Q1. If you had, lets say Rs.

30 crore, which stocks/asset-class would you

invest your money into?

1. STOCKS

First, if i talk about stocks, I would select stocks that benefit from the drop in the prices of
oil.
Which stocks would that be?
Paint and Airline Industry.
Around 45% of the input cost in these industries is occupied by the oil, so a decrease in the
prices of oil would definetly widen the profit margin of these companies.
Recently Indigo posted a net-profit of Rs.1300 crores.It is also coming up with an IPO of size
Rs.2500 crore, so i will definetely subscribe to the shares of Indigo Ltd, also because it is the
only profitable airline in india.
If they ask about Paint-industry, then say Asian Paints. It has given a year-on-year returns of
over 30%. (Share-price 1 year back- Rs.650 and share-price now- Rs.840)
If i talk about the oil-prices specifically about the next year, they are only going to
decrease.Now that sanctions from Iran have been lifted, it is expected to add 1 million
barrels of oil to the world supply from the next year, which according to World Bank, will
bring the oil prices by further $10/barrel (1 barrel=119 litres) Jet Airways, Indigo, Spice Jet.
I would also buy stocks which would benefit from depreciation in Rupee-Dollar Exchange
Rates, stocks of companies that prinicipally earn their revenues from exports, such as IT
Industry, Pharmaceutical exports (Sun pharma, Lupin exports to US)

2. CURRENCIES
I would also buy dollars, and hoard it till the month of December, because sooner or later
the Federal Rate is going to go up, and when it does, it will cause a lot of pressure on the
Rupee Dollar exchange Rate. I will buy Dollars at Rs.66 and sell it at Rs.70-71, as this is where
many experts predict where INR would reach once the FED raises the interest rates.

Q2. Why would you not invest in Gold, any particular reason?
Sir, it has been historically observed that there is an inverse relationship between US stock-market
indices and the price of Gold.
If the US stock-market indices such as S&P 500, Dow Jones, are climbing up, then investors liquidate
their investments in Gold, and invest in growing Stock-markets.
No point investing when others are liquidating their investments.

Q3. Do you think Raghuram Rajan will decrease interest rates?

Sir, in my opinion Mr.Raghuram Rajan should try to cut CRR & SLR rates.Why not Repo-rates,
because of 3 reasons
1. In my humble opinion, he doesnt see interest rates as a tool to boost economy.Time and
again he has said that lower cost of capital won't help India, reforms such as GST will.
2. Another reason he shouldnt decrease interest rates is that banks source only 20% of
loanable funds from the repo-window. Decreasing the rate by 25 basis points isn't going to
make much of the difference in bring down the loan rates, as banks source major portion of
their loanable funds from Deposits from customers.
3. 3rd reason is that when only 6 out of 47 Indian banks have passed on the benefits of interest
rate reduction to customers, it doesnt seem to make sense to cut Repo-rates, when you are
convinced that banks arent going to cut down their loan rates further.

So what could make the banks bring down their loan-rates, i think competition.Recently, RBI
has issued payment bank licenses to 12 banks of late following which HDFC bank brought down
its base rate to 9.35% in order to stay in competition.

Q4. Do you think that the Indian government is walking the talk on Make in
India Program?

I think the government is trying very hard to implement its Make in India program across
all states.
Few weeks back Foxconn said it would invest 1bn $ in Maharashtra.
Few of the Russian Defence firms have agreed to manufacture 50% of the equipments
in India.
Even Huawei has agreed to bring manufacturing to India.
It would have been great if it had passed GST bill in the monsoon session of the
parliament.
We also have seen SEBI coming up with the proposal of E-IPO and IPO for start-ups,
which is a good thing not only for the investors.
At the same time there have been mixed signals from the Finance Ministry as to whether
or not does it want India to remain investor friendly or not, because of imposing MAT on
FIIs, also becasue of having 2nd thoughts about challenging the Mumbai highcourt
judgement regarding the Vodafone tax case.

Q5. Is Internationalization of China's yuan a good thing for India?

Before answering the question, let us understand what would happen if china
internationalizes its yuan.
It would lead to increased demand for it in international markets and if this demand goes
too high it colud infact be detrimental to Chinese economy as it would lead to appreciation
of currency which would be the worst thing for a largely export based economy.
But that would most surely not happen since china has kept US Dollar exchange rate within
specific range of +/- 2%.
And even if demand is too high, China has $3.5 trillion of reserves which it can put to use.
Now coming back to the main question, if many countries including India start using Yuan as
a trade-currency, it's definetely a good thing for India, because since India is a dollar-scare
country it will save dollars upto the extent the Chinese yuan is used in striking the trade
deals.

Q6. Whats your opinion about China's inclusion in SDR?

Inclusion in the SDR basket is neither necessary nor sufficient to achieve true reservecurrency status.
The SDR accounts for just 2% of total central-bank reserves, and it is not used by the private
sector at all.
In fact, the four-currency basket has not changed for 15 years, largely because of its lack of
significance.
The renminbis inclusion in the SDR basket would, at best, be an important symbolic
milestone on the renminbis path to full internationalization.

Q7. Where do you think will the SENSEX be after lets say 6 months?
OR
Q7. Has the SENSEX bottomed out?
Before delving deep into the question, let us first understand what does SENSEX constitutes of.It
constitutes of stocks from various sectors such as
1. Banking Industry
It includes ICICI Bank, HDFC, SBI, Axis Bank. Banking industrys future looks bleak.Reasons
for the same: Rs.14,00,000 crores of stressed assets, as per the ICRA report.
Rs.2,00,000 crore additional capital needed to meet the BASEL-III Norms.Where will
the money come from?Even Finance Ministry doesnt seem to know!
2. Manufacturing Industry
It includes Tata Steel, BHEL Ltd, Vedanta Resources. Manufacturing Industrys future looks
dull as well. Reasons for the same: Lot of cheap dumping from countries such as China, South Korea and Russia, due to
which the profit margin of Indian companies have taken a beating.
Tata Steels share price year-on-year decreased from Rs.500 to Rs.220
BHELs share price from a quarter ago and now is Rs.250 to Rs.210
Vedantas share price from a year ago to now is Rs.1000 to Rs.530
3. FMCG Industry
It includes ITC and HUL. Future looks mixed for both ITC and HUL.Reason: ITC: Indian Government has banned the advertising of cigarretes, due to which sales
of brands such as CLASSIC and GOLD FLAKE have taken a hard landing.Government
has also increased the excise duty from Rs.60/kg to Rs.70/kg, making it all the more
expensive.
Its share prices are down from Rs.370 to around Rs.310 year-on-year.
HUL: HUL has infact performed well, its share-price being up from Rs.740 to Rs.800,
year-on-year basis.
4. Pharmaceutical Industry
It includes CIPLA, Dr.Reddys, LUPIN, and Sun Pharma.The future looks promising though
there have been cases of US FDA banning few Indian drugs.Reasons being: Depreciation of USD/INR from 62/- to 66/- will widen the profit margins of pharma
companies.
Overall, in my humble opinion, the SENSEX will fall from where it is right now. If the Indian
Government comes up with reforms such as GST Bill, things might be different.

Q8. Can you explain to me why oil prices are down?

Supply-side reasons:
In order to understand why the prices of oil are so low today, we have to understand what
happened 7-8 years back when oil touched a peak of around 130$ / barrel ( 1 barrel= 119 litres).
Many firms started developing new techniques such as fracking and shale-production, which created
a boom in the oil production.They didn't know at that point of time that oil-prices would come down
so drastically.What we are seeing now is that every day on an average there is an excess supply of 2
million barrels of oil.

Lifting sanctions from Iran will further add 1 million barrel to the oil market, which according to
World Bank will drag the prices of oil down by 10$/barrel.Even USA which was an oil importer before
is now exporting 10 million barrels of oil per day.
Demand-side reasons:
Demand from countries such as China, and Eurozone, has declined significantlty due to economic
turmoil in their respective regions. China is the world's largest importer of crude oil. Any changes in
its economy are bound to imact oil-economics in the world. China previously imported 7.5 million
barrels of oil, now it imported 5.5 million barrels of oil.

Q9. Whats the impact of falling Oil prices?

1. Exposure of 600bn$ by banks to Oil Industry (banks might go bankrupt if firms go bankrupt)
2. India stands to benefit, as it is a net-importer of oil.
3. Russia loses about $2bn in revenues for every dollar fall in the oil price.