Anything under the sun: 11/01/2004

Friday, November 19, 2004

Winning horses - Sensex in India

After so many years, finally Indian stock markets seem to act on fundamentals. Albeit I agree that sentiments till play a role when need arises, atleast the markets learn how to react when there are companies declaring sound results.

There are two recent instances that made me form the above opinion. One, the UPA govt announcing oil price hike that comes as a huge relief to oil companies. The relief is really really huge....its so huge that its expected to save around 10,000 crore rupees for oil companies in the current fiscal year. No wonder HPCL, BPCL, Reliance and Refineries surged ahead.

The second news, banks hiking interest rates. RBI allowing banks to revise their interest rates and ICICI taking the first step to hike housing loan rates. Bankex would have gained atleast 20% in a week. This is a clear sign how secondary market is reacting to the news or facts that really help companies. I am certain there were rumours before the hike in interest rates, but they could not change the picture much than an action from ICICI did.

All said and done, 'its elementary Watson !'. Keep the eyes and ears open for the news and be aware of the surroundings and I feel its easy to be a good investor.

Monday, November 08, 2004

Offshore startups

Most of the IT companies with a sound offshore model had started their operations in two fundamental ways. One, start with a business solution supported by IT for a manufacturing concern in west. Build it well, make it a success, partner with that company, make this solution a successfull one and adapt the solution for other companies with similar requirements. As the cash flows, extract generic knowledge of providing business solutions and expand your network. This process is not as easy as it sounds. The first step is always difficult. It requires huge effort from the IT solution provider to grab the project. Who will trust the IT company that never provided any solution before? Ofcourse, the easier way would be through contacts. If someone already worked at client's place whom the client knows and can trust, then there is a good amount of possibility for the IT company to get a footing. The second way I would say is identify a gap in the industry, try to bridge that gap with the help of a new product. Now, to get this product in right shape, partner with a company that needs this product most. Once the product is stable, start licensing it. License and maintenance revenues will feed the company.

Though the above two models are red ocean strategies (scroll down in my blog to find out about red and blue ocean strategies), it is quite difficult to find the right market to sell.

-- PS: I may be publishing an un-finished post.