Ishant Sharma did his chance of being picked  for the series down under no harm at all as he rocked Pakistan’s late order batsmen with a 5 wicket haul on a placid Bangalore pitch. Generating considerable bounce due to his height and high arm action Ishant finally got his radar right. What followed was a rare sight in Indian cricket… a quick bowler moping up the tail of the opposition in double quick time. The way he did get his wickets was quite a sight. Going wide of the crease to accentuate his inswinging deliveries - one ball pitched up, the next dug in short, the other a near perfect yorker. The bouncer he bowled to surprise Danish Kaneria was the perfect end to his spell and the Pakistan innings. Wonder what Sunil Gavaskar, who unceremoniously dismissed his credentials yesterday by calling him ‘not quite ready for test cricket’ and a ‘workhorse not a racehorse‘ will write now ? Maybe he will simply ignore Ishant’s feats and try drum up some support for Bombay hopefuls for down under in another guise. Will have to wait and see

Been more than 2 decades since we won a world championship in cricket so today’s win in the World T20 tournament is a real special day for an Indian cricket fan. The finale was just the perfect dream scenario against our bitter rivals Pakistan - a thrill a minute, topsy-turvy roller coaster with both teams having dominant moments alternately. In the end we held our nerve while Pakistan lost theirs and our unbeaten record against them in world championship matches continued.

Gautam Gambhir our most consistent batsmen in the tournament saved his best performance for the final with a terrific 75 off 50 balls and ensured a reasonable target for our bowlers to defend. But Pakistan bowled real well in the middles overs and our big hitters(Dhoni, Uthappa & Yuvraj) were never allowed to dominate. So in the end it was left to Rohit Sharma(IMO wrongly demoted to no. 6) to smartly up the ante in the last 3 overs. Rohit made a crucial 30 off just 16 balls and remained undefeated. I think it would have served India better if Rohit was sent up the order at either 3/4. He has got a bigger range of strokes than Uthappa and can stay for longer periods at the crease. Despite his brilliant innings against South Africa he is still treated as a junior… well I guess his time will come soon.

India have depended on Pakistan to panic and lose the plot in world cup matches. And despite a good start they ended up doing the same in the middle overs. Joginder Sharma was never targeted for punishment while they were completely at sea against the off-cutters bowled by Irfan Pathan. Mishbah played valiantly with the tail like in the tied group match. But in the end he made the wrong choice of shot when only 6 runs were left to get off 4 balls. RP Singh, our best bowler in the tournament, bowled superbly at +140 Kmph while Sreeshanth was at his erratic worst. He never seems to have 2 good matches on the trot always swings from brilliance(like against Aussies) to mediocre(today against Pakistan). On the whole Dhoni’s captaincy was superb in the tournament and he seems more than capable of thinking on his feet despite having to keep wickets too. Now I just can’t wait for the upcoming one-day series against Pakistan and Australia. Hopefully the young guns(Rohit, Gambhir and Uthappa) will get a chance to showcase their talents.

There hasn’t been much time to blog in the past 8 months. Been very busy trying to adapt to the volatile stock market conditions this year. There already has been two 10%+ corrections that have lasted 5-8 weeks each. And despite that the valuations at 16348 are close to all time highs @22.4 times trailing earnings for the sensex. Well actually those figures are an optical illusion. If we strip out the forex gains for the past quarter and ignore the IT, Auto, commodity (i.e steel, aluminium) and oil sector(ex-Reliance Industries) the valuations are well above those reached last May. Now even commodity stocks like RIL quote @ 20x one yr forward which is well above valuations that global oil exploration majors trade at.

The macro conditions too have deteriorated over the past 6 months. Globally the sub-prime mess is threatening the stability of the whole financial system and the US Fed is being forced to aggressively cut rates. While that move has led to a ST upside in emerging markets it remains to be seen if they can really decouple if US goes into recession. Many of the Asian economies are still heavily dependent on exports to US which comprise up to 60% of GDP growth for some of them.

In India the RBI’s drastic moves on the interest rate front at the beginning of the yr have started to hurt growth now. I was very apprehensive then about such aggressive action(0.75% move in 3 months) at the fag end of a growth cycle. To me it reflected a lack of insight into our GDP growth trajectory. The rate hikes should have perhaps come much earlier in late 2005 and into 2006 when the whole real estate bubble happened due to unusually low rates. The auto sector growth is now down for the 1st quarter and the slowdown is fast spreading into other sectors including consumer durables. The slowdown in growth of commercial vehicles will soon have a trickle down effect in the manufacturing sector too. Hopefully now with inflation at a 5 year low RBI will bite the bullet and cut down rates to revive growth. Encouragingly FDI flows have been much larger than portfolio inflows this year. This despite the govt. dragging it’s feet on opening up new sectors like retail and insurance to FDI.

There have been significant changes in my portfolio in the past 8 months. For the first time in four years there is now no exposure to IT. The amazing rise of the rupee this year(more than 10%) have knocked the sails out of IT stocks pegging valuations down to 5 yr lows. My exposure to auto-ancillaries is trimmed now after the rate hikes and initial signs of auto sector slowdown in April. I’ve focussed more on companies with leadership, branding and pricing power while exiting commodity type businesses. So there is no place for cyclical sectors like hotels and cement where demand-supply mismatch is no longer as strong as in the last 2-3 years. Now I have some exposure to the fast growing entertainment sector(multiplexes) where valuations are more realistic after the correction over past 18 months.

After all this cleaning up I’ve ended up with a more concentrated allocation in each sector I’ve positive on. Accordingly the no. of stocks in my portfolio have gone down to 27 from 32 back in January 2007. Interestingly now I have a more modest exposure to small caps where there has been a marked change in performance(both business and stock price) in the last 4-5 months. This is not due to any change in my approach but just that some of my small caps have now become large mid caps in the past 2-3 years. Maybe it’s about time for me to try unearth some more small niche stories.

Rohit Sharma was just a passenger in the Indian team for the past few months, not getting a proper hit even when others were struggling in the one dayers in England. And in typical Indian cricket board style of treatment for fringe players he was dropped unceremoniously for the upcoming one dayers against Pakistan & Australia even before he got a hit in the 20-20 World Cup. I have never in all my years of following Indian cricket been able to figure out why we declare teams while a tournament is underway. Must be to motivate our team I guess !

But as luck would have it Yuvraj pulled out in the crunch game against South Africa citing injury thus elevating Rohit’s batting position. Now the scene was all set for him to show his mettle on a green bouncy track against the likes of Pollock, Ntini and Morkel. And he did just that with a style and panache that belied his young age. He seemed a bit uncertain of the bounce and pace at first. But once Rohit got in he seemed to have time to spare while playing the quicks. He played very well on the backfoot and didn’t have any problems disposing of full tosses out of the park. His strokes were an elegant mixture of proper technique and flair. Later on while fielding Rohit also pulled off an amazing direct hit to run out the in form Justin Kemp in what would prove to be the turning point of the match. The Man of the Match award he got is just about the perfect start anyone would want for what will hopefully be a long fulfilling career ahead. Hopefully our selectors would quickly realize their error and pick him at some stage to play in the coming one day series. If he does well then Rohit also has a chance to get picked on the tour down under. He already has some experience of those wickets while touring with the Indian A side last year.

A new year has begun. A lot of things have changed in my world since I last posted. My portfolio is more focussed and I’ve re-balanced it a bit(not done completely yet) in the last 3 months to reflect current valuations/business performance. I’m reasonably happy with my returns over the last 6 months, having more than recovered from the big crash in May and June. Smaller companies that comprise the bulk of my investments have somewhat lagged the market indices during this period. But luckily for me financial services and IT suddenly became mkt leading sectors again, helping offset the smallcap underperformance.

However it must be said that now @13650+ our mkt wide valuations are getting stretched again. People are getting too optimistic about the sustainability of current growth rates and not factoring in the effects of a cyclical downside in the global economy. Also interest rates have gone up 0.5% in the last 4 months and might trend up another 0.5% in the next 12 months. Present interest rates are now in fact within touching distance of 6 year highs(11.5% now vs peak of 12% in 2000). Since credit growth @25% is still probably higher than what RBI wants(15-20%) rates might stay up there for a while now to rein in growth.

Well all these macro worries notwithstanding the structural part of the Indian economic growth story seems intact for now. Manufacturing sector continues it’s amazing revival(now into it’s 4th consecutive year of robust growth) rebounding after a 7-8 yr slump since the mid 1990’s. So far the big players haven’t rushed in to announce extravagant plans yet. Hopefully they have learnt their lessons from the crazy post liberalization capex binge & subsequent bust.

Result season started in earnest today with two of my top overweights(& favourite companies) Infosys and HDFC Bank reporting q3 results. Not much change as far as business performance goes for these two jewels of our corporate sector. Infy reported results inline with guidance despite the Rs appreciating 3.8% during the quarter. They improved productivity and managed to negotiate better billing rates. Their dependence on US also reduced to an extent with European business growing more strongly. HDFC Bank clocked a 19 sucessive quarter of 30%+ growth in bottomline. It did this despite RBI curbing branch expansion for last 12 months ! This quarter they made up for lost time - adding 48 branches and 120 odd ATM’s. NII was up 38% and NIM’s steady at 4%. With the 1.5% increase in PLR in December the next few quarters should see these margins maintained. Both these co’s are expensive I guess by most normal valuation parameters and they have been that way for most of the current 4 yr bull run. Luckily I figured out early enough that adjusted for growth(and it’s sustainence) they were absolute steals for a LT investor.