Mega Charity Fund Created

Warren Buffett just hours ago held press conference with Bill Gates and Melinda Gates pledging to donate $37 billion or 85% of his total wealth ($44 billion) to charity. Majority of this charity would go to Bill and Melinda Gates Foundation and the rest to other four foundations.

The philanthropist Buffett in his usual style commented that he is good at managing money efficiently and for charity the Gates Foundation can do a better job. This comes from the man who refused to invest in Tech Companies during the Tech Bubble of late 90's saying that, "I do not understand the business of tech companies; I understand insurance, that is why we have invested in insurance companies." The total fund of Gates foundation is doubled by the pledged charity made by Warren Buffett. The money would be raised by selling of the Berkshire Hathaway shares that Buffett owns. The Oracle of Omaha further stated that selling of shares would not affect Berkshire Hathaway negatively. Infact he believes that selling of shares would increase the liquidity of the company.

Buffet had already made it clear that after his and his wife's death all of his wealth would go to charity. During the press conference one italian reporter asked why doesn't he leave the wealth to his children. Buffet philosophically replied that, "I do not belive in creating dynastic wealth". Later he added that, "I would like my children to only have enough money so that they can do something not so much money that they do nothing."

CNN reporter acclaimed that "What difference would this money make is about to be seen, but it certainly is a lot of money."

Interesting News

A chance to dine with billionaire investor Warren Buffett drew bids as high as $455,100 US yesterday in the first hours of a charity auction run by eBay Inc.

Commodity Watch: Copper

Globally the demand for copper is increasing with its wide uses in industries. The global market for copper has recorded a growth rate of close to 4% in FY 06, in India this growth rate is near 8% and in China growth is in double digits. It is amazing to see that these rates do correspond to the GDP growth rates.

The Copper along with other base metal commodities like Aluminium and Zinc has enjoyed a long bull run. In the 90's there was a global bear market for Commodities (base metal & precious) and many copper mines did not expand their production capacities due to low demand. Now due to high demand for Copper the mines are running a full capacity and developing new capacity. But still the demand cannot be met because of long gestation period for new mines; it takes atleast 10 -15 year to explore and set up new capacity. The same is true for other metal commodities. This is the reason why we are witnessing a huge bull market for metal commodities.

Percentage change in Copper prices

One week  - 4.1%
2 month    - 11.5%
6 month    + 51.44%
One year   +100%

From above you could see that the copper eventhough still in bull (1 year) has lost a lot in last few months. On Friday the Copper was trading at $ 6,780 per tn compared to close to 8,000 few months ago. This price decline could be attributed to the 6.8% increase in the production of copper to 17.5 million tns compared to the 16.5 million tn consumption. It is to be noted that there are two ways for increase in production of copper one by minning another through recycling. According to analysts due to the cappacity bottle-neck the copper industry would expand in the other side of minning (recycling). Already close to 75% of copper production is through minning rest 25% from recycling.

Through analysis of Copper we could se that the commodity bull cycle (usually 10 year long) that started 5 years ago would continue. But in short term it is very difficult for copper prices to breach the 52 week highs set few months ago.

Market Recovers

Today the markets opened lower and were down till noon because of the fear of the interest rate hike due to the inflationary preassure. Later towards the close of the day there was a turnaround with Sensex and Nifty both gaining above one percent.

The stock market was greatly affected by the increase in the inflation from 4.72% to 5.24% with a week. For more information go to economy-india.blogspot.com.The lowest for the sensex today was 10,075 and it closed at 10,401 up 125 from the openning price. The Nifty also showed similar gains with 48 point rally and a closing of 3,042. The 6 month outlook for the markets still looks bearish and we would end the year below the 52 week highs. But still there are many value stocks available with good potential and limitied risks.

Midcap Picks

I have two midcap value picks: Tata Elxsi and Surya Lakshmi Cotton.

Tata Elxsi
It is a company with diverse business in electronics and graphics. Also the business is managed in good hands and the dirt cheap valuations makes it a good investment with 2 year horizon.
Surya Lakshmi Cotton
It is textile company with a very good expansion plan. Investing in Denim capacity would be very fruitful and would reflect in the balance sheet within 2 years. This will also make it the 3rd largest Denim manufacturer in India.

Keep reading this space and expect more value picks and analysis of market in these volatile times.

Sensex on Year's Lowest

The stock markets openned low on Monday this was another day of selling with no buyers having courage to hold on to their investments. The Sensex was hit by close to 420 points and the Nifty by 120 points. This Mid-cap and the small caps were the worst hit in todays markets, with many companies falling close to 10% and falling to their 6 month lows. This selling preasure is said to be created by the selling of the Mutual Funds by investors (both HNI
's and retail) who entered the market late or were slow at booking their profits at 12,000 levels. When they saw a fall of close to 20-30% in their investment they started to liquidate.

Global Fall

Globally the stock markets have all gone down in the past one month in both emerging as well as global markets. In the developed markets like USA markets have had a 10% correction compared to gains made during the bull run this is very substantial. Markets like Japan have also fallen heavly, with Nikkei falling close to 4%. In other asian markets like Korea Foriegn investor have net sold as much as $ 1 billion.In India last few trading sessions shows that they are net buyers in the indian share markets the FII have been the net buyers. And the Mutual Funds the Net sellers.

Selling Preasure

(A) The main selling is comming from the Mutual Fund companys that are heavily invested in the Mid-Cap sector. Because of redemption of MF's by HNI's and Retail investors the Fund is trying its best to sell off its shares. The problem is that the Mid-Caps are very illiquid and because of that they have ot selloff their core investments.

(B) The investors who followed the principle of buying into cheap low price shares afters doing value research are also the culprits. These investors who follow share markets analysts like Mr. Rakesh Jhunjhunwala purchase heavily in companies that undervalued through margin trade. Now they face the problem of meeting the settlement of their accounts. So, the Brokers are selling off the collateral shares or selling the share held by the investors in liew of the cash obligations.

Let us hope that the markets do not plunge further and the bull rally of the indian economy would continue.

Down on Monday

The markets plunged further on Monday, with all sectoral indexes falling sharply. The Sensex was down 2.28% (237.9) at 10,213.4 and the NSE Nifty down 2.4% (74.7) at 3061.6 at the close of the trading hours.

Quick Look at Market

	Percentage Decline
BSE Metal Index	style="text-align: right">3.68 %
Oil $ Gas	style="text-align: right">2.68 %
FMCG	style="text-align: right">2.5 %
Hindustan Zinc	style="text-align: right">7.68 %
Sterlite	style="text-align: right">5.6 %
Tisco	style="text-align: right">4.32 %

It is clear the markets are still in the phase of deep correction that started with the fall in May. It seems that the markets will continue their bad run for a while, and the month of June will be either rage bound or the makets may further correct to the levels of 9,000 - 10,000.

Most analysts belive that this current phase is temporary and the long term prespective of the markets is still very much intact. Some even predict at the end of the year we may end up at 15,000 for the Sensex! So let us just keep our fingers crossed and hope that the FII's would understand this and bring their money back to our markets.