Outlook:
Economy continues to be in sticky mode with most of the industries
going slow in the last month. Commodity
price crash led by gold and crude has been helpful for India to bring down the
current account deficit to some extent.
However, in the long term, whether this and the trade deficit can be
shrunk is to be seen. Most of the
industry leaders want RBI to cut rates but I am not sure RBI will oblige unless
it expects the inflation to come down which remains stuck at high level. While the WPI inflation had moderated, the
CPI inflation continues to be high.
Most of the companies have come up with good results for the
quarter and year ending March 2013.
Infosys was the only company that disappointed the market in a big
way. Towards the end of April, market
started rallying a bit but not sure if this is a sustainable one.
Given the current situation, one needs to be very cautious in
making fresh investments and make investments only in companies that have very
good cash flow and are available at valuation with good margin of safety. If such opportunities are not available, best
option would be to sit on cash and wait for right opportunity
Thought on my holdings
Number of stocks in the current portfolio is 28. Patels
Airtemp has gone on auction mode from Apr and I have a residual position which
is required to be exited. Over the next
few months, I will be exiting the stocks that will find it tough to survive
this kind of economy and consolidate my portfolio to less than 25 stocks.
Some of the companies have declared their results. While most of them were okay, Ador Fontech disappointed
again with its results. There has been
margin erosion in the product segment. I
have reduced my exposure in this stock.
I have added a few new names to the portfolio like MCX, RS
Software and Indag Rubber. These are
very minor positions. My disappointment
for the quarter has been Axis bank. As
mentioned in my last month update, I wanted to accumulate a big position in
Axis bank and it kept going down from 1400+ to 1200 when I was buying and had a
good time accumulating the stock at lower levels. However, before I could accumulate a large
position, the stock started going up so fast that it now above my comfort
buying range. As mentioned in my
previous post
here, I like to buy stocks like groceries when they are on
sale. Right now all stocks are not on
sale.
Balmer Lawrie announced bonus and as far as I am concerned, it is
more of a pain than happiness. My
problem of bonus is that I cannot sell the bonus shares for one more year if
want to avoid paying capital gains. If
there is not bonus, I can sell anytime now as I have been holding it for more
than a year already. Bonus does not any
value to the shareholders. All it does
is move the capital from Reserve part of the book to Equity capital part of the
book. Bonus shares are like cutting the
same pizza in more pieces. No matter how
many pieces you make, it is the same pizza.
I wish the price shoots up now so I can exit this stock.
Lumax Auto sent Postal Ballot to approve the additional expense of
around 2.5Cr for the medical bills of Managing Director for treatment of
ovarian cancer. They also sought shareholders’
approval for increasing the remuneration by 2cr for this financial year. All shareholders should refuse the proposal
as this is bad corporate governance. How
can they ask for shareholders money to fund a personal expense of Managing
Director? I wonder if they would send a
similar thing if one of the minority shareholders had similar problem. India and specially mid and small caps are
not well known for their corporate governance and I am at least happy that they
are seeking approval. There are a lot of
promoters that just first steal the money and do not even show it on books. I stopped adding more to this counter after
this postal ballot.
