Monday, January 28, 2008

Wait and Watch

Stock markets are know for volatility. But not something like what we have witnessed last week. In this kind of situation, it is always better to wait and watch.

Don't press the panic button yet. Hold on to the stocks, because this is the long awaited correction period that is being due for the last 2 months.

In fact this is a good time to buy some of the stocks. Some small and midcap stocks are available on discount at the moment. Some are extremely attractive.

This volatility could last for at least couple of weeks more.

Tuesday will be a big day for the market. RBI's quarterly review of credit policy is to be announced on Tuesday. There are rumours of a reduction in the benchmark interest rates (repo rate) by 25 basis points. But lots of other factors will also influence RBI decision.

However a rate cut will clear a lot of uncertainty prevailing in the market. So wait for Tuesday's RBI decision.

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Monday, January 07, 2008

Indian Power Sector IPOs – 2008 and beyond

Year 2008 will be most likely a year of the power sector IPOs in India. The 11th plan period (2007-2012) has set an ambitious target of achieving 78,577 MW by the government of India.

The capacity addition target has been set with a perspective of adding 100,000 MW by 2012, which will take India's total installed capacity to 200,000 MW.

Unlike the last plan period, Indian private sector is going to play a major role in the 11th plan to meet the ambitious target set by the government. No wonder almost all power companies are contemplating the idea of initial public offerings to raise money for this capital intensive sector.

With economy tipping near the 10 percent growth rate and BSE SENSEX on record high, the timing is not bad at all.

If one take a quick look at the power sector companies that have already announced or planning with IPOs for 2008, he will be speechless.

From Reliance Power to Sterlite Energy to JSW Energy to JP Associates, the list is long and all these companies are going ahead with their plans for IPOs this year. The total capital these companies are planning to raise from the market is whopping Rs 30,000 crore (US$ 7.69 billion).

If all these plans fructify, this year's power IPO collections alone will match last year's total IPO mobilisations of Rs 34,000 crore (US$ 8.71 billion).

With economy growing at full throttle and power in short supply, this sector will be the next big thing to watch for in the coming years.

Surely I will bet some 20% to 25% of my investments in this sector in the medium to long term.

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