Demat Account India

Indian Food Industry

2012-07-04T03:16:00.000-07:00

India is a land of lands. Not only is the primary occupation agriculture here but also due to various culture diversification, there are a variety of foods to be found here. And now with the ever increasing use of technology, India has become one of the leading exporters in food and food materials.

India‘s level of processing food material is also quite high considering how backwards it was not so long ago. The level of processing fruits and vegetables has increased upto 6%, around 38% for milk, 22% for meat and around 9% for poultry products.

The operation, ‘white flood’ was implemented in 1950s and 1960s. This execution met with a phenomenal success rate. Today, India is amongst the top 3 producers of milk and milk products. The total dairy industry in India is expected to soar upto 83 million US $ by 2015. The major and perhaps the most vital contribution comes from the processed milk and milk products which fetches nearly 75%in value terms and 25% in volume terms.

The major contribution comes from the unorganized sector in the form of milk products such as sweets, home-made ghee (clarified butter), yogurt, curd, butter milk and sweet butter milk (lassi), etc.

The Beer and wine industry is one of the most upcoming sectors in the Indian food industry. The consumption of beer is growing annually at a rough estimate of 7%. India is witnessing a high growth in the same sector at the rate of 30%. The total market size of beer and wine industry is expected to grow upto US $ 5 billion by 2015, with a major contribution coming from India alone.

In the current thriving scenario, India needs to establish an incorporated supply chain which should include warehousing, cold chain and transport from farm gates to the food plates for strong backward and forward integrations.

The public-private partnerships should be allowed and encouraged in the joint infrastructure project sectors, R&D capacity, sharing of information and international branding, etc. A standard transfer is required in the production system from supply driven towards market demanding driven production. It will require a collective endeavor by all stakeholders which includes R&D organizations, extensions, market players and the government machinery and infrastructure.

Transfer of technology, capacity building and upgradation of skills, strong links are necessary to be re-built to transfer the technology that has been developed in isolation at various public and private sectors to identify research organizations to their respective targeted beneficiaries.

What is net worth and how it is useful?

2012-06-26T02:29:00.002-07:00

What exactly do you mean by net worth? The amount by which an organization or individual’s resources exceed its liabilities is known as net worth.

When it comes to counting, Assets are things that you or your entrepreneurship owns, liability are things that you or your entrepreneurship owe to someone else , so therefore net worth in simple language means your actual worth.

This is a very important aspect as normally an organization compares itself to the other to observe its standing.

An organization which has a positive net worth is well financed and thus is able to finance its current operations without fearing or defaulting in paying its suppliers and other liabilities.

When an organization does not have enough assets to settle or clear its obligations is known as a negative net worth. There is a general fear that the day-to-day operations may stop functioning in the organization and the creditors may have to run after the organization’s assets to satisfy their obligations.

This also means that the organization is more of a type where it is actually owned by its creditors rather than its owners. Therefore impending ‘net worth’ in this unusual way (read holistic) keeps things in outlook and can provide various opportunities for us to get all assets as well as providing an opportunity to actually calculate the cost of carrying non-financial liabilities during our life time. It also acts as a reminder for us to focus purely on money as a calculation of ‘net worth’ is a very simple and potentially devaluing vantage issue.

So, how does one increase its net worth?

Here are a few points to focus on:

1) Try and save un-necessary expenditure. Put a budget together and stick to it.

2) Focus on eco-friendly initiatives such as saving electricity and water if you are paying for them from your own pocket.

3) Buy your necessary stationery from a wholesale store

4) Avoid usage of phone calls until and unless absolutely required

5) Walk more and try to avoid usage of vehicles. You can use public transport too.

Increasing your network is also another way of increasing your net worth. Networking is nothing but staying connect with people who are associated with your day-to-day work. Building relationships with people – the people who are related to work and higher the quality of these people, the better.

It is all about developing a rapport and staying connected to these people for a long term relationship.

Remember, developing support is the key to this relationship and over a period of time, when you develop trust, you know that you have these people in your database forever.

Get the feel of actual Stock Market with Stock Trading Simulators

2012-06-20T23:44:00.000-07:00

Stock Trading Simulator are stock trading based games that feature a virtual stock market. These games are developed and ideated mostly by stock brokers, to give its clients a feel of the actual stock market and get some hands on training and confidence before they begin trading in the actual Stock Market.

Stock Market simulators are of two different types, i.e. Financial Market simulators and Fantasy simulators.

Financial Simulators

Financial market simulators allow its users to generate a virtual portfolio which is based on real stock entries but is bought with virtual currency. A majority of the current active financial simulators use delayed data feed between 15-20 minutes to ensure that traders do not use their data to trade actively on a competing system.

The main purpose behind such a system is to let the investor get hands on practice with fantasy funds in a real-life situation so that they can understand and determine whether they would or not gain money by investing all by themselves.

Fantasy Simulators

Fantasy simulators trade in shares or derivatives of real world items or things that usually are not listed on a commodities trading list or market exchange. For e..g, movies, television shows, etc. Some of these simulators focus on sports and may or may not have been linked to active betting and wager based systems.

Technology behind these simulators

Many of these online stock simulators use Java, Javascript, ASP or php with a mysql or postgresql database. Many of them are based on open source and others are proprietary with the codes being marketed as priceless market software. This technology has been sold to a lot of film studios such as MGM and Lion’s Gate films and also to many popular science teams for usage in their PPX systems.

The stock market simulator engines can be customized for being used in other functions other than basic stock information tracking. The HSX engine has also been modified to trace popular science trends and is very useful in tracking YouTube videos.

Other various applications that can be used for implementation with this software including popularity tracking and ranking from a set scale rather than actual numerical values.

Many of these Stock market games are speculative that allow its players to trade in stocks or in a virtual or simulated share market.

There are many stock market games which exist in several forms but the basic concept in these games is to allow players to gain experience in trading in the stock market or just for entertainment by trading stocks in a virtual world where there is no actual risk.

Some stock market games do not involve real money at all. Players compete with each other to actually see who can predict the direction of the stock markets. Many stock market games are based on real life stocks from NSE, BSE, etc.

These games are useful for people who don’t know anything about the stock market but want to invest in stock market.

It allows them to get a feel of the actual market without involving any risk factor.

Get the feel of actual Stock Market with Stock Trading Simulators

2012-06-19T00:21:00.000-07:00

Stock Market simulators are of two different types, i.e. Financial Market simulators and Fantasy simulators.

Financial Simulators

Fantasy Simulators

Technology behind these simulators

Other various applications that can be used for implementation with this software including popularity tracking and ranking from a set scale rather than actual numerical values.

Many of these Stock market games are speculative that allow its players to trade in stocks or in a virtual or simulated share market.

These games are useful for people who don’t know anything about the stock market but want to invest in stock market.

It allows them to get a feel of the actual market without involving any risk factor.

Initial Public Offering – A boon or a curse for investors?

2012-06-12T01:31:00.002-07:00

An Initial Public Offering (IPO) or a share market launch is the very first sale of a stock by a company to the public. It is a type of public offering as a result of which the private company turns into a public company. This kind of process is used by various companies to raise or expand their capital and become a public based trading enterprise. Many companies that undertake an IPO also request the assistance of an investment banking firm which acts in the capacity of an underwriter by aiding them correctly to assess the face value of their shares i.e. the share price.

Whenever a company lists its shares on a public exchange platform, the money paid by the investors for the recent issued shares directly goes to the company. This is in contrast to a much later trade of shares on the exchange and the money has to pass in between the investors.

Therefore an IPO, allows a company to gather a wide pool of investors to provide itself with capital revenue for future growth, repayment of debt or working capital. A company that sells its common shares is never required to repay its capital back to the investors.

Once a company is listed, it will be able to issue extra common shares via a secondary offering, thus providing itself again with a capital for expansion without incurring any debts.

This ability to raise large amounts of capital from the market in a short span of time is a key reason for many companies seeking to go public.

There are many benefits on offer after becoming a public limited company. Some of them are listed below:

1) Bolstering and assorted equity base

2) Allowing cheap access to capital

3) Providing, exposure, prestige and public image to the company

4) Attraction and retaining better management and employees through liquid equity participation

5) Facilitating acquisitions from various investors

6) Creating multiple financing opportunities via equity, convertible debt, cheaper bank loans, etc.

Thus IPO’s can be a mixed bag as an investment option. One must carry out the necessary investigations, background and reference check for a newly turned public limited company before investing their money. However, one must also simultaneously remember that investments are a long term process and one must show maximum patience during the investment period. The long term benefits can prove really a boon, if the investor shows the right amount of patience while investing in the right place.

The difference between a financial and an investment advisor

2012-06-11T01:58:00.000-07:00

Investment Advisor is either a firm or an individual that provides advice or guidance to its clients regarding securities (financial).

It guides and advices on securities such as investment in stocks, bonds, mutual funds, or exchange traded funds are investment advisers. Some investment advisers manage portfolios of securities.

The main difference between an investment advisory and a financial planner is that almost all financial planners are investment advisers but not all investment advisers are financial planners. Some financial planners assess every aspect of an individual’s financial life which includes savings, investments, insurance, taxes, retirement and in some cases estate planning as well. After their assessment, they help the individual to develop a detailed strategy, insurance, taxes, retirement and estate planning.

They also help you to develop a strategy or a financial plan for meeting your day to day financial goals.

Before hiring the services of any financial professional, one must know what kind of services is exactly required and what kind of a background does the financial professional hold. After all you are going to invest your hard earned money therefore it is very necessary for you to know everything about your investment advisory.

1) To how many people do you provide advices regarding investments?

2) What is your educational background?

3) With which stock broking organization are you associated with?

4) Which are the licenses you hold?

5) What products and services do you offer?

6) What is the commission that you charge for your services?

Also one needs to know how the investor advisers are paid in order to make better use of the services that are provided to them.

1) A percentage of the total value of the assets that they manage for you.

2) An hourly or daily fee on the basis of their handling of your work.

3) A fixed fee for the services that they offer you.

4) A commission on the basis of the securities that they buy/sell for you.

5) A small combination of everything mentioned above.

All the compensation methods have potential benefits and possibly drawbacks, based on your individual needs. You must ask the investment advisory to explain you all the differences thoroughly before you do any business with them.

One must also ask if these service fees are negotiable or they are a onetime fixed amount. Based on your needs and requirements, the investment advisers will provide you with various strategies that will cater to your financial needs.

Indian stock market and companies daily report (June 08, 2012, Friday)

2012-06-07T23:17:00.000-07:00

The Indian markets are expected to open in the red tracing negative opening in most of the Asian bourses and the SGX Nifty. Asian stocks were trading lower after comments by Federal Reserve Chairman Ben S. Bernanke overshadowed China’s first interest-rate cut since 2008.
The People’s Bank of China has lowered its benchmark lending and deposit rates by 25 basis points. The announcement, two days before China is due to report inflation, investment and output figures, may signal that the economy is weaker than the government expected. Bernanke said the central bank will need to assess conditions before deciding if more measures are needed to stoke an economy threatened by Europe’s debt crisis and U.S. budget cuts.
Meanwhile Indian shares extended recent gains on Thursday after the rupee breached the 55 mark to hit a two-week high against the dollar reflecting a return of appetite for risk. Talks of the government giving a big push to infrastructure development bolstered sentiments. Although there were reports of the Union Cabinet deferring a decision on the Pension Bill due to lack of consensus, the benchmark indices ended the trading day with significant gains.

Markets Today
The trend deciding level for the day is 16,617/5,039 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 16,713 – 16,777/5,070 – 5,091 levels. However, if NIFTY trades below 16,617/5,039 levels for the first half-an-hour of trade then it may correct up to 16,552 – 16,456/5,018 – 4,987 levels.

China cut borrowing costs
China reduced interest rates for the first time since 2008 and loosened controls on banks’ lending and deposit rates, in its bid to combat a deepening slowdown as Europe’s ongoing debt crisis threatens global growth. The one-year lending rate and one-year deposit rate were reduced by 25bps to 6.31%, and 3.25%, respectively. Banks are now given more leeway to offer upto 10% higher than benchmark deposit rate to depositors and to charge upto 20% lower than the key benchmark lending rate (previously 10%).

RIL plans a capex of Rs.100,000cr over next 4 years
Reliance Industries (RIL) conducted its Annual General Meeting (AGM) for FY2012. With cash and equivalents of ~Rs.80,000cr as of March 31, 2012 on RIL’s balance sheet, Chairman Mr. Mukesh Ambani announced that the company plans to invest Rs.100,000cr across business segments over the coming four years. It targets to invest ~US$3.5bn on shale gas. On its core petrochemical business, RIL aims to increase its capacity to 25mn tonnes from the current 15mn tonnes and also invest in operational efficiency projects. RIL aims to become a market leader in retail business and targets to achieve top-line of Rs.40,000-50,000cr over the next threefour years (current top-line Rs.7,600cr). Further RIL informed that although KG D6 production has declined over the past one year to 34mmscmd, it aims to raise total gas production to 60mmscmd by 2015. On profitability front, Mr. Ambani said that RIL aimed to double its operating profits in the coming five years. RIL has bought back 2.79cr shares at a cost of Rs.1,929cr under its share-buyback program. Alongside decline in KG D6 gas output, deployment of huge cash pile was amongst the key concerns on the stock. Clarity over deployment of cash is positive in our view. We maintain our Buy rating on the stock with a target price of Rs.879.

L&T bags orders worth Rs.2,410cr
L&T’s construction arm has won Rs.2,410cr new orders across various businesses during April-June 2012. The Buildings and Factories IC has secured new orders worth Rs.1,921cr. The orders are from leading developers for the construction of major residential towers across various cities in the northern part of the country. L&T Infrastructure IC has won orders to the tune of Rs.345cr for the design and construction of viaducts and three elevated stations from Delhi Metro Rail Corporation which also includes additional orders from various ongoing projects. Water effluent and treatment business has bagged new orders worth Rs.244cr from Bangalore Water Supply and Sewerage Board for upgrading the existing water distribution systems including additional orders from various ongoing projects.
At the CMP of Rs.1,277, the stock is trading at 16.7x FY2014E earnings and 2.4x FY2014E P/BV on a standalone basis. We have used the SOTP methodology to value the company to capture all its business initiatives and investments/stakes in different businesses. Ascribing separate values to its parent business on a P/E basis and investments in subsidiaries on P/E, P/BV and mcap basis, our target price works out to Rs.1,553, which provides 21.6% upside from current levels. We recommend Buy on the stock.

Economic and Political News
- People’s Bank of China cuts interest rates as economy continues to slide
- Monsoon 36% below average in first week: IMD
- PM's push for infra sector to boost investor confidence: CII
- Cabinet defers decision on pension reforms bill

Corporate News
- Tata Steel to set up Rs.30,000cr plant in Karnataka
- Suzlon to invest Rs.15,000cr to set up a 2,500 MW wind farm in Karnataka
- Dr Reddy's launches generic Parkinson's disease tablets in US
- BHEL commissions 250MW unit at UP thermal power project
- Jubiliant Life Sciences to invest ~Rs.1,000cr across businesses in Karnataka

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What are Mutual Funds and different types of Mutual Funds

2012-06-06T01:23:00.001-07:00

Mutual funds are a type of certified managed combined investment schemes that gathers money from many investors to buy securities. There is no such accurate definition of mutual funds, however the term is most commonly used for collective investment schemes that are regulated and available to the general public and open-ended in nature. Hedge funds are not considered as any type of mutual funds.

Mutual funds are identified by their principal investments. They are the 4th largest category of funds that are also known as money market funds, bond or fixed income funds, stock or equity funds and hybrid funds. Funds are also categorized as index based or actively managed.

In a mutual fund, investors pay the fund’s expenditure. There is some element of doubt in these expenses. A single mutual fund may give investors a choice of various combinations of these expenses by offering various different types of share combinations.

The fund manager is also known as the fund sponsor or fund management company. The buying and selling of the fund’s investments in accordance with the fund’s investment is the objective. A fund manager has to be a registered investment advisor. The same fund manager manages the funds and has the same brand name which is also known as a ‘fund family’ or ‘fund complex’.

As long as mutual comply with requirements that are established in the internal revenue code, they will not be taxed on their income. Clearly, they must expand their investments, limit the ownership of voting securities, disperse most of their income to their investors annually and earn most of their income by investing in securities and currencies.

Mutual funds can pass taxable income to their investors every year. The type of income that they earn remains unchanged as it gets transferred to the shareholders. For e.g., mutual fund distributors of dividend income are described as dividend income by the investor. There is an exception: net losses that are incurred by a mutual fund are not distributed or passed through fund investors.

Mutual funds invest in various kinds of securities. The various types of securities that a particular fund may invest in are mentioned in the fund’s prospectus, which explain the fund’s investment’s objective, its approach and the permitted investments. The objective of the investment describes the kind of income that the fund is looking for. For e.g., a “capital appreciation” fund generally looks to earn most of its returns from the increase in prices of the securities it holds rather than from a dividend or the interest income. The approach of the investment describes the criteria that the fund manager may have used to select the investments for the fund.

The investment portfolio of a mutual fund’s investment is continuously monitored by the fund’s portfolio manager or managers who are either employed by the fund’s manager or the sponsor.

Advantages of Mutual funds are:

1) Increase in diversification.

2) Liquidity on a daily basis.

3) Professional investment management.

4) Capacity to participate in investments that may be available only for larger investors.

5) Convenience as well as service.

6) Government oversight.

7) Easier comparison

Like its advantages, the Mutual funds have disadvantages too. Here are some of them:

1) High fees.

2) Less control over timing of recognition of gains.

3) Much lesser predictable income.

4) No opportunity for customization.

There are different types of Mutual funds as well. Here are some of them.

Open-end funds

In open-end mutual funds, one must be willing to buy back their shares from investors at the end of every business day at the net asset value that is calculated for that day. Most of the open-end funds also sell shares to the public on every business day. These shares are also priced at a particular net asset value. A professional investment manager will oversee the portfolio, while buying or selling securities whichever is appropriate. The total investment in the funds will be variably based on share buying, share redemptions and fluctuation in the market variation. There are also no legal limits on the number of shares that can be issued.

Close-end funds

Close-end funds generally issue shares to the public just once, when they are created via an initial public offering. These shares are then listed for trading on a stock exchange. Investors, who don’t wish any longer to invest in the funds, cannot sell their shares back to the funds. Instead, they must sell their shares to another investor in the market as the price they may receive may be hugely different from its net asset value. It may be at a premium to net asset value (higher than the net asset value) or more commonly at a lesser to net asset value (lower than the net asset value). A professional investment manager will oversee the portfolio, in buying or selling securities whichever is appropriate.

Unit Investment Trusts

UIT or Unit Investment Trusts issue shares to the public just once when they are created. The investors in turn can cash in on the shares directly with the fund or they may also sell their shares in the market. UIT’s do not have any professional investment managers. Their portfolio of securities is established by the creation of the UIT’s and does not undergo any changes. UIT’s in general having a limited life span, which is limited at their creation.

At Angel Broking, we provide insights into various aspects on Mutual Funds. You also can benefit by investing in Mutual Funds. For more details, please contact: Tel: (022) 3935 7600 or SMS EBRO to 5757587.

What are Derivatives and their need in the Indian Share Market

2012-06-04T23:21:00.001-07:00

Derivative instrument is a contract between two parties that emphasizes conditions ( including dates that result in values of the underlying variables and notional amounts) under which payments can be made between both the parties.

Derivatives are used by investors for the following reasons:

1) It provides leverage with a small movement in the underlying value that causes a large difference in the value of the derivative.

2) One can often speculate and make a profit, if the value of the underlying asset goes in the way they expect.

3) It mitigates the risk in the underlying, by making an entry in the derivative contract whose value moves in the opposite direction, stays in or out of a specific range and may reach a certain level.

4) It can obtain exposure to the underlying where it may not be possible to trade in the underlying derivatives.

5) It has the ability to create options, where the value of the derivative is linked to a specific condition or event.

When Derivatives allow risk related to the prices of the underlying asset to be transferred from one party to another, it is known as Hedging. Both the parties have a reduction in a future risk, however there is still a risk of the non-availability of the resource that may back-track because of the events unspecified by the contract such as natural damage, may cause problems on the contract.

Although a third party, which is also known as a clearing house, it insures a futures contract, not all derivatives can or will be insured against a counter-party risk.

Derivatives are also used to acquire risk, rather than hedging the risk. Thus, some investors or institutions can enter in a derivative contract to speculate on the value of the underlying asset.

These speculations look to purchase an asset in the future at a really low price which according to the derivative contract maybe a high price to sell the asset in the future when the market price is low.

An OTC or over-the-counter derivative is a contract that is privately traded and negotiated between two parties without going through an exchange.

Exchange-traded derivative contracts are those derivatives that can be traded via specialized derivative exchange or other exchanges. There is a market where derivatives exchange acts as an intermediary to all transactions and takes an initial margin from both the sides of the trade to act as a guarantee.

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What are the advantages and disadvantages of Online Trading?

2012-05-28T02:45:00.001-07:00

Due to the problems that arose during paper shares, there was a need of a system that would make share transfer, buying/selling of shares, etc. an easier affair.

Therefore in 1996, the Indian parliament passed the Derivatives act, which allowed online transaction of shares, thus making it much easier for the broker and investor.

In the new online Trading system, an investor must open a demat account with one of the Stock Brokers to start trading online.

A demat account is a must for an investor to trade online.

Mentioned below are some of the advantages of trading online:

1) Easier and convenient way to own shares

2) Immediate transfer

3) Zero stamp duty on transfer of shares

4) Safer than paper shares, e.g., fake signatures, delay, thefts, etc.

5) Lesser paperwork for transfer of securities

6) Less transaction cost

7) No “odd” problems. Even a single share can be sold.

8) DP registers a change in address with all companies. No need for the investor to contact the companies immediately.

9) DP transmission of securities, thus eliminating the need of notifying the companies.

10) Automatic credit in demat accounts

11) Both equity and debt instruments can be held by a demat account

The depository system aids in reducing the expenditure of new issues due to lesser printing and distribution costs. It increases the efficiency of the registrars and transfer agents and the secretarial department of a company. It provides better facilities for communication and timely service to shareholders and investors.

The disadvantages of online trading are mentioned below:

1) Investors, who are trading for the first time, go with the flow and get immersed in technology and actually temporarily forget that they are actually using their real money.

2) There is no relationship that of a mentor between a professional broker and an online trading account holder, thus leaving the investor on his own to make choices of the right shares.

3) Users who are not familiar with the ins and outs of the basics of brokerage software can make mistakes which can prove to be a costly affair.

4) This is like any other financial strategy, where your commitment to online trading takes research and dedication to make sure by yourself that everything is up to par. You have to take time out to do your own research where you will have to overcome a great learning curve to make some money from online trading a possibility.

Online share trading in India, open demat account for stock market

Equity and Equity Investments in India

2012-05-25T03:18:00.000-07:00

In accounting and finance, Equity means the residual claim or interest of the junior level of investors in assets, after all the liabilities have been paid for.
If liability is more than the amount of assets, it becomes negative equity.
In the context of accounting, shareholder’s equity (or stockholder’s equity, shareholder’s funds, shareholder’s capital or any such similar terms) is represented by the remaining interest in assets of a company which is spread amongst individual shareholders of common or the preferred stock.
In the beginning of a business, the owners invest some funding into the business to the finance operations. This forms a liability on the business in the form of a capital as the business becomes a separate entity from its owners. Businesses can also be considered, for accounting purposes, sums of liabilities and assets; thus this is the accounting equation.

After the liabilities have been accounted for any positive remainder, it deems the owner’s interest in the business. This definition is helpful for understanding the liquidation process in case bankruptcy occurs. Initially, all the secured creditors must be paid against the proceeds from various assets. Afterwards, the series of creditors, who are ranked in terms of priority sequence, have the next claim or right on these residual proceeds.

Ownership equity is the last or residual claim against these assets, which is paid only after all other creditors are paid. In such a scenario, even the creditors who do not get enough money to pay their bills, there is nothing over to reimburse the owner’s equity. Thus, this makes the owner’s equity to zero. The ownership equity also becomes known as the risk capital or liable capital.

An equity investment is generally referred to as the buying and holding of shares in a share market by various individuals and companies in anticipation of an additional income from dividends and/or capital gains as they expect the value of the stock to rise. When the equity holder receives the right to vote, it means that he can vote for the candidates for a majority of the board of directors as well as some major transactions and residual rights, which means that they share some portion of company’s profits as well as may help in recovering some of the company’s assets in the event of bankruptcy or any untoward incident that might harm the company’s liquidity. This is possible despite they having the lowest priority in recovering their investments.
It might also refer to the acquisition of ownership or participation in a private or a startup company. These equities which are held by private individuals are often known as mutual funds or other forms of collective investment scheme. Many of these have quoted prices that might be listed in financial magazines or newspapers.
The mutual funds are managed by prominent fund management firms that allow such holdings in the hands of private investors and pension funds, who are subjected to hold shares directly. In such institutional environment, many clients who hold their own portfolios have what we know as segregated funds. As opposed or in addition to the pooled mutual fund alternatives.
A calculation made can be made to assess whether equity is overpriced or underpriced, in comparison to a long term government bond. This is known as the yield gap or the yield ratio. It is the ratio of the dividend yield of equity and that of the long term bond.
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Factors influencing Stock Prices in India

2012-05-24T03:15:00.002-07:00

A stock price or share price is the price of a single stock or a number of stocks that are saleable of a particular company. Once the stock or stocks have been purchased, the owner becomes a shareholder of the company that has issued the particular stock.

Analysts use random walk techniques in economics and financial history to model the behavior of asset prices in particular share prices on stock markets, currency exchange rates and various commodity prices.

This practice is ritual and has its basis on the presumption that the investors will act rationally and without any biasness and any moment they can estimate the value of an asset based on future expectations.

Under these conditions, all the current information affects the price of the stock which changes only when any new information comes out. The asset price is randomly affected when new information appears randomly.

It has been demonstrated by empirical studies that prices do not completely follow the random walk.

Low serial correlations may exist in short term and have slightly stronger correlations over the long term. Their sign and strength also depends on a variety of factors.

It has been found by the researchers that some of the biggest price deviations are from random walks that result basically from seasonable and temporal patterns. Particularly, the returns in January normally exceed those in other months and on Mondays, stock prices may go down more probably more than on any other day.

It has been observed that these effects in various markets since last 50 years or so.

But there has been no satisfactory explanation for their persistence.

Most of the technical data is used by the anomalies to gather and extract information on future price movements via historical data. However, some economists’ follow the Eugene Fama as a result patterns occurs most frequently. This results in an irrational or insufficient behavior of many investors. The large amount of data that is available for researchers for an analysis that can literally cause fluctuations.

Another school of thought, i.e. behavioral finance is attributed by non-randomness to investigations, cognitive and emotional biases. Thus, this can cause a contrast with the main fundamental analysis.

When this is viewed over longer periods, the stock price may or may not be directly related to the earnings and dividends of the firm. Over short periods of time, more so for the younger or smaller firms, the relationship between a stock price and dividends are mostly unmatched.

open demat account for online share trading

Demat Account In India

2012-04-12T23:44:00.001-07:00

In India, a Demat account means dematerialized account for people to invest in securities online.
The investor opens a demat account while registering with an investment broker. This account number is used by the broker for all transactions that are used in online stock trading.
To access a demat account, the investor requires an internet password and a transaction password. This allows an initiation of buying or selling of securities on the demat account.
A demat account reduces brokerage charges considerably. It makes transfer of shares easier, enables quick ownership of shares by settlement resulting in an increased liquidity.
It also avoids confusion in ownership of securities and provides easy receipts for public issue allotments.
In the last 15 years, the capital market in India has witnessed an unprecedented boom. However, in the early 80's a lot of paperwork and tedious maintenance meant that the common man kept himself away from the capital market.
Due to overwhelming number of paper shares they were becoming increasingly tedious to maintain and archive.
Problems like fake and stolen shares, forged signatures, mismatch of signatures, duplication of shares, transfer problems plagued the traditionally paper based trading and settlement system.
To top it all, the system had some very irritable procedures and an overdose of paperwork that made retail and institutional investors from entering the capital market. Investors felt that they were gaining less for the risks undertaken by them.
Lack of modernization in a large and inefficient system became a major hurdle to the growth of the Indian capital market.
Thus, Indian stock market adopted the Demat system for electronic book-keeping where the securities are represented and maintained electronically. It erased the troubles that one would associate with paper shares.
After the introduction of the depository system by the Depository Act of 1996, the procedure for buying, selling and transfers of shares became much easier and most of the risks associated with paper certificates were eliminated.
Advantages of a Demat Account:
1. Convenient, easier and safer ways of holding securities
2. Instant transfer of securities
3. Zero stamp duty on transfer of securities
4. Less transaction cost
5. Even a single share can be sold or purchased
6. Flexibility for traders to work from anywhere
7. A single demat account can hold both equity as well as debt investments
8. Address change recorded with a DP will get registered with all companies in which the investor holds his securities, thus it erases the need to contact all of them separately and save time.
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Indian stock market and companies daily report (March 30, 2012, Friday)

2012-03-30T00:03:00.000-07:00

The Indian markets are expected to open in the red tracing negative opening in most of the Asian indices. Asian stocks fell for a second day as growth in U.S. durable-goods orders trailed estimates.
The US markets drifted lower over the course of the day on account of profit booking as some traders cashed in on the recent strength in the markets amid calls by a number of analysts for a correction. Traders also reacted negatively to the latest batch of U.S. economic data, including a report from the Labor Department showing that weekly jobless claims came in above economist estimates. However the indices recovered significantly in the later sessions and eventually ended up near the opening.
Indian shares extended losses for a second consecutive session on Thursday, as concerns about growth prospects in the world's two largest economies prompted investors to square off long positions on the expiry of March series derivative contracts.

Markets Today
The trend deciding level for the day is 17,136/5,200 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,232 – 17,342/5,231 – 5,267 levels. However, if NIFTY trades below 17,136/5,200 levels for the first half-an-hour of trade then it may correct up to 17,026 – 16,930/5,164 – 5,133 levels.

TCS to provide banking solution - BaNCS to AmBank, Malaysia
TCS' financial services platform, TCS BaNCS, will replace Malaysian AmBank's core banking engine. This integrated banking suite, spanning conventional and Islamic banking, will support both retail banking and lending functionalities. TCS BaNCS will help expand AmBank's business into new areas. It will also enable development and the scalability required to meet both current and future market and regulatory needs. Due to this deployment, TCS may soon have a regional support centre for TCS BaNCS in Kuala Lumpur. We maintain Accumulate rating on the stock with a target price of Rs.1,262.

NTPC Tamil Nadu Energy Co. commissions Unit I of Vallur Power Project
NTPC Tamil Nadu Energy Co. Ltd. a JV of NTPC Ltd. and TNEB has commissioned Unit I (500 MW) of Vallur Thermal Power Project on March 28, 2012. With this, the total capacity of NTPC group has become 36,514 MW. In all NTPC group has commissioned 2,320MW of capacity in FY2012 till date, which is below the initial target of 4,320MW. At the CMP, the stock is trading at 1.6x FY2013E P/BV. We maintain a Buy on the stock with a Target Price of Rs.199.

Economic and Political News
- February infra output up 6.8% yoy
- Indian GDP to grow at 7.5% in FY2013: Fitch
- Government will clarify stance on P-Notes taxation: Finance Minister

Corporate News
- Tata Motors hikes commercial vehicle prices by up to Rs.60,000
- Tata Motors to invest Rs.600cr on defense vehicles
- NTPC to halt expansion of gas-based projects
- Bharat Forge earmarks Rs.100cr to develop artillery gun

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Share Prices in India

2012-03-29T00:23:00.002-07:00

A share price is the value of a single or a number of shares or saleable stocks of a particular company. Once an investor has purchased the shares, he becomes a Share holder of that company that has issued the share.

The research analysts believe that the share price deviation results on the basis of seasonal and temporal patterns. It has been noted that the returns is significantly more then what it is in other months and on Mondays the share price is down more than on any other day.

These effects have been observed by the research people on the basis of these fluctuations.

The technical analysis to extract information based on future share price movements from historical data. As a result of such an unpredictable or behavior the huge amount of data available researchers for analysis causes the fluctuations.

The causes an element of unpredictability in the share prices, depending on what the market has achieved so far. When viwed over a long duration the stock prices are directly or indirectly related or the dividends to the earnings, and cause a fluctuation in the market value.

The desire of the investors has led into trading of shares. The stock exchange is the place, where buying/selling of the stocks take place.

A stock broker usually represents the stock trader, who buys the shares on his/her behalf. A company lists its shares on the BSE or NSE stock exchange by maintaining the listing requirements of the particular stock exchange.

In India, BSE and NSE hold the rights for all its investors.

Small companies that cannot qualify or cannot meet the listing requirements of the major exchanges can be traded over the counter using the off-exchange mechanism in which trading can take place directly between both the parties.

When an investor wants to buy shares, he purchases them via the stock broker. The brokers normally charge a fixed amount of commission over the prices. Another way to buy shares is by purchasing them directly from the company at the originally listed prices.

A direct public offering is an initial public offering in which the shares are directly purchased from the company without the aid of brokers.

The share prices are normally not affected when the stock broker buys the shares on the behest of the investor.

Selling stock is similar to buying it. Generally the investor will buy when the share prices are low and sell them when the share prices are high. Even while purchasing the broker has a certain fee depending on the type of brokerage services that he is offering to the investor.

The share prices play an important role in the profit or loss statement of the investor. So, after any transactions, the seller is then entitled to all the money, but he must make sure to keep a regular track of his earnings.

Today’s Report of Indian Stock Market

2012-02-27T22:44:00.001-08:00

Outlook on markets today

The Sensex closed at 17924, down 154.93 points or 0.86% and the Nifty ended at 5429 down 54 points or 0.98%. It was first weekly collapse for markets in 2012. Among the 13 sectoral indices, five bunged superior. Top Gainers - BSE Metal up by 1.08%, BSE TECK up by 0.56% and BSE IT stirring by 0.55%. Top Losers - BSE CG down by 2.96%, BSE Realty down by 2.28% and BSE Bankex down by 1.95%. Profit booking appear after current gains as concerns increase over the state of the universal financial system, including rising oil prices. India’s widening financial shortage also added to obscurity. Volatility was high owing to F&O expiry for Feb 2012 this week. There was also a lot of uncertainty ahead of events like the upcoming financial statement.

ICICI Bank and HDFC Bank were among the big losers as market potential for a rate cut in March was tempered by the rally in world oil prices, which could make it difficult for the central bank to relieve strategy. Housing Development Finance Corp fell as much as 6.2% after Citigroup Inc sold its entire chance in the company for about $1.9 billion.

Market cinch was weak at ~0.60x as investor sold large cap stocks. On temporary origin FIIs bought equity of Rs.8955.30Cr while domestic institutions sold equity of Rs.836.71Cr.

Many chief Asian markets slip but Japanese stocks rise as the yen weakens against the euro on trust of a larger euro-zone bailout package.

We expect a flat opening for the Indian markets today following the mixed nod from the Asian markets.

Monetary and Mutual Developments

The Centre has asked fertilizer firms not to lift imported nutrients, especially potash and DAP, planned to reach ports in February and March, due to poor command, a move that could save up to Rs 1,000 crore in the subsidy bill of this monetary.

A Group of Ministers (GoM) today accepted a new asset policy for the urea sector, to make the nation independent in the input soil nutrient.

Vibrant Stocks

Oil and Natural Gas Corporation (ONGC) is spending Rs 26,000 crore to enlarge 10 oil and gas bunch in western and eastern offshore, to enlarge crude production by up to 4 million tonne per annum by 2013-14.

NTPC to invest Rs 24,000 cr in Andhra plant.

The Karnataka government has completed land acquirement for Tata Steel and Tata Metallic’s incorporated scheme at Haveri district, an official of the corporation said on Saturday.

Stock Market Update on GSPL for 4QFY2011

2011-06-09T21:31:00.000-07:00

Stock Market Update on GSPL for 4QFY2011 with an Accumulate recommendation and a Target Price of `105 (12 months).

For 4QFY2011, GSPL reported strong set of numbers on the bottom-line front, despite lower volumes and a marginal increase in realisation on a yoy basis on account of change in depreciation rate (from 4.75% to 3.17% w.e.f.
April 1, 2010) adopted by the company during the quarter. Thus, the bottom line surged by robust 39.7% yoy to `150.6cr (`107.9cr). We recommend Accumulate on the stock.

Transmission volume flat, realisation higher: In 4QFY2011, GSPL recorded a marginal 1.1% yoy decrease in revenue to `255cr (`258cr) on account of a 2.4% yoy dip in volumes transmitted, which stood at 3,200mmscm (3,278mmscm). However, average transmission realisation increased by 1.3% on a yoy basis to `797/’000scm (`787/’000scm).

Outlook and valuation: Although GSPL is a leveraged play on increasing gas demand in Gujarat (the country’s hydrocarbon capital), slower ramp-up in domestic production from the KG-D6 field and expensive spot LNG are taking a toll on the company’s volume visibility in the near term. This has resulted in the stock’s under performance in the recent past. However, limited downside risk on the tariff front and successful winning of three inter-state pipelines provide support to valuations. We have valued GSPL at 7x FY2013E EBITDA, which provides a target price of `105 for the stock, implying an upside of 6.1% from the current level. Hence, we recommend an Accumulate rating on the stock.

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Stock Market Update on Ashok Leyland for 4QFY2011

2011-06-09T21:28:00.000-07:00

Stock Market Update on Ashok Leyland for 4QFY2011 with a Buy recommendation and a Target Price of `64 (12 months).

For 4QFY2011, Ashok Leyland (ALL) registered 30.3% yoy growth in net sales, aided by 15% growth in volumes. Net average realisation increased by 13.2% yoy due to change in product mix. EBITDA margin came in substantially higher than our expectation at 13.3%. Net profit registered a substantial increase of 33.9%. We recommend Buy on the stock.

Strong volumes support top-line growth; OPM surprises on the upside: For 4QFY2011, ALL reported 30.3% yoy growth in net sales to `3,829cr (`2,939cr), which was 4.3% above our expectation. Sales growth came on the back of a 15% yoy increase in volumes. Net average realisation for the quarter registered a 13.2% jump yoy to `1,289,980 (`1,138,854). During 4QFY2011, ALL witnessed a 44p yoy increase in EBITDA margin mainly due to lower other expenditure.
Net profit increased by 33.9% yoy to `298cr (`223cr).

Outlook and valuation: The overall outlook for the domestic CV industry is positive, which is in its mid-cycle, with volumes expected to register a ~10% CAGR over FY2011–13E. Most of the factors that drive freight demand and consequently M&HCV demand are positive and CV manufacturers are benefiting from the economic recovery. At `50, ALL is trading at 12.4x FY2011E and 11.2x FY2013E EPS. We recommend Buy on ALL with a target price of `64.

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