Executive Chairman of Templeton Asset Management, Mark Mobius expects a 20% correction in global markets. “That’s the kind of correction that we would expect in the bullish environment we've had for almost one year now. So, 20% should not be surprising. I was thinking this to be a buy situation resulting in a global 20% correction but it hasn't happened yet. However, I think we may see that. Of course on an individual market level it can happen. China has already corrected by that much. So that could certainly happen.”
China and India story
Bullish on China and India, Mobius said, “From a longer term perspective we are still quite bullish on both China and India. The growth rates are very high, inflation is low, money supply as you know globally still very high.”
‘In the middle of valuation range’
He feels the markets are in the middle of a valuation range. “At a low point in the last ten years it was one time's book. At the high point, it was three times of the book value and now it's about two times. So we are more or less in the middle of the valuation range. But as I said with the high money supply that we see, low interest rates cause derivatives alive and well. This trend is definitely with us and we think it will continue into 2010.”
On Commodities
Expecting commodity prices to move higher, Mobius said, he sees a lot of opportunity in the consumer space. “There are two sectors that we are emphasising. First is commodities, we believe that commodities will continue to trend upwards because the demand supply situation is such that we see high prices. The second area would be consumers—the per capita incomes are going up at a very rapid rate, thus I see a lot of opportunity in the consumer area.”
US on a growth path
The US economy is likely to see a recovery in 2010, according to Mobius. He sees the emerging markets too to do well in 2010, much in line with the US. “Though Ems have suffered on their exports, they would see a recovery in 2010. With this US recovery the entire global situation will look a lot brighter. I think the US is going to do quite well.”
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Early JLR turnaround hope lifts Tata
Tata Motors was among the big gainers in Friday’s bearish session, with the stock gaining over 3% supported by strong volumes. On BSE, the stock closed at Rs 732.75, with 12 lakh shares changing hands compared with a two-week daily average of about seven lakh shares.
Players tracking the counter say the rise could have to do with some purchases by fund managers, convinced about a buy recommendation on the stock by JP Morgan on Friday. The brokerage has raised its rating on the stock to ‘overweight’ from ‘neutral’, and assigned a price target of Rs 825, after a meeting the company’s senior management.
Morgan is betting on a quicker-than-estimated turnaround at Jaguar Land Rover, because of improvement in the global economy, and also a sustained growth in the company’s domestic commercial vehicle business. Fund managers may be willing to take a medium-term bet, but derivatives traders seem confident that the stock is due for a correction.
Tata Motors December futures closed at a Rs 4 discount to cash on Friday. Open interest shrunk by 3.2%, indicating many traders with long positions would have used Friday’s rally to pare their positions.
Market seen in range as bulls, bears play safe
With the Nifty closing below the 5000-mark on Friday, the gloomy mood in the bull camp persists. Key indices have been range-bound for the past few weeks, and the “consolidation” is turning out to be longer than what bulls had thought. Even the staunchest of bulls are now bracing for a downturn over the next one month, with some saying that the Sensex could shed around 2000 points.
Those who have missed out on the rally this year are eagerly awaiting the correction with cheque books in hand, hopping to net some good bargains. But will the market correct as sharply as expected? Those gloomy/cautious /cautiously optimistic are not backing their words with actions. In other words, they are not selling the shares in their portfolios.
The mood in the bear camp is not upbeat either. Having lost money repeatedly over the past few months, trying to call a correction, bears are Arshiya jumps nearly 50% in a month Arshiya International appears to have caught the fancy of traders of late. The stock rose around 1% in a weak market on Friday, closing at Rs 188.25. Over the past one month, the stock has risen 43%. It is hard to see what bulls are excited about in the stock. For FY09, the company reported consolidated revenues of Rs 500 crore, and an earnings per share of Rs 11.30. For the first half of the current financial year, the company has clocked revenues of Rs 228 crore and an EPS of Rs 4.31. Unless the company’s topline and bottomline grow significantly during the remainder of the year, the price-earning multiple of 17 looks stretched. The extremely low-profile top executive of a domestic broking firm, with a sizeable stake in the firm, is said to be the self-styled advisor to the company, and is also pitching the company to institutional investors. Earlier this week, Arshiya’s subsidiary sold its Cyberlog product suite to Aurionpro Solutions for $10 million. Incidentally, the low-profile executive holds a decent stake in Aurionpro, too. (Contributed by Santosh Nair) | |
RIL continues to be top pick of MFs in Nov
See 12000 on Sensex before 21000: Shankar Sharma
See 2010 as a stock picker's market: PN Vijay
Gas case: Hearing ends; solicitor general makes final pitch
Report: Mark-to-mkt performance of IPOs of 2009
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From Economictimes
Flurry of IPOs set to hit markets in 2010
2010 may be a positive year for Indian investors: Credit Suisse
Trading pattern of recent IPOs | Potential stocks
Low volumes may cause volatility
************************************Src: Economictimes, Moneycontrol