The curious case of rising currency in circulation.....

The rate at which currency in circulation is increasing in the Indian economy is moving up. The rate at which deposits in the banking sector are growing is moving down. Together, these two factors are worsening liquidity conditions in the banking sector, putting banks and the Reserve Bank of India (RBI) in a spot.

While the latter is more easily explainable, the former is confounding many in banking circles. Here’s what the data shows.

Currency in circulation, a reflection of the cash in use, has risen by 15.4% in 2015-16 (data for the last week of the year is yet to come). In FY15, the growth in currency in circulation was lower at 10.7%. The higher growth this year appears to run counter to most factors that typically drive currency in circulation. The key among these factors are higher inflation (which necessitates more spending) or higher transactions in sectors like retail and real estate (where there may be chunky payments in cash). There are other factors like elections, which also lead to temporary spikes.

The reason FY16’s jump in circulation is puzzling is because inflation has not moved up compared to last year and transactions in sectors like real estate, by all accounts, have been down for most of the year. While state elections, such as in Bihar, may explain a temporary spike, they don’t explain why it has persisted.

The weekly growth rate since the start of FY16 was between 9% and 11% till November. It was only in mid-November that growth in currency in circulation jumped to about 14%, and since then it has remained at 12-15%. So what’s going on? There is no clear answer but there are a few theories, some backed by data, some not.

At a macro level, one explanation could be a pick-up in urban consumption demand. While urban demand has been stronger than rural demand through the year, there is anecdotal evidence that urban demand may have strengthened further in recent months. Mint’s Sapna Agarwal hears from brick-and-mortar retailers that demand in post-festive months has held strong and purchases are up even after discounts have ended. In a recent conversation, a top executive at a fast-moving consumer goods company pointed to strength in urban demand and added that premium categories in particular are seeing strong growth.

This anecdotal evidence may point to more spending in urban areas in recent months, which, if done in cash, could explain some of the increase in circulation. What gives this theory credence is timing. Retailers speak of a pick-up in demand during festive and post-festive months, which coincides with the increase in growth rate of currency in circulation.

In a 23 March editorial in Business Standard, Soumya Kanti Ghosh pointed out that gems and jewellery output (as shown by the industrial production data) has been particularly strong in FY16. He linked this to the increased use of cash and asked whether this could point to the start of a demonetisation trend.

A second data point that ties in to the increase in currency in circulation is the pick-up in ATM withdrawals. Saugata Bhattacharya, chief economist at Axis Bank Ltd, highlighted that ATM withdrawals between April 2015 and January 2016, were at Rs.21 trillion compared to Rs.18 trillion in the same period the previous year and Rs.20 trillion in FY14. Could this be a behavioural change driven by higher ATM charges making people draw more cash at once, he asks.

There are other possible factors playing out in rural areas, but none seem statistically significant. For instance, direct benefit transfers may be putting out more cash. Also, given the pressure on rural incomes, some have asked whether people are borrowing more from informal channels or liquidating gold holdings. But a dip-stick survey of three people who work in rural areas and in rural lending didn’t reveal anything that would lead us to believe that these areas are contributing to the rise in currency in circulation.

All of this matters because the increase in circulation is being cited as a key reason for the liquidity tightness in the banking sector. The other reason for the liquidity crunch is weak deposit growth. This may be more easily explainable as deposits may be flowing towards other avenues such as equity as suggested by strong inflows into equity mutual funds through most of this year.

The net result is tight liquidity, which bankers believe RBI must address. In an interview to Mint, Hitendra Dave, head of global banking and markets at HSBC India, said this increase in currency in circulation was a key reason for liquidity tightness. “Currency in circulation last March was Rs.14.8 trillion. Now it is more than Rs.16.7 trillion. The difference is about Rs.2 trillion. Assuming that the liquidity conditions have to be maintained at the same level as last year, at least that Rs.2 trillion has to be injected as primary liquidity,” said Dave, adding that the liquidity injections have been far below that.

So, will RBI yield to pressure from banks and ease liquidity through a cut in the cash reserve ratio. Bankers and economists are hopeful and say RBI is sympathetic to the issue. But they may choose to wait until a review of the liquidity framework—which the central bank is currently in the midst of—is completed.

NIFTY CORELATION HISTORICALLY....

Nifty made a 1994 top and then it took 4 years of correction uptill 1998 and thereafter it again resume the Ketan parekh bull run...till 2000
from 2000 bull market nifty again corrected and took 3 years of bear market and thereafter again resume its bull market...till 2008
from 2010 october till 2013 October  again nifty was in bear market for 3 Years....
now from 2015 February uptill 2018 February nifty will be in the bear market presumably and can trade between 7000 to 9000 levels and thereafter 2018 nifty will again resume its Bull market uptill 2022....so happy long term investing...please note these are my observations and i can be way away from my targets...

G sec a new low....

today again because of hugh influx of money in the banki8ng system because of demonetisation the G-SEC 10 year yield rates are going down and down...today it again made a new low of 6.187%....my target of G-SEC going down below 5.50% in the near future say 1 to 1 and half years looks possible...
NIFTY TILL APRIL 2018 WILL TRADE BETWEEN 7400 AND 9000...BUT IN A WORSE CASE SCENARIO IT CAN AGAIN GO TO 6800 LEVELS..BUT RIGHT NOW IT LOOKS DIFFICULT...NOTE THE GDP GROWTH OF INDIA WILL GO DOWN AND SO WILL THE EARNINGS OF THE COMPANIES TILL MAY 2018...THEREFORE NIFTY EPS EARNINGS WILL BE DOWNGRADED AND SO THE PE WILL START CONTRACTING...

NIFTY LEVEL IN FEW MONTHS and Demonitisation of 500 and 1000 notes by Modi Government....

Demonitisation of 500 and 1000 notes by Modi Government....there goes all the black money in the drain and sewearge...hurray...hurray...now the fun will start...legal money value has gone up by almost 3 times...the coming next 6 to 8 months will be very difficult for the economy...complete stand still...but thereafter Dhamaal...the economy will start soaring to new heights...

NIFTY IN THE COMING 4 MONTHS MIGHT TOUCH 7770 LEVELS....BUT MAYBE BEFORE MARCH OR APRIL 2017 or even earlier....and IN COMING FEW DAYS....8070 lvls is for sure...

Worst in banking over, see consumption picking up: Ambit CEO

It will be a few more quarters before general consumption and investment cycles pick up, said Ashok Wadhwa of Ambit Capital. He added that he expects a strong positive consumption cycle in the first half of FY18 and an uptick in investment cycle in FY19 subsequently.

Banks are actively addressing the problem of non-performing loans and even corporates have realised the issue and are actively addressing the problem, according to Ambit. The worst in banking sector is over and collaboration between banks and the corporates will ensure that the issue of stressed assets is addressed, said Ashok Wadhwa, Group CEO, Ambit. He said that the brokerage has a positive bias on the consumer durables space in terms of growth. Two-wheelers showing a positive bias over a three-month period indicates the start of a positive consumption cycle and the broking house thinks that process may have begun, he added. ADVERTISING inRead invented by Teads Wadhwa, however, said that it will be a few more quarters before general consumption and investment cycles pick up. He added that he expects a strong positive consumption cycle in the first half of FY18  and an uptick in investment cycle in FY19, subsequently. Wadhwa also lauded the efforts of the government to be able to implement GST in a relative short time. The government is trying to make GST as inflation neutral as possible, he said. 

First story...US ELECTION RESULTS...Second...Italy Referendum...

The story of USA elections between Trump and Clinton has created so much uncertainty that all the idiots are saying that if Trump wins the US elections market will crash..what stupid judgement and reasoning..whatever it might be he will be in no position to start the 3rd world war..right now all this idiots are thinking if he becomes the president something really bad will happen..i dont buy their story..no one sitting on that post is mad to start something which will hurt so many people around the world..
For sure after the elections are over ..president elected whoever it might be..the story will be that the news got discounted...and then in next few days the new story of Italy going to referendum to stay in EU zone will start....and blah...blah....blah...whatever it might be the world will never be short of stories...

Compounding returns for long term investing

In other words, for 80-90 percent of your holding period, the price doesn’t change much but it’s that window of 10-15 percent that captures all the price movement. When that window will occur is very difficult to predict

Bull market to kick in once Nifty hits 9100 next year: Elara Cap

Currently, we are in a bounce and the bull market will began after Nifty touched 9100, which will happen next year, Harendra Kumar of Elara Capital said adding that new bets on the market will be placed then.

Eventually the structural bull market has to start very soon.. Also Number of IPOs are hitting the primary market..they are all getting oversubcribe..and most of them are getting listed atleast 20% above their issue price..
Lately i have been talking with say 10 people who are active in the stock market presently..today 5 out of 10 are saying give me stcoks to invest where the gains are overnight..gains should be such that to make big money overnight..fultu Speculation..other 4 are no less because they are also speculating but with little common sense..but all are trading in F&O..all want to make big bucks..maaza aavi joa...give such stocks..so now it is all about speculation..greed..big money overnight..entertainment..
Phase...today we are at the bottom of OPTIMISM PHASE..AFTER LEAVING THE TOP OF THE SKEPTICISM PHASE..Greed is dominating and fear is diminishing slowly slowly..

CPI Inflation heading Southwards....

The Good News is CPI inflation is heading down...Southwards...That means more monetary rate cuts in the near future...and more supply of Money in the economy which will eventually drive the animal instincts of people to more leverage and more loans..and most important less deposit rates from Banks..so people will again be forced to buy assests like gold...stocks..equities..properties..rather then keeping their money in Fixed deposits in Banks..Eventually because of CPI inflation going down and so will be the Monetary interest rates..finally by 2018 the G sec Government benchmark rates will go below 6%..and thereafter the economy will start booming like you have never seen before..because of so much money been printed in the world..But remember after this so called bull market which will play out by 2021/2022 the bust will be so severe that it will be remembered for centuries..there will be a great recession and which will eventually lead to Depression...but before that enjoy the ride till 2021/2022...

India's consumer prices increased by 4.31 percent year-on-year in September 2016, easing from a 5.05 percent growth in the previous month and missing market expectations of a 4.8 percent gain. It was the lowest inflation rate since August last year, as food cost rose at a slower pace. On a monthly basis, consumer prices fell 0.23 percent. Inflation Rate in India averaged 7.54 percent from 2012 until 2016, reaching an all time high of 11.16 percent in November of 2013 and a record low of 3.69 percent in July of 2015. Inflation Rate in India is reported by the Ministry of Statistics and Programme Implementation (MOSPI), India.

Why corporate loan growth is at record low despite festive rush............

Online retailers clocking record sales this festive season have triggered hopes of a sustained revival, but data from India’s banks and factories seem to tell a story of an economy caught in a peculiar flux. Banks are awash with funds but corporates aren’t taking any. Plants have large spare capacity and companies have a stockpile of unsold goods. Industrial credit offtake growth, banking parlance for loans given mainly to fund additional investment, plunged to a ten-year low of -0.2 percent in August in 2016. The statistic is telling. In the 12 months from August 2015 to this year, industrial loan growth has crashed more than five percentage points. As of August this year, total bank loan to industry stood at Rs 26.18 lakh crore from Rs 26.23 lakh crore in August 2015, recently put out Reserve Bank of India (RBI) data show. This, however, broadly coincides with the period when India firmly cemented its position as the world’s fastest growing major economy, outpacing neighbouring titan China. According to analysts, firms were expanding at a slower pace because of unused capacities, large enough to meet extra demand for goods. RBI’s findings backs this argument. The latest quarterly industrial outlook survey, indicated a moderation in “in the sentiments in demand conditions,” in July to September compared to April to June 2016. “On a net basis, percentage of respondents favouring increase in production, order books, capacity utilization and exports/imports was lower in this quarter,” the RBI survey said. The survey, conducted among 723 manufacturing companies during August-September, is aimed to assess the current business situation and outlook in the near future. Nearly 8 out of 10 respondents (78.4 percent) were of the view that their plants had adequate production capacity to meet additional demand in the next six months, while 14.2 percent believe that their capacities were “more than adequate” to meet any sales spike in the coming months. “Although respondents to the July-September 2016 industrial outlook survey expect input costs in manufacturing to increase, corporate pricing power will still be stunted due to the slackness in demand and spare capacity in the manufacturing sector,” India Ratings, a ratings and research firm, said in a recent report. Within the industrial sector, the fall in loan growth has been the sharpest in food processing (-9.24 percent), followed by beverage and tobacco (-8.04 percent) and cement (-4.27 percent). The scrutiny over mounting bad loans and tighter norms may have slowed down bank credit growth. India’s banks have been beset with mounting bad loans. In the last 12 months, for 39 listed banks, gross non-performing assets (NPAs) rose 96 percent — to Rs 6.3 lakh crore in June 2016 from Rs 3.2 lakh crore in June 2015. “The manufacturing sector is beset with low capacity utilisation, while corporate balance sheets are stretched and banks are saddled with bad assets,” the India Ratings report, quoted earlier, said. Analysts, however, expect household spending to pick up. Good summer rains this year will likely raise farm income, pushing up sales for such as televisions and cars. Analysts also expect hike in salaries and pensions of 4.8 million central government employees and 5.5 million pensioners to boost spending on cars and houses. “Private consumption is expected to receive a further boost in the coming quarters on the back of expected improvement in rural demand led by a near-normal and well-spread monsoon,” Crisil, a credit rating and research firm said in a report. “This, together with the implementation of the pay commission recommendations augur well for domestic consumption growth this fiscal,” it said. A consistent rise in household spending should help in rapidly exhausting unused capacities in consumption-linked sectors. “We believe investment revival would be triggered by sustained recovery in consumption demand and thus capacity utilisation and investment push by the public sector, leading to a virtuous cycle of cash flow generation in the system,” Motilal Oswal, a brokerage and research firm, said in an second-quarter earnings preview report. 



Read more at: http://www.moneycontrol.com/news/economy/why-corporate-loan-growth-is-at-record-low-despite-festive-rush_7610281.html?utm_source=ref_article

Bank loan to industry in contraction mode; no revival in sight...Most important article...

Four years ago, bank loans to the industrial sector was growing at roughly 20 percent a year. The rate of growth has been on a downward trajectory since, slipping into the negative territory in August 2016, the first in a decade. In August scheduled commercial banks’ outstanding loan to the industrial sector contracted by 0.2 percent. The weakness over the last few months has stemmed from low corporate demand and a lack of fresh projects, says a note by domestic broking house Religare. Pawan Goenka, Executive Director at Mahindra & Mahindra (M&M) concurs. In a recent interview to CNBC-TV18, Goenka noted the manufacturing sectors are still running at average 70-75 percent utilisation and investments will begin only once utilisation breaches 80 percent. “So, if we have one more year of demand growth then we will get into a zone of where there is a need to invest in capacity,” he said. He also pointed to other factors like leveraged balance sheets both for banks as well as the industrial houses as another important reason for the weak credit trends. Growing risk aversion among public sector bankers following the non-performing assets crisis was also cited to be a key reason leading to credit availability issues by former Reserve Bank Governor Raghuram Rajan. This could well be inferred from the fact that corporate have steered towards alternate modes of short-term financing like commercial papers where rates are now attractive. In a note released in August, Karthik Srinivasan, Senior Vice President and Co-Head of Financial Sector at ratings agency ICRA said the CP market is expected to remain an attractive source of funding for better-rated corporates in the current environment of ample adequate systemic liquidity, sound inflows into key investor segments and structural inability of banks to sharply reduce their lending rates. Meanwhile, Religare does not expect any material improvement in credit growth for FY17 and builds in a modest 12-percent year-on-year growth for the year.   

IPO market heads for mega year; 50 cos raise $2.93 bn in 2016......

FINALLY THE IPO MARKET HAVE STARTED TO TAKE OFF...

We have positively entered the Cautiously Optimistic Phase of the stock market... Few more months say around 9 to 12  months the little bit of fear which is left today in the stock market will fade away permanently and thereafter we will enter the Optimistic Phase of the Bull Market for the next 4 to 5 years..

The year 2016 is set to be a record-breaking year for Indian IPO market as 50 firms have entered Dalal Street with initial share-sale offers to garner USD 2.93 billion and an impressive pipeline is already in place for the coming months, says a report. Besides, another 22 companies have lined up IPO plans in 2016 bringing the year-end estimated total deal value to USD 5.8 billion, more than double from last year's deal value of USD 2.18 billion. According to a report by Baker & McKenzie, Indian IPOs are set to hit a six-year high, with USD 2.93 billion already completed and a further USD 2.90 billion of IPOs in pipeline for 2016. Further, 16 companies are in the pipeline to be listed domestically in 2017, raising USD 5.86 billion. This includes Vodafone's highly anticipated USD 3 billion initial share-sale plan, which could potentially surpass the state-run Coal India's IPO to become the country's biggest public issue.

Dual listing on both exchanges - BSE and NSE - accounted 98.8 per cent of companies listings by value in 2016 to date, raising a total of USD 2.9 billion from 19 IPOs, including ICICI Prudential Life Insurance's USD 909 million IPO, which is the country's biggest IPO this year. Improved business confidence is also driving Indian companies to look at growth and market expansion opportunities overseas by way of cross-border IPOs. This provides a means to access risk capital that is not available in India, and also to connect with investors who better understand and appreciate their businesses.

New IPOs on Rock and Roll mode...GREED IS JUST STARTED TO BE INTRODUCED...

these last one year or so new ipos are hitting the secondary markets like hitting 6 sixes...almost in last few months there are two new ipos hitting the secondary market..astonishingly all these ipos are getting subscribe overhemingly and some issues are subscribe like 20 times...50 times..etc...just 2 years back there was a drought of ipos...people were skeptical and were fearful to invest even in ipos...forget about investing in the stock market..these shows that GREED has returned back and now i can powerfully say we have crossed the skepticism phase of the market and enter the OPTIMISM phase.. also to support the above view point am receiving phone calls for tips..also people i talk with are saying that retailers have started showing interest in the stock market and have started investing...people have started giving TIPS as analyst..they have started feeling little confident about themselves and about investing...SLOWLY SLOWLY GREED WILL BE THE DOMINANT FORCE IN INVESTING....IMAGINE WHAT WILL HAPPEN IN NEXT 5 YEARS when all these and left out people will start participating in the biggest bull market of next 5 years...

Sub-6% yield is coming. It will transform the economy .......

yes...now they have started talking about sub 6% levels....

The benchmark 10-year government-security yield remained stuck in 8-7.5 percent range through all of 2015 and half of 2016, moving lower to sub-7 percent only when the RBI promised in April to reduce the system's liquidity deficit. The yield may now fall more.

After the Reserve Bank moved early 2015 to cut rates, it brought the benchmark repo rate down from a peak of 8 percent to 6.5 percent till before yesterday's policy. But the benchmark 10-year government-security yield remained stuck in 8-7.5 percent range through all of 2015 and half of 2016, moving lower to sub-7 percent only when the RBI promised in April to reduce the system's liquidity deficit. With the central bank slashing rates once more and the inflation outlook promising a few more cuts can follow in 2017, veteran observers of the bond market believe a 6 percent or sub-6 percent yield looks like a possibility next year. Such a move will have a bearing on almost all vital economic functions. Cost of borrowing will reduce as loans are linked to the risk-free g-sec rate, banks will see profits on their treasury books and economic growth may perk up further. In an interview with CNBC-TV18, Axis Bank Deputy MD V Srinivasan and Bank of America India MD and Treasurer Jayesh Mehta talked about the possible trajectory for bonds and the implications for the economy. 

Last time when we talked sub-7 percent when the liquidity was infused, started about and as Srinivasan said earlier, there was expectation of one more cut till March. That continues, but I would say there is couple of changes which has happened. The monetary policy statement is sticking to monetary policy style of it, rather than other developments and the way it pans out it does talk about upside risk but there is also downside risk on inflation and if one takes that call looking at the world today maybe next year we can see more cuts. So, we might look into paradigm shift. Maybe initial stop for the 10-year at 6.50 percent or 6.55, people would rethink or people would book some profit but as things pan out in the next two months globally, that would determine the further course.

This in effect would mean that banks will cut lending rates if there is adequate liquidity in the system. As of now 

there is surplus liquidity in the range of Rs 60,000 crore to Rs 70,000 crore in the banking system. 

The King is Money Supply...

today the RBI decreased the repo rates by 25 bps points..what does it mean for the economy and business.. money is released and supplied by the RBI in to the system...liquidity will improve and money borrowing will become cheaper..that means more money in the hands of the people..more money means more spending by the people and more profits for the companies..leverage companies have to pay less on the borrowed money..decrease in the stress assests in the economy..but not all it is possible only because the WPI AND RETAIL INFLATION ARE DOWN..so the RBI governor has the room to reduce rates..

India Money Supply M3  1972-2016 | Data | Chart | Calendar | Forecast

Money Supply M3 in India increased to 122289.14 INR Billion in September from 121337.78 INR Billion in August of 2016. Money Supply M3 in India averaged 20315.52 INR Billion from 1972 until 2016, reaching an all time high of 122289.14 INR Billion in September of 2016 and a record low of 123.52 INR Billion in January of 1972. Money Supply M3 in India is reported by the Reserve Bank of India.

HIGHEST                LOWEST                   DATE                  UNIT              FORECAST2021                                                                                       

122289.14            123.52              1972--2016     INR BILLION    225000

MONEY SUPPLY HAS AVERAGE 17% ON CAGR BASIS AND IT IS THE AMOUNT OF MONEY WHICH IS INTRODUCED IN THE SYSTEM..

now many people may argue that liquidity alone wont drive the economy..yes i do agree..the other most important thing to drive the economy is Psychology and the Inner Belief People should have and also to the extent of Demography where India has the biggest Advantage of young population Today i am writing this article which i was awaiting for atleast 3 years to write was because yesterday an analyst from JP MORGAN also spoke about the liquidity supply of money in the economy which is increasing and it will keep on increasing as compared to last few years..
Today the RBI decreased the monetary interest rates..so RBI infused and increased the Money Supply in the ECONOMY..and eventually more money in the hands of the people..so now what will the people do with more money..that you will have to think and guess by yourself if you are wise enough..when you have more money in your pocket..

The King of Everything...MONEY SUPPLY

Oct 04, 2016, 06.49 PM | Source: CNBC-TV18 RBI cuts rate by 25 bps, warns of inflation, keeps GDP forecast The decision of the monetary policy committee (MPC), headed by new RBI governor Urjit Patel, will likely cheer business leaders and households as cheaper loans will aid investment and spending.

The Reserve Bank of India (RBI) on Tuesday cut its key lending—the repo rate—by 25 basis points to 6.25 percent, as a newly set up panel felt that inflation levels were low enough to reduce loan rates. The decision of the monetary policy committee (MPC), headed by new RBI governor Urjit Patel, will likely cheer business leaders and households as cheaper loans will aid investment and spending. The six member panel, which brainstormed over two days, unanimously agreed that inflation was unlikely to gallop past the tolerance threshold of 6 percent in the near future. The MPC expects retail inflation rates to hover around 5 percent by March 2017, the RBI said in a statement, which is well within the comfort zone. A lower repo rate—the rate at which banks borrow from RBI--would mean households may expect cheaper bank loans to buy houses and goods such as cars, which peak during the festival shopping season in October and November. The BSE Sensex rose 85 points to 28,328 mirroring the stock markets’ heightened expectations about lower rates. Since January 2015, the RBI has cut the repo rate six times. India’s retail inflation has touched a five-month low of 5.05 percent in August, triggering hopes of a rate cut. “The MPC expects that the strong improvement in sowing, along with supply management measures, will improve the food inflation outlook,” the RBI said in a statement. The drop in overall inflation rates has been primarily aided by continuous drop inflation in food inflation. The committee credited the drop in food inflation to recent efforts by the government to keep price growth in check including measures to tame prices of pulses, a common source of protein for most Indians. “Food inflation holds the key to future inflation outcomes,” the RBI statement said. “The government has announced several measures to cool food inflation pressures, especially with regard to pulses. These measures should help in moderating the momentum of food inflation in the months ahead,” it said. India’s economy grew 7.1% during April to June, the slowest in 6 quarters, but the RBI and the MPC expect a revival in the coming months boosted by good rains, a pay bonanza for government employees and festive season buying. The RBI retained its earlier  growth projection of 7.6 percent for 2016-17. “The momentum of growth is expected to quicken with a normal monsoon raising agricultural growth and rural demand, as well as by the stimulus to the urban consumption spending from the pay commission’s award,” the RBI statement said. Besides, banks appear to be awash with funds and well equipped to deal with rise in loan growth demand to aid new investments. “The accommodative stance of monetary policy and comfortable liquidity conditions should support a revival of credit to the productive sectors,” the statement said. The spurt in demand could, however, potential push inflation. “The Committee took note of potential cost push pressures that may emerge, including the 7th pay commission award on house rent allowances, and the increase in minimum wages with possible spillovers through minimum support prices.  The fuller play of these factors will need vigilance to prevent a generalised cost spiral from taking root,” it said. The RBI and the government have set a retail inflation target of 4 per cent for the next five years with an upper tolerance level of 6 percent and lower limit of 2 per cent.

India 10-Year G sec Bond Yield....

finally the gsec have started to go down from 7.20% few months back and is @ 6.913...if you read my previous articles on gsec  i have written that within the next two years the rates will go below 6% and my target is between 5.60% and 5.95%.. and once this levels are reached the indian economy will start booming for the next  atleast 3 to 4 years...

Bad loans & they have become only worse for banks.....

The gross non-performing assets of scheduled commercial banks have zoomed 10 times in the last ten fiscal years. In FY16, the stressed assets of these banks were a whopping Rs 5.41 lakh crore. Rewind a decade. It was a mere Rs 51,000 crore in FY06. The banks' reporting of bad loans increased in the last two years or so after former RBI Governor Raghuram Rajan had ordered them to recognise their stressed assets.   Rajan had set a March 2017 deadline for the lenders to fully disclose their bad loans and make adequate provisions. And it explains why just in the last fiscal year, immediately following the order, the gross non-performing assets of these banks rose 67 percent in FY16 from the year before.   

Household fin savings at 5-yr high, set to grow further in FY17 Gross financial savings (GFS).of households increased to 10.9 percent of the gross domestic product (GDP) in FY16 from 10.1 percent in FY15, says a report by domestic broking house Motilal Oswal Securities quoting Reserve Bank of India data. Moneycontrol Bureau India’s household financial savings saw its first improvement after nearly 6 years in FY16 driven by higher exposure to capital markets, currency holding and government deposits. Gross financial savings (GFS) of households increased to 10.9 percent of the gross domestic product (GDP) in FY16 from 10.1 percent in FY15, says a report by domestic broking house Motilal Oswal Securities quoting Reserve Bank of India data. Capital market exposure (investment in both shares and debentures) of households at Rs 918 billion in FY16 was the highest absolute amount in a single year on record since 1950s. Currency emerged the most preferred method of savings, with holdings increasing to 13.5 percent of GFS in FY16, the highest since 1990. Despite lower interest rates, savings in government schemes also increased considerably.  Although the GFS to GDP might look trivial compared to average 14.4 percent seen in the decade leading up to 2011, it gains significance as being the highest increase in the GFS growth rate since. This did not account for any real improvement in savings rate at the net level due to similar increase in financial liabilities of households alongside. Net financial savings (NFS) inched up only marginally to 7.8 percent in FY16 from 7.6 percent of GDP in FY15.  Although the highest NFS rate in five years, it was much lower than the average rate of around 11 percent of GDP in the decade to FY11. Motillal says a look at several leading indicators to gauge household financial savings for FY17 points to further pick-up in GFS.   The build-up in bank deposits growth in the first five months of FY17 is 3.6 percent versus 2.9 percent in the corresponding period last year, the note says. Similarly, currency till August 2016 was up 4.7 percent, as against 2.7 percent in April-August 2015 and exposure to equity also seems to be stronger, the note adds. "While GFS is likely to increase further in FY17 – a definite positive development – higher borrowings may keep improvement in NFS limited," the note concludes.

Herd and miss out feelings....

In Investing

Have you heard of the joke about an oil speculator who dies and reaches at the gates of heaven to meet St. Peters? “Heaven is already full of oil speculators. No place left for you,” declares St. Peters.

“I make my own place.” With these words, the oil speculator leans through the gates and yells, “Hey, boys! Oil discovered in Hell.” A stampede of men with picks and shovels duly streams out of Heaven and enter into Hell.

“I guess you do deserve a place in Heaven. Come on in,” an impressed St. Peters waves the speculator through.

“No thanks,” says the speculator. “I’m going to check out that Hell rumour. Maybe there is some truth in it after all.”

That kind of sums up the way Observer Effect plays out in stock market. A famous investor, let’s call him Mr. X, openly talks about his recent investments. Small investors (and sometimes even big ones too) get influenced by this and start buying the stock which results in a jump in stock price, precisely because of increased buying activity. This jump in price will seem to validate Mr. X’s hypothesis. And in short term you see a positive feedback loop reinforcing the stock price. This further reinforces Mr. X’s confidence in his investment and he starts considering buying even more.

It should be obvious to any serious value investor that a stock’s attractiveness rests on its purchase price and if a good business is available at expensive valuation, it ceases to be a good investment. So in this case, just because a good business became visible (to observers i.e., investment crowd) to many, the stock’s attractiveness changed.

In other words, markets can influence the events that they anticipate. George Soros’ theory of reflexivity too is based on Observer Effect. He writes –

When we act as outside observers we can make statements that do or do not correspond to the facts without altering the facts; when we act as participants, our actions alter the situation we seek to understand.

Untill unless the Psychology of People will not change to Positive there is little chance of Growth in the Economy..

I am still o0f the opinion after reading so many books that two things are necessary to move the economy...one is money and the other is Psychology of the Masses..Untill unless the negative  psychology barrier of the masses  is not broken which presently is of fear ...skepticism..doubts ...uncertainty... things cannot move...and so will the economy of the world will lag and starve for growth..still say all this printed money will have its catostrophic effetcs within the next few years from today and mother of all bull market is going to mhit us in the distant future...believe in the Demographs of India and its future unstoppable growth...happy long term investing...

Let us forget about the levels of growth, let us talk about can growth rate move up. Let us talk about what is it that allowed growth in last two years. One of the big factors that drove growth positively in the last two years was this massive positive terms of credit shock that came from this huge decline in commodity prices. Now that is gone. So, you need to look forward to what is going to replace that. So, we have a bit coming out from monsoon, government spending is probably going to struggle given where the fiscal deficit is, so you are not going to get anything out for public investment itself. So, you really have to go back and look at private investment. For the last 4-5 years the private investment has continued to languish and slow and has come to a point where unless that moves up it is very hard to see growth moving up. I am not even going where the level should be. Q: We are still at 70 percent and under 70 percent capacity utilisation. Aziz: That is exactly the point. The point is that what is the reason why private sector is not investing. I would say that apart from the various supply side impediments that the government is addressing through reforms etc, I think the bigger thing is that and it is a global phenomenon, is that there is no visibility of sustained demand which goes back to the growth slowdown story. If there is no demand, as a private sector why would I expand capacity. Q: You think we could end up in disruptive policies if we chased 8 percent? Oganes: The focus should not be in obsessing about targeting a high rate of growth but rather how to get there. How to get there is, there has got to be a re-ignition of private sector investment. There is a lopsided growth dynamics in India right now which is excessively relying on consumption which is product of positive terms of credit shock that is now exhausting itself. There is an attempt by this administration of trying to narrow the fiscal deficit which means that fiscal policy will not be providing the same support to growth that it has up until now as well. So, what is going to replace that? Global trade is weak, so exports maybe they have some room to recover but it is difficult to imagine that, that being the source of growth going forward. So, it has got to be private investment and for that you need more reforms to make private investment more viable, more attractive, more appealing and for the private sector to feel that there is some money making opportunities to be pursued given the reforms.

The Power of Compounding for Long Term Investing....

Investing and Fear of Missing Out...........

“You know I saved 50 rupees today,” declares the husband to his wife as he enters the house in the evening. “And how did you do that?” the surprised wife asks. “I missed the bus and ran behind it all the way from office to home.” The air of pride was palpable in the husband’s voice. “Well, then you should have chased a taxi and saved 200 bucks!” the wife said. And her logic was spot on, wasn’t it? Here is question for you – how much do you think the poor husband saved? Rs 50 or Rs 200? Extending the wife’s argument, the guy could have chased a Limousine and saved Rs 2,000. Do you see the absurdity of the logic? Although it’s a joke but more than that it’s a sarcasm for those who are always worried about missing the taxi? That chronic anxiety about losing something which is either irrelevant or outside your reach is called FOMO or Fear of Missing Out. This has a very strong implication in investing. Let me share my own experience which many of you can relate to. In July 2010 when I first started investing money in the stock market, one of the first books that I read was Peter Lynch’s One Up On Wall Street. I loved his idea of finding businesses based on observing things around us. I love eating Domino’s pizza. So Jubilant Food Works (which owns Domino’s in India) was one of the first few businesses that I started studying. The problem was that I knew nothing about analyzing a business nor did I have any skills in stock valuation. So even though I liked the pizza and Jubilant’s business, I couldn’t figure out if the stock was worth buying for Rs 300 (the price then). So I gave it a pass and kept the cash, which I had earmarked for Jubilant, in a bank fixed deposit. Fast forward to July 2012. My fixed deposit had earned 6 percent (post tax) but Jubilant’s stock was trading at Rs 1,200. It had quadrupled in 2 years. Had I invested Rs 10 lac in it, it would have turned into Rs 40 lac. That was a huge loss of Rs 30 lac, or so I thought. It took me a long time to understand this distinction that Domino’s wasn’t really a missed opportunity. It was never in my circle of competence, for two reasons – (1) I didn’t understand Domino’s business and its valuation in 2010. So buying it would have been an act of speculation. (2) I never had Rs 10 lac to invest in the first place so it wasn’t really a loss of Rs 30 lac. Remember the bus vs. taxi logic I shared above? But the fear of missing out was so strong that I bought Jubilant in July 2012. I still couldn’t tell if the stock was worth Rs 1,200 but I didn’t want to miss my taxi again! Fast forward to July 2014. Jubilant’s stock hadn’t budged an inch. That made me research it further and I learned that a very small percentage of the company’s outstanding shares was owned by retail investors and rest by promoters and large FIIs, who had no plans of selling their stakes. Which means, inspite of being a good business, the price-value gap may not close for a long time. But the point wasn’t that. I had bought the stock for wrong reasons. FOMO was driving my decision. But now I could say that my opportunity cost for owning Jubilant was at least 6 percent. Had I invested my money in fixed deposit, I would have at least earned 6 percent. Fixed deposits are well within my circle of competence. That was my true opportunity cost. FOMO in Investing The lesson is things which are outside our circle of competence aren’t potential opportunities. In other words, missing a 10-bagger (which was outside your circle of competence before it became a 10-bagger) is not the same as missing a 2X opportunity which is inside your circle of competence. As value investors, our circle of competence is finding good businesses run by ethical management and then let our money compound over long term. If someone is making quick and easy money in day trading, derivatives, real estate etc., which is akin to traveling by taxi, it’s not our opportunity cost. So what’s a better option to invest your money? In bank deposits earning 7 percent interest; Mutual funds earning 12-15 percent returns; Investment in fundamentally strong businesses earning 18-20 percent; or Derivatives promising 25-40 percent returns. All things being equal, the last option is a no-brainer. Isn’t it? The answer isn’t as easy as you would hope it was. Because all things are never equal for an investor. Before answering the above question, what’s even more important to know is the certainty of the return in each case. In other words, what’s the risk? Here’s a brilliant insight from Prof. Sanjay Bakshi – Should we reject projects that are within our circle of competence and which promise to deliver a return of 20% p.a. just because some other projects that are outside our circle of competence promise to deliver a higher return, say 25% p.a.? In other words, should we allocate capital based on our own ability to understand the fundamental economics of the project, or should we look over the fence to see what the other fellow is doing, and if he is doing better than us in things we do not understand, should we feel envious and not do something sensible that will, over time, make us rich? So one of the more basic emotion underlying FOMO is envy. It’s human nature to feel envious about the grass which is greener on the other side of the fence. To quote Charlie Munger, who said the following in 2000 – There’s one big truth that the typical investment counselor will have difficulty recognizing but the guy who’s investing his own money ought to have no trouble recognizing: If you’re comfortably rich and you’ve got a way of investing your money that is overwhelmingly likely to keep you comfortably rich and someone else finds some rapidly growing something-or-other and is getting richer a lot faster than you are, that is not a big tragedy. And if you’re not comfortable and don’t understand the fact that somebody else is getting rich faster, so what? How crazy it would be to be made miserable by the fact that someone else is doing better because someone else is always going to be doing better at any human activity you can name. Even Tiger Woods loses a lot of the time. And, on another occasion, he said – Suppose, any one of you knew of a wonderful thing right now that you were overwhelmingly confident- and correctly so- would produce about 12% per annum compounded as far as you could see. Now, if you actually had that available, and by going into it you were forfeiting all opportunities to make money faster- there’re a lot of you who wouldn’t like that. But a lot of you would think, “What the hell do I care if somebody else makes money faster?” There’s always going to be somebody who is making money faster, running the mile faster or what have you. So in a human sense, once you get something that works fine in your life, the idea of caring terribly that somebody else is making money faster strikes me as insane. Apart from envy, Mr. Munger, of course, is referring to the fundamental ignorance of an enormously important mental model from mathematics – the power of long-term compounding. As Prof. Bakshi writes – Even small sums of money, when compounded at a rapid rate over the long term, become enormous, regardless of how much more rapidly, someone else is compounding money. And, if you are competent enough to compound money at a rapid rate, simple arithmetic shows that you’re going to become rich. And if that outcome is virtually certain, then how in the hell does it matter, if someone else got richer than you? Of course, it doesn’t. But try telling that to the capital allocators of the world – corporate boards or investment committees of institutional money managers. Don’t compare your investment performance to some other money making strategy which you don’t understand. Stick to your circle of competence. In spite of knowing this, FOMO remains a powerful motivator. It causes even smart investors to do stupid things. It leads to poor decision making not only in investing but in many other areas of our lives. It is not uncommon for advertising and marketing campaigns to employ the appeal of FOMO. Brands and companies often inform their customers of “can’t miss out” experiences or deals. One very common marketing technique is to include a countdown timer as a way to explicitly show customers how long they have until they miss out on the sale. Like those latest smartphones available online on Wednesday flash sales. Look at the comments people leave on popular e-commerce web sites for such flash sales products. Most people are upset not because of the product or service but because the item went out of stock before they could buy it. FOMO keeps us using social media – “What if I miss that important news story or fall behind what my friends are talking about?” But if we drill down into that fear, we’ll discover that it’s unbounded. We’ll always miss something important at any point when we stop using something. Living moment to moment with the fear of missing something isn’t how we’re built to live. And it’s amazing how quickly, once we let go of that fear, we wake up from the illusion.

Dec CPI reading likely to be sub-4%: SBI Research......

"Our recent projections indicate that December 2016 CPI reading will be sub-4 percent while at least 4-5 readings in FY17 will be sub 4.5 per cent," SBI Research said in its Ecowrap report. The decline in inflation trajectory is expected to be driven by several factors like fall in pulse prices, projection of above normal monsoon, among others. "From historical data, it can be inferred that there is a clear downside of at least 60 basis points to headline CPI numbers over the medium-term," the report said, adding that this alone will pull down CPI to sub-4.5 percent. The distribution of core CPI over the last 20 months indicates a nicely shaped Bell curve, with mean CPI at 4.5 percent, it added.
On RBI's monetary policy stance, the report said the Central Bank is expected to go for a 50 basis points cut in key policy rates this fiscal. "We are still maintaining a 50 bps repo rate cut in FY17, though we believe RBI may go more aggressive on liquidity for rate transmission in Q2FY17," it said.

New People asking me Investment tips...

in recent days i got phone calls from 2 people for tips to invest in the stock markets...one person called me after 6 years to ask for tips as he came to know about my newly developed skills in stock market which is still 1 %....there we are now...new people now want to start investing in the stock market...so we are entering the stage of cautiously optimistic phase...the anxiety to invest and earn in the stock market is now started going up.. the left out feeling has started to be felt by the people awaiting on the sidelines...but one note of caution to all the investors...invest like a monkey which sholud grow to a gorilla and then finally to become King Kong...so all your investments in the long term should grow to King Kong size...

Tectonic shit of money from bonds to equity ....

today in the rest of the world because of liquidity overflow and helicopter money if you keep your money in banks you are getting negative returns...but still this money has not found its way to capital allocation and investment in other assests...but slowly gradually money have started flowing to the equity markets throughout the world...and finally this flush of liquidity will finally flow to capital expenditure and other assets...but note because of the negative psychology prevailing in the world as investments are concerned it might take another 2 years to see results on the ground level where round the year the world economy will start kicking and rolling...but one has to be patient till that time...one still not understand where has all these printed money disappeared...note it is there in the system which will come out once the fear factor evaporates and the people psychology is gone and the environment is conducive for capital investments...it will happen and for sure it will happen...right now the water is getting accumulated in the river and in the Dam/resorvoiuor...slowly slowly the water level will reach to overflow levels and the water will start overflowing from the top of the dam...so today in the world water is getting accumulated and in the next few years with so much liquidity getting infused the world will start overflowing with cash and that is the time to get out of all your investments...but before that let the world get overflowed will cash and liquidity and allow the printed cash to play its destructive characteristics after everything has bubbled...

Nifty and Sensex eps.....

Research firms possibly use complex models to forecast earnings growth, price/earnings ratios and other market-driving factors. However, the cold calculations of a model are frequently overridden by a very rosy view, which inevitably leads to a downgrade of their estimates, when reality strikes. This is the pattern every year, in every country. But the farce goes on.

A few brokerages are now expecting the Nifty earnings per share (EPS) to grow by over 20% in FY17 and about 18% in FY18. How realistic are these growth figures? Analysts at Prabhudas Lilladher, a Mumbai-based stock broking firm, expect the Nifty EPS to grow to Rs459.1 by FY17 and Rs543.3 by FY18. This translates in to a growth of as a high as 23.9% in FY17 and 18.3% in FY18. Similarly, Edelweiss Research estimates the Nifty EPS to be at Rs483 in FY17 and Rs572 in FY18, which translates to a growth of 31% and 18% respectively.

Recently, brokerage firm Motilal Oswal Securities said that they have revised their FY17 and FY18E Sensex EPS downwards by 1.7% to Rs1,493 and 0.9% to Rs1,854 respectively, from March 2016. They expect the Sensex EPS to post 12.3% growth in FY17 and 24.2% growth in FY18. Clearly, of the three, Edelweiss is the most optimistic, while Motilal Oswal Securities has moderate expectations for FY17, but expects earnings to grow faster in FY18.

Prabhudas Lilladher explains that the stronger growth of FY17 is more on the back of de-growth in FY16 as well as the large provisioning of banks in last two quarters of FY16. They expect banks, automobiles, engineering & power and cement to lead the growth in FY17. For the June 2016 quarter, Edelweiss states that the top line and net profit of Nifty companies are estimated to grow 3% and 2% Y-o-Y, respectively. “The profit growth is indeed lower than our and consensus full year EPS estimate of 20% and hence there are chances of earnings downgrade,” they admit.

Over the past six years, the Nifty EPS’s peak growth has been 18% on a year-on-year basis. Moving out from an earnings de-growth as seen in FY16, to a growth of 20%+ in FY17 maybe overly optimistic. At 8,514 as on 22 July 2016, the Nifty P/E is at 23.43, which translates to an EPS of Rs364.54, lower than the EPS of Rs370.4 reported in March 2016.

A growth of 20% will put the Nifty EPS at Rs444. Assuming the P/E of the Nifty to be at around 21, (the same level as on 31 March 2016), the Nifty will be at around 9,300, up about 9-10% from the current level of 8,500 as on 22 July 2016. But as we mentioned earlier, a growth estimate of 20%+ is too optimistic.

Let’s assume the earnings to grow by a moderate 12% as suggested by Motilal Oswal. This will put the Nifty EPS at Rs415 in FY17. At a P/E of 21, the Nifty index will be around 8,700. This means that the Nifty will move up about 2% from the current level. In other words, Nifty future growth is probably discounted at the current level. A slight disappointment can push the market lower while a huge EPS growth would be needed to push the market much higher.

FOR ANY ECONOMY TO COME OUT OF RECESSION MONEY HAS TO BE PRINTED AND CIRCULATED...

recently was listening to few experts and came to know for any economy to come out of deflation... recession...stagflation...new money has to be printed and pumped in to the economy.. otherwise how can a economy come out of recession...depression...so all these false propoganda by this as holes..so called experts is just to divert our mind from the actual facts and realities that in near future the economy will go up because of new flush of money in the system...suppose if you are admitted in a hospital to get operated...the first thing is required is money to be deposited for the operation...no money no operation...now suppose i am your friend and have the power to print money and print few lakhs of rupees and give it to you for your operation...so is it good for you to accept the money and get operated and survive...definitely..you will accept the money and want to survive..so is what is been done by the central banks round the world...till they print and till the dtae hyper inflation is created between that time you make your money in all the assests by being invested and at the signs of first trouble get out with all the money you made...which is what Vijay Mallaya did...get out of india at the sign of first trouble...now whatevet happens thereafter good or bad is a different story..so after making money you get out of your investments and invest your money is Bond which are safe...but before that let this liquidity infusion by all the central banks of the world be played out by sky rocketing stock market highs....bubble in commercial properties....etc...

Bond prices soar: New 10-year yields may fall below 7%

THE G-SEC IN 2008 WAS 9.15...THEN WENT DOWN TO 5.25
THE G-SEC IN 2013 WAS 9.10...RIGHT NOW IT IS @ 7.10
MY PREDICTION IS BY 2018 THIS G-SEC HAS TO GO BELOW 6%..AND THEREAFTER THE ECONOMY ON THE GROUND LEVEL WILL START ZOOMING....MONEY...MONEY...BUT BEFORE THAT STOCK MARKETS WILL BE CLIMBING NEW DIZZY LIFETIME HIGHS....

Mumbai: India's benchmark bond yields are set to breach the 7 per cent mark for the first time since 2009 when the government sells 10-year bonds which would become the new benchmark for traders. 

With the demand for Indian fixed income papers soaring due to high yield differential with the developed world, or even with other developing markets, prices could rise further, said traders. Bond prices and yields move in opposite direction 
"The new benchmark paper is expected to yield at sub-7 per cent level," said Piyush Wadhwa, head of trading, financial markets group, at IDFC Bank."Traders will be interested to buy those while investors will be more inclined to the existing benchmark that offers higher rates." 

The government is scheduled to sell Rs 8,000 crore worth of bonds that would mature in 2026 as part of its sale of Rs 14,000 crore of bond sale slated for September 2. In Indian bond market, government bonds that mature in 10-years are the most traded. Although many bonds would be maturing, in cluding the one that is currently traded as benchmark, traders take a fancy for the one that is newly sold for reasons that few are able to explain. The latest 10-year bonds are termed Rs on the run' and those which have been benchmark but would fade away once the new one comes in, are known as Rs off the run.' Although both sets of bonds would ma ture in the same year, they tend to trade at different yields. 
The benchmark yield on Tuesday fell two basis points to close 7.11 per cent, six basis points lower than the level seen last week when some jittery inves tors rushed to exit position after the government appointed Urjit Patel as the new RBI governor.
"Long-term in vestors are expected to build up G-sec positions as the net supply in the second half of the year may be constrained due to purchases by the RBI from open market," said Badrish Kulhalli, fund manager, fixed income, at HDFC Life Insurance. "As per current expectations, the new 10 year bond is likely to set a coupon be tween 6.95 and 7 per cent." 

NPAs nearly doubled to 8.5% in Q1: Report

The banking system's gross NPAs shot up to 8.5 percent by the June quarter, as against 4.6 percent a year ago. The spike was largely due to the doubling of NPAs at public sector banks to 10.4 percent compared to 5.3 percent in June 2015.
The banking sector's non-performing assets (NPA) almost doubled to 8.5 percent in the first quarter of this fiscal, driven by surging bad assets of state-run lenders, Care Ratings said. The banking system's gross NPAs shot up to 8.5 percent by the June quarter, as against 4.6 percent a year ago. The spike was largely due to the doubling of NPAs at public sector banks to 10.4 percent compared to 5.3 percent in June 2015. However, the rating agency did not quantify the bad loans in absolute terms. Private sector lenders witnessed their NPA ratio increasing to 3 percent from 2.1 percent a year ago, it added. "The state-run banks have been under pressure to identify and provide for their NPAs, which could last for another one to two quarters," the agency said, adding the high NPAs and consequent provisioning is an "area of concern" that will impact their profitability going forward. Many state-run lenders reported net losses in the June quarter, with market leader SBI turning in a 32 percent drop in net income, while private sector banks' net collectively fell just 2.6 percent. The agency said given the government's plan to raise money by offloading stakes in banks, profit is an important issue. "High NPAs and low profitability would not augur well if the government is working towards lowering its stake in these banks to 51 percent," it said. However, it termed the recognition of NPAs as a positive step in the long term as higher provisioning makes the state-run lenders better prepared to face the market.

A complete insight why stock market will go up....

I completely believe 100% what this person says...but still our retail investors lack total confidence in investment in the Indian stock market.... Please listen to the person very carefully...Also the best thing what he told is invest in companies which will earn for you DAY AND NIGHT..24 HOURS A DAY..IN WINTER, SUMMER AND IN RAINS..The idea here is to invest in sound monopolistic market leader pricing power companies..

https://youtu.be/74QnI2N6kc8

Purchased bank of india

Before I start... purchased 400 shares of bank of India at 112/- totally against my investing style and my investment discipline....so please note I do not recommend to buy as per fundamental view... somehow the power of reflexive brain was so powerful that it got the better of my reflective brain and made me take the decision to buy the bank of India shares intitutively... Also the technical analysis always exerts a greed in me and upteem number of times have made me take foolish steps without thinking twice..it immediately ignites my reflexive brain and I compulsorily i am forced to take action...so this purchase was based more on the technical analysis basis and to some extend on psychology.... Today no one wants to invest in PSUs banks and they are definitely right about their decision of avoiding investing in the PSUs banks...but note I feel that bank of India has bottomed out technically and it is the right price to buy today...I mean the risk reward ratio today for bank of India is very good for long term investing...also they have been very sincere in disclosing their Npas and taking losses on their results...cleaning up their books which is a good sign for the bank.... Note anyways I not recommending anyone to buy bank of India..... Please invest as per what your financial advisor tells you...happy Independence Day.....

Bank Npas are nearing its bottom

Mostly the psu banks Npas are nearing its top..I mean all the bad news about npas are being discounted and factored...today the average Gnpas of psu banks are around 11% to 12% and the Npas are around 9%...but if you have noticed the RBI is hell bound to clear the banking system of NPAs... The Npas are topping out can be clear visible by many factors.. Firstly almost all the PSUs banks have shown Huge quarterly losses and a very high provisions for npas.. This type of bad quarterly results will be continued for the next few quarters... But most important thing is that structural changes have been happening in the banking sector...thanks to dr Rajan...believe it or not one year of more pain in the PSUs banks and the scenario will change drastically for the banking sector...also Rajan in one of his interview said that the PSUs banking sector will change completely after two years time...secondly the Indian government is infusing money in the PSUs banks to revive them...also the government is infusing money in the PSUs banks on performance basis...ie reduce the npas and get your act together and take the money to revive the bank...excellent...giving money to bank is on performance basis...thirdly the interest from these levels will go southwards as the clues are easily visible from g sec 10years interest rates which will revive all the businesses and give a new life to the corporates who are heavily burden...off course all this will take time but the course is set for the revival of the banking sector...