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MAKE MORE-WEEKLY 09.06.08 (A Weekly Stock Market Newsletter BY MANSUKH SECURITIES & FINANCE

LIMITED)

Markets crumbles on fuel price hike,inflation

The S&P CNX Nifty fell 242.3 points or 4.97% to 4627.80 in the week. The marketdeclined sharply as a hike in fuel prices by about 10% announced by the Uniongovernment on Wednesday, 4 June 2008, triggered possibility of a surge in inflation todouble digit level. The BSE Sensex declined 843.39 points or 5.14% to 15,572.18 in the

week ended 6 June 2008. The BSE Mid-Cap index fell 410.39 points or 6.07% to6,350.15. The BSE Small-Cap index slumped 436.99 points or 5.37% to 7,696.05.

The government on Wednesday, 4 June 2008, raised petrol by Rs 5 a litre and dieselprice by Rs 3 a litre in an attempt to curb mounting losses of state-owned refinersthereby stoking inflation. The wholesale price index rose 8.24% in the 12 months to 24May 2008, above the previous week's annual rise of 8.1%, government data released on6 June 2008 showed. The reading was the highest since 28 August 2004, when it stoodat 8.74%. Inflation for the week ended 29 March 2008 was revised upwards to 7.75%from 7.41%.

India's largest state-run oil exploration firm in terms of revenue Oil and Natural GasCorporation (ONGC) jumped 8.58% to Rs 938.50 in the week. The stock spiraled higherafter Union government on Wednesday, 4 June 2008, halved the state-owned upstreamcompanys subsidy burden in fiscal 2009.

India's largest private sector firm by market capitalization and oil refiner RelianceIndustries slipped 6.76% to Rs 2239.35. India's largest private sector bank by assetsICICI Bank fell 2.21% to 770.85.

India's largest wind turbine maker by sales Suzlon Energy rose 1.06% to Rs 280.20.The firm said it signed a share purchase agreement with Areva for acquisition of latter'stotal stake of approximately 30% in REpower Systems AG, Germany. This acquisition

will consolidate Suzlon's total holding in REpower to around 66%, the company said ina statement to the Bombay Stock Exchange on Friday, 6 June 2008. 2007.

Mumbai-based large-cap natural gas and oil exploration firm Cairn India rose 0.21% toRs 286.25. The firm was awarded a licence by Sri Lanka to explore for oil & gas in theMannar basin. Spicejet surged 10.62% to Rs 35.95. Anil Dhirubhai Ambani Group isreportedly in talks to acquire the Gurgaon-based small-cap low-fare carrier.

Back-office firm HOV Services soared 18.05% to Rs 100.40. The firm received an offer of$202 million for sale of its HOV Services LLC subsidiary and its Honk Kong unit. Thepayment will be made in a mix of cash and stock.

Foreign institutional investors (FIIs) sold shares worth Rs 3291.20 crore so far in themonth of June 2008. They sold shares worth Rs 18660.60 crore in calendar year 2008,till 5 June 2008. Domestic funds sold shares worth Rs 144.20 crore in the month of

June 2008, till 4 June 2008.

.

Editorial

News round up

Technical picksFundamental picks.

Mutual funds

Global Snapshot

Personal Finance

SENSEX constituents

fundamentals.Classroom


2/10

NEWS ROUND UP

BSE ANNOUNCEMENT:

Oil & Natural Gas Corporation to announce financial results Board meeting on 25 June2008 The board meeting of Oil & Natural Gas Corporation will be held on 25 June 2008to approve the audited financial results for the quarter and year ended 31 March 2008and to recommend final dividend, if any

Pidilite Industries appoints additional director On the board The board of PidiliteIndustries has appointed Bharat Puri as additional director of the company with effectfrom 28 May 2008.This was decided at the board meeting held on 28 May 2008

Rajshree Sugars & Chemicals to anounce financial results Board meeting on 19 June2008 The board meeting of Rajshree Sugars & Chemicals will be held on 19 June 2008to consider the audited financial results of the company for the year ended 31 March2008 and final dividend, if any.

NSE ANNOUNCEMENT:

Acc Limited has informed the Exchange regarding a media release dated June 04, 2008,titled Cement Production and Despatches in May 2008

Advani Hotels & Resorts (India) Limited has informed the Exchange that the appeal filedby the Company and the Promoters before the Securities Appellate Tribunal, has beenscheduled for hearing on June 10, 2008.

Abb Limited has submitted to the Exchange a copy of the proceedings of the AnnualGeneral Meeting of the Company held on June 03, 2008.

Advani Hotels & Resorts (India) Limited has informed the Exchange that the appeal filedby the Company and the Promoters before the Securities Appellate Tribunal, has beenscheduled for hearing on June 10, 2008.

CORPORATE ANNOUNCEMENT:

Pursuant to Regulation 13(6) of the SEBI (Prohibition of Insider Trading ) Regulations,1992, the company has informed that Dr.Richard Helmut Rupp an Additional Director isholding NIL equity shares of the company as on 27.05.2008 (i.e. date of assuming officeas Director).

With reference to the earlier announcement dated April 03, 2008, SRF Ltd has informedBSE that the remaining 3 Wind turbine Generators for a capacity of 4.65 MW have beencommissioned. With this the entire project of 13.95 Mw of wind power has beencommissioned in Tamil Nadu. The project will generate wind energy to be used forcaptive purpose.

Wipro Ltd has informed BSE that Administrative Committee of the Company's Board ofDirectors vide their resolution dated June 04, 2008 resolved to issue and allot 20280equity shares of Rs 2/- each pursuant to exercise of the stock options by the eligibleemployees under the Wipro Employee Stock Options Plan i.e. WESOP 2000 andRestricted Stock Unit Plan 2004.

Jai Corp Ltd has informed BSE that the Board has accepted the resignation of Shri.Virendra Jain as the Managing Director of the Company with effect from June 04, 2008.However, Shri. Virendra Jain will continue to remain on the Board as a Non-executiveDirector and has been appointed as the Vice Chairman of the Board of Directors. TheBoard of Directors in their meeting held on June 04, 2008, have appointed Shri. Gaurav

Sensex


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Jain, as the Managing Director of the Company with effect from June 04, 2008, subject tothe approval of the shareholders.

TECHNICAL PICKS

BSE-SENSEX:

MANSUKHs VIEW: SENSEX is looking to weaken further under immense bear

pressure which can push it to 15000 level. Below this level 14700 level wont besurprising at all.RSI and MACD with negative crossovers lend support to our bearishprognosis of the index.

ADITYA_BIRLA_NUVO:

MANSUKHs VIEW: ADITYA BIRLA NUVO is looking to test lower levels in not so conduciveeconomic environment characterized by high inflation,fears of CRR hike and hiked petroleumprices. MACD and RSI are looking highly bearish.1200 level can be seen. Remain short.


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FUNDAMENTAL ANALYSIS

SINTEX INDUSTRIES LTD.

ANSUKHs VIEW: SINTEX INDUSTRIES LTD. is one of the leading providers of plastic products and niche structured yad textiles-related products in India. Sintex manufactures a range of plastic products at its eight manufacturing facilities across India, whudes prefabricated structures, industrial custom molding products, monolithic construction, and water storage tanks. Inaddition, through ious subsidiaries, Sintex controls 22 manufacturing plants around the world and has access to worldwide clients. Sintexs textile divisiuses on niche products andcaters to premium fashion industry selling directly to top design houses of Europe. The textiles division is locat

Kalol.tex has a dominant position in the fast-growing processed plastics (composites) segment in India. It has also built a significant presenceUS and Europe by leveraging its core knowledge of materials and plastic composites. This segment has witnessed a sales CAGR

%over the past three years (48% underlying growth) and accounts for 85% of sales (FY2008). We estimate that the segment will grow0% for the next two years and will account for 90% of revenues (FY2010E). India is underpenetrated in terms of plastics usage with currestic usage at 5 kg per capita compared with the global average of about 120 kg (Asian average of 25 kg), clearly indicating further room netration as innovative products are introduced locally.tex has also exhibited a strong ability to identify and execute on acquisition targets in the plastic segment (custom molding) in the recent paS$121 mn spent to acquire US$263 mn of sales . These acquisitions have enabled the company to leverage its core competency in materiduction to foray into other higher-margin products and geographies as well as helped add manufacturing capacity located closertomers.Sintexs textile business (11% of FY2009E sales) focuses on manufacturing high-end mens structured shirting fabrics. The compure of the manufacturing know-how for these fabrics has enabled Sintex to maintain its robust growth in the segment and protected it froy margin squeeze despite the rupee appreciation. Sintex manufactures fabrics for both foreign design houses (Canclini in Italy sources abo

mn meters annually from Sintex) and for top garment sellers in India (such as Zodiac, Wills, Arrow, etc.).tex will fund the high growth that the company is currently witnessing. It has raised US$150 mn through a qualified institutional placemeP) issue and another US$150 mn through promoter warrants (US$30 mn already subscribed). A majority of these funds are being invest

o the high growth monolithic construction business (Rs400 mn into equipment, and the rest into working capital) and prefabs (doubling tacity of 3 existing plants). Sintex trades at a one-year forward P/E of 16.9X and EV/EBITDA of 9.5X. Goldman Sachs believes that stock h

ential to become 1.8X-2.2X (80%-120% return) on a two-year horizon and has set price target of Rs664.Long term investors can buy into thnter.

Sintex Industries LtdFinancial Performance (Rs Cr) Latest Results (Rs Cr)

Year End 200703

200603

200503

200403

200303

Period-Ended 200803 200703Var. (%)

Equity 22.19 19.73 18.48 14.56 14.56 Sales 647.38 364.88 77.42

Networth 650.87 449.46 507.19 351.98

349.79

Other Income 17.5 7.98 119.30

Enterprise Value 2643.41

2442.5 1047.15

439.43

281.82

PBIDT 147.54 84.62 74.36

Capital Employed 1329.13

1032.12

845.6 650.55

615.12

PBDT 134.19 71.94 86.53

Gross Block 881.85 677.18 669.42 629.51

492.12

PBIT 134.47 73.76 82.31

Sales 1212.8 913.98 715.16 580.78

491.15

PBT 121.12 61.08 98.30

Other Income 26.69 29.79 10.53 13.84 7.04 RPAT 88.4 53.7 64.62

PBIDT 243.99 174.51 123.71 103.17

86.94 EPAT 0 0 NA

PBDT 203 145.42 98.86 71.85 56.51 APAT 88.4 53.7 64.62PBIT 202.52 143.38 95.46 80.54 64.87 CP 101.47 64.56 57.17PBT 161.53 114.29 70.61 49.22 34.44Shareholding PatternRPAT 130.58 92.01 53.91 33.82 23.95 (AS ON 31 Mar 2008) Shares (%)APAT 129.38 79.21 53.95 33.7 23.03 Foreign 57341605 42.01

CP 172.05 123.14 82.16 56.45 46.02 Institutions 21105061 15.46Rev. Earnings inFE

35.89 30.02 27.29 48.67 9.84 Govt Holding 0 0

Rev. Expenses inFE

11.76 15.41 17.81 14 14.87 Non Promoter Corp. Hold. 9087366 6.66

Book Value (Rs) 58.66 45.56 274.45 241.74

240.24

Promoters 39787195 29.15

EPS (Rs.) 11.61 9.2 28.65 21.86 14.77 Public & Others 9174206 6.72Dividend (%) 48 44 40 30 20 Totals 136495433 100Payout (%) 8.35 9.76 13.96 13.73 13.53Share Price Graph

Ratio Analysis

Debt-Equity 1.15 0.96 0.74 0.77 0.66Current Ratio 1.7 1.52 1.14 1.12 1.32Invtry Turnover 10.46 9.46 7.85 7.47 6.95

Debtors Turnover 6.67 6.12 5.42 5.03 5.09Interest Cover 4.94 4.39 3.84 2.57 2.13PBIDTM (%) 20.12 17.37 17.3 17.76 17.7PBDTM (%) 16.74 14.19 13.82 12.37 11.51APATM (%) 10.77 8.67 7.54 5.82 4.88

ROCE (%) 17.19 13.67 12.84 12.79 11.08


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MUTUAL FUND ---BEST FUNDS TO BUY

Top Performers for the Quarter Ended 6th June 2008

Category SchemeQrtly Return

%Annual Return

%

Open-Ended

FOF DSP Merrill Lynch World Gold Fund -8.96 NA

ETF Quantum Gold Fund -4.80 NA

Arbitrage Fund HDFC Arbitrage Fund - Wholesale 1.60 NA

ETF KOTAK PSU BANK ETF -19.47 NA

Equity-Derivative JM Arbitrage Advantage Fund 1.62 8.64

Equity-Diversified Principal Global Opportunities Fund 10.95 19.35

Equity-ELSS Libra Taxshield 96 0.28 34.99

Equity-Index LICMF Index Fund - Sensex Plan 0.30 8.00

FOF ING Global Real Estate Fund 16.36 NA

Sectoral-Auto UTI Transportation and Logistics Fund -7.94 -17.76

Sectoral-Bank Reliance Banking Fund -10.33 15.09

Sectoral-Basic UTI Petro Fund -8.62 -11.24

Sectoral-FMCGSBI Magnum Sector Funds Umbrella -FMCG Fund

6.14 13.34

Sectoral-Healthcare J M Healthcare Sector Fund 11.34 3.41

Sectoral-InfrastructureICICI Prudential Infrastructure Fund -Institutional Option - I

-4.68 NA

Sectoral-Media andEntertainment

Reliance Media and Entertainment Fund -11.94 -8.51

Sectoral-Pharma UTI Pharma and Healthcare Fund 10.87 1.90

Sectoral-Power Reliance Diversified Power Sector Fund -5.50 45.96

Sectoral-Services Tata Service Industries Fund -4.57 -8.61

Sectoral-TMT Franklin Infotech Fund 22.08 -13.06

FOF DWS Global Thematic Offshore Fund 14.38 NA

Gilt Canara Robeco Gilt PGS 2.19 10.95

Income Franklin India International Fund 5.48 10.79

LiquidDBS Chola Liquid Fund - SuperInstitutional

13.13 13.52

Liquid - PlusDWS Money Plus Advantage Fund -Institutional

1.68 NA

MIP DBS Chola Monthly Income Plan - Regular 3.02 26.88Balanced ICICI Prudential Blended Plan A 1.67 8.84

FOF FT India Dynamic PE Ratio Fund of Funds -0.42 14.64

MANSUKH BEST MF PICKS METHODOLOGYMansukh mutual fund Best Picks is based on the corpus of the scheme and relative performance of thescheme within its peer group weighted by:

The performance over 5 time horizons, with the maximum weightage given to its one-yearperformance.

The consistency of its performance.

Relative age of the scheme.


6/10

MANSUKH RESEARCH

CRUDE RALLIES TO US$138 ON WEAK DOLLAR,POOR DATA

ude oil surged more than $10 a barrel to a record as the dollar weakened after the U.S. unemploymete grew the most in two decades and Morgan Stanley said prices may reach $150 within a month. Oay ``spike'' because ``Asia is taking an unprecedented share'' of Middle East exports, Morgan Stanlalyst Ole Slorer wrote. The dollar weakened against the euro after unemployment rose to 5.5 percen

gnaling the Federal Reserve may be reluctant to increase interest rates. Oil also rose after an Isranister said an attack on Iran may be necessary. Oil is ``being used as a hedge by speculative buyers foe weakened dollar,'' said Gary Adams, vice chairman of oil and gas consulting at Deloitte & Touche LHouston. ``We are seeing that the price will continue to go up as investors look for alternatives.''

ude oil for July delivery rose $10.75, or 8.4 percent, to settle at $138.54 a barrel at 2:48 p.m. on thw York Mercantile Exchange. Today's increase was the biggest gain in dollar terms ever and the largea percentage basis since June 1996. Oil rose $11.33 to an all-time high $139.12 a barrel durin

ading.

idays rise was bigger than the entire price of oil on Dec. 10, 1998, when crude traded at $10.72rrel. Oil has more than doubled in the past year. Gasoline for July delivery rose 21.35 cents, or 6

rcent, to $3.548 a gallon in New York after reaching a record $3.565. Regular gasoline at the pump f3 cent to an average $3.986 a gallon after touching a record yesterday, AAA, the biggest U.S. motoringanization, said today on its Web site.

haul Mofaz, Israel's transportation minister and a contender for the post of prime minister, told tdiot Ahronot daily newspaper that Israel will have to attack Iran if it doesn't abandon its nucleavelopment program. The Iranian risk premium, which had left the market for some time, is likely turn and hover over the market in the next few weeks.

ent crude oil for July settlement rose $10.15, or 8 percent, to $137.69 a barrel on London's ICE Futururope exchange, a record close, after reaching an all-time high of $138.12 a barrel.With Asia taking aunprecedented'' share of Middle East oil, U.S. benchmark West Texas Intermediate crude oil may rea

50 a barrel by July 4, Morgan Stanley's Slorer said in his report.NP Paribas SA, France's biggest bank, boosted its 2008 oil outlook by 19 percent to $124 on climbinian demand for diesel fuel and kerosene. Last month, Goldman Sachs Group Inc. raised its New Youde-oil price forecast for the second half of this year by 32 percent.

decline in oil prices earlier in the week came after Congress held hearings on possible energy prianipulation, and billionaire investor George Soros said an oil price ``bubble'' is working windamentals in the market that may lead to a recession. Prices rose yesterday after European Centrank President Jean-Claude Trichet's comment that the bank may raise interest rates next month causee dollar to fall against the euro.

l has surged to records this year partly because investors have turned to commodities as a hed

ainst the falling dollar. The dollar weakened further after the Labor Department said the U.S. joblete increased by half a point to 5.5 percent, the biggest increase since 1986 and higher than everecast in a Bloomberg News survey.

sing unemployment ``is going to lead to a drop in the dollar and higher commodity prices,'' said Phynn, a commodities trader for Chicago-based Alaron Trading. The Fed will be ``less aggressive in raisinterest rates.''orkers at Chevron Corp. in Nigeria may strike, a union official said. Chevron has yet to respond orker demands that the head of the Nigerian unit be replaced, said Ethelbert Uka, treasurer of thtroleum and Natural Gas Senior Staff Association of Nigeria. Daily production of about 450,000 barrecrude oil may be threatened, the Lagos-based newspaper Vanguard reported earlier.


7/10

PERSONAL FINANCE

HOW TO SAVE TAXES THROUGH EQUITY?

Three friends met at Naresh`s office to discuss the most popular and interesting of all avenues Èquity Avenues`. Most popular are Èquity Linked Savings Scheme` (ELSS) Tax saving MutualFund and Unit Linked Insurance Plans (ULIP).

Naresh suggested that they start with the Tax saving Mutual Fund (ELSS Fund).Srini insisted,``Start with the basics, then we will get into intricate details of the avenues``. Raju nodded, hewas an ardent Equity fan and a good part of his investments were into equities, he never wentoverboard though.

Naresh started off, `ÈLSS have a lock-in of 3 years, they are invariably linked to the performanceof the capital market, hence the risk is inherent. Returns have been very good in the past,however, lately there has been volatility in the market, which has made investors a little skepticalabout investing in Equities``.

Raju defended his investment pattern, `Ì felt the same way, but now I am quite convinced thatequities perform best in the medium term, 3 Yr lock-in is more like a savior, it helps ironing out allvolatility`` he concluded.Naresh mentioned, ``Raju uses Systematic investment Plan (SIP) routefor investment in equities. Rupee cost averaging where you buy more units during a downwardrun and lesser units when the markets are charging upwards, actually reduces your risk. SIP isalso easier on your pocket, you can commit as minimum as Rs. 500 p.m``

Srini asked, ``What are the other options within this space?``Raju mentioned, ``There`s UnitLinked Insurance Plans (ULIP), as interesting as the ELSS fund.``Naresh added, `ìt is a headymix of Mutual Funds and Insurance, here again you can invest by SIP, you can choose betweenEquity/Balanced/Debt based on your risk profile, can also choose a combination of Equity & Debt.There are 2 distinct features of ULIPs, cumulative withdrawal facility and switching facility``

``Lets say you have invested in ELSS/NSC in 3 consecutive years`, to withdraw each suchinstallment you need to wait for 3/6 Yrs respectively. Each installment has a block lock-in. Incaseof ULIPs, you can pull out cumulative fund value after the lock in period. Well there is anotherinteresting aspect of switching. This is a unique opportunity which will help achieve supernormalreturns if you are able to work according to market trends.``

Naresh took it from there. ``You have the opportunity to invest in Debt/Equity/Balanced fundswithin ULIP, let`s say markets are moving down and you have put all your funds into equity, nowyou can move it across to Debt or Balanced, thereby restricting your downside, and do vice versaif the market starts moving up.``

Raju queried, ``What should one look for while choosing ELSS or ULIPs?``Naresh answered,``Both are different asset classes, hence, let us start with ELSS Choosing right funds is key,look at various parameters like Fund house, Size of Fund, past performance, fund managerexpertise, load structure etc.,. While choosing a ULIP, you can go for a plan which has staggeredfront end charges, the past performance and expertise is key. Broadly, a ULIP will out-perform anELSS in about 5 7 Yrs. So if you are looking for a shorter period, 3 years, then ELSS wouldwork out better, but if you are planning for medium-long term financial goal, then ULIP is ideal.Also, Life cover is an important aspect of financial/tax planning``

Srini drew out his IT projection and declaration to finalize on the investments he wanted to do forhis taxes. Raju thought it was appropriate to leave the two to do the number crunching.(myiris.com)


8/10

SENSEX CONSTITUENTS FUNDAMENTALS

SENSEX NIFTY

FIIACTIVITY

REPORTINGDATE

DEBT/EQUITY

GROSSPURCHASE

S

Rs.Cr.

GROSSSALES

Rs.Cr.

NETINVESTME

NT

Rs.Cr.

Jun 06,2008 Equity 3739.6 5158.5 -1419Debt 0 30 -30

Jun 05,2008 Equity 3245.7 4070.9 -825.2Debt 0 15 -15

Jun 04,2008 Equity 2966.8 3919.2 -952.3Debt 0 25 -25

Jun 03,2008 Equity 2483.2 2832.5 -349.3Debt 0 0 0

Jun 02,2008 Equity 4215.2 3960.6 254.6

Debt 0 0 0

COMPANY INDUSTRY CURRENT

MARKETPRICE

COMPANY

P/E RATIO

IND

P/E

EPS BOOK

VALUE

Div% 52 WEEK

HIGH

52 WEEK

LOW

ACC CEMENT 628 9.27 17.66 67.72 221.3 200 1315 615

Ambuja Cem. CEMENT 85 11.57 15.09 7.39 30.6 175 161 84

B H E L ENGG. 1421 24.34 55.06 58.4 220.1 153 2925 1301

Bajaj Auto AUTO 802 24.38 22.55 32.9 106.6 0 1149 700

Bharti Airtel TELCOM 207 23.01 42.43 9 48.5 0 234 160

Cipla PHARMA 520 34.43 20.22 15.1 66.1 200 1225 506

DLF Ltd PHARMA 2263 10.01 8.81 226 887.1 300 4074 2152

Grasim Inds. CEMENT 2347 33.75 23.34 65.3 420.6 250 3257 1724

H D F C NBFC 1237 27.59 46.89 43.4 324.3 85 1825 1050

HDFC Bank BANKING 236 29.25 54.47 8.06 6.5 900 256 170

Hind Unilever FMCG 176 7.53 28 23.3 132.7 0 223 135

Hindalco Inds METAL 771 20.63 9.09 37.4 417.5 110 1465 720

ICICI Bank BANKING 1993 25.5 48.92 72.5 235.8 665 2140 1212

Infosys Tech. IT 213 25.75 28.86 8.3 31.8 350 239 150

ITC FMCG 201 38.64 24.49 5.2 33.3 50 510 128

L&T ENGG. 2682 37.14 92.37 72.2 325.9 850 4670 1863

M & M AUTO 582 14.69 19.03 39.6 176.8 115 872 543

Maruti Suzuki AUTO 753 12.57 19.22 59.9 291.3 100 1252 700

NTPC POWER 166 18.42 28.17 9 63.8 35 291 149O N G C OIL & GAS 939 12.21 19.06 76.87 289.5 310 1387 770

Ranbaxy PHARMA 507 37.74 43.18 13.43 68 170 541 300

Rel Comm. TELECOM 547 43.64 66.74 12.5 116.1 15 844 467

Rel Energy POWER 2239 21.21 52.45 103.7 542.7 130 3252 1640

Reliance Ind. PETROLEUM 1101 24 33.01 45.9 433.8 63 2632 508

Satyam Comp IT 509 19.91 21.7 25 109.5 175 544 305

St Bk of India BANKING 1335 12.61 26.14 103.3 772.4 215 2397 1206

Tata Motors AUTO 540 10.85 15.51 49.8 202.8 150 840 523

Tata Steel STEEL 823 13.82 15.17 59.56 259.8 155 970 471

TCS IT 960 20.86 27.06 43.6 111.4 1400 1244 730

Wipro IT 505 24.51 25.27 20.6 78.7 300 556 325

Date Open High Low Close

June16,591.4

616,632.7

215,991.2

116,063.1

8

June15,851.7

215,985.4

015,709.5

115,962.5

6

June15,992.9

015,992.9

015,442.3

415,514.7

9

June15,479.6

515,814.8

015,314.0

215,769.7

2

June15,914.4

115,970.7

015,526.5

015,572.1

8

Date Open High Low Close2-Jun-08 4869.25 4908.8 4713 4739.63-Jun-08 4739.3 4739.3 4634 4715.94-Jun-08 4718.7 4731.5 4564.5 4585.65-Jun-08 4586.95 4690.6 4536.25 4676.956-Jun-08 4680.55 4746.3 4614.25 4627.8


9/10

DISCLAIMER: This Weekly Newsletter is an expression of research team as doneby Mansukh Securities & Finance Ltd. It is neither a market prediction nor anadvisory or suggestion to buy or sell any types of securities or investment. This is aneducational and learning exercise, only to share with investors our method ofanalysis. Trading and Investing MUST always be done with prudent moneymanagement and use of stop losses. One bad trade can ruin the trader, so always

keep risk low.For any query, suggestion and feedback write to

Mansukh ClassroomWHY FUTURES TRADING SHOULDNT BE BANNED?

There has been a sharp rise in worldwide food prices. While this has led to renewed Malthusian fears, it is likely that a big supply response s way. Sharp responses of prices to small changes in supply reflect the insensitivity to price of food consumption of an increasingly we

world. While price volatility is not inherently bad, commodity futures markets and hedge funds operating on these markets will help reduce olatility.

With high food prices, we are yet again in the midst of memories of Malthus: fears of the inability of the planet to support the ever lopulation. As with each edition of this story that has played out in recent centuries, such fears are misplaced.

The simple fact is the average global yields are far, far below what is possible with contemporary science. Vast tracts of land in the world n India have extremely poor yields. High prices generate the incentives for increasing yield. This process, of prices sending out signalsields then going up, has been going on for centuries.

The socialist vision sees humans as inflexible and slightly stupid, who then need to be told what to do by the government. The single greatf economics is that people respond to incentives. When prices change, far-reaching changes take place in response. There are reports th

Afghanistan, farmers have switched from growing opium to wheat owing to higher wheat prices!Some elements of this response are already visible. The global production of wheat and rice will reach record levels this year. World w

roduction in 2008-09 will be up 8%. Much more will come by way of this response as individuals and firms rethink how to play a worldigher food prices.

While high food prices are seen as a problem, it is important to emphasise that these very high prices are doing the work of sendinncentives for higher production and lower consumption. Prices are the messenger. Our attempts at artificially preventing price volatility amo shooting this messenger, and thus preventing the adjustments in the real economy, which solve the problem. It is fashionable in India to that volatility is bad, that there is a dichotomy between the "real" economy and "financial prices". But volatility i.e. changing prices issence of how the market economy works. The people who dislike volatility are perhaps yearning for a socialist paradise where prices dohange. This is not how the market economy works.

Why did prices go up so sharply in the last three years? Many hypotheses that are getting a lot of press, such as the role of futures marsing demand in India and China and the shift to biofuels, should be viewed with caution. The growth acceleration of India and China dates

o 1978-79. Futures markets have been around for centuries. The land that has shifted to biofuels is tiny.One element of an explanation is based on focusing on the imbalance between supply and demand. There were some small supply shockshift to biofuels; ten consecutive droughts in Australia). How much do prices have to move in response? Prices have to move by as mueeded to equate supply and demand.

This makes us ask: How much do prices have to rise to crimp off demand? If you are buying a naan, the embedded wheat cost in it is rough. A 50% rise in the price of wheat only increases the wheat cost to Rs 1.5. A large change in wheat prices does not substantially chaemand for naan. With growing affluence, the price elasticity of food demand goes down. Hence, when a small imbalance came along, pad to move sharply in order to clear the market.

This reasoning links up to demand for meat. Making a kilo of meat requires 2-8 kilos of grain. In a poor country, when food prices go up, peut back on meat consumption, thus freeing up a lot of grain. But as the world becomes affluent, price sensitivity goes down; people eat mven though prices have gone up. When a supply-demand imbalance appears, large changes in the price are required to eliminate the gap.

This same price inelasticity will operate in the reverse direction. When the supply response comes about in 2008 and 2009, food prices will o drop sharply because consumers are so price-insensitive in their demand for food. (See http://tinyurl.com/5evn3s).

thus seems that as the world gets more prosperous, food price volatility goes up. In the olden days, there would have been calls for overnment commodity stabilisation funds. But we now know that these government interventions in agriculture do not work.

The right way to confront volatility is to emphasise commodity futures markets and hedge funds. Commodity futures markets produce warnings about future supply-demand imbalances. Hedge funds have the ability to put capital behind the job of holding buffer stocks. Whenutures markets show a high price at a future date, hedge funds are uniquely able to carry inventories into that future date, thus smoothingrice fluctuations, and vice versa. The integration between the world of commodities and financial firms is thus a critical element of the resp

o this new world of high commodity price volatility. There is a good long-term business potential in the fields of global commodity futureslobal hedge funds focused on commodities.

Recent events have demonstrated that there is only one food market: the world food market. Through imports, exports and smuggling, Inood prices are increasingly integrated into the world. Events all around the world are now tightly interlinked. It should be a wake-up call fondian private sector and agricultural bureaucracy, which has tended to view India as an island that is unconnected with the world. What we

eed is an unabashedly international perspective on production, prices and commodity futures trading. We need to position ourselves antegral and important part of the world economy when it comes to food. We should be using the world as our buffer stock, exporting whenarvest comes along and importing at other times of the year.


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Mr. Vishwesh Chandra Shrivastav: [email protected] Sharma:[email protected]
mailto:[email protected]://var/www/apps/collegelist/repos/collegelist/trunk/collegelist/tmp/scratch7/[email protected]:[email protected]://var/www/apps/collegelist/repos/collegelist/trunk/collegelist/tmp/scratch7/[email protected]

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