Monsoon led fall

Today's market, everyone says, fell cos of the monsoon.
Another reason could be the weak world markets which are awaiting US job data on Friday.

Mahindra - largest tractor manufacturer also fell today. Companies like Bajaj, Bharti and Maruti, which were betting on rising rural demand fell.

The monsoons also add a risk to economic growth and keeping inflation within limits. Kotak has downgraded the GDP growth target from 6.5 to 4.8%.

Bad monsoon

How does a bad monsoon affect a investor like you and me?

• Are you holding businesses which cater to agri business? This directly affects you. eg. Aries agro, Kaveri seeds, Monsanto, Bayer. edible oil companies like Marico or Ruchi soya, partially ITC and HUL. Bad monsoon is a negative for most of these companies.
• What about fertilizers? Fertilizers will be lesser in demand during bad monsoons and probably bought lesser in the season following as farmers may not have cash in hand. examples are Chambal, nagarjuna, GSFC, Madras fertilizers, RCF, Zuari
• Sugar companies like Balrampur, bajaj hindustan, Sakthi, Triveni engg tend to fall as sugarcane is in short supply.
• FMCG and white goods companies face pressure as demand for them comes down due to lesser money flow in rural areas.
• Auto industries, jewllery and many other industries see lesser demand from rural areas in years of bad monsoons.

More than all these concerns, the short term direction of the market, may go up or down in a bad monsoon. This really depends on the world markets and other macro-economic data. Sometimes, the markets expect the bad news from monsoons to be offset by urban areas. Though the current trend is positive, watch out for the earnings in these companies. These may perform to a lesser extent compared to ones that have better earnings visibility.

The bad monsoons may result in higher inflation as the food prices would rise. The GDP growth rate also suffers as India is very much dependent on agricultural income. So, overall this is a negative for all stocks as well.

NHPC IPO

IPO opens today, ends on August 12th.
price band is from 30 to 36.
Total issue size is 5K06K crore.

Chances of you getting some shares is rare until you apply for the full lot. It is in great demand and as any PSU IPO's have done, this would also be in short supply. The PSU IPO's are also priced on the lower side compared to most private companies. Most Indian brokerage houses do recommend this IPO. Some feel NTPC and powergrid are better power PSU plays.

The price at which NHPC may list may really depend on market levels at the time of listing. NHPC would list at a premium of Rs. 10 (i.e at 46) if market sustains 4650 level. Below 4500, NHPC may at or below issue price.

US Jobless claims down, but markets are waiting for Friday

Markets are awaiting the employment numbers for July. These are expected to be out on friday (Aug 7th). So, US markets are in red. Most feel that this is not the end of the rally. The markets are junst in wait-n-watch mode. Things will get back to bullish ways once everyone is assured that the recession is ending.
Indian markets may open down today as well, but do not short till the end as market end may depend on how European markets open. And this in turn depends on the ECB and BoE interest rate decisions.