FM delivers what was expected

Yes our FM has delivered what was expected and that is a populist budget. With the assembly elections looming ahead the timing couldn’t be more apt and he is right on cue to please the Indian populace by raising the income tax limits to Rs. 180, 000 and Rs. 150, 000 for women and men respectively. Or maybe, he could have raised the tax exemption limit from Rs. 100, 000 to Rs. 150, 000 to encourage savings. This is open for debate.

The one thing that definitely doesn’t make sense is the raising of Short Term gains tax from 10% to 15%. This can have two fallouts; either it doesn’t encourage day traders and a lot of people who are new to the stock markets to book profits early and periodically or a lot of people who book handsome gains but would shy away from actually disclosing their profits to avoid tax.

Yes one might argue this would do well to cultivate and inculcate values of long term investing which is free from any tax. The Great Indian middle class who is slowly waking up to virtues of investing in the stock markets would be wary of these kinds of taxes. It’s generally seen these tax structures are a big deterrent to a layman who has never invested in the markets and such news would certainly add to the confusion. The recently listed Reliance Power IPO has also dented many a first time investor’s confidence. Also it’s a little harsh on the day trader who handsomely contributes to the volumes in the stock markets and lends liquidity.

Meanwhile let’s celebrate, after all our wallets are going to a little heavier this year J

Tracking your portfolio too often ...

Are you one of those people who are waiting for the market to open everyday so that you can track the value of your portfolio. Or are you someone who is looking for a site like mantya.com so that you wont have to hit refresh on the ICICIDirect page. If yes then this is something that you must avoid since this is not very good for your health. The book Fooled by Randomness, which by the  way is a best seller suggests that the amount of pain inflicted when ones stock goes down is more than the amount of happiness one gains when ones stock goes up. Something directly from the book

You feel some pleasure when the performance is positive but not in the equivalent amount as the pain experienced when the performance is negative.

This is something I can personally vouch to, I used to track my portfolio minute by minute on ICICIDirect to see the small changes in my stock value. After reading this I decided not to do that and check my stock value only once a day after the markets have closed and it helps. Clearly you cannot do this if you are involved in some sort of margin trading and plan to make money out of the Intra day fluctuations in the market.

Mutual Funds in Volatile Markets

The past 3 months at the stock market have been very volatile to say the least. At times like this can we trust the experts to conjure up a decent rate of return for us? Let say instead of investing in the equities directly and we hand over this task over to the experts i.e. invest in a Mutual Fund, to be specific an Equity Diversified Fund (EDF).

Analysis shows this may not be a good idea after all. Almost none of the EDF have given positive returns, at times when a common man would have found the going tough in the markets. Only one EDF, Reliance Regular Savings Fund has given a return of about 7.5%. The performance of some of the Gold Funds has been better, with some of them giving up to 18% returns. One may choose selectively going further then.

Meanwhile in a panel of speakers hosted by the The Economic Times, Tata Mutual MD Ved Prakash Chaturvedi is of the opinion that the market will be at 18000 levels on December 31, 2008. But still feels the mutual fund managers can beat that and deliver positive returns for the investors.

Here’s a light excerpt from one of the related articles.

After Albert Einstein died and reached the gates of heaven, St Peter asked him to temporarily share lodgings with three others till he was alloted space. St Peter introduced the room-mates by their IQ levels. As two of them had IQs of over 200, Einstein decided to discuss his theory of relativity and global warming. St Peter then pointed to the third person and apologetically said he had an IQ of just 60. “No problem,” said Einstein, “We can discuss where the stock market is headed.”

DISCLOSURE: All investments are subject to markets risks and should only be done after through consultation with a registered financial planner.

Sub-Prime market and Consequences

What are sub-prime mortgages

Simply put, Sub-prime mortgages is practice of lending money to people with lower credit ratings. Prime lending is the normal lending practice and the rates of interest in sub prime would normally be a couple of percent more than a similar prime lending loan.

What is Securitisation

Securitisation is the process of converting future cash flows into tradeable bond like packages. These future cash flows can be anything from future home loans, student loans, credit card payments and even music royalties. Securities can be very useful as you can use the money that you were going to get in the future.

What happened in the current scenario

A type of security backed asset called collateralized debt obligation(CDO) based its future cash flow on sub-prime mortgages. With the default rates in the sub-prime mortgages rising the value of these CDO started falling exponentially. These securities which had a value of billions of dollars suddenly became useless. This created a massive credit crunch with banks not able to finance things with these securities. A slump in housing market caused a world wide credit crunch because in this global economy these CDOs were brought and sold by banks all over the world. The extent of damage caused by these CDOs is still not clear even after Banks around the world have taken big hits on their balance sheets in the financial quarter. There is a school of thought that suggests that Securitisation encouraged lax lending practices. 

(The Consequences of Mortgage Credit Expansion - Study link here)

What is the future of structured Financing

Even the most ardent opponent of Structured Financing and Securitisation will agree to the fact that it has brought a lot of benefits to economies across the world. To throw Financial engineering out of the window because of the sub-prime problems would be wrong. This quote from the Economist.com article stuck "So it may just be a matter of hanging on. As any punter in Las Vegas will tell you, every losing streak ends eventually, if you can only stay solvent for long enough."

REC: Is the Retail Investor Missing Out

Before the Reliance Power IPO a lot of investors seemed to be sitting out of IPOs for some totally different reason; to avoid the anguish of not getting allotment. But post the Reliance Power IPO, the same investors are staying away from the fear of getting an allotment and a volatile market.

It seems like the retail investor is missing out on a decently priced issue. As of the 3^rd day it has been subscribed only 0.78 times in the retail section. Also the PE of the stock is quite lower than that of the currently listed Power Finance Corporation (PFC). The lending exposure of REC has also improved with a 27% share of power generation projects in its portfolio. With a strong thrust on Power related projects on which India’s future depends this seems like a decent stock if not one of those star performers.

Download the Prospectus.

DISCLOSURE: All investment decisions have to be taken only after sound advice from a registered financial consultant. This blog is in no way responsible for any investment decisions and exposure to the stock markets.

Plan Ahead. Get Organized.

Well with many of us running around to meet deadlines to avail various tax benefits, can we plan and have a better year the next time around. Here are some suggestions to get in shape financially.

1) Early bird gets the interest.

With our income levels rising and many of us having some surplus cash to invest, invest early. Many of us must be owning a PPF Account (Guys, if you don't have one yet get one fast.) instead waiting for the fiscal year to end, invest by 1st week of April. This amount with your earlier invested amount is going to earn you a whole year's interest.

2) Get a contingency fund.

Many of us living a fast life and several dependants to take care of you never know what is going to strike you. Plan and park a decent amount of money in a risk free account (ideally a FD) to take care of those unwanted surprises.

3) Get a Life Insurance Policy.

A lot of us already must be having Life Insurances Policies already but is it really enough for your family? Well check out Term life insurance policies where you can get insured yourself for a larger sum for a smaller premium. Generally you won't get your premiums paid at the end of the term but there are some policies which will. Ask your insurance agent for this.

4) Invest regularly. Understand compounding.

Discipline yourself to save a portion of your money monthly. To achieve this check out various SIP schemes of successful Mutual Fund houses. Look out for a good history and a good track record. You will find loads of information. One good place to start is here.

If you are risk averse get a monthly Recurring Deposit account in a bank.

And yes most importantly understand Compounding. That's why getting a PPF account makes sense.

5) Get a home.

Though not easy but this is a great option for anyone who can avail of a home loan or with some surplus amount of money. While on the home loan front you can avail of attractive tax benefits. On the other it can become one of your assets. It can be a great little getaway when you want to retire. Happy Investing.

DISCLOSURE: All decisions have to be taken only after through research and sound advice. This blog is in no way responsible for anyone's actions.

Fastest growing Indian Business

Read this article on time.com and you would be surprised to know what has become one of India's fastest growing business. This is not entirely surprising if you take into the consideration what India surfs for on the net. According to a India Online 2007 (A survey conducted by JuxtConsult, an online research solutions consultancy firm), 48 percent of urban net users in India use the Internet for online matrimonial search.The popularity of online matrimonial search has really surged in last one year. Last year the percentage of all net users undertaking matrimonial search was only 15 per cent. At 48 per cent usage level now, the category has seen an addition of a 33 per cent of all net users joining the category in this year. With so many Indians looking for a soul mate online, the number of users in this category has increased exponentially and along with that has increased the fraud that goes along with it. More and more people are looking at Dating detectives to find out that they are not being cheated.

BTW the most used activities on the net are email, job search and instant messaging.

Mint – Organize your finances

For readers in the US here's a useful site that will be able to help you out to manage finances smartly. This is a web application wherein you can find all your finances at one place. Also they provide tracking tools to see where your money is being spent through friendly charts, track your bills and plan your budgets.

Visit the website Mint.

Indian Economy Slowing . . .

With our markets turning the tide over the past few days not all confidence is back. With the Sensex putting a good show many wonder with glee of getting back into the market. Key economic data made available this week throws caution to the wind.

Industrial production for December '07 has fallen to 7.6% compared to 13.4% in December '06. Also the Core sector growth , comprising of crude oil, steel, cement, electricity, coal and refinery was 4% in Decemeber '07 as opposed to 9% in the corresponding month in the previous year. One might argue this is just a sign of the economy slowing in line with the global economy especially since our exports are hit hard due to a strong rupee. Our GDP too has been expected to grow at a rate of 8.7%

This does raise concerns over India's competitive relationship with China. Though China's GDP is slowing too; it is still growing at a rate faster than India's. To catch up or atleast maintain a healthy gap between India and China so as to not China get away with the cake we need to continuously clock growth rates higher than currently forecasted. As they say - We live in interesting times. Hope our FM comes up with his magic potion for the economy soon.

 

The optimist in me........

If you go through the various business sites related to the US, most of them would have articles about whether US is headed for a recession or not or is US already in a recession. Even though most of the articles point that the US is headed for a recession or is already there; I would always end up reading one that says positive things about the economy and the market. Like this one which speaks about the fourth quarter earnings of various companies, if you leave the financial sector out the others have been doing well. But as the article explains the losses of the Financial sector are too big to ignore, the hope is that we have seen the worst and things will improve in the coming quarters. Every time the Indian market loses a few hundred points(seems a daily phenomenon to lose a few hundred points), I hope that the market has found its bottom and will gain over the coming period. That has not been the case and at 16500 we have analysts saying that we may lose another twenty percent in sometime. But the optimist in me says Investing in companies having strong fundamentals will give great returns, how much time it will take for the markets to return to its bullish ways is  the million dollar question...

ADAG plans a new IPO... Will you get carried away this time?

There is news floating around that ADAG might file for DRHP with SEBI for Reliance entertainment IPO.

All about Reliance Entertainment.. (ADA Group)

Reliance Entertainment is spearheading the Group’s foray into the media and entertainment space. Reliance Entertainment’s core focus is to build significant presence for Reliance in the Entertainment eco-system: across content and distribution platforms.The key content initiative are across Movies, Music, Sports, Gaming, Internet & mobile portals, leading to direct opportunities in delivery across the emerging digital distribution platforms: digital cinema, IPTV, DTH and Mobile TV.Reliance ADA Group acquired Adlabs Films Limited in 2005, one of the largest entertainment companies in India, which has interests in film processing, production, exhibition & digital cinema.
Reliance Entertainment has made an entry into the FM Radio business through Adlabs Radio www.big927fm.com Having won 45 stations in the recent bidding, BIG 92.7 FM is already India’s largest private FM radio network with 12 radio stations across the country as on 28th February 2007, with many more to be launched in the coming months.

I'll surely think twice before applying for this one. How about you?

Regards
HM

Reliance Power and a frivolous excuse

Reliance Power today came out saying that global factors were to blame for it's IPO listing so terribly. Is it really so? It seems that the promoters have gone too far with their optimistic pricing and have been victims of their own game. Deep analysis shows that promoters after all have made money already and retail investors are left in the lurch.

By going through some reports about their current and projected capacities, NTPC seems to be available at a really cheap market price. How does one justify the excuse given as "global factors" when all of them or atleast most of the future projects are going to be based in India. So it seems not only they factored reasons core to their future plans but buoyancy in our capital markets rake in some moolah. Surely lot of the investors got allured by the Reliance brand name and especially a lot of them who got their demat accounts opened only for this IPO. This will not go well with the first time investors and create a general negative sentiment regarding the Reliance pack among these people.

Are the promoters only to blame for this? Reliance Power has for sure consulted the bankers before coming out with this issue. It depends upon the bankers to come up with a fair price for the Reliance Power IPO. Do they really feel that was a fair price band based on the company's growth prospectus keeping in mind the domestic focus, then why blame global factors.

Credit has to be given to the promoters about marketing the issue well for the retail investors. A discount on the upper limit and full payment not being required at the time of subscription. Oh yeah, that's sweet, it was for me too.

One hard truth is, a lot of investors have lost money and hopefully the ADAG group gives us some reasons to cheer in the future.

IPO party may be over !!

IPO (Initial Public offering) was the most happening thing or rather something which attracted almost everyone in last few months. Every Tom, Dawood or Hari with no knowledge of the actual business or the profit margins of the company was more than willing to apply the maximum number of shares offered to a retail investor.

Well, Markets did not play a spoilsport either. Most of the IPO's listed in last few months have made the retails investors happy by not only giving handsome gains on listing but also sustaining the levels. Few examples in last couple of months would be Burnpur cement(listing gains of 350%) (I still regret not applying for this one), Edelweiss Cap(100% premium), Allied Computers (current gains of 191%).

But, as they say Grass is not always green. The present day scenario is a complete different story. The events that took place in last few days are more than terrifying,,,

a) Wockhardt recalls the IPO after poor subscription.
b) Emaar MGF recalls as well.
c) Future Capital (IPO that was oversubscribed 130 times opens with a small premium of 40%)
d) Reliance power (ADAG company), most talked IPO of the year so far falls flat on its face. (closes below the issue price.)
e) J Kumar Infra (listed today and currently trading with a loss of 18%)

I personally applied for both Future Cap and Rel Power, not bothering much about the business model or current valuations or future growth plans. And here I am (always hoped for booking huge listing day profit), sitting with a mere 20% gain on Future Cap and still trying to cope up with the Rel Power disaster.

Lets hope to see those 500+ trading sessions in near future which may bring smiles back for many small investors.

Till then Happy Investing :)
Hanif Merchant

Maintain stock portfolio without login

This web site created by me allows you to maintain a list of stock portfolio without the "jhanjhat" of registration and login.It uses cookies for the same.
The symbol should be from ICICI Direct and only NSE stock prices can be seen.This is auto refreshed after 3 minutes.There may be some errors but please bear with me for the same
Donot press F5 it may show wierd results

http://www.mantya.com/stockwatch/quickstockwatch.aspx

Margin and Margin Plus trading in ICICI Direct

ICICI Directmargin trading you can square off the position between 9.55 am to 2.45pm,after 2.45pm system can any time square it off.
Every time you open an application there is a temporary image of the same application being stored in the computer. When these images get accumulated they affect the smooth functioning of your computer. Hence it is always advisable to clear your cache memory with below mentioned procedure:
1.a. Click on Toolsb. Go to Internet Optionsc. Click Temporary Internet Filesd. Click Delete Filese. Click ok
2. a. Go to Tools b. Internet Optionsc. Temporary Internet Filesd. Settingse. Check for newer version of stored pagesf. Set to " Every visit to the page. "
After checking the above, we request you to go to:
1. Tools 2. Internet Options 3. Security 4. Click on Custom Level 5. Ensure that everything is enabled
Then click on:
1. Default Level 2. Ensure that the security level under this section is Medium Low
For your information, the below mentioned settings as per preferred requirement which is more compatible with ICICI Direct:
1. Operating system ( Window )2. Browser ( Internet Explorer 5 or 6 )3. Internet Service Provider ( VSNL or MTNL )4. Connection ( Dial Up Connection and LAN )
In CASH delivery based trading, the shares would be credited to your demat account on Trading+2 working day. Suppose if you had purchased shares on Monday (trading T-day), Tuesday will be the T+1 working day and Wednesday will be the T+2 working day. On T+2 working end of the day the shares would be credited. Once the shares are credited to your demat account, you can sell the shares.
If you want to sell the shares which are purchased on same day (i.e., trading day in "Cash"), you can go for sell link and you can place the sell order. If the stock is under rolling segment, you can buy and sell on same day under cash segment.
In cash you would be unable to short sell the shares. You need to have the shares in your demat account before selling.
The Margin and Margin Plus trading can be done only in market hours. The margin option is enabled only in the market hours in buy or sell link.
In Margin and Margin Plus trading you can short sell the shares.
Margin trading is known as an intra day trading wherein if you place a buy order, you will have to place a sell order by the end of the day (i.e., 2:40) or vice versa. The transaction placed by you in margin either needs to be squared off or needs to be converted to delivery before the end of settlement.
In case you fail to convert or square off your positions the system would automatically place a square off order by the end of the settlement. Also margin trading is funded by certain percentage of cash trading i.e., you need not require to pay 100% of the transaction amount while placing the order. The margin segment also enables you to short sell shares i.e., sell shares though they are not available in your demat balances.
However, in cash trading if you do not square off you would receive the shares in your demat account directly. In cash segment you need to have 100% of cash while placing a buy order and you need to have shares in your account while placing a sell order.
To trade in margin all you will have to do is just select the margin option from the product down on the buy or sell page. All the other factors while placing the order would remain the same.
Only the initial margin would be blocked at the time of placing the order. For example:
You want to place a buy order for 100 shares @ Rs.4,000 of INFTEC and the margin percentage for the same is 10% then the margin amount blocked would be:
100 * 4000 * 10% = Rs.40,000.
This means that you would be required to allocate at least Rs.40,000 to take a position in margin segment.
For placing the square off order (if you had purchased, then for placing the sell order), select the Margin Positions link, in that you find "Square off" link, click the same and place the square off order.
For viewing the stocks which are tradable in Margin and Margin Plus trading, we request you to follow the below procedure:
1. Login to our website www.icicidirect.com.2. Select "Stock List" option in "Equity" section.3. Select "Product" as Margin/Margin Plus.4. Select "Exchange" as NSE.5. Click on "Go" button.
Once you follow the procedure, you would be able to see the list of stocks which are tradable under Margin/Margin Plus. You can also check the margin percentage required for a particular scrip.
Margin PLUS trading offers an order placement feature through which you can take a intra-day position in the equity segment and at the same time, place a cover order for this position specifying the Stop Loss Trigger Price and the limit price. This cover order will help you to limit the loss, if any, on the position.
How does Margin Plus work?At the time of taking a position in Margin Plus, you would also be required to specify a Stop Loss Order, and hence limiting your loss to that extent. Since the risk is now limited to the difference between your Buy/Sell rate and the Stop loss Order price, margin will be primarily based on this difference.
FeaturesMargin Plus is available for intraday trading in more than100 stocks on www.icicidirect.com site.Margin requirement could be as low as 5%. Helps to limit your loss through a Stop Loss Order. Open Margin Plus positions can be closed any time before the End of Settlement timings as specified by ICICIdirect.com Auto Square off process to help you close your open positions at the End of the Day. How to place a Margin Plus order?Allocate the funds for trading in Equity segment. Select the link "Margin Plus order" on the trading page. Select the Buy/Sell option and the Stock for trading. (Orders may be placed only during market hours)The first Buy/Sell order has to be a market order. At the time of placing this order, also select a cover Stop Loss Trigger Price (SLTP) order. Example of a Margin Plus order: If you place a buy order in Margin Plus for 100 shares of XYZ Co at market price, then your order will look like: Buy order at Rs.100 (got executed at Market price) for 100 shares. Cover order (Sell order) SLTP Rs.98. Limit Price (Rs.98 minus 5% of Rs.98) Rs.93. Where as, 5% is a minimum difference for the script as per Stock List. In this Scenario Margin Blocked per share will be: Rs.100 - Rs.93 = Rs.7.00
Hence, total margin blocked will be Rs.700 (Rs.7 * 100).
You have to square of your position by 2:45 p.m. Otherwise system places the square off order at market price.
Once you place the order, if you want to track your profit or loss you are making at that moment, you may check the same from "MarginPlus Position" link.
If you are in profits and if you want to square off your position, you have to select the "Modify" option, the square off order page opens and select the order type as "Market" and "Submit". Once you do the same the order would be executed at the current market price.
If you are going in losses, SLTP would be triggered once market price matches with the SLTP and you will be out of the market.
We like to inform you that there is an option called as BTST.
BTST means Buy Today Sell Tomorrow. The BTST is used only for selling the stocks. After purchasing the stocks, if you want to sell the stocks before they credit to your demat account, you go for BTST facility.
Incase you purchase some shares today and if you want to sell the shares tomorrow or day after tomorrow, you have to check whether that stock is having Buy Today and Sell Tomorrow (BTST) option or not. For crediting the shares into your account it takes Trading day T, T+1 and T+2 working days.
If you want to sell your scripts in BTST on T+1 or T+2 working day, you need to sell them from the "Security Projection" option which is in the Equity Trading page. If that script is under BTST you find a link called "BTST Sell" and you have to click that link and you will be getting a BTST Sell page from where you can place the order on T+1 or T+2 working day to sell the shares and this BTST facility is available only under NSE Exchange.
Generally, if you want to sell shares in BTST, you need to check whether the stock is listed under BTST segment or not. To check the same you need to follow the below mentioned procedure:
Visit our site www.icicidirect.com. Go to "Stock List" option. Give the Stock name in Stock option . Select the Exchange as NSE. Under Product drop down box, select BTST. Click "Go".Once you click, you will be able to know whether the share which you have given is listed under BTST or not.

Markets searching for Leadership?

The Bombay Stock Exchange and the National Stock Exchange for quite sometime are showing a flip-flop behaviour triggered by global events more importantly worries of a US recession. This being the fact that the US Fed has cut interest rates repeatedly, which usually is a reason for our markets to cheer.

Should we really look for external factors before believing our own domestic story? Or is it the case of the domestic story hinging upon global factors upon which it bound to slow down in the times to come. Surely the consumerism shown by the present Indian middle class can vouch for a strong growth momentum being maintained on the domestic front.

Stocks like RNRL, RPL, India Infoline etc. had sky rocketed based on factors other than their current intrinsic values. Now the same people who had bet on their positive outlook for the future seem to have lost their belief for reasons unknown. Are we waiting for the FIIs to show us the way? Or is the time right, to set the ball rolling for a year bigger than 2007.

PUNJ LLOYD Ltd.

The Company has posted a net profit of Rs 391.60 million for the quarter ended December 31, 2007 as compared to Rs 190.30 million for the quarter ended December 31, 2006. Total Income has increased from Rs 6694.10 million for the quarter ended December 31, 2006 to Rs 12582.00 million for the quarter ended December 31, 2007.

NSE Code PUNJLLOYDEQ Date & Time 2/6/2008 3:36:49 PM Current 390.00 Open 390.00 Change -11.00 High 395.00 % Change -2.74 Low 376.00 Prev Close 401.00 52 Week high 656.00 Volume 0 52 Week Low 142.31

Research Link:

http://myiris.com/shares/research/brokResearch/bin/showRep.php?redir=/shares/research/ESSBL/PUNLLOY1_20080204.pdf&linkfrm=pdf&brokercode=ESSBL&code=PUNJ LLOYD

Core Projects and Technologies

Core Projects and Technologies is a India based IT solutions provider company. With the appreciating rupee, the Technology sector has not done very well in the last year.In its last quarterly results, it posted a 118 percent increase in profits and its value increased from about 200 to about 450 in the space of a couple of months. With the stock markets crashing around the world the value of this stock has pulled back to the level of 220-230. This is an attractive level to enter this stock. With the AV Birla group picking up a five percent stake in this company, the stock looks in great shape for the future.

link to the birla group story
http://www.indiainfoline.com/news/innernews.asp?storyId=57196&lmn=1
another block deal that was carried out in Jan
http://www.myiris.com/newsCentre/storyShownew.php?fileR=20080118194410121&secID=fromnewsroom&secTitle=From%20the%20News%20Room&dir=2008/01/18

Experts to write posts on this blog

This blog will contain expert comments from the three great experts of the Indian Stock Market, Hanif, Noopur and Swapnil. Their experience in the Financial Industry comes from speculative gambling in the Indian stock markets. From what they have seen in the years of Investment in the markets is the Markets always get the better of the experts. There is an article that is posted on Moneycontrol.com which predicts how the Indian market is going to behave, we feel this completely bases its opinion on how the Asian markets behaved earlier in the day. We are of the opinion that we can also provide such expert comments and this blog would contain our recommendations, which already has made a million millionaires and we are looking forward to replace "m" with "b".