SENSEX-CLOSES AT A ALL TIME HIGH

Today the Sensex closed at a all time high.What does this mean for an average retail investor?-Nothing in my view.Does this give u the impression that we are an in a secular bull market from the lows of June 2006.The answer is a big NO.If u are to look at an portfolio of most of the investors it would show a depreciation from the levels of May 2006.It goes to show that every new upward movement in the market will have its favorites.What does the ordinary investor do? The solution is to simply buy into a company and wait for the company to deliver consistently and the market to recognise the true value of the company.

I am reminded of two stocks in the market which make this grade consistently.They are HDFC and HDFC Bank.Excellent Management,good steady business and participating directly in the India growth Story.Year on Year the company delivers good set of numbers and the enterprise value of both companies keep rising year on year.These sort of companies withstand the downturns in the market much better than any of their competitors.

So invest in a great management,good business and simply wait it out.The returns will happen on its own.

As one of the greatest investors in modern times said

"Investment is one of the most boring exercises that an individual can do".

WISHING YOU ALL A VERY HAPPY DIWALI AND A PROSPEROUS NEW YEAR.

3i INFOTECH-INTERESTING IT PLAY

3i Infotech promoted by the ICICI group is a interesting mid cap IT player.It is both a products as well as a services company.It is involved in Banking,Manufacturing,Retail and Insurance verticals.Products and services approximately contribute equal amount to the turnover.The company has an interesting portfolio of products in the areas of Banking,Insurance,Anti-Money laundering areas (remember for this product I Flex recently bought a US company for Rs.2000 crores).

The company has given a guidance for a growth of 25-30% for this financial year.For the current year the company will end up with a turnover in excess of Rs.500 crores and a eps of Rs.13 to Rs.14 Rupees.On the current price of Rs.185 the share is traded at a p/e of 14 times forward.Assuming a conservative growth rate of 20% for the next two years the share looks undervalued.

Product companies typically get higher valuation than the services ones of intelluctual property value enshrined in the company.Good parentage,steady growth shown by the company,reasonable valuations and a good outlook for technology makes this company attractive for investment with a 3-5 year perspective.

YES BANK-SAY YES TO THIS

This recently started private sector bank has been promoted by Shri.Ashok and Rana Kapoor.The Bank has no legacy systems (no past baggage!) so it created a totally differentiated model in the Banking Industry.The bank has focussed on fee based business and in sunrise sectors or sectors with least banking penetration like Food & Agriculture,Retail and private wealth management solution where it is bringing in significant expertise to build viable income streams for itself.The bank has started with cutting edge technology platforms which will deliver excellent service to its customers and also in a way negate the lack of a huge physical branch network to bring in more business.

Within an year of operations it has been ranked 105th most private sector company and the 7th most valuable bank in India by Business today.The Management Vision is to build one of the "World's Best Quality Bank in India".With a Solid Management team that is available with the bank the company is surely on its way to achieve its ambition.

For the year ended March 07 the bank is expected to post a eps of Rs.2.5-Rs.3 which on the current price of Rs.100 gives a P/E of 30-35.This may look expensive however the bank is growing on a small base so growth rates of 30% plus in the next two years is easily achievable.

Buy on all declines with a holding period of 3-5 years.Expected return 25-30% CAGR(compounded annually).

CLARIANT-THE RIGHT CHEMICAL MIX FOR SOLID GAINS

Clariant Chemicals (India) Ltd is a MNC in the business of pigments,Leather chenicals,Textile chemicals,speciality chemicals and other agri intermediates.Recently the company merged Vanavil Dyes,Clariant India and two other companies to form this company.The company is a global leader in most of the products it is involved in.

For the quarter ended June 06 the company recorded a turnover of Rs.230 Crores and a net profit of Rs.15 crores on a equity of Rs.27 crores giving it an eps of Rs.5.5 (not annualised).The company is a zero debt company.Post the merger the company is expected to scale up its operation and also derive down costs due to synnergies in operation.

On an annualised Earnings of Rs.20 the company is today traded at 15 times (current price is Rs.300) which is cheap considering the growth plans and the leadership status of it business.Moreover the chemical outsourcing business is yet to pick pace in India which will happen rapidly over the next few years.The company has a excellent track record of distributing dividends to it shareholders.The parent company holds close to 64% in the Indian company.Buy for long terms gains.