'Buy Indian, we are'
In this issue:
» Can US bring down oil imports to virtually zero?
» Europe just days away from a financial Armageddon
» Oil prices are from being deregulated yet
» Consumer goods sector in India poised for a huge boom
» ...and more!---------------------------------------- Have an enriching Saturday! ----------------------------------------
Can Europe find a solution to end the current economic crisis?
Will the new economic reforms drive the stock markets?
Are we paying a price for bad democracy?
Get answers for all such complex issues straight from Jawahir Mulraj.
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Just then, like a bolt from the blue, an article appeared in the New York Times. Its editor talked about how he was making a move into and not out of stocks. And how his entire net worth was about to become 100% US equities. Frankly speaking, the man is no stranger to going against the crowd. It is in fact this trait that has made him the world's most successful investor ever. Quite clearly, Warren Buffett was sending a signal to the world. The signal that courtesy the broad sell off, US equities had suddenly become very attractive.
His thesis was very simple. At a time when the entire world was taking a short term view of things, Warren Buffett had his mind fixed firmly on the long term. He argued that investors were extremely correct in taking a negative view of highly leveraged entities like financial institutions and businesses in weak competitive positions. But to paint even the strongest companies with the same brush was not fair according to him. This is because he believed that these companies would be setting new earnings record from a 5, 10 and 20 year perspective and hence the steep correction in their prices made them very attractive from a long term point of view.
We believe that a somewhat similar story is being played out in India as well. With interest rates high and tremendous amount of global uncertainty, investors are exiting even the most fundamentally strong companies and taking a very short term view of things. But just as Buffett observed, these companies would certainly create new earnings record 5 to 10 years from now and hence, a steep correction in their prices should be looked at as an opportunity rather than be scared of it. To sum up, the title of the Buffett's article read 'Buy American, I am'. What we would like to tell you is 'Buy Indian, we are'.
01:15 | Chart of the day | |
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Source: Financial Express |
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At the same time, it would also help in bringing down the defense expenditure in the country as a large part of its paramilitary forces are currently deployed in the oil rich regions where oil is in danger. If the US government decides to follow Mr Pickens' advice then it could end its reliance on foreign oil within the next 5 years. Maybe India could take a chip off Mr Pickens advice as well. Oil accounts for one of the largest share of India's import bill. Introducing measures to boost investments in efficient and indigenous energy technologies and resources could lead to huge savings for the country.
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According to him, China's Gross Domestic Product (GDP) is going in the reverse and the economy is in the midst of a serious economic crisis- almost on the edge of bankruptcy. It is very difficult to say whether what the professor is saying is indeed true or an exaggeration. But we totally agree with him when he says that the communist regime, through its excessive censorship, does not allow the truth to be known.
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Well, the Central Information Commission (CIC) is looking for answers to these questions. The CIC enforces the Right to Information act, and has directed the RBI to make public the names of the top 100 industrialists defaulting on loans taken from PSUs. But, getting this information may not be such an easy task. The Reserve Bank of India (RBI) has stated that it cannot share such data. Banks are saying that customer info is confidential. Having this data made public will serve a larger public interest, and may even help cornering the defaulters, according to CIC and we concur. But for this information to be dispensed on a regular basis, maybe an amendment in banking laws is needed.
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Taking this farce a step further, the state-run oil firms will now revise petrol prices every two weeks if domestic prices need to be aligned with international levels. This is a disingenuous way to formalize the roll back in price that the Government feels is high enough to jeopardize its position. Far from helping any stake holder, they will just distort the supply demand dynamics of markets with consumer deferring purchase post roll back and marketing companies hoarding to offer only when prices are up. With petrol facing this, we hardly have any hopes of diesel deregulation and reforms in LPG.
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Reportedly, sales contribution from modern retail format is a substantial 40% for breakfast cereal maker Kellogs India and over 10% for FMCG behemoth Hindustan Unilever. Not to be left behind, companies like ITC, Godrej Consumer Products, Marico and Britannia are increasingly focusing on this channel to increase sales. Market research agency, Nielsen has projected sales from modern retail format to triple to $ 5 bn by 2015 from the current $ 1.8 bn.
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04:57 | Today's investing mantra |
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1 Responses to "'Buy Indian, we are'"
bhaskar mukherji
Nov 17, 2011yes,buy Indian,we are.