ADVISED TO GO FOR INVESTMENT IN STEEL PIPES MFG. COMAPNIES !!!!!!!!!!

According to Emkay Research's report on Steel Pipes sector, steel pipes exporting companies have got a sigh of relief as the union government has finally rolled back the 10% export duty on steel pipes and tubes. This is a positive move for the pipe and tubes exporting companies such as Welspun Gujarat Stahl Rohren, Jindal Saw, Man Industries (India), Ratnamani Metals, PSL, etc.Emkay's report on Steel Pipes sector:Steel pipes exporting companies have got a sigh of relief as the union government has finally rolled back the 10% export duty on steel pipes and tubes. This is a positive move for the pipe and tubes exporting companies such as Welspun Gujarat Stahl Rohren, Jindal Saw, Man Industries (India), Ratnamani Metals, PSL, etc. Earlier Government of India in its notification on 10th May 2008 levied 10% export duty on steel pipes and tubes which was a negative move and would have resulted into lower competitive advantage to domestic pipes exporting companies against its global peers. Since the move was implemented from the immediate effect, the pipe exporting companies had to pay 10% export cess on existing order also. Line pipe manufacturing business has lower net profit margin of 5-9%, hence the 10% exports cess on existing orders would have negatively affected the bottomline for these players."Upto 60% off on Arrow Shirts, Offer till stocks last!"If you were to spot this in your city, it is very likely that you would have rushed to the shop to grab a few shirts. In fact, there are many of us who keep an eye for these kinds of sales to fill up our wardrobe. We don't even blink at the fact that lower prices increases off-take of goods. After all, classical demand supply equation in the real world dictates that demand increases at lower prices. Hence, prices at a discount to their perceived value should make merchandise move. In our case, it is the Arrow shirts. But do these market forces that we take for granted work everywhere?Stocks on saleWhy are there no takers for stocks when stock markets crash? Why do market participants buy when the prices start appreciating? This strange behaviour of the stock market becomes painfully evident when the prices crash and there are no buyers L The obvious reason is that you buy a shirt for the value that it offers today not because you hope to sell it back at a profit to somebody else tomorrow. On the other hand, you buy a stock for its future appreciation in value. So when stock prices come off, there is always an expectation that they will be available cheaper tomorrow. Hence the successful purchase of a stock is one that appreciates today, tomorrow and the day after too! This uncertainty about future prices is what makes stock price behaviour very different from the real world. As a result, declining stock prices do not necessarily mean that buyers will flock in. Thus, in the stock market there are periods when there is a collective consensus that stock prices can only appreciate. These periods typically occur at the extreme of a 'bull market' (Remember Feb 2000?). At this extreme everybody wants to buy because it might be too late to buy tomorrow and nobody wants to sell.Similarly, there are periods of collective consensus that stock prices can only decline. Such periods typically occur at the end of a 'bear market' (Dec 1998?). At this point nobody wants to buy, they want to wait for prices to fall further before buying. And those who already own stocks want to get out so that they can get back in later and cheaper!For many of you this behaviour of the market is nothing new. However, this is an interesting corollary. If there is a collective consensus in the market on the future direction of prices either up or down, then that event is more unlikely to happen.Here is why?If 90% of the market participants think that all the stocks will be available cheaper the next day, then most of them would have sold the stocks they hold. They must be mad holding it when they are so sure! The smarter ones would have short sold. The next day there are only willing sellers and no buyers. All it needs then is one buyer or somebody to change their mind J Next time when everybody around you is sure that stock prices will fall further tomorrow and the day after, be ready to turn a buyer. But then how would you protect yourself from the uncertainty that could still persist? You can rein in the uncertainty by buying more than one stock. Basically, put your eggs in more than one basket. In fact, a big benefit of having a diversified portfolio is that the fortunes of your investment do not depend on just one stock. Hence, you would be more inclined to buy a beaten down stock, which could ultimately prove rewarding over time.Stretch your investment horizonA better way to reduce risk is to stretch your investment horizon. Imagine buying a good stock when everybody has turned negative on the market with a five-year horizon. There are scores of examples available. In fact 'Voting for stocks' highlights how the seemingly insurmountable short-term uncertainty disappears over the long term.The key is to always retain once perspective during extreme periods for the market. When everybody looks at stock prices trading at a steep discount and believes that they will get it even cheaper tomorrow is probably when you need to grab the offer.

Disclaimer : This is only my views and not firm news and therefore I am not responsible for any kind of damaged or loss to viewer's property of funds. They can take their own decision for buying the stock/s at their own risk.