepest depression of the 20th century. In the 21st century, the Great Depression is commonly used as an example of how far the world's economy can decline. The depression originated in the U.S., starting with the fall in stock prices that began around September 4, 1929 and became worldwide news with the stock market crash of October 29, 1929 (known as Black Tuesday). From there, it quickly spread to almost every country in the world.

The Stock Market Crash in the US however was just the beginning. Since many banks had also invested large portions of their clients' savings in the stock market, these banks were forced to close when the stock market crashed. Seeing a few banks close caused another panic across the country. Afraid they would lose their own savings, people rushed to banks that were still open to withdraw their money. This massive withdrawal of cash caused additional banks to close. Since there was no way for a bank's clients to recover any of their savings once the bank had closed, those who didn't reach the bank in time also became bankrupt.

Businesses and industry were also affected. Having lost much of their own capital in either the Stock Market Crash or the bank closures, many businesses started cutting back their workers' hours or wages. In turn, consumers began to curb their spending, refraining from purchasing such things as luxury goods. This lack of consumer spending caused additional businesses to cut back wages or, more drastically, to lay off some of their workers. Some businesses couldn't stay open even with these cuts and soon closed their doors, leaving all their workers unemployed.

The Great Depression had devastating effects in virtually every country, rich and poor. Personal income, tax revenue, profits and prices dropped, while international trade plunged by more than 50%. Unemployment in the U.S. rose to 25% and in some countries rose as high as 33%. Cities all around the world were hit hard, especially those dependent on heavy industry. Construction was virtually halted in many countries. Farming and rural areas suffered as crop prices fell by approximately 60%. Facing plummeting demand with few alternate sources of jobs, areas dependent on primary sector industries such as cash cropping, mining and logging suffered the most. Some economies started to recover by the mid-1930s. However, in many countries the negative effects of the Great Depression lasted until the start of World War II.

The Great Depression of 1929 had a very severe impact on India, which was then under the rule of the British Raj. The Government of British India adopted a protective trade policy which, though beneficial to the United Kingdom, caused great damage to the Indian economy. During the period 1929–1937, exports and imports fell drastically crippling seaborne international trade. The railways and the agricultural sector were the most affected.

The international financial crisis combined with detrimental policies adopted by the Government of India resulted in the soaring prices of commodities. High prices along with the stringent taxes prevalent in British India had a dreadful impact on the common man. The discontent of farmers manifested itself in rebellions and riots. The Salt Satyagraha of 1930 was one of the measures undertaken as a response to heavy taxation during the Great Depression.

The Great Depression and the economic policies of the Government of British India worsened the already deteriorating Indo-British relations. When the first general elections were held according to the Government of India Act 1935, anti-British feelings resulted in the Indian National Congress winning in most provinces with a very high percentage of the vote share.

The Concept of Gold Standard

The gold standard is a monetary system in which the standard economic unit of account is a fixed mass of gold. There are distinct kinds of gold standard. First, the gold specie standard is a system in which the monetary unit is associated with circulating gold coins, or with the unit of value defined in terms of one particular circulating gold coin in conjunction with subsidiary coinage made from a lesser valuable metal.

Similarly, the gold exchange standard typically involves the circulation of only coins made of silver or other metals, but where the authorities guarantee a fixed exchange rate with another country that is on the gold standard. This creates a de facto gold standard, in that the value of the silver coins has a fixed external value in terms of gold that is independent of the inherent silver value. Finally, the gold bullion standard is a system in which gold coins do not circulate, but in which the authorities have agreed to sell gold bullion on demand at a fixed price in exchange for the circulating currency.

At the onset of the First World War, the cost of gold was very low and therefore the pound sterling had high value. But during the First World War, the value of the pound fell alarmingly due to rising war expenses. At the conclusion of the war, the value of the pound was only a fraction of what it used to be prior to the commencement of the war. It remained low until 1925, when the then Chancellor of the Exchequer (Finance Minister) of United Kingdom, Winston Churchill, restored it to pre-War levels. As a result, the price of gold fell rapidly. While the rest of Europe purchased large quantities of gold from the United Kingdom, there was little increase in the financial reserves. This dealt a blow to an already deteriorating economy. The United Kingdom began to look to its possessions as India to compensate for the gold that was sold.

What Did Smart Money Do In the 1929 Crash and Aftermath?

During the same bear market period smart-money moved from the plunging equity markets (i.e. financial assets) to hard asset investments, like Homestake Mining - which is used heretofore as a surrogate for all gold stocks.

The stock price of this gold mining company soared relentlessly upward during the entire bear market. Homestake Mining stock rose continuously from $80 in October 1929 to $495 per share in December 1935 - which represents a total return of 519% (excluding cash dividends) during the devastating bear market period.

Contemplate and appreciate the monumental difference in investment returns during a serious bear market. Smart-money invested $10,000 in Homestake Mining (hard assets) in late 1929 - which increased in value to almost $62,000 by December 1935. This represents a compound rate of return of 35% per year in appreciation alone!

It is meaningful to note that in late 1929 the value of Homestake Mining was about $80 per share. Moreover, during the next six years Homestake Mining paid out a total of $128 in cash dividends. In fact the 1935 dividend alone reached $56 per share. That's almost a 70% dividend yield payout (basis 1929) in only one year! Indeed, hard asset investments (gold mining shares) were islands of economic refuge during the grueling years of the Great Depression.

Unfortunately, those innocent souls who remained invested in stocks - and had a buy and hold strategy - saw their initial $10,000 investment slowly dwindle to only $3,600 by late 1935. This represented a devastating capital loss of almost two-thirds of their investment savings. The hapless naive investor with a buy and hold strategy in financial assets lost the greater part of his original stake. Pathetically, he could ill-afford to risk - let alone lose - his precious capital during the many long despairing years of the Great Depression.

One does not have to be a Ph.D. in higher mathematics to understand the 1929-1935 comparative investment results stated below.

Investment Vehicle	Investment Date	Amount	Investment Value @ Dec. 1935
DJIA	Oct - 1929	$10,000	$3,600
DJUA	Oct - 1929	$10,000	$2,100
Homestake Mining	Oct - 1929	$10,000	$62,000

Note: For simplification cash dividends not taken into account

What should an Ideal MF Portfolio look like over the next 2 years?

MF Scheme Name	Scheme Type	Investment Logic	Minimum Amount	% Allocation
DSP BR Top 100 Equity Reg – SIP (Growth)	Large Cap Fund	Safe bet in the Indian equities because of investments in blue chip companies	500 /-	10%
HDFC Top 200 Fund  - SIP(Growth)	Large Cap Fund	Safe bet in the Indian equities because of investments in blue chip companies	1,000 /-	20%
HDFC Prudence Fund – SIP	Balanced Fund	Balances the portfolio due to debt and large cap equity exposure	1,000 /-	20%
Birla Sunlife Dividend Yield Plus – SIP	Mid, Small & Micro Cap Fund	Risky bet but decent opportunity to accumulate midcap/small cap stocks at lower levels	1,000 /-	20%
DSP World Gold Fund – SIP	Gold Miners fund	Hedge to direct gold investments since if the US equities stabilize and gold falls a bit from here these companies will still earn higher margins	500 /-	10%
Kotak Gold Fund – SIP	Gold Fund	Direct gold investments as a total hedge to your equity investments	1,000 /-	20%
Total			Rs. 5,000 /-	100%

Thanks,

Dewang K. Mehta

DENIP Consultants Pvt. Ltd.

Disclaimer Post Applies

Goldman Sachs Upgrades India - Dewang K Mehta

Dear All,

‎​

Goldman Sachs Upgrades India back to market weight after a year at underweight, on a turn in the macro cycle, oil prices, valuation, and policy reform. "Given recent developments in the macro landscape, we are moving India to a marketweight (neutral) stance from underweight, which we have held for over a year. As we have written previously, the core arguments for our underweight stance were based primarily upon valuation concerns, inflation risks, and policy tightening overhangs. 

In our latest piece Asia Pacific: Portfolio Strategy: India: staying underweight on May 13, we noted that we would focus on four key areas for signs that we should turn more optimistic on the Indian equity market:

(1) a turn in the macro cycle

(2) lower oil prices

(3) valuation

(4) policy reforms.

We believe enough progress has been made in these areas to warrant a relatively more optimistic view.

Nifty View - DENIP Consultants - Dewang K Mehta

Dear All,

The charts of the S&P CNX Nifty show that we have broken down from a descending triangle pattern with a gap down which usually is considered to be a strong down move. If a target has to be set then the first target for this fall would be 10% lower from the breakdown point which comes to 4815 - 4825 considering that the break down happened from 5361 levels.

We however believe that since we have had a 5% fall this week, we will spend the coming week consolidating and then the week after in a pullback mode. Ideally we believe that the pullback till 5360 / 5350 should not be ruled out in the coming 2 weeks. However the 5350 / 60 would be a good level to short again and this time around expect a fall till 4800 levels.

According to us large cap stocks such as M&M, TCS, SBI etc. of the world would be strong candidates for a buy since they would lead the pullback.

Our Previous Post: http://denipconsultants.blogspot.com/2011/07/s-cnx-nifty-still-bearish-dewang-k.html

Thanks,

Dewang K Mehta

DENIP Consultants

Disclaimer Post Applies 

Godrej Industries - 6Month Buy - Dewang K Mehta

Dear All,

On June 16^th we said that Godrej industries (http://denipconsultants.blogspot.com/2011/06/godrej-industries-technical-view-enter.html) could soon test 250 levels and today i.e. the 7^th July 2011, it made a high of 229.7 and gave a close of 222.6. We have clocked a 10% return at the very minimum in under a month.

We advise part profit booking at current levels of 222+.

Please click on the image to get an enlarged view.

Thanks,
Dewang K Mehta
DENIP Consultants Pvt. Ltd.
Disclaimer Post Applies

Nifty View - DENIP Consultants - July View - Dewang K Mehta

Dear All,

In continuation with our view on the Nifty where we did mention a possibility of a break out and we do seem to be in place now with the S&P CNX Nifty closing at 5728 levels. We believe that we should see at least 2 – 3 sessions in the green on the Nifty before we witness a pullback.

For now we should face resistance on the Nifty at the 5740 /5750 level and a close above that should take us to 5800 levels. However we do not rule out a pull back from the 5740 / 50 levels which could happen as early as Friday.

Please click on the image for an enlarged view.

Thanks,

Dewang K Mehta

DENIP Consultants Pvt. Ltd.

Disclaimer Post Applies

Nifty View- July 2011 - DENIP Consultants - Dewang K Mehta

Dear All,

Attached herewith are 2 S&P CNX Nifty charts. If you look at the charts then you will clearly see that the Nifty is facing stiff resistance at the 5720 – 5745 mark due to the resistance line (denoted in red) which has been pretty effective since November 2010.

Our understanding is that although it might be a good level to sell the Nifty, this time around the scenario might just be a bit different. If you look at the numbers then the FII have been buying heavily in our markets and the fall on Friday could be nothing more than profit booking. Monday might turn out to be a more decisive day than ever considering that we already have one close in the red. If we do close in the red on Monday with decent volumes then we might actually witness the Nifty fall back to 5555 levels where it should find some decent buying.

However a close below the 5555 level could essentially see the nifty fall back in the 5400+ region. We advise traders to keep strict stop losses on their long positions and could buy some puts to hedge their long positions. A 100 point fall on the Nifty from the current 5627 level could earn decent money on Puts.

The scenario does change if we do mange to close above the 5730/40 mark. We could have an upside that potentially extends till 6000 levels. If I look at the historical trend in July then the trend has been on the upside with the Nifty gaining a minimum of 100 points in the past 2 years or so. If I was to look at the indicators then all of them suggest that we are overbought but more often than not during a break out these indicators tend to be in the overbought zone.

This time it will be very interesting to see whether we break out or continue the downtrend considering that the FIIs have been buying heavily and the DIIs have been selling. Let’s see who wins this battle but for now trade safe and be light on your portfolio positions.

Thanks,

Dewang K Mehta

DENIP Consultants 

Disclaimer Post Applies

Nifty View - DENIP Consultants - Dewang K Mehta

 Dear All,

Attached herewith are 2 charts for the Nifty which clearly show that the Nifty is on the verge of breaking a major long term channel which was started in 2009. Although we did try to break this channel on the upside we seem to have re-entered this channel since Jan 2011.

We have taken support 3 times on the bottom end of this channel and we are again at the same level. We have been overbought every time the Nifty has tested this channel and this time too is no different. However judging the FII selling and global queues, I believe that we might break this channel on the downside. If 5340 is broken on Monday or in the coming few days, we might witness some major momentum on the selling side.

I would advise everyone to avoid trading the Nifty right now and if you would have gone short on the 5900 levels as per our last advise then book part profits at current level of 5366. 9% profit made in 2 months on the Nifty.

Thanks,

Dewang K Mehta

DENIP Consultants Pvt. Ltd.
Disclaimer Post Applies

Indian Equities to Trail Emerging Markets

Indian stocks will continue to lag behind emerging-market equities as rising borrowing costs and inflation squeeze profits, Morgan Stanley said. Overseas investors may continue to remain net sellers of Indian equities this year, Jonathan Garner, the investment bank’s chief Asian and emerging-market equity strategist, told reporters in Mumbai yesterday. The strategist reduced his recommendation on Indian equities to “underweight” from “equal weight” in March.

The Bombay Stock Exchange Sensitive Index has fallen 10 percent this year as the Reserve Bank of India boosted interest rates to curb price increases. Stocks in the index trade at an average 14.8 times estimated profit. The MSCI Emerging Markets Index, which has risen 0.3 percent this year, trades for 11.1 times earnings, data compiled by Bloomberg show.

“The valuation relative is at a 35 percent premium to the rest of emerging markets,” Garner said. Valuations “have not moved lower in line with the deterioration in profitability.”

A 37 percent gain in oil in the past year and rising consumer prices have forced the Reserve Bank of India to raise interest rates nine times in 15 months. About 33 percent of the companies in the Sensex reported profits that missed analysts’ forecasts in the three months ended in March, compared with less than a quarter that did so a year earlier. India relies on imports to meet three-quarters of its annual energy needs.

“Compared with China, India has got more than twice the negative sensitivity to higher oil prices,” Garner said. “At the same time as it gets affected adversely by oil prices, India has one of the biggest deficits on its trade account.”

‘More Skeptical’

Garner’s comments came a day after Morgan Stanley’s India analysts led by Ridham Desai forecast the Sensex to increase to 22,100 this year. Profit growth is “nearing a trough” andinterest rates are “closer to the peak than before,” the analysts wrote in a report. The stock gauge fell 0.9 percent to 18,437.34 as of 9:23 a.m. Mumbai time.

“We need to see this improvement in profitability which Ridham is expecting to start to improve,” Garner said. “I am a bit more skeptical than that.”

Citigroup Inc. analysts led by Aditya Narain trimmed their year-end Sensex forecast to 21,500 from an earlier prediction of 22,000, according to a report dated yesterday. Still, low economic growth expectations, high risk perceptions and a resulting moderation in valuations are “reasons to buy,” the report said.

Overseas Investors

Foreigners pulled 66.14 billion rupees ($1.5 billion) last month, the most in a year, according to data from the market regulator. They invested a net 72.1 billion rupees in April and 69 billion rupees in March.

Inflows from abroad reached a record 1.33 trillion rupees in 2010, making the Sensex the best performer among the world’s 10 biggest markets last year. The largest-ever outflow in 2008 led to the biggest annual slump of 52 percent.

“The only investor class that is selling shares is foreign institutional investors,” the analysts led by Morgan Stanley’s Desai wrote in their report two days ago. Share buybacks by companies are at an “all-time high” and local institutional and individual investors have been net buyers for four months, the note said.

“We remain buyers of Indian equities with a 12- to 18- month view,” the report said.

Source: Bloomberg.com

Vivek Agrawal

Summer Intern-Fundamental Analysis

DENIP Consultants Private Limited.