The biggest positive for India — Fuel price drop

The other day I was with a client who made me think about the Crude Oil price drop on a different thought process. Till then I was of the thought that Crude Oil has hit its top and the prices are down for good. It will not go beyond $80, because of Shale gas discovery which make oil Oil available at $80.

Crude market getting more bearish after it broke the $ 62 mark on the international markets meant that all the producing countries are scrambling to sell their stock before the price drops further, in contrary to the experiences that we have had so far with OPEC controlling output just to keep the supply at bay so that demand takes care of the price.

I also got informed that when Crude price crashes more than 40%, it will have a similar impact on the stock market and was given the example of 2008 crash. Though I did not buy this thought fully, I got into a learning mode, why not it be so? From then on, all the information I was searching or working with I used to find co-relation to the thought I had received and mostly it did match. I don’t know if that came because of my mind set which attracted them.

Today I saw an article in Economic times with a graph of Crude in comparison to SENSEX. It just caught my attention. Here is the chart…….

Crude-Chart_dec14

 

As it was said, the stock market went along with Crude when it took a slide in 2008. But, what is happening now is totally opposite, it is opening out like a jaw, this gave me perspective to think. If this time it is different, when was it similar earlier. In 2006, when crude went down, the stock markets were up. From there what happened was history. The stock markets went into a very high bull power. That means, this time it will repeat the same. One important note here, this time the power is far higher than what it was earlier.

So, Nifty reached 125000 by 2030, which was a very optimistic gesture of Rakesh Jhunjhunwala, would be a real possibility.

Folks, be invested, take opportunity of India’s historic growth.

India – The world’s investment destination.

SwachhBharath

The other day I was in the Millionaire Mind intensive seminar by Harv Eker. It was a 3 day intensive course on how to become a billionaire by taking away all the blocks in our mind. It was an impressive program. The learning for me was when Harv, told about the potential India has as an investment destination. The following is his words, ‘Your prime minister has been admired by the world, he has been called by other countries to take the opportunity of growth by either participating or investing. Not many leaders get such an opportunity, which means India is the world’s destination for investment. He has already been to the US, UK, recently to Australia and more to come very soon. All his thoughts are positive, I travelled through your country in the past weeks and I could witness people have only positive aspirations. For the next 10-15 years India is the place to make big money, your markets are going to roar. Being here in India, living in India at this part of its great journey, if you are not capitalizing on the potential, God, only God can give you another such opportunity. Take the opportunity, be invested, you will feel proud that you took the right decision when you look back to 2014 from 2019. If you wait for more confirmation, you will only be staring on a lost opportunity.”

Everything said in few minutes, I was very happy listening to this conversation, my judgement too was the same, India will all it glorious development in the next 5 years. Why is it so? What is so euphoric?

One by one if we look at the external situation

There is able administration, who are willing to take fast decisions.

Crude oilCrude Oil is a story that is next to over now, producing countries are no more waiting for their leader to hold production and dictate price, they are scrambling to get their maximum share in whatever they could sell at available price. It has become a buyers’ market, no more a sellers’ market. Something our generation has not experienced so far. No more new high’s possible in crude oil, it has begun the other part of the journey on its bell curve.

Very good rains this year, many of our dams are full. Many governments are planning to construct new dams. So, crops are going to be very good in the coming years.

1 trillion of investments coming into India from the International markets, this will bring many new businesses to India and so much employment opportunity.

Make-In-IndiaLogo650

Make in India, drive is going to add more value to our products and this means higher profits.

Swach Bharath drive is going to make our country crisp and clean, this is a great opportunity. A person wanting to open a window cleaning company can make billions, take our railways for example, it is so dirty that one company can run exclusively to do the cleaning business. As I write this I am travelling in the train from Salem to Bangalore. Like this if we look for cleaning opportunities as a business there are plenty.

More number of businesses and more employment means, people have more money to spend and all that money will circulate into the economy making people more and more rich.

Waking up infrastructure projects will ensure that we have more and better road networks which will make real estate accessible. This should ease out pressure on cities with growing population influx.

Infrastructure growth means big business opportunity for Cement and Steel companies, their businesses are going to soar.

There are a lot more that will be unfolding as days pass by.

 

Wireless is a boon to battery companies…..

I invested in Eveready Industries in the month of June 2014 after the stock came into our ranking tables. The ranking table measures a stocks earnings and its stock price against  a group of stocks and ranks them. We invest in those stocks that have both their earnings(EPS) and price (PRS) above 80. At that time the stock price was ₹. 45.00. At the price, the stock’s chart was showing pretty high strength, it has a good run up I price. I normally don’t buy into a stock that has already run up. Now, the decision has changed, I had committed myself that I will follow the system without second guessing or judgement.

Eveready

After I bought the stock it was going higher and higher. By September it crossed the 100 mark.

BatteryAABy the end of November 2014, it has reached 195.00, has given 350% profit on our investment in 5 months period. September quarter results came out and the performance was stronger, but, still was not in a position to give a growth signal, which we consider when a stock gives 25% plus growth in its sales as well as its earnings in comparison with the same quarter of the previous year.

One day when I had asked my son to buy batteries for the mouse and keyboards at home. He bought 6 nos, stating that, we need that much as it is used in the clocks, remotes, keyboards and mouse. This made me think, if we are consuming so much, it would be the same to others around the country too. With the world going wireless, usage of batteries has at least multiplied 3 times. And this is  going to increase going forward. A reason enough for Eveready to sky rocket in its sales and earnings. Eveready has been the leader in this industry segment, when we think of batteries we only think of ‘EVEREADY’, it has become a ‘XEROX’ for copy machines. This means, there is a very high potential for this stock to give us 1000% profits along with some fancy dividends. The beauty is that, all of this profit will be tax free, as the period it would take to hold on to this growth is going to be above 365 days. What a nice choice to be invested in Equities.

This incidence also made me think, if I can search such kind of supporting thoughts to find companies that have the highest potential to growth, the returns on my investments will be triple digit year-on-year.

TVS Motor clocks 36% growth in Nov

jupiter_1586436fTVS Motors had a sales growth of 93% in the last quarter. November growth is 36%,Two-wheeler sales jumped 36 percent to 2.1 lakh units while scooter sales increased by 62 percent to 62,223 units and motorcycle sales rose by 41 percent to 86,424 units during the same period. “Three wheeler sales of the company registered an increase of 44 percent, growing from 6,304 units in November 2013 to 9,067 units in November 2014, said the company in its filing.

This stock was an investment opportunity in July this year. It came to buy when the stock was at 150 levels. As of this writing the stocks has made 50% return on investment and it looks like continuing the growth path.

Another notable point here in TVS Motors is the Three wheeler sales, there has been talks going on in the markets that Autos will lose their market share against the competition from taxis, Autos are charging Rs. 12 per km now. Taxis that are operating at Rs. 14 per km has began to get as low as Rs. 10 per km. There is a high possibility that people will pick a taxi instead of an Auto, which has many drawbacks. With bumper to bumper traffic across all the major cities in our country, people will be forced to use more taxis for their commuting requirements, this means more business for Auto manufacturers.

This would mean lower sales for Three wheelers, but, TVS has managed to corner some of their competitors market share to increase their sales volumes. This show a great business strategy in place for the company.When a company has a good sales and earnings growth, it is eventually going add value to the stock. And has all the likeliness to run up and give good returns to its investors.

How long this growth is going to continue? That we may not know, but, as long as the growth is strong, if we are invested, we can reap rich rewards. A car that is going at a 60 km speed in 4th gear cannot come to an abrupt stop, it has to at least get down to the speed at 2nd gear and gradually slowdown. And this slowdown is going to be visible, which can be utilized as an opportunity to take exit and book profit.

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One other stock that has been consistently having high growth is Eicher Motors, in the November month Eicher Motors, the Royal Enfield maker, sold 27,542 motorcycles in November, registering a growth of 52 percent compared to 18,131 units in November 2013. This stock came into high growth when the stock price was Rs. 1180, way back in 2010. From then on, it was a no look back for the stock.

In January 2014, the stock was quoting at Rs.5000 and today it is inching closer to Rs. 15000. A gain of 200% in 11 months, and the performance is going to continue. People normally shy away from stocks that are priced so high, complementing them with a low priced stock, but, price reflects the value the stock has in it. No smart investor will buy a stock at this price if there is no value.

Automobile stocks began to show strength in their earnings early this year and have rewarded their investors richly so far. But investing in any Auto stocks will not give us such high returns, specific stocks like Eicher, TVS have great potential in them. We need to identify such growth stocks for investment, which brings down the risk of stock investing almost to zero.