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Investment Banking: Valuation, Leveraged Buyouts and Mergers & Acquisitions University

2017-01-08T11:34:00.001+05:30

Book Name:

Investment Banking: Valuation, Leveraged Buyouts and Mergers & Acquisitions University

Author : Joshua Rosenbaum (Author), Joshua Pearl (Author)

In the constantly evolving world of finance, a solid technical foundation is an essential tool for success. Due to the fast-paced nature of this world, however, no one has been able to take the time to properly codify the lifeblood of the corporate financier's work--namely, valuation. Rosenbaum and Pearl have responded to this need by writing the book that they wish had existed when they were trying to break into Wall Street."Investment Banking: Valuation, Leveraged Buyouts, and Mergers & Acquisitions" is a highly accessible and authoritative book that focuses on the primary valuation methodologies currently used on Wall Street--comparable companies, precedent transactions, DCF, and LBO analysis. These methodologies are used to determine valuation for public and private companies within the context of M&A transactions, LBOs, IPOs, restructurings, and investment decisions. Using a step-by-step how-to approach for each methodology, the authors build a chronological knowledge base and define key terms, financial concepts, and processes throughout the book. They also provide a comprehensive overview of the fundamentals of LBOs and an organized M&A sale process.

In the aftermath of the subprime mortgage crisis and ensuing credit crunch, the world of finance is returning to the fundamentals of valuation and critical due diligence. This involves the use of more realistic assumptions governing approach to risk as well as a wide range of value drivers. While valuation has always involved a great deal of "art" in addition to time-tested "science," the artistry is perpetually evolving in accordance with market developments and conditions. In this sense, this book is particularly topical--in addition to detailing the technical fundamentals behind valuation, the authors infuse practical judgment skills and perspective to help guide the science.

Overall Review:
This Book covers the basic aspects of Investment Banking in a very simple manner.
If you want to start your career in Investment banking , this is good for understanding the terms involved.
This categorizes various practices followed in the industry as definition and special part is they do explain the merits and demerits of them, this makes the authors unique.
If you are already having sound experience in Investment Banking then this is just a quick glance for you.
This may help you to explain juniors in a better way about basics.

How to Avoid Loss and Earn Consistently in the Stock Market: An Easy-To-Understand and Practical Guide for Every Investor

2017-01-08T01:32:00.004+05:30

Best Seller Book in INVESTMENT & FINANCIAL PLANNING:

How to Avoid Loss and Earn Consistently in the Stock Market: An Easy-To-Understand and Practical Guide for Every Investor

Author : Prasenjit Paul

Note by author about the book:

Hundreds of books are there about ""How to make money from stocks?"" Still 80% small investors suffer loss in the stock market. Why?

Plenty of free trading tips are available across Television and Internet; still maximum small investors are unable to earn significant return consistently from trading. Why?

Why maximum individuals still consider the stock market as a place for gambling?

Investing in high-quality business (stock) at the right price and holding them for a reasonable period is the only way for wealth creation.Written in an easy-to-understand and simple language, this book will guide you on how to select fundamentally strong business, when to buy and sell stocks and above all how to minimize or avoid loss in the stock market.
Chapters-
1. How to avoid loss in the stock market?
2. Stock Market is NOT risky at all
3. First step of picking winning stocks
4. How to evaluate management?
5. Valuation - It matters much
6. When to buy and when to sell
7. Do's and don'ts to avoid loss in the stock market
8. How to construct your portfolio?
9. Is it required to follow an equity advisor?
10. Quick formula for picking winning stocks
11. Little bit of myself - Important Lessons to be learnt

The book ends with a small note on Life is not all about the stock market and money.

Short Review:

This book mainly aims at providing guidelines for people with 2 years horizon.

Day traders may get few ideas , but this is not for people who want to do very quick flipping.

Repeating same examples may feel boring , still the author has made his best efforts to make people understand.

If you are interested in buying the book have a look here,

http://www.amazon.in/Avoid-Consistently-Stock-Market-Understand/dp/1482850885

Steps to Apply for PAN Card

2010-09-22T10:07:00.003+05:30

Dear Friends,

Now-a-days many of you are asking about where to apply for PAN card & what are the proofs required.

Here it is.

Step 1: Keep the Documents Ready with you

Documents Required:

Identity Proof:

Photocopy of Voter's ID, Driving License, Valid College ID card.

If you don't have any photo ID proof till now, YOU CAN USE YOUR SSLC MARK SHEET

Address Proof:.

Photocopy of Voter's ID, Driving License, Valid College ID card.

1 Photo:

size: 3.5cm * 2.5cm

(If you are taking new photo, tell them to print in standard PAN size of 3.5cm * 2.5CM )

Or you can cut your passport photo to fit in.

Step 2: Locate the PAN center

Locate the PAN Center near you using this website:

http://www.myutitsl.co.in//intra/web/search_psa.jsp

You can collect the application from the nearest PAN center .

(Or you can download it here.http://www.utitsl.co.in/Form49a.pdf All the details are mentioned in the form itself)

Step 3: Visit the PAN center

Get the application form.

Instructions are provided in the form itself

Fill out the form with all necessary details.

Double Check, to ensure that the details given by you are correct.

Pay Rs.99 (Rs.5 + Rs.94)

They will give you an acknowledgement. Keep it safe with you.

Step 4: Tracking PAN status Now you can expect the PAN Card to be delivered to your home within 15days (approx).

After 10days of applying, Visit http://www.utitsl.co.in/utitsl/site/pantracker.jsp

Select Application type as New Application (F49a)

Then enter the application number and/or coupon number.

The status of your PAN card will be mentioned there.

With this you can know the PAN number allotted to you before receiving it physically.

Step 5: CongratsNow you have received the PAN Card.

Ensure that the details in it are correct.

Now congrats, Keep it safe with you.

VERY VERY IMPORTANT INSTRUCTION :

USE ONLY BLACK PEN TO FILL THE FORM.

Cost involved:
Application: Rs.5
Pan Card Processing fees: Rs.94
Totally with Rs.99 you can get your pan card by post to your home address.

If you have any queries comment us here. We will be happy to answer you.

Note:The details mentioned here are focused on young individuals.

Prices mentioned & links given here are valid as of today. Authorities can change them @ anytime.

New Income TAX Slab proposed in the budget for the financial year 2010 - 2011

2010-02-26T13:00:00.002+05:30

New Income Tax slab proposed by the finance minister for the upcoming financial year 2010 - 2011

New tax slabs are:
Income up to Rs 1.6 lakh - NIL
Income above Rs 1.6 lakh and up to Rs 5 lakh - 10%
Income above Rs 5 lakh and up to Rs 8 lakh - 20%
Income above Rs 8 lakh - 30%

If you are looking for any further clarification, ask your question as a comment here.
I will answer your questions.

November exports up | First rise in 13 months

2010-01-03T11:39:00.000+05:30

India's exports rose an annual 18.2% in November to USD 13.2 billion, the first rise after 13 straight months of decline, the government said on Friday.

Imports dropped 2.6% from a year earlier to USD 22.88 billion.

The trade deficit shrunk to USD 9.69 billion in November from USD 12.33 billion a year earlier.

Exports for April-November, the first eight months of the 2009-10 fiscal year, were down 22.3% at USD 104.25 billion from the same period in the previous year.

Source: MoneyControl

Phone subscriber base crosses 500-m mark

2009-11-05T20:21:00.003+05:30

Growing numbers: India is the second country after China to reach this milestone

The number of telephone subscribers in India has increased to 509.03 million at the end of September with nearly 15 million subscribers being added in the month. This beats the Government’s target of 500 million users by 2010-end.

Tele-density

India is the second country after China to reach this milestone.

With this, the overall tele-density in the country has reached 43.50 . Wireless subscriber base increased from 456.74 million in August to 471.73 million at the end of September, a growth of 3.28 per cent.

Mobile operators offering per second billing has contributed to the surge in subscriber numbers. Wireless tele-density stands at 40.31. Wireline subscriber base declined from 37.33 million in August to 37.31 million in September.

This is mainly on account of reduction in the subscriber base of BSNL/MTNL, which lost 0.06 million in September. The two PSU operators hold 85.67 per cent of the wireline market share. The overall wireline tele-density is 3.19.

Broadband subscription

The total broadband subscriber base has increased from 6.98 million in August to 7.22 million in September, thereby showing a growth of 3.29 per cent.

Broadband subscription is expected to get a boost once the Government auctions spectrum for 3G and broadband wireless access services early next year.

Courtesy: The BusinessLine

Nifty hits 4700; RIL, Infy, ICICI Bk, DLF, Sterlite up 5-7%

2009-11-04T15:33:00.000+05:30

At 14:24 hours IST, the Nifty was trading strong and touched the 4700 mark on the back of institutional buying in heavyweights like Reliance Industries, Infosys, ICICI Bank, DLF, TCS and Sterlite Industries, which rose 5.2%, 5%, 5.42%, 7%, 3.3% and 5.4%, respectively.

All the sectoral indices were in the green. The BSE Realty Index shot up 7%. IT and Metal indices gained 4% each. Oil & Gas, TECk, Auto, Bank and FMCG indices were up 2-3.3%. Healthcare and Power indices gained over 1%.

The benchmark indices were outperforming the broader indices; the Sensex was trading at 15,880, up 475 points and the Nifty was at 4,700, up 137 points. The BSE Midcap Index rose 2.5% and Smallcap Index up 1.5%.

The market breadth was positive; about 1,727 shares advanced while 1,228 shares declined on the BSE. Nearly 808 shares were unchanged.

On the global front, European markets were up 0.7-1.1%. US index futures rose 0.3-0.5%

In the largecaps, Jaiprakash Associates, Hindalco and Unitech gained 7-8%. However, Suzlon Energy tanked 5.58%. ABB, Sun Pharma, Reliance Communication and Grasim fell 0.6-1.6%.

In the midcap space, Indiabulls Real and Educomp Solutions were up 11-13%. LIC Housing Finance, Anant Raj Industries and Dish TV India went up 7.6-8%. However, Andrew Yule, KGN Industries, Ipca Labs, REI Six Ten and Blue Dart slipped 2-4%.

In the smallcap space, Entertainment Network India, Tata Coffee, Glodyne Techno, Sanwaria Agro and Sasken Communication gained 9.5-10%. Webel SL Energy, Shree Ram Urban, Prime Securities, Garden Silk Mills and Disa India lost 7-10%.

Continued on the next page.. _PAGEBREAK_
Sensex recovers most of Tuesday's losses; heavyweights lead

AT 13:16 hours IST - consistent buying in heavyweights like technology, realty, FMCG, oil & gas exploration, private banking and metal stocks helped the Sensex to extend gains and recovered more than 4/5th of Tuesday's losses. The Nifty held above the 4650 level.

Heavyweights like Reliance Industries, Infosys, ICICI Bank and DLF gained 4-6%. Jaiprakash Associates, Unitech, Hindalco, Ranbaxy Labs, Tata Steel and Sterlite Industries were up 4-7%.

The Sensex was trading at 15,781, up 376 points and the Nifty was at 4,669, up 105 points. The benchmark indices were underperforming the broader indices, which were up just 1-2%. Advances were outnumbering declines; about 1,633 shares advanced while 1,313 shares declined on the NSE. Nearly 817 shares were unchanged.

However, in the largecaps, Suzlon Energy tumbled 4.38%. Tata Power, Idea Cellular, Reliance Communication, Sun Pharma, BHEL, Grasim and Sun Pharma declined 0.5-1.5%.

On the global front, Asian markets moved up further. Hang Seng, Kospi and Taiwan Weighted were up 2% each. Jakarta rose 1% and Straits Times gained 0.9%. Shanghai and Nikkei were up over 0.4%.

Nifty hovers around 4650; RIL, Infy, ICICI Bank, DLF up 4%

At 12:09 hours IST, the Nifty was strong in trade on the back of buying in heavyweights like Reliance Industries, Infosys and ICICI Bank, which gained over 4%. It tested the 4650 level while the Sensex was trading above the 15,700 level. On the sectoral front, technology, banking & financial, FMCG, realty, select metal, cement and auto stocks were seeing buying interest.

On the global front, Asian markets remained supportive. Kospi and Taiwan Weighted went up nearly 2% each. Hang Seng gained 1.6%. Straits Times and Jakarta were up close to 1%. Nikkei and Shanghai went up 0.2-0.4%.

The 30-share BSE Sensex rose 329 points to 15,734 and the 50-share NSE Nifty gained 92 points at 4,655. The market breadth was positive; about 1,621 shares advanced while 1,302 shares declined on the BSE. Nearly 840 shares were unchanged. The broader indices were up 1-2%.

However, Daryl Guppy, Founder & Director of guppytraders.com said the markets were likely to fall about 12-15%. "We are looking for a pullback to around 4,270 on the Nifty; we are testing 4,600 at the moment, a fall below that gives 4,270 as a downside target." In terms of Sensex - "The critical support is actually at 14,500, there is a minor support at 15,000 but that’s relatively minor its not particularly strong."

The BSE Realty index rose 5.5%, as DLF gained 5% and Unitech shot up over 6%.

Infosys surged over 4%. TCS, Wipro and HCL Tech were up 2-2.7%. The BSE IT Index jumped 3.4%.

However, in the largecaps, Tata Power lost 2.29% and Suzlon Energy slipped 3.8%. Grasim, Sun Pharma, BHEL, SBI, Idea Cellular and ABB lost 0.5-1.6%.

In the midcap space, Indiabulls Real, Torrent Power, Amtek Auto, Dish TV India and Anant Raj Industries gained 6-10.5% while REI Six Ten, KGN Industries, Andrew Yule, Motilal Oswal and Spice Communication fell 2-4.5%.

In the smallcap space, Genus Power, Agro Tech Foods, Subhash Project, aurionPro Solutions and SREI Infra went up 9-12% while Webel SL Energy, Shree Ram Urban, Disa India, Prime Securities and Garden Silk Mills lost 6-10%.

Sensex strengthens further; realty, tech, FMCG, banks gain

At 10:58 hours IST, the Sensex strengthened further. Positive Asian markets were supportive while buying in technology, banking, realty, FMCG, oil & gas exploration, cement and select auto stocks was helping as well. The Nifty has tested the 4650 level as well.

Among the Asian markets, Hang Seng, Kospi and Taiwan Weighted gained 1.3-1.7%. Shanghai, Jakarta and Straits Times went up 0.7% each. Nikkei was marginally in the green.

The Sensex rose 287 points to 15,692 and the Nifty gained 82 points at 4,646. Among the broader indices, the BSE Midcap Index rose 1.6% and the Smallcap Index up 0.7%, as about 750 shares advanced while 429 shares declined on the NSE.

All the sectoral indices were in the green barring power. The BSE Realty Index was the major loser in the last six days, which shot up 4.8%. IT, Oil & Gas, TECk and Bank indices moved up 2-3%.

Technology stocks like Infosys, HCL Tech, TCS and Wipro were up 2.4-3.9%.

In the banking space, ICICI Bank shot up 4%. PNB, Axis Bank, Kotak Mahindra, SBI and HDFC Bank gained 0.9-2.4%.

Realty stocks like Indiabulls Real surged 9%. Unitech and DLF went up 4% each.

In the FMCG pack, ITC, HUL, United Spirits, Tata Tea, Marico and Dabur India were up 0.9-2.5%.

Auto stocks like Bharat Forge, Ashok Leyland, Bajaj Auto, Maruti Suzuki, Tata Motors, M&M and Hero Honda gained 0.7-2%.

In the midcap space, Indiabulls Real, Amtek Auto, United Breweries, HDIL and Torrent Power surged 5.5-7.5% while KGN Industries, Hindustan Oil Exploration, Andrew Yule, Maharashtra Seamless and Spice Communication fell 2.5-4.5%.

In the smallcap space, Agro Tech Foods, SREI Infra, Indiabulls Securities, Bliss GVS and Bilcare went up 6-8% while Shree Ram Urban, Webel SL Energy, Prime Securities, Gayatri Project and Panacea Biotec declined 5-10%.

Nifty bounces back; RIL, Bharti, ICICI Bank, Infy, TCS lead

The Sensex bounced back after six days of losses on the back of positive Asian cues. Buying was seen in high beta stocks. Telecom, realty, banking, select metal and technology stocks were the gainers in the early trade. The Nifty clawed back above the 4,600 mark.

At 9:56 am, the Sensex rose 169 points to 15,574 and the Nifty went up 51 points ot 4,614. The CNX Midcap gained 105 points at 6,490. The market breadth was positive; about 666 shares advanced while 148 shares declined on the NSE.

Among the frontliners, Hindalco, Unitech, Suzlon Energy, Jaiprakash Associates, Sterlite, DLF, ICICI Bank, Axis Bank, IDFC, Reliance Industries, M&M, Bharti Airtel, Idea, Reliance Communications, HCL Technologies and Infosys were the gainers.

However, selling in Hero Honda, ABB (on disappointing quarterly numbers), Tata Power, ITC, HUL, GAIL and Siemens capped the gains to some extent.

Midcap space:

Bombay Rayon Fashions gained 4%. Mahindra Satyam shot up 5% as the company signed $400 million outsourcing deal with SAAB.

Indiabulls group stocks bounced back after sharp sell-off. Indiabulls Securities and Indiabulls Real were up over 6-7.5%. Indiabulls Financial gained 4%.

Educomp Solutions was up 4%.

Balrampur Chini was up 3% and Bajaj Hindusthan gained 6% as UP government temporarily banned import of raw sugar, reports CNBC-TV18 quoting agencies.

Global cues:

Asian markets were trading higher. Hang Seng rose 1.77% and Taiwan Weighted gained 1.6%. Shanghai, Straits Times, Kospi and Jakarta went up 0.6-0.8%. Nikkei was flat. SGX Nifty rose over 1%.

The US markets recovered from the day's low to end flat. Commodities gained as USD pared its early gains.

The Dow Jones Industrial Average ended down 17.5 points at 9,772, after seeing recovery of 68 points from day’s low of 9,704.

The Nasdaq Composite ended up 8 points at 2,057, after seeing recovery of 26 points from day’s low of 2,031. The S&P 500 Index ended up 2.5 points at 1,045, after seeing recovery of 10 points from day’s low of 1,035.

Commodities:

The Reuters CRB Index was up 1%.

Crude oil gained 2% to $79.6/bbl.

Gold was up 3% at $1084.5/ounce, hit all-time high at $1088.5/ounce.

Copper lost 1.5% to $6460/tonne.

Market cues:

-FIIs net buy USD 157 million in cash on October 30
-FIIs net buy Rs 114.8 crore in cash on October 30
-Total F&O Open Int up by Rs 2,950 crore at Rs 84,576 crore
-FIIs net sell Rs 874 crore in Cash on November 3
-DIIs net buy Rs 752 crore in Cash on November 3
-FIIs net sell Rs 567 crore in F&O on November 3

F&O cues:

-Total Futures Open Int down by Rs 743 crore
-Total Options Open Int up by Rs 3693 crore
-Nifty down 3.1%, Futures Open Int up 8% (Huge short buildup in last 1 hour)
-Nifty Nov futures trading at a 5 pt discount
-Nifty PCR ratio down from 1.13 to 1.03
-Nifty IVs at 29-30% versus 25-27%
-Nifty Calls add 53.8 lakh shares in Open Int, Nifty Puts add 18.4 lakh shares in Open Int
-Nifty 4700 Call Adds 20.8 lakh shares in Open Int
-Nifty 4600 Call Adds 16.1 lakh shares in Open Int
-Nifty 4500 Put Adds 6.4 lakh shares in Open Int
-Nifty 4500 Call Adds 6.2 lakh shares in Open Int
-Nifty 4800 Put Sheds 4.4 lakh shares in Open Int
-Stock futures shed 2.9 cr shares in Open Int (Have shed 5.8 crore shares in 2 days)

Nifty bounces back above 4600; RIL, Bharti, ICICI Bank lead

2009-11-04T10:23:00.001+05:30

Nifty freefalls, closes below 4600 | Realty, Metals dip 6 to 9%

2009-11-03T16:27:00.002+05:30

The Nifty has seen sharp sell-off today and inched back towards the 4500 level for the first time since August 2009. It has fallen for sixth consecutive day on heavy volumes and closes below psychological - 4,600 mark for the first time since August 21, 2009. Huge shorts build up and weak global cues hammered the equity benchmarks. High beta stocks have beaten down badly.

Selling was seen across all the sectors. The BSE Realty Index crashed 9.7%. Metal, oil & gas, power, technology and capital goods stocks also cracked, respective indices fell 3-6%

Gold futures to correct lower

2009-11-02T22:07:00.002+05:30

Comex gold futures ended lower due to an equity sell-off which triggered worries about a nascent recovery in the economic conditions. Gold prices posted their first weekly losses since the week of September 25, following four consecutive weeks of gains. The dollar rose on safe-haven buying after steep losses in the earlier sessions.

The gold trade is getting worried on developments about minor sale of Russian gold. The market also saw a series of higher gold production figures from some key miners earlier, but that news does not appear to be applying distinct pressure to gold prices. Investment in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, slipped 0.3 per cent this week as the dollar rebounded from a 14-month low against the euro.

Comex gold futures fell lower against our expectations. Corrective declines are expected towards $1,025-27, followed by a crucial support at $1,009-1,011, also being a rising trend line support point. In the near-term while below $1,055 we can expect prices to edge lower towards the support levels mentioned above. As we have been maintaining a bullish view for some time based on the big picture charts, we believe the bullishness to extend with some deeper corrections. As long as the crucial support at $1,009-1,011 remains intact, we feel gold futures could again inch higher towards $1085 or even higher towards $1,100.

Unexpected fall below $1007 could dent our bullish expectations.

Such a fall could take it lower towards $980 or even lower towards $928. Elliot wave analysis indicates a possible fifth wave move in progress. This has been confirmed above $978. A potential fifth wave target lies at $1,100. RSI is in the neutral zone now indicating that it is neither overbought nor oversold. The averages in MACD are still above the zero line of the indicator indicating the bullish trend to be intact. Therefore, look for gold futures to correct lower initially and then rise higher again.

Supports are at $1025, $1,011 & $982. Resistances are at $1,055, $1,072 & $1,085.

Gnanasekaar T.

(The author is the Director of Commtrendz Research and also in the advisory panel of Multi Commodity Exchange of India Ltd (MCX). The views expressed in this column are his own and not that of MCX. This analysis is based on the historical price movements and there is risk of loss in trading. He can be reached at gnanasekar_thiagarajan@yahoo.com.)

Correction mode likely to stay

2009-11-02T21:33:00.001+05:30

Investors would look for opportunities to move into better performers.

The market went into a correction mode last week after indicating in the second half of October that it might make such a move. This week too, Dalal Street may witness a downward trend. Some observers said the Sensex may plunge to 14,000 level in the short-term.A marked increase in profit booking by a section of FIIs has changed the ball game, according to investment advisors to overseas funds.

Sensex DiVeS on FII selling

2009-10-30T08:45:00.001+05:30

The BSE Sensex dived 230 points on Thursday as foreign institutional investors continued their selling amid negative global cues and rising inflation concerns. The benchmark index closed at 16,052.70. The broader Nifty closed 1.5 per cent down, at 4,750.55.The Sensex touched an intra-day high of 16,264, but quickly dropped to a low of 15,993.8.FIIs were net sellers on Thursday for Rs 2,546.6 crore, while domestic institutions were net buyers for Rs 977 crore. Retail investors seem to have taken advantage of the situation and bought equity worth Rs 113 crore (on BSE) in the net.Since Monday the Sensex has fallen more than 4 per cent.

Inflation rate surges to 1.51%

2009-10-30T08:38:00.000+05:30

The wholesale price inflation rose at its fastest pace in six months, with the annual Wholesale Price Index-based inflation rate surging 1.51 per cent during the week ended October 17, up from the previous week’s annual rise of 1.21 per cent.

Inflation was recorded at 10.82 per cent during the corresponding week of the previous year. The official WPI for ‘All Commodities’ for the latest week remained unchanged at previous level of 242.2 points.

Is gold a safe-haven asset?

2009-10-24T21:09:00.001+05:30

Gold prices are going through the roof once again with each burst of boom seeing the yellow metal scale a new high.

The world might have abandoned gold standard but the Indian middle class continues to buy for social reasons. It is this practice more than anything else that explains the relentless gold rush in India.

Drain on forex reserves

Decried as wasteful and constituting a drain on our precious and scarce foreign exchange — gold is the second largest item on the Indian import basket — gold has serendipitously placed India in an enviable position with a conservative stock of 15,000 tonnes valued at roughly $480 billion that can hasten our growth if not catapult us into the ivy league of rich nations.

Gold standard may not be in vogue and not many are pining for its return but there are intelligent governments and central banks that are seeing the writing on the wall and building their war chests like never before.

China, for example, realised its mistake in putting all its eggs in one basket — the US dollar — and is now making amends by investing its fresh forex accretions in the yellow metal.

Our government has a much easier job on hand. It has to hard-sell its gold bond scheme so that the huge gold pile strewn across the country is put to better use and the drain on our precious forex resources is staunched.

Apart from checking the drain from forex reserves, popularising the gold bond scheme would inculcate the habit of holding gold in paper.In fact, a nation’s stock of gold should remain in official vaults. Therefore, besides popularising gold bond scheme for those sitting on gold, for the wannabe gold owners, exchange traded gold must be the norm.

Given the fact that rural folks swear by gold, this won’t be an easy task unless they are won over by explaining the danger of keeping their precious possession meant for the rainy day in their houses.

Paper gold must be sufficiently publicised and the services of the ubiquitous post offices roped in to sell them at the doorsteps of consumers.

Land has also been perceived as a safe-haven asset. The Chinese government and Indian entrepreneurs have been acquiring land abroad considered favourable for cultivation of crops not possible back home due to climatic and soil deficiencies or disadvantages. But any huge land acquisition by foreigners is bound to be resented by the locals. Industrial metals no doubt are precious but they don’t lend themselves to easy storage as gold does.

Besides, the scientific community can come up with substitutes. Shares briefly held themselves out as a safe haven asset which explained a rash of Sovereign Wealth Funds (SWF) before realisation dawned that they are not. In the event, gold remains the only safe haven asset for both individuals and governments.

In the event, gold remains the only safe haven asset for both individuals and governments.Crime for gold

In the hands of individuals, though, it is an unsafe safe-haven asset. Indeed, gold-related crimes figure high in the pecking order of crimes committed universally.

But this is no major handicap if only individuals are sold on the idea of investing in paper gold whose value keeps pace with its underlying asset.

While the fear factor can be played upon to effect transfer of gold from households to government lockers, promoting paper gold in lieu of jewellery may be a harder task. Paper gold might give safety and returns but not the glitter of the real thing.

The income-tax law does its bit towards promotion of paper gold by sparing it from wealth tax while imposing tax on gold per se. In capital gains tax, once again paper gold emerges trumps.

S.Muralidharan

(The author is a Delhi-based chartered accountant.)

Courtesy: The Business Line

BSNL awaiting Government decision on IPO

2009-10-24T21:06:00.002+05:30

The Initial Public Offering (IPO) of State-owned telecom major Bharat Sanchar Nigam (BSNL) Ltd has been deferred.

Mr Kuldeep Goyal, Chairman and Managing Director, BSNL, said, “As of now, I do not think it is on the immediate radar.”

On being asked if the IPO would happen within this financial year, Mr Goyal said it would be difficult to comment on the issue.

“The Government has to take a decision on it. We are waiting for the decision,” he added.

The government would need to time the listings of various public sector undertakings, he said.

For BSNL, there is no particular timelineas of now, he added.

BSNL had approached the Government with a proposal to divest 10 per cent stake to the public in a bid to raise about Rs 50,000 crore. The company was hoping to use the funds for expansion.

Mr Goyal was speaking at the sidelines of the launch of BSNL’s pre-paid broadband services in Karnataka.

Customers must have BSNL land line connection to avail themselves of this service. The service would be extended to other circles by the end of the year, BSNL said. The company has 4.3 million broadband customers, it said in a statement

Courtesy:The Business Line

When will the 'healthy' correction take place?

2009-10-12T21:15:00.003+05:30

The Indian equity markets continue to power on. On Monday, the stock indices got a major boost in the form of industrial production numbers, which came in at a 22-month high, and buzz that the warring Ambani brothers may be headed for a settlement in the bitter legal tussle over supply of gas. With the Sensex atop the 17,000 market and valuations certainly not cheap as compared to six months ago, will the market see a correction — something that everybody is terming ‘healthy’? Analysts think so but with the usual caveat — liquidity is the joker in the pack you can’t predict and so long as that remains robust, you never know.

View from the street

“There is still a lot of liquidity flowing into India,” said Sonam Udasi of brokerage firm Brics Securities. “It’s still looking attractive though our view is cautious on the market.”

“While there is enough money waiting on the sidelines, people would prefer to see some correction — even if it’s only a 5-10% correction — and that’s the broad voice what we have heard historically,” said C Jayaram, ED of Kotak Mahindra Bank. He added that, if indeed a correction took place in the market, it won’t exceed 5–10% because of the amount of money waiting on the sidelines to get invested.

Jayaram, however, was concerned with the market rally and said stocks had gone up more than the expectation of a recovery in the companies’ actual businesses. “At these levels it becomes very difficult to justify the valuations particularly in many of the frontline stocks,” he said. “I would also suspect that the market has factored in a lot of positives in earnings upgrades as well. Some of those may indeed happen but I would also think there could be some cases in which upgrades or improvement in earnings may not be as much as the market thinks it will.”

“I would be cautious about whether earnings upgrade in many of these cases is actually justified. If you put the whole thing in a pot then I would argue that there is a larger case for disappointment right now rather than for any sort of big positive,” Jayaram said.

However, almost every analyst has been for long echoing the correction-is-healthy call but the market continues to surprise.

Information technology: “One or two big concerns about IT is that it’s a question of in terms of visibility as to how clear is it particularly for the smaller and midcap IT firms,” Jayaram said. “More immediately, the question of the rupee strengthening seems to be a feature right now and unless you start to see some reversal of that, honestly I can’t think of too many reasons to be particularly positive about IT right now.”

Capital goods: “Within the sector, we have an overweight on the transmission and distribution (T&D) equipment space, on companies which are into project execution. We are positive on Jyoti Structures, Kalpataru Power Transmission all these companies. We are not so positive right now on the utility space in the near term,” said Udasi.

Metals: “Within the metal space, we are generally positive on the resource companies, so we may not be so positive on the commodity aspect as such because it is too cyclical but on whoever owns the resource,” Udasi said. “So we are positive on Hindustan Zinc with a long-term view. Whoever owns the raw material on this rather than the metal itself.”

Source: Money Control

Gold ETFs: High Volume shows firm recap

2009-10-09T18:09:00.001+05:30

Record gold prices may be deterring jewellery buyers, but they are triggering trading interest in Gold Exchange Traded Funds (ETFs). All gold-ETFs have seen volumes double in the last two days. GoldBEeS, which saw an average of 22,000 units traded last week, has seen a surge to 42,000 trades in the last two days.

However, Indian investors who bet on gold-ETFs a month ago have not participated actively in the recent rally. Their returns have been depressed, capped by the rising rupee. Despite the 5 per cent run up in international gold prices in the last one month, prices for domestic gold-ETFs are where they were last month. GoldBEeS, Benchmark Mutual Fund’s gold-ETF, which closed flat in Wednesday’s trade, has been hovering around Rs 1,570-levels for the last one month.

The spurt in gold prices in the international markets, from $1,000 last month to $1,053/ounce, follows the weakness in dollar on fears of a fall in the currency’s value. However, this has lent strength to the rupee, thus muting returns for investors. GoldBEeS, Goldshare (UTI Mutual Fund) and Relgold (Reliance Mutual Fund) all are below their last month highs. When gold crossed $1000 on September 8, all these funds reported new highs.

Source: The Business Line

Gold ETF | Advantages & Disadvantages

2009-09-21T08:08:00.003+05:30

Advantages of Gold ETF:

First, Gold ETFs allow you to invest in gold even if you have a small investible surplus. Instead of waiting until you accumulate enough funds to buy a 50 gm gold bar, you can make an investments in gold ETFs with an outlay of just Rs 10,000, to start with.

Second, You can also gradually build your exposures by buying additional units as and when you can afford them. Second, you can phase out your investments in a Gold ETF over a period of several months or years, so that you do not invest lump sum at a single price.

Third, when you take the ETF route, you can invest in gold without worrying about the purity issues that usually dog jewelery purchases.

Finally, because you can liquidate your ETF units at NAV-based prices through the stock market, they may offer better liquidity at prices closer to the market than gold bars or jewelery.

Disadvantages of Gold ETF:

One, returns on Gold ETFs may be lower than those on physical gold by virtue of management fees, transaction costs and other operational expenses levied by the fund house on the fund's NAV.

Second, if the ETF units are not actively traded in the stock market, you may not be in a position to exit your holdings at the time or price of your choice.

Solutions:

However, these risks appear unlikely to play out in practice. Competition between different ETF products may ensure that these products generate returns that are pretty close to those generated by physical gold.

The problems associated with liquidity may be sorted out if the idea of Gold ETFs really catches on with investors.

Exchange Traded Funds | Advantages & Disadvantages

2009-09-21T08:00:00.003+05:30

Exchange traded funds (ETFs) are a popular among investors nowadays.
These investment vehicles are similar to index funds, except they are traded as stocks on the stock market.

Here are advantages and disadvantages of investing in ETFs

Advantages

1. Convenience
Investing in ETFs are as easy as investing in stocks. You just need to buy one as you would buy any regular stock.

2. Low fees
Like index fund, ETFs have low fees. You can expect the management fee to be about .1% for S&P 500 trackers like IVV and SPY.

3. Tax efficient
There are no unexpected capital gains/losses when you purchase an ETF. Sell when tax-wise it makes the most sense to you.

Disadvantages

1. Convenience
The ease of buying/selling an ETF means you might sell an ETF when you later believed you should have held on. Of course, solid investment discipline will avoid this disadvantage.

2. Market spread
If you are buying a rare ETF, the buy/ask spread might be somewhat significant. This can be avoided if you invest in the major ETFs.

3. Index fund disadvantages
Since you gain the advantages of an index fund (like low fees), you also receive most of the disadvantages as well. Because an ETF blindly follows an index, it means it holds shares of stocks you might not like that happen to be in that index.

Telecom towers, huge power guzzlers too

2009-09-14T19:01:00.000+05:30

With about 2.5 lakh towers powering mobile services to over 400 million subscribers, the telecom industry is now the second largest consumer of energy in the country.

According to industry estimates, each tower consumes 3-5 kW to run the air-conditioner, generators and other equipment required to keep the base station in operation.

“The entire ICT industry accounts for 1.5 per cent of India’s total energy bill. This is expected to go up to 2.7 per cent by 2020. That makes it the second largest consumer of energy. Of this, telecom infrastructure accounts for one-third of the consumption while running IT equipment accounts for half,” says Mr Ankit Tandon, Company Strategist, Acme Tele Power.

High consumption also means high cost for infrastructure companies and mobile operators. “Most of the towers in rural areas are run on diesel gensets since there is no regular supply of power. Even in urban areas, there are frequent power cuts and we have to use as much as 5-10 litres of diesel a day,” said a mobile operator.

Telecom companies are adopting a multi-pronged strategy to reduce energy cost.

Infrastructure sharing has cut down power consumption in a major way. A single base station requires about 3 kW for uninterrupted service. So, if three operators were to set up their own towers to load up the base stations, it would require 9 kW. However, since operators are sharing the infrastructure by loading up their base stations on a single tower, they need only about 5 kW.

Operators are also using renewable sources such as solar and wind to power the base stations. “Though this is more costly in terms of capital expenditure, it gives lower operational expenditure,” said Mr Tandon.

Operators have sought incentives from the Government to promote use of renewable sources of energy.

Since air-conditioning is the major reason for high power consumption at tower sites, operators are also deploying systems that keep air cool without compressors.

Home loans up to Rs 10 lakh get 1% interest rate subsidy

2009-09-11T20:07:00.001+05:30

Affordable housing, especially in non-metros, could get a much-needed boost with the Government on Thursday approving the one per cent interest subvention scheme for housing loans up to Rs 10 lakh. The Centre has allocated Rs 1,000 crore for the scheme.

Under the new scheme approved by the Cabinet, the interest subsidy will be made available through commercial banks and housing finance companies for construction/purchase of a new house or extension of an existing one. This will be allowed so long as the cost per housing unit does not exceed Rs 20 lakh. The move augurs well for the sector as it comes at a time when there has been a notable slide in the flow of credit to the sector. This was largely on account of increase in real estate prices, slackening of income growth, and rise in interest rate for home loans — all of which have brought home sales to a near standstill since late last year.

The sop will be available only for the first twelve instalments for loans sanctioned and disbursed in the twelve months running from the date of publication of the scheme.

Also, the one per cent subsidy will be computed for 12 months on disbursed amount, and adjusted upfront in the principal outstanding irrespective of whether the loan is taken on fixed or floating rate basis.

On a housing loan of Rs 10 lakh, the interest relief will amount to Rs 10,000 per account, an official release said. As such, the scheme of a size of Rs 1,000 crore is expected to cover 10 lakh beneficiaries in one-year period.

Meanwhile, Mr S. Sridhar, Chairman, National Housing Bank (NHB) — the designated nodal agency for this scheme — told Business Line that the scheme will help improve sentiment in the housing sector, especially those in the non-metros.

“A home loan borrower will be encouraged to take a decision. The developers can also quickly get their act together to increase the supply of affordable housing,” Mr Sridhar said. Developers such as DLF and Unitech said that the scheme would “galvanise” buying sentiments. Clearly, it would benefit buyers in tier-II and tier-III cities as also affordable housing projects that are now coming up in the suburbs of major cities. But, it may not be of much benefit to buyers in prime locations of metros where the ticket sizes tend to be over Rs 20 lakh.

“Nearly, 50-60 per cent of potential home buyers belong to the low cost housing category. So, the scheme is a welcome step and would benefit buyers in smaller cities and suburban locations”, Mr Pradeep Jain, Chairman of Parsvnath Developers, said.

Source: Business Line

See acceleration in emerging markets led by China: JPMorgan

2009-04-27T17:42:00.000+05:30

Adrian Mowat, Chief Asian and Emerging Markets Equity Strategist, JP Morgan, sees signs of stabilization in developed economies and acceleration in emerging market economies led by

China

. "China was the first big country to move to pro-growth policies. We have seen major emerging markets move to pro-growth policies."

He advices investors to get into early cyclical markets like Korea and Taiwan, sell defensives and get into building materials. "Some cement stocks are doing really well in India and China at this point."

The US Federal Reserve released the methods it used to conduct stress tests of the biggest US banks, but stopped short of any details that signalled how much new capital regulators will demand. Commenting on the same, Mowat said the stress test is applicable on top 19 banks but the real problem in mid-tier banks. "I think investor focus will be on the actual results of the stress test, which was almost a non event for US markets. I am intrigued by the market’s under reaction to the stress test."

Source: m o n e y c o n t r o l . c o m

Deflationary phase?

2009-03-20T06:30:00.000+05:30

Data released by the Finance Ministry on the contribution of broad commodity groups to the year-on-year inflation during the latest week show that primary articles contributed 227 per cent to inflation, a quadrupling of its share from 56 per cent in the previous week.

In manufactured products, the contribution to inflation was 166 per cent in the week under reference, from 90 per cent in the previous week. The fuels group, on the other hand, showed a negative contribution at (-) 289 per cent against (-) 46 per cent the previous week, registering a six-fold drop.

Even as analysts predict that inflation is likely to turn negative starting April and could remain so until the end of 2009, the Government, on its part, allayed fears that the economy could be entering a deflationary phase. “I do not see any sign of deflation right now. Probably, the decline in inflation is more due to higher base last year than any significant drop in prices,” the Cabinet Secretary, Mr K.M. Chandrasekhar, told presspersons on the sidelines of an event here.

The International Monetary Fund, earlier this week, said that India should rely more on monetary policy to support the economy as high public debt makes fiscal efforts difficult. The RBI had, on March 4, cut its key repo rate to an all-time low of 5 per cent, having pruned it by 400 basis points since October.

Source: Business Line

Inflation plummets to 0.44%

2009-03-20T06:29:00.000+05:30

The annual Wholesale Price Index-based inflation inched closer to zero in the first week of March, setting the stage for the Reserve Bank of India to cut interest rates further to prop up growth.

Despite the decline in the headline inflation estimate to a three-decade low of 0.44 per cent, food products inflation continues to rule high and hurt at the consumer-level. The latest Consumer Price Index for Industrial Workers, to be released on Friday, is expected to be around 10.4 per cent.

According to data released by the Ministry of Commerce and Industry here on Thursday, the annual WPI inflation rose 0.44 per cent for the week ended March 7, sharply lower than the previous week’s annual rise of 2.43 per cent. Inflation was recorded at 7.78 per cent a year ago and the sharp dip in the latest reported week has been partially attributed to the base effect coming into play.

The drop of 199 basis points in the latest WPI inflation estimate is the steepest since the week ended November 1, 2008. There is no record of inflation dipping this low since 1977-78, according to Government estimates.

The sharp fall in headline inflation during the latest reported week was on account of an across-the-board dip in inflation levels. In primary articles, the year-on-year inflation dipped to 4.4 per cent for the latest reported week, against 5.8 per cent the previous week. In food articles, inflation fell to 7.4 per cent after being stable at 8.3 per cent in the previous two weeks. Cereals, pulses, salt, milk and sugar, however, clocked high relatively year-on-year inflation rates.

In the fuel and power group, inflation dipped further to clock minus 6 per cent versus minus 5.1 per cent in the earlier week. In manufactured products, inflation rate decreased to 1.3 per cent in the current week, from 4 per cent last week. Inflation in most sub-groups declined or remained steady relative to rates recorded in the previous week.

Markets see biggest single-day gain in 2009 led by financials

2009-03-13T18:35:00.001+05:30

Today's session was the strongest session for the benchmark indices in the year 2009. The markets continued their northward journey on the back of strong global cues. Short covering in rate sensitive and fresh long build up in major heavyweights boosted the markets higher.

The Nifty closed above the 2700 mark, after seven sessions while the Sensex ended above 8700 level, after eight sessions. Banking & financial, technology, metal, oil & gas and capital goods stocks led this rally followed by auto, realty and FMCG stocks.

The 30-share Sensex touched an intraday high of 8,793.21, before closing the day at 8,756.61, up 412.86 points or 4.95%. The 50-share NSE Nifty gained 101.80 points or 3.89%, to settle at 2,719.25, after hitting a high of 2726.15.

In an interview to CNBC-TV18, KV Kamath, Managing Director and Chief Executive Officer of ICICI Bank, said he sees recovery in the fourth quarter of the current financial year across sectors except in the textile industry. Kamath, also the president of industry body Confederation of Indian Industries (CII), said he was basing his assumption on the interaction with members of the CII National Council meeting.

Reliance Industries, Infosys, ICICI Bank, HDFC, L&T, HDFC Bank, SBI, ONGC, TCS, Tata Power, Bharti Airtel and Reliance Communication were leading contributors in this rally. However, only NTPC closed in red, was down 2%.

The Nifty March Futures ended with 1-point premium and added nearly 40 lakh shares in open interest (OI) with a turnover of close to Rs 9,900 crore. The Nifty Put-Call ratio was up to 1.35 from 1.25. Among stocks futures, DLF added about 46 lakh shares, SAIL added about 30 lakh, ICICI Bank added nearly 22 lakh and Reliance Capital added about 11.5 lakh shares in open interest.

This rally was mainly led by positive global cues. At the time of closing of Indian equities, European markets were trading higher. FTSE went up 62 points, to 3,774. CAC was trading at 2,744, up 50 points and DAX was trading at 3,999, up 43 points.

The US futures were trading with marginal gain; Dow Jones Futures were at 7,195, up 27 points and Nasdaq Futures at 1.166, up 3 points.

Asian markets ended higher; Nikkei 225 Average surged 5.15% and Straits Times was up 5.62%. Taiwan Weighted shot up 3% and Hang Seng gained 4.37%. However, Shanghai and Seoul Composite were up just 0.2% each.