These days the markets are mixed. Some days it sky rockets and other days it crashes. There is nothing major in the economic situation around the world but still the investors are not sure about the situation. Some feel that things are going to be fine in some time whereas most of the investors feel the other way around.
There was a big bull run in the markets from past few weeks and pundits were predicting 21k mark in the next few months and today surprisingly the same pundits have waved a red flag and they think the situation might change and the sensex might get down to 14k levels and stabilize at this level only. This is very confusing to me and I don’t want to elaborate on the pundits and their efficiency.
Investors are not sure about the situation of the company. These days it is not easy to analyze the situation. I was thinking of investing in one of the ITES Company. Here is my analysis of the company and my thoughts on the same.
The Company was established in the year 1999. They had around 12k employees and the turnover is around 300 million dollars. They are doing pretty fine. They have some 30 fortune 500 companies as their clients. This is a morale boost for any investor. I checked their balance sheet they have some nice assets like property and infrastructure. Recently they fired around 300 people to strengthen their holdings which translates to me directly that one of the clients withdrew the services.
When the company fires people generally the investors buy that company shares and it makes sense as an investor. Since the expenses decreases and the investors is directly benefitted from such a move. I used to think why the company fire people and now I know why they do. The companies at the time of distress want to ensure that the spending decreases and what can be better than firing people. This is the easiest way of reducing the expenditure.
As a investor I am not sure what will be the prospects of this company. Since it is a service based company things look bleak. The fortune 500 companies itself are in trouble and when they are given an option to reduce expenditure they will start with stopping the out sourcing since the jobs that are out sourced are customer support. When things look bleak this is the first that gets hit. The customer support is not very crucial aspect of any company it is an added value to the company. When the company is taking a blow they will shut its operations slowly. If such a thing happens the company I am going to invest with which is dependent on the company will in turn take the blow. This will reduce their earnings.
Just to invest some money that I have, I think so much. You can assume how much the fund managers and others will be thinking to invest the money that they have.
The situation seems bad and I don’t have much courage to invest at this point of time. I should have invested two to three months back and now it is scary for me.