Layman's Finance Blog .....

DEPOSITORY

2009-12-23T20:42:00.003+05:30

What is a Depository?
A Depository is a Company where the shares of an individual are held in the electronic form, at the request of the shareholder.This eliminates the physical form of holding. The National Securities Depository Limited (NSDL) was promoted by IDBI, UTI, SBI and NSE. The Central Securities Depository Limited (CDSL) was promoted by BSE .

What is the Depository System?
Your money may be held in the form of liquid cash at your home or may be deposited in a bank. The bank holds your funds in the electronic form and subsequently debits or credits the account. Depending on your issuance of cheques or deposit of cheques. The advantages of safety and convenience of dealing with a Bank overweigh the reasons for holding liquid cash in your home.Your financial assets such as Equity Shares may be compared to the above example.You may hold physical share certificates in your home and be exposed to the various risks of lack of safety, mutilation, loss etc.Alternatively, you may deposit your shares in an organization called a Depository, which holds your shares in the electronic form. The advantages of the Depository System can be further compared with physical shares as below :

The risk of loss, mutilation is common for physical certificates and completely removed in electronic shares. Handling of a large number of physical certificates is ended in the Depository mode. In the electronic segment, there are no bad delivers as in physical segment. There is no stamp duty payable in electronic shares compared to the duty of 0.50% in the physical segment while transferring ownership. In loans against shares, banks usually charge a lower interest rate and margin money than in the physical share certificates. Settlements in the Stock Exchanges has commenced in the electronic segment and has proven to be far more efficient and convenient compared to physical shares.

How can I Deal with the Depository directly?
You cannot deal with the Depository directly. However, if you have any unresolved grievances against your DP, you can make a complaint to the Depository at the below mentioned address.
What are the obligations of a Depository?

The Depository is obligated to maintain the Client Holdings, enable demat and remat of eligible securities, disbursement of corporate benefits,effect settlement of securities traded on the exchanges as well as Off-market trades through book entry transfers, provide for Pledging/Hypothecation of eligible securities.

What is NSDL?
National Securities Depositories Limited is a Depository promoted by UTI, IDBI, SBI & NSE who hold the securities in electronic form on behalf of the beneficiary holder.
Tell me about the Insurance Policy by NSDL?

Shares in the electronic segment are 100 percent secure. The agreement between you and the DP indemnifies you against misuse of your electronic holdings by any party, in any manner whatsoever. You may legally invoke such indemnity and be 100 percent compensated.A comprehensive Insurance Policy has been taken by NSDL which covers your DP account so as to protect you against any losses, breach of security etc.

What is CDSL?
Central Depositories Securities Limited is a Depository promoted by BSE.
How does the Depository curtail Forgeries / Fakes in Duplicate Distinctive Numbers?

Physical share certificates with duplicate distinctive numbers are essentially forged certificates. The R&T would identify and reject the certificates.The concerned Stock Exchanges are informed of the details.

Who is a Depository Participant?
Depository Participant (DP) is an organisation that acts as an Agent of the Depository and interacts with the investor.A DP is responsible for maintaining your securities account and operating it only under your written instructions. The Depositories Acts mandates that investors can use Depository facilities only through DP’s. The distribution channel and geographical spread of the DP’s offices allows you to access the Depository at a low cost.

What is a DP ID No?
It is an identification number given to a DP similar to a client ID.

Why is it necessary to open a Depository Account?
A Depository Account should be opened with a DP if you intend to hold your securities in the electronic form and also if you intend to trade in the electronic form.

Where do I open the Depository Account?
The Depository Account must be opened by you with a Depository Participant. A list of names and addresses of all Authorized DP’s is available with the NSDL and CDSL and you may meet any of these DP’s place and make a choice at your based on your comfort and convenience.
What are the formalities that are required to be completed to open a Depository Account?

To open a Depository Account, you have to submit the duly filled in Account Opening form along with the relevant documents.

Are applications for account opening to be collected at NSDL?
No. The Account Opening form must be collected only from a DP.The Account Opening form can be collected from any of the Aditya Birla Money Offices.The forms may be submitted and you may collect the acknowledgement across the table.

How do I open an Account with any DP?

The account opening form may be collected from any DPs office or downloaded from the Internet.If your shares are in joint name, open your account in the same order of the names.For combination of joint names, you must open separate accounts for each combination.You can open multiple accounts with the same DP.Submit photographs of the account holders along with their bank accounts nos.Sign the agreement with DP.For NRI’s, RBI Reference Number and Approval Date must be provided.Submit your physical shares for demat and await credit to your DP account.

Can my account with my DP be viewed by any other Depository Participant?
No. Your DP can only access their own clients' information. They cannot access the client information of any other DP.

How many holders are possible?
The maximum number of holders possible are 3.

What are the maximum number of Accounts that I can open?
You may open more than one account with the same DP.

Can I open a Second Account with a second Depository Participant?
Yes. You have the choice of opening accounts with more than one DP.

How confidential is the information in my account?
The information of your holdings in the account is completely confidential. This is similar to your account balance in a bank.

How do I Nominate more than one person?
As per the latest Company’s Act Amendment, only one person can be nominated.

How do I avail Nomination Facility?
Fill in the relevant columns in the application.

Do Depository Accounts have Nominee Facility?
No. NSDL allows the DP and the investor to capture details of the Nominee.

How is account confidentiality maintained?
Your account confidentiality is maintained, since only your DP has access to the information in your account.

What are the types of Accounts that can be opened by a client?
Individual accounts can be opened by Ordinary Resident, HUF, NRI ~ Repatriable and NRI Non-Repatriable. Corporate Accounts can be opened by Body Corporate, Banks, Trusts, Financial Institutions, Foreign Institutional Investors, Overseas Commercial Banks etc.

What are the RBI Approvals for NRI’s?
If you are an NRI, the RBI permission is required for NRI’s depending on the category as given below :
S.NO Category of your Account Sale or Purchase Remarks
1 Primary Market ~ Allotment Purchase No RBI permission is required for allotment on repatriable basis.
2 Primary Market Sale On repatriable basis RBI permission is required.
3 Secondary Market Sale or Purchase Repatriable or Non-repatriable basis.RBI permission is required and is valid for 5 years.

How do I open a HUF Account?
An account can be opened in the name of HUF in a similar way to individual account and mentioning the account category as HUF. However, Kartha of HUF will sign the application, agreement and all transactions under the account.

How do I open an Account of a Partnership Firm?
An account cannot be opened in the name of the firm. It has to be opened in the name of any of the Partner as an Individual account only.
What are the formalities that are required to be completed to open a Corporate Account?

The procedure to be followed in order to open a Corporate account is quite similar to the opening of an account by an individual, but in addition to that you also have to submit the Memorandum of Association (MOA) as well as the Board Resolution for authorized signatories in case of a limited and private limited firms.

What is the Participant-Client Agreement?
The Participant ~ Client Agreement is a bipartite one to be signed by each joint holder and the DP at the time of account opening on a non-judicial stamp paper of Rs.10/-. A Beneficiary Account No. is generated by the DP and given to you for all future reference.

What is a Beneficiary ~ Non House?
A beneficiary having an account with a Depository Participant other than the Depository Participant himself.

What is a Beneficiary ID No?
Each beneficiary is allotted an ID No. generated by DP by which a beneficiary is identified. This is similar to your Bank A/c No. or the Folio No.

What are the details relating to Joint Holders?
The DP will open the account only in the ORDER OF THE JOINT HOLDERS.

How do I open an account for Holdings in different Combinations?
For shares held by Joint Holders(different combinations), a separate account must be opened for each such combination. This is so since ownership was originally vested in that particular unique combination.

Must I have to open an account with my Broker's Depository Participant ?
No. There is absolutely no compulsion for you to open an account with the same DP as that of your Broker.There is no loss in operational efficiency, as claimed by some Brokers.However, some DPs offer concessions in fees if the Broker as well as his Clients are dealing through him.

Why does a Broker have only one Clearing Member Pool Account?
The Clearing House deals with ONLY ONE designated account for pay-in and pay-out with the Broker.This single account allows you to know to which account securities must be delivered and received from.One Clearing Member Pool Account is opened per card / Stock Exchange to settle trades in the Dematerialised form.

How do we open a Clearing Member Account?
An application has to be made to the Depository with a request to the Depository directly also.

What is a CMBP ID?
A CMBP ID is a Clearing Member Broker Pool Account. The broker opens this account in order to use this account as a clearing house for all the clients for whom he is the broker and the unique identification number given to this account is known as the CMBP ID.

Can a Broker hold his personal shares in his Clearing Member Pool Account?
No. The CMPA is to be used only for clearing purposes, as this is a temporary and in transition Account.Securities in this account are not eligible for corporate actions, Bonus, Dividends, Rights etc.Thus, the Broker must open a separate account for his own investments.

How do I operate my Account?
In the operation of your account, your DP can act on your written instructions only. Make sure always that pre-signed instructions are not given by you to anyone. This is like a pre-signed and blank cheque.

What is a standing instruction?
A standing instruction is an instruction given by the client, in order to receive credit into his account.

When does my account get credited?
Your account would be credited with shares that you have freshly dematerialised or have purchased recently.The credit will be confirmed to you in the fortnightly Statement of Transactions sent by your DP

What is a client master list?
A client master list is a statement, which gives the complete details of the client as well as the account which he has opened.

How safe is your account?
Your account is completely safe with your DP since nobody has access to your account except your DP and the DP will operate your account only on instruction from you.

What are the formalities to be completed for closing your account?
In order to close your account, you need to fill in an Account Closing form and submit the same to your DP.

What is meant by Dematerialisation?
Dematerialisation is a process in which you can convert physical share certificates into electronic shares.Shares should have been transferred in your name / joint names before sending it for dematerialisation.

Why should I buy shares in the demat form?
The single biggest reason over buying shares in the physical form is that demat shares credited to your account within 2 to 3 days after the end of the settlement. This is unlike the average 30 to 40 days taken in receiving back physical shares from the R&T Agent and sometimes with objections.Further, possibility of loss or theft of the certificates is eliminated.This is in addition to the 0.50% stamp duty savings, which works out to Rs.50 for transfer of shares worth of Rs.10,000

How do I benefit by selling demat shares?
Brokers have no fear of bad delivery while selling demat shares. Due to this, they offer lower brokerage to you.As bad deliveries are eliminated shares are not returned due to objections, resulting in saving of costs and follow up.

What is meant by Companies in compulsory Demat?
Only share certificates in these companies can be dematerialized by the investor.Shares must be registered in your name to allow for dematerialisation.Shares delivered by your Broker on Purchase (known as street name deliveries) cannot be dematerialized.

What if I hold shares of Companies not in Demat?
You may approach the company and request them to sign up with NSDL Vigorously follow up as Demat is in your favour.

Is it true that Demat is not compulsory?
Yes. You have the option to hold shares either in the physical OR in the dematerialized form.This is as per the Depositories Act, 1996.However, when you buy shares you may receive delivery in the demat form as per the option of the seller.

Can physical AND Demat shares be held for a company ?
Yes. You may dematerialize only a part of your holdings.

In Demat do I need a Transfer Deed?
No, there is no need for a Transfer deed in order to get your share certificates dematerialised.

How do I Demat my Shares?
In order to demat your shares/certificates, you have to fill in a Dematerialisation Request Form in triplicate alongwith the relevant details and submit the same to your DP alongwith the certificates to be dematerialised. The combination of names in the shares must be same as that in the account.

What is a DRF?
In order to get your shares converted from the physical to the electronic form, you have to submit your certificates alongwith a request form asking for the conversion. This request form is called a DRF or a Demat Request Form.

What is Defacing of Shares?
When the certificates are surrendered for demat they are to be canceled at the face of the certificate by putting a stamp " Surrendered for Demat " so that the certificate cannot be traded. This process of affixing the "Surrendered for Demat" stamp on the shares is known as defacing of shares.

How long would it take my account to be credited when I submit my shares for dematerialisation?
Your account will be credited typically in 15 days.

Are there Distinctive Numbers & Certificate Nos. in Demat Shares?
No. Dematerialized shares do not have any distinctive or certificate numbers.The shares are in FUNGIBLE ~ 100 shares of a company are the same as any other 100 in that company.

Why dematerializing, can a sole holder add a Joint Holder?
No. At this point, ownership cannot be transferred from an individual name to a joint name.To do this, you should first open a Depository Account as the sole holder and dematerialize the shares.You should open another Depository Account in the joint names (AB).Now make an off-market transaction from account A to account AB.The DP will charge a nominal amount for this transaction.As an alternate, the certificate can be sent for transfer in the joint names AB and then surrendered for demat with the DP.

What are the various reasons for Rejections in Demat?

Fake Certificate, Signature difference, Third Party Claim, Court Cases are the reasons as to why a demat request is rejected by R&T Agent.

What is meant by rematerialisation?
Rematerialisation is a process in which you can convert your electronic holding into physical share certificates

Does the NSDL issue fresh certificates in Remat?
In the rematerialisation process, a request goes from the DP to the R&T Agent through the NSDL for the remat. The R&T Agent will process the request, print and then despatch the new share certificates directly to you.Thus, the NSDL does not issue or handle share certificates.

What are the rules for Odd lot Rematerialisation?
There is no concept, any longer, of a market lot in the electronic segment . Thus, you may remat your odd lot shares at any time.This would be done in exactly the manner as you would remat you market lot shares.

What are the rules for stamp duty in Remat?
The Depository is the registered holder in the Company’s records.In a remat, transfer from the Depository to you will NOT be liable to a levy of Stamp Duty. This is as per the Depositories Act. However, the Depository will charge nominal charges for this process.

How to remat my securities?
For Remat of Securities, you have to submit a Remat Request Form (RRF)to the DP mentioning the relevant details for the rematerialization process to take place.

What is a market/Off market transaction?
A market transaction is a sale or purchase in which a broker is involved and an off market transaction is a sale or purchase in between two clients and in which a broker is not involved.

What are Transaction Slips?
A transaction slip is a debit or credit instruction slip endorsed by you submitted to your DP for execution.

What is Electronic Credit?
Electronic Credit is the process of crediting of your account through demat or if you purchase some shares in the electronic form.

What is RECEIPT IN instruction?
When you purchase shares in the electronic segment, the payment will be made to your Broker and to now receive the credit of the purchased shares in your DP account, you must give instructions to your Broker as well as your DP by way of a RECEIPT IN instruction.This instruction effectively credits the purchased electronic shares in your DP account.

What is Electronic Debit?
Electronic Debit is the process of debiting of your DP account through remat or if you sell some shares in the electronic form.

What is a Delivery Instruction Slip?
A Delivery Instruction Slip (DIS) is an instruction given by the client to the DP to debit the holdings of the client.

Can dematerialized shares be traded in all Stock Exchanges?
No. These can be traded only at those Exchanges that have connectivity with NSDL and only Exchanges which have a SEBI approved settlement guarantee system are connected to NSDL.Presently, only NSE, BSE and CSE have this facility.

Can I go to my DP to Trade in Securities?
No. The DP is only an agent of the depository to facilitate settlements in trades.You must approach a registered member of a stock exchange to buy and sell shares.How can I purchase or sell dematerialised sharesYou must instruct your Broker to complete the purchase transaction in the dematerialised form and confirm to you.You must then ensure that your Broker sends a matching instruction to your DP to transfer the purchased shares to your account.This is the same procedure for Sale of shares.

What are the rules relating to The Benami Transaction (Prohibition) Act, 1989?
The rightful and registered owner of your dematted shares is the Depository. Purchase / Sale or Trading in these shares would be considered as Benami transactions.However, the Benami Transactions (Prohibition) Act, 1989 have been modified to exclude Securities held by :~ A Depository as a Registered owner ~ A DP as an Agent of the Depository.

How do I transfer shares from one account to another?
In order to transfer the holding in your account, you need to submit a delivery instruction slip in case of a pattern differentiation, and you need to close an account and transfer the shares in case there is no pattern differentiation of the holders name of the debiting and crediting accounts.

What if wrong Debit-Credits take place in my account?
If wrong debit-credits takes place in your account, you can inform your DP and your DP will inform the relevant DP or the client who has also been wrongly debited or credited and if it receives confirmation from that particular DP or the client, it will reverse the transaction, and if your DP does not receive any confirmation it will then inform NSDL of the same.

Can I square off in dematerialized Trading?
Yes. Trades can be squared off within the weekly settlement cycle of a Stock Exchange, in the physical segment.Trades can be squared off within the same day, in the exclusive Demat segment.

What is an auction?
An auction is a public sale of your shares to the highest bidder.

When is the Occurrence of Auction?
Subsequent to a sale trade made by your broker, the scrip number traded are required to be delivered to the exchange, through your broker pool account. Failure to deliver the shares before the deadline time period will result in default and your shares will be auctioned.

What is a Settlement?
A settlement period is the period, when the business is done in an exchange. There are different types of settlement with different exchanges

What is a Settlement number?
The settlement number is a unique number given to each settlement period of a particular exchange in order to differentiate that settlement from all the other settlements of that particular exchange.

How many types of settlement are there?
The following are the types of settlements
• Rolling odd lot
• Company objection
• Physical
• Auction rolling
• Rolling market lot
• Bad delivery
• Auction physical
• 3D market
• Institutional
• Inactive

What is Rolling settlement?
Rolling settlement is a type of settlement in which the settlement date for that particular exchange is not taken into account for settlement, but the shares should be delivered to the stock exchange within a fixed time after the trade has been executed. For e.g.: a T+5 type of settlement would indicate that the shares should be submitted to the stock exchange within 5 bussiness working days after the trade has been executed

What is T + 5 in Settlement?
T + 5 in settlement means that the delivery of shares to the stock exchange should take place within 5 business working days after the trade has been executed

What is Settlement deadline?
The settlement deadline is the time by which the trades for that particular settlement should be executed.

What is Late Window?
Late window is a concept in which the trades are executed a little later than the settlement time for that exchange, although the DP does charge a late fee for executing the trades in this mode.
What if the execution day given in the instruction is an NSDL Business Holiday?

In such a case, the next working day is taken to be the execution day.

What is a Pledge?
If you wish to take a loan from a Bank against the security of your physical share, the certificate must be physically lodged with the Bank.This action is called a Pledge.In electronic holding also you can pledge the shares by making a request with your DP in favour of any Bank.

Where can I pledge my shares?
You can pledge your shares in a bank which is a DP or a client of a DP.

What are the rules for Pledge Of Locked-in Securities?
Locked-in shares can be pledged with a Lendor (such as a Bank) for a loan.However, the pledge cannot be closed or invoked before the lock-in release date.

How can I Pledge / Hypothecate Shares?
First of all the Bank granting the loan should be a DP or a Client of a DP.You may submit the written Pledge instruction to your DP.The Pledged quantity is blocked in your DP Account by the Bank electronically.The loan is now available for use by you.

Can I dematerialize shares which are Pledged with a Bank if the Bank is also a DP? Yes. You may, with the permission of the Bank.

How to revoke pledged/hypothecated shares?
To revoke pledged/hypothecate shares, you need to submit a pledge revocation form to the DP asking for the revocation of your pledged securities.

What happens after the closure of my loan with the Bank in case of a Pledge?
Upon closure of your loan with the Bank, the Pledge is closed in your DP account by the Bank directly.Those released shares in your DP account are once again available to you as free balances.

What is Pledge Invocation?
When a pledgee does not repay the loan amount the shares pledged with the Bank can be transferred in their favour. This is similar to the physical shares being transferred in the name of the lendor in the event of a default.Who will receive the corporate actions like dividends, bonus etc in Pledged shares . You continue to remain the beneficial holder of pledged shares. You will continue to receive the Dividends, Bonus and all other Corporate actions.

How do I go about Change in Address?
For changing your address. you have to write to your DP asking for a change of address, mentioning your client ID as well as the address to which you want to change it to and sign the letter.

How do I go about Change in Bank Account?
For changing your bank details, you have to write to your DP asking for a change in your bank details, mentioning your client ID as well as your changed bank details and sign the letter

How do I go about Change in Nomination?
For a change of Nomination, you have to submit the duly filled in relevant form to the DP asking for a change in Nominee.

How do I go about Change in Signature?
For changing your signature, you have to submit an affidavit to the DP asking for a change in signature.

How do I go about Change of Name?
Once an account is opened , you cannot change the name .However, if you want to have an account in a different combination , you can open another account with your DP.

How do I change my status in the account after opening?
A change in status is not possible after opening your account. In order to have a different status, you need to open a new account.

What is Transmission?
Transmission is a process in which the holdings of a client are transferred to the joint holder and the nominee in the event of the client’s death or expiry and if the joint holder/nominee is available.

What are the formalities for Transmission?
In case of death of a holder, the balances can be transferred in favour of the joint holder if available or the nominee in case of no joint holder. The joint holder or the nominee is required to fill in the transfer form and execute an indemnity for the purpose.

Can successors claim the shares upon the Death / Expiry of a Holder?
A transmission request form is available with the DP.A single form should suffice for transmission of shares of all the companies held by the deceased.The successors must submit the request form with all supporting documents.On confirming validity, the DP will transfer shares of all the companies in a single action to the Depository Account of the Successor.

What is an IPO allotment?
Allotment of shares in a new issue is known as IPO Allotment.

How do I receive electronic credit in an IPO?
In the IPO application form, fill up the option for electronic allotmentProvide your Client Account No. and DP Identification No.If allotted, shares will be credited to your DP Account.Your fortnightly Statement of Holding sent through post, will indicate the credit

When are allotments credited in an IPO Allotment?
Allotments in an IPO are credited directly to your account on any day between the allotment date and the date of listing.This is at the discretion of the company.

Is it compulsory for companies to make IPO allotments only in the demat form?
No. It is not.However, the laws are expected to change whereby it would be compulsory for issues more than Rs.10 crores.

Is there any preferences in allotment in an IPO,if I hold shares in the physical or the electronic form?
No. The basis of allotment in an IPO is independent of the form of the shares in physical or electronic. Thus, no one can receive any preference in allotment.

Will NSDL open my account if I do not have one, for my allotment in an IPO?
No. In such an instance, physical shares will be issued by default.A Depository account can be opened only by the beneficiary holder or by the Power of Attorney.

What is a Corporate Action?
Any action taken by the company for its shareholders is known as a Corporate Action. For e.g. Declaration of Bonus/Rights Issue, Dividend etc

How does Corporate action take place?
Corporate action takes place when the company issues a dividend or a share.

Why is a Bank Account necessary?
A Bank Account is necessary if you want to get your bank account credited whenever there is some corporate action like dividends etc.

BONUS

How will I receive Bonus Shares?
Usually Bonus shares will be credited directly to your account by the Depository.You may however exercise your choice and receive the bonus / rights shares in either demat or physical form. Please inform the company of your choice.If you have the existing shares in physical form, the bonus may be issued in the demat form, as per your request to the company.Your statement of transaction, sent every 15 days by the DP, will show the bonus credit in your account by default

How do I receive fractional part of Bonus?
The fractional part of bonus will be paid to you in cash by the Company.The remaining whole part will be credited to your account.

DIVIDEND

How do I receive my Dividend?
The Company / R&T Agent will forward Dividend payment to you through a physical warrant, as in the normal course.NSDL, which has the names of the beneficiary owners as on the Record Date, gives the list to the Company / R&T Agent the list of beneficial owners.NSDL does not handle cash corporate actions such as Dividend and Interest.

RIGHTS ISSUE

How do I receive Rights Offers?
The Company / R&T Agent will mail the rights form directly to you.These forms will be mailed to all shareholders of the company whether in the physical or electronic segments.You cannot receive Demat shares in case of rights without having a Depository Account.The statement of transaction, sent every 15 days by the DP, will show the rights credit in your account.

BOOK CLOSURE DATES

How will I know about Book Closure Dates?
The DP will have the book closure dates of all the scripts, so you can contact the DP for the book closure dates.

What is ISIN?
ISIN stands for International Security Identification Number. The ISIN number and name of the company must be necessarily mentioned in the DRF. This ensures that the security in the DRF is same as the one you want to dematerialise.

Why are there different ISIN ‘s for different scrips?
There are different ISIN (International Securities Identification number different scripts in order to have a unique method of identifying each script. In order to differentiate each and every script from all the other scripts.

How are Partly-paid and Fully-paid shares to be recognized in the depository?
In the depository, partly paid shares are given a separate ISIN number and so are the fully paid shares. Thus, they are completely separate entities and are distinguishable as they are traded separately on the Stock Exchanges.When partly paid shares are fully paid up on payment of the Call Monies, the R&T Agent will electronically convert those into fully paid shares. What is a Statement of Holding? A Statement of Holding is a statement, which gives the details of the holding in the clients account i.e. the scripts that are there in your account and the quantity in each script on that particular day.

What is a Statement of Holding?
A Statement of Holding is a statement, which gives the details of the holding in the clients account i.e. the scripts that are there in your account and the quantity in each script on that particular day.

When do I get the Statement of Holding?
The DP shall print and despatch the Account holding statement to the client once in every month.

What is the Transaction Statement?
The details of the purchase / sale made by you during a period is given in a statement and this statement is called the Transaction Statement.

When do I receive the Transaction Statement?
The transaction statement is like a Bank Passbook.It shows all transactions done by you within a fortnight.If there are no transactions, the statement is sent to you every quarter giving details of your holding.

How can I use the Internet ~ View Transactions & Statement of Holdings?
Go to Registration / Transaction.

What is BENPOS?
Beneficiary Position giving the details of holding in the Beneficiary Account is downloaded by the Depository to the companies on a periodical basis.
What are the formalities for Freezing / Unfreezing of an Account ?

If you are likely to be out of station for a long time, you may instruct Aditya Birla Money DP to freeze your account.This is a method to prevent misuse and tampering.To freeze your account, simply issue a written instruction letter to the effect to your DP.Your account will be unfrozen when you once again issue a written instruction to the DP.

What is a Lock in Period?
The shares cannot be transferred from the holders name for a fixed period mentioned on the face of the certificate.

How do I calculate Capital gains?
You can Calculate Capital gains by the following method:
For example, you have two scripts, script A and script B : Quantity of script A * Price of script A=X Quantity of script B * Price of script B =Y Then , value of the holding = X+Y Capital Gains =Value of the holding at the end of a period-Value of the holding at the end of the previous period

What is Securities Lending?
Securities lending in a concept in which a client can raise a loan for his securities directly from the DP itself and not go to a bank and pledge these securities.

How do I pay my bills?
You can pay your bills either by Cheque or DD.

GOLD SHINNING!

2009-12-15T17:04:00.001+05:30

Amongst all the doom and gloom that many of headlines these days convey, gold is one of the few investments that offer the most promising returns if the global economy were to go in a tailspin.

Consider commodities guru Jim Rogers' comments. In a recent interview with CNBC, he shared his detailed perspective on gold. Even though he owns gold, he's not buying the precious metal currently. That's because gold has shot up in price and according to him, whenever something shoots up it probably will go down for a while. But if gold goes to US$ 1,000 per ounce again, he will surely be smart enough to buy more. Infact, he has gone as far as to say that gold will certainly go to a couple of thousand dollars an ounce over the next decade. So he remains a firm believer of the theory that am gold will be a great investment over the next decade or so. With the kind of problems that the western economies are facing, we must say that that does not seem such a far off possibility after all.

Indian GDP grew by 6.8 %

2009-12-15T16:53:00.000+05:30

It is not just the investors who seem to be happy with the Indian GDP growth in the quarter gone by. Even our FM, Mr Pranab Mukherjee seems to be all smiles. And why not? After all, India's not so comfortable public debt position may not deteriorate any further in the current fiscal. Strong economic performance has given the FM the hope that government revenues are likely to come in more buoyant than expected and hence, India's fiscal deficit, a measure of how much more it spends than earns, is likely to remain within the targeted 6.8% as a percentage of GDP. However, no further deterioration in the deficit situation does not mean that the 6.8% is a good number. Agreed that these were extraordinary times where the government had to come to the rescue but if India has to put itself on a higher growth path and has to lower the cost of borrowing for its companies and citizens, its deficit will have to be reined in substantially.

Abu Dhabi palns to bail out DUBAI

2009-12-15T16:28:00.001+05:30

Many years ago, during the height of the cold war, there was a popular theory - mutually assured destruction. If you sink, so will everyone. Others had no choice but to keep you alive. Years later, the theory has mutated to a financial version - Too Big To Fail. We saw it being played out when governments had no choice but to bail out financial institutions during the meltdown. We are seeing that again with the Dubai bailout.

Abu Dhabi, the richest member of the UAE has agreed to bail out neighbouring Dubai. At the last minute. After all, it couldn't let Dubai default without harming its economic interests. Abu Dhabi has provided the Dubai government with US$ 10 bn. That's enough to pay the US$ 4.1 bn due immediately but less than the total debt. As per the New York Times, Dubai World (real estate arm) still owes about US$ 18 bn, Dubai Holding (investment arm) owes US$ 8 bn, the Investment Corporation of Dubai owes US$ 26 bn and the Dubai government itself owes US$ 16.3 bn. What about these remaining creditors? We believe they will also have to show some flexibility while dealing with a sovereign state. Too Big To Fail, you see.

The lesson in all of this - if you decide to borrow, borrow big time. The smaller fry is taken to task, borrowers who are Too Big To Fail are bailed out. Not that it is the right thing to do. We certainly don't believe in it. But it appears that this logic is working. Let's see for how long.

DUBAI CRISIS: WHAT AILS DUBAI? AND WHY SHOULD WE CARE?

2009-12-15T16:16:00.002+05:30

In order to transform its economy as a major tourist and financial hub, Dubai borrowed US$80bn. However, it suffered a massive property slump in last year’s credit crisis. Now, it is not able to repay its liabilities, and asking borrowers to postpone repayments. There were 53 lakh Indians in the Gulf, of which 31% were in the UAE, mostly employed by construction sector for Dubai’s real estate boom. The Gulf region accounts for over half the total inward remittances worth over USD 25 billion annually from expatriate Indians, out of which 10% of overall remittances to India could be from construction workers. If Dubai were to default, there would be repercussion in other parts of world, where banking would take a hit from lending to Dubai. Though the overall size of the liabilities are not very big compared to US banking problems, this could be a taken as an excuse for the markets to correct at lower levels.

Layman's Finance

2008-12-10T20:42:00.002+05:30

NSG Waiver for Indo US Nuclear Trade Deal

2008-09-06T21:29:00.000+05:30

Finally good news for India and I believe for the markets too. The buzz in market is that India gets waiver from the NSG. Today it got waiver from 45 nations, which literally lifted a global ban on nuclear trade with India and approving the US. So finally after a long meeting all the because it was forced by Strong power from Us side and also after various talks by Pranab nations accepted and other congress ministers they are sure that we will not test Atom Bomb again .

What else to be done
Now the remaining thing to be done for this deal is to sign the Pact in US congress which is happening on September 8th 2008,This will close that day if they sign it after 3 years of the 123 India-US bilateral agreement was conceptualized.
If it doesn’t Happen
If it doesn’t happen this September then it has to happen only in new government and never know what will happen after that .when i say new government i’m talking about US government which is going into election in November.

How it happened
Until yesterday country like Austria , New Zealand, Ireland, Switzerland, Norway where all proposing and was insisting that provisions be included in the draft on the proposed waiver that will allow NSG to terminate nuclear business with India if it conducted another test.Finally they where all happy with the statement that Mr.Pranab Mukerji reaffirmed that New Delhi’s commitment to a ‘voluntary moratorium'.

Finally what will happen
So finally if the deal goes through in the congress then the Nuclear trade between both countries would start after 34 years when the US first did Economic sanctions on India when we did the first nuclear test in 1974.

Company that are paying dividend and company that are going EX Dates for bonus , record date and more ...

2008-09-03T22:44:00.004+05:30

Company that are paying dividend and company that are going EX Dates for bonus , record date and more ...

Scrip Code	Scrip Name	Ex-Date	Purpose	Rs.
506285	BAYER CROP	8/22/2008	Dividend	2.4
523207	CAMLIN LIMIT	8/22/2008	Stock Split from	-
523207	CAMLIN LIMIT	8/22/2008	Rs. 10/- to Re. 1/-	-
500110	CHENNAI PETR	8/22/2008	Dividend	12
520131	COASTAL ROAD	8/22/2008	Dividend	0.5
532640	CYBER MEDIA	8/22/2008	Dividend	0.5
502137	DECAN CEMENT	8/22/2008	Dividend	3
500136	ESTER INDUST	8/22/2008	Dividend	0.5
501848	GARWAR OFF	8/22/2008	Dividend	1.8
505712	GUJARAT AUTO	8/22/2008	Dividend	3
513519	PITTI LAMINA	8/22/2008	Dividend	2
519260	SANWAR AG OI	8/22/2008	Dividend	0.3
590071	SUNDARAM FIN	8/22/2008	BONUS 1:1	-
509960	U P HOTELS L	8/22/2008	Dividend	10
511736	USHDEV INTER	8/22/2008	Dividend	2.1
500095	WYETH LTD	8/22/2008	Dividend	30
507717	DHAN AGRI	8/25/2008	Dividend	5
590083	MAVENS BIO	8/25/2008	Stock Split From	-
590083	MAVENS BIO	8/25/2008	Rs. 10/- to Re. 1/-	-
501154	ROSE INVESTM	8/25/2008	Dividend	1.5
526725	SANDESH LTD	8/25/2008	Dividend	3
532332	SOFTPRO SYSL	8/25/2008	Dividend	1
524715	SUN PHARMACE	8/25/2008	Dividend	10.5
507878	UNITECH LTD	8/25/2008	Dividend	0.25
532630	GOKALDAS EXP	8/26/2008	Dividend	1
531979	HIND ALUMIN	8/26/2008	Final Dividend	1.5
509040	NETLINK SOLU	8/26/2008	Dividend	0.04
532923	REN JEWELERY	8/26/2008	Dividend	1.5
531266	VST TILLER T	8/26/2008	Dividend	5
531847	ASIAN STR CO	8/27/2008	Dividend	2
500069	BNK CAPITAL	8/27/2008	Dividend	1
520022	DENSO INDIA.	8/27/2008	Dividend	2
500246	ENVAIR ELECT	8/27/2008	Dividend	0.7
511668	FACT ENTERP	8/27/2008	Dividend	0.5
532334	HB ESTA DEVL	8/27/2008	Dividend	1
509627	HINDUS DOR O	8/27/2008	Dividend	0.6
532960	IB SECURITIE	8/27/2008	Dividend	7.5
532832	INDBUL REAL	8/27/2008	Dividend	13.5
531253	INDIA GEL CH	8/27/2008	Dividend	0.7
532544	INDIABULLS	8/27/2008	Dividend	8.5
505737	INTERN COMB	8/27/2008	Dividend	5
532705	JAGRAN PRAK	8/27/2008	Final Dividend	1
502958	LAKSH MILL C	8/27/2008	Dividend	5
522085	STONE INDI L	8/27/2008	Dividend	2.5
513005	VBC FERRO AL	8/27/2008	Dividend	2
517164	ZENITH COMPT	8/27/2008	Dividend	1.2
532298	ZENITH INFOT	8/27/2008	Dividend	1.5
532683	AIAENGINEER	8/28/2008	Dividend	4
590033	APW PRES	8/28/2008	Dividend	3
526851	AREX IND.	8/28/2008	Final Dividend	0.9
532443	CERA SANITRY	8/28/2008	Dividend	1.5
526550	COUNTRY CLUB	8/28/2008	Final Dividend	2
517437	DUTRON POLYM	8/28/2008	Dividend	0.9
503681	ELCID INV	8/28/2008	Dividend	10
517271	HBL P SYS	8/28/2008	Dividend	1.5
515145	HIND NAT GLS	8/28/2008	Dividend	4
500440	HINDALCO IN	8/28/2008	Dividend	1.85
500440	HINDALCO IN	8/28/2008	Right 3:7	-
500207	INDO RMA SYN	8/28/2008	Dividend	1
532150	INDRAPRA MED	8/28/2008	Dividend	1.4
523596	IRCON INTERN	8/28/2008	Final Dividend	9.7
513509	KALYANI FORG	8/28/2008	Dividend	2.2
526015	KEMROC IND E	8/28/2008	Dividend	1
504269	KHAITAN ELCT	8/28/2008	Dividend	2
590078	MAITHAN ALL	8/28/2008	Dividend	2
524709	NAGARJ AGRIC	8/28/2008	Interim Dividend	1
531416	NAREN PROPER	8/28/2008	Dividend	2
508670	NEELAMA AGRO	8/28/2008	Dividend	10
505355	NESCO LIMITD	8/28/2008	Dividend	1.2
532555	NTPC LTD	8/28/2008	Final Dividend	0.8
526801	PSL LIMITED	8/28/2008	Final Dividend	2.5
517522	RAJ GLO WIR	8/28/2008	Dividend	1
517496	RICOH INDI L	8/28/2008	Dividend	0.5
524667	SAVIT CHEMIC	8/28/2008	Dividend	11.5
502742	SINTEX INDUS	8/28/2008	Dividend	1
532143	SKM EGG PROD	8/28/2008	Dividend	0.5
526582	TPL PLAST	8/28/2008	Final Dividend	2
513629	TULSYAN NEC	8/28/2008	Dividend	2
524394	VIMTA LABS L	8/28/2008	Dividend	0.8

It’s Time to switch to Quality IT stocks:

2008-07-22T08:20:00.001+05:30

The global economy has been going through a phase of slowdown. The financial crises have only added to this slowdown. Reigning high crude prices, escalating costs and fears of recession have cast a cloud of uncertainty over the IT spends of clients. Given such a backdrop majority of the brokerage houses are advising investors to shift their portfolio to large cap stocks due to the following reasons:

Clients would go in for vendor consolidation. This would benefit large companies (the big companies are among the top three to four vendors for most of their top clients).
IT budgets are expected to remain flat as compared to last year, but as expected offshoring to increase, which would benefit the larger players the most.
The bigger companies have the scale and the management bandwidth to withstand a period of flattish growth in revenues. Also, they have greater flexibility in managing client’s accounts.
Larger companies with a wider base of customers will be relatively less impacted by lack of spending by a particular client unlike mid or small tier companies who are more dependent on single clients.

Thus investors start locking your money into Infy, Wipro, TCS, HCL etc.

Recent insider news of some exciting 150 companies.

2008-07-18T10:31:00.000+05:30

This is again a copy-paste work. Not my research for sure. But very useful information.

1)Shrenuj & Co:Targets a revenue of US$1 billion by the year 2012.

2)Simplex Infrastructures:The current order book is at Rs 10012 crore.

3)Indian Bank:Hikes Dividend from 30% to 40%.

4)Tata Steel:Return on Invested capital to be increased to 30% by 2012.

5)Setco Automotive:Capex and Investment Plan of Rs 62 crore.

6)Patel Engineering:Expects a growth of 20% to 30% for FY09.

7)LIC Housing Finance:Gross NPA ratio has declined from 2.58% to 1.7% while net NPA ratio declined from 1.26% to 0.64%.

8)Jagran Prakashan:OPM to remain stable or improve from FY08 levels

9)Bombay rayon:Maharashtra expansion project as per schedule.

10)Himatsingka Seide:Expects Hassan facility to breakeven in FY’09.

11)Gujarat State Petronet:The company expects to increase volume of gas by more than 50% to 25 mmscmd by FY’09.

12)Associated Alcohols & Breweries:Plans a capex of Rs 50.9 crore.

13)Thomas Cook India:To raise about Rs 200-300 crore within a year.

14)PSL:Standalone top line to grow over 40% in FY09.

15)Sagar Cement:Expects 1.5 million metric tonnes cement sales for FY 09.

16)ONGC India:Plans a capex of Rs 19,338 crore in FY’09.

17)Piramal Healthcare:Top-line for the current year is expected to grow at 16%.

18)FCS Software Solutions:FY09 EPS expected at Rs 30.60.

19)Bharat Bijlee:Outlook for the company, except for the first quarter, is positive.

20)Tulip Telecom:Expects revenue from data connectivity, managed services and value added services to increase.

21)Consolidated Construction Company:Just 10% of order backlog is at fixed rates.

22)Union Bank of India:Expects deposits and advances to grow by 23% and 22% in FY09.

23)Idea Cellular:To acquire 40.8% stake in Spice Communications.

24)Cairn India:Capex for FY’09 is $1.8 billion.

25)Jet Airways:ASKM growth expected at 59-60% for FY09.

26)Kansai Nerolac:Planning capex of Rs 100 crore in FY09.

27)IndusInd Bank:Expects to grow its balance sheet 40%-45%.

28)TV Today Network:Rate hike of 13-15% for FY09.

29)Essar Shipping Ports & Logistics:Has committed contracts worth $4.5 billion over next 5 years.

30)Ratnamani Metals and Tubes:The order book stands at Rs 650 crore, executable over the next 6-8 months.

31)Syngenta India:Capital expenditure plan for the current year is around Rs 180 crore.

32)Hindalco Industries:Will come out with right issue of Rs 5000 crore.

33)Sujana Towers:Targets revenue of Rs 1150-1250 crore with EBIDTA margin of 15-16% in FY09.

34)Tata Communications:Forays in to China market with 50% equity acquisition in CEC.

35)Rajesh Exports:Has an order book of Rs 1,685 crore.

36)Dish TV India:Targets 2 million subscriber additions in FY09.

37)HEG:Targets to produce 58000 tonnes of Graphite Electrodes during the FY’09.

38)Wire & Wireless (India):Capex of over Rs 1000 crore in next 2 years.

39)JSW Steel:By the year 2010 the company shall be investing Rs 14000 crores on various projects.

40)KLG Systel:Expects FY09 revenues at Rs 540 crore with PAT of Rs 74 crore.

41)Godawari Power and Ispat:Targeting around 25% rise in production volumes for the FY’09.

42)Vikas WSP:Capital expenditure plan of Rs 900 crore for the next three years.

43)KPIT Cummins Infosystems:Revenue shortfall and variable pay impact margins.

44)Omnitech InfoSolutions:60-70% growth in FY09 including acquisitions.

45)NIIT:OPM for individual learning to improve by 200-300bps.

46)Hindustan Construction Company:The company has Rs 10000 crore order book.

47)3i Infotech:"Transaction services business could contribute as much as 30% of the revenues in the next few years.

48)Wanbury:'In FY ’09 it expects net sales of Rs 520 and a net profit margin of 12-13%.

49)Asian electronics:The company expects to put its bad times behind very soon and hopes to regain its lost glory in the coming few months.

50)Avon weighing systems:-The company expects to acheive 100crs turnover by 2009.

51)Bihar Tubes:Expects to be Rs 1000 crore over the period of next 2 ½ years.

52)PTC India:Focusing on long-term market for traded power.

53)Jindal Saw:Order book in excess of a billion dollar.

54)Ashok Leyland:Price hike in April ’08 not enough to cushion escalating costs.

55)R Systems International:OPM margins of 12-13% to be maintained.

56)Astral Poly technik:Expects tremendous growth in business and raises the planned expansion capacity from the initial target of 18000 tons to 25968 tons by Sep.’08.

57)Cerebra Integrated Technologies:New ventures to give multifold growth.

58)Development Credit Bank (DCB):Focus on SME business and CASA deposits.

59)Dena Bank:Plans to open at least 26 new branches and 12 retail asset centres in FY 09.

60)Entertainment Network (India):The share of Radio in the advertising industry grew to 4% from 3% last year and the company expects it to increase to 7-8% in the next 3-4 years.

61)Usha Martin:Targets gross sales turnover of Rs 5000 crore on a consolidated basis for FY’09.

62)Garware Offshore:Expects turnover of Rs 200 crore in FY’10.

63)Varun Shipping:Capex of US$ 400 million to complete by December 2008.

64)R Systems International:OPM margins of 12-13% to be maintained.

65)Bafna Pharmaceuticals:Coming up with IPO of Rs 25.60 crore.

66)Omnitech InfoSolutions:FY09 revenue growth expected at 35-40% excluding acquisitions.

67)Almondz Global Securities:Expects equity broking operations to turn profitable this year.

68)Chennai Petroleum Corporation:Capex for FY ’09 will be Rs 800 crore.

69)DCM Shriram Consolidated:Capital expenditure of Rs 200 crore for the current year.

70)Tech Mahindra:US$ 2 billion revenues locked for next 4-5 years.

71)Blue Star:Order book at the end of FY08 stands at Rs 1135 crore.

72)Mercator Lines:Revenue from coal mines to accrue from July ‘08.

73)Voltas:Order book stands at Rs 4631 crore with average execution period of 2 years.

74)Housing Development & Infrastructure:Rise in carpet area of SR tenements to 269 sq ft will not impact negatively.

75)Tata Teleservices Maharashtra:Plans capex of Rs 850 crore mostly for active infrastructure side.

76)Lakshmi Machine Works:Order book position declines 17% to Rs 4400 crore.

77)J K Cement:Company to set-up cement unit in Fujairah (UAE) for a cost of Rs 1,400 crore.

78)Max India:Expects 55-60% growth in the insurance business in FY08-09.

79)Opto Circuits:Invasive Healthcare segment expected to grow at 80-90% in FY09.

90)Bharat Heavy Electricals:The company targets 25% growth in sales in FY’09.

81)Dalmia Cement:Co-generation unit to contribute significantly to the top-line during the current year.

82)Omaxe:Expects to deliver 15-17 million sq ft in FY-09.

83)Deepak Fertilizers & Petrochemicals Corporation:KG Basin gas will add around Rs 200 crore to topline and Rs 50 crore to PBT.

84)Micro Technologies:Plans to increase Micro Shoppe network to around 300 shops by March 2009.

85)HOV Services:Offer to sell off of 95% of existing business at Rs 170 per share.

86)Modern India:Plans to dilute equity, to part finance Rs 170 crore of investments.

87)Mawana Sugar:Expects 5-6% decline in area under cane cultivation in next season.

88)Provogue (India):Total cost of Prozone’s 12 projects will be around Rs 4800 crore.

89)Kesoram Industries:Rs 840 crore capital expenditure plan to increase tyre capacity.

90)SEAMEC:Will acquire one more vessel by year-end.

91)Indoco Remedies:Expects OPM of around 22% in FY-09.

92)Moser Baer (India):PV installed capacity to be over 240MW by end FY09.

93)Mphasis bfl: Application services business to be on track by end Q3FY09.

94)ITD Cem: Estimated value of work in hand currently is Rs 2312.91 crore.

95) Advanta India: International business is expected to grow 20-25%.

96)Dabur India: Expects a sales growth of 15% and margin of 17% for FY 09.

97) Binani Cement:Capacity to increase to 12-13 million metric tones by FY 2010.

98)Sintex Industries Targeting a margin of 14-15% in the next 2-3 years for its foreign subsidiaries.

99)GTL Infrastructure:Demand from operators having tower companies slows down.

100) Elgi Equipments Expects a sales growth of 20-25% for FY ’09.

101)reliance industries:Having grown global gross reserve and contingent resource base to 5 billion barrels of oil equivalent, it has set an ambitious resource accretion target of 10 billion barrels of oil equivalent.

102)SKF India:Growth in revenue is expected to be around 12-14% for CY’08.

103)State Bank of India:Bank will open 2000 new branches in FY09.

104)Lotus Eye Care Hospital:Eyes capex of Rs 55 crore.

105)Page Industries:The company’s average capacity has increased to 56.5 million pieces per annum as against 30 million pieces in the corresponding previous year.

106)Shasun Chemicals and Drugs:Expects 30% increase in bottomline.

107)Orbit Corporation:Adds 7 new projects in FY 2008.

108)Reliance petroleum:Long term outlook positive for refining margins.

109)PVR:Expects 200-300 bps improvement in OPM going forward.

110)Visa Steel:Would sell 250000 of coke in FY’09.The 0.5 Mtpa integrated special and stainless steel plant will be commissioned by end of FY 2008.

111)Colgate Palmolive:Overall volume to grow by 9%.

112)Punj Lloyd:The company is hopeful for settlement of the claim from one of its clients, which otherwise, according to auditors, will result in loss of Rs 305 crore.

113)Sanghvi Movers:EBITDA margin of 73-74% will be maintained.

114)GIPCL:First unit of Surat TPS II will be operational by Dec ’08.

115)Essar Oil:Increasing capacity to 50 MTPA from 10.5 MTPA.

116)Sun Pharmaceuticals:Expects US business to grow at 25% in FY-09.

117)Larsen & Toubro:The company expects the momentum in order book growth to continue.Targets a growth of around 30-35% for FY’09

118)Shriram Transport Finance Company:Target to reach AUM to Rs 300 billion by FY’10.

119)India Glycols:Capex of Rs 350 crore in FY ‘09.

120)Indian Oil Corporation:Implementing projects of over Rs 50,000 crore.

121)Steelcast:The company has set up a Vision 2010 statement where it has set up a target of net sales of Rs 175 crore.

122)JCT:On implementation of capex, the company is targeting to achieve turnover of over Rs 1000 crore with substantial improvement in profitability.

123)Supreme Industries:The company expects to double its turnover in four years.

124)Eastern Silk Industries:The goal is to increase average realization from current US S $ 10 to US $ 18 per metre by 2009.

125)VST Industries:Pins hopes on shift from Bidis to Cigarettes.

126)Wockhardt:Strategic acquisitions to drive future growth.

127)McLeod Russel India:Tea prices expected to firm up.

128)RS Software:Targeting revenues of Rs 900 crore by FY2011.

129)Four Soft:Targeting fully diluted EPS of Rs 7.50 for FY08.

130)Rajshree Sugars and Chemicals:Planning for setting up a new sugar factory.

131)HEG:The order book for FY08 is healthy, with 40-50% of sales already booked at prices, which are 18-20% higher than last year.

132)Usha Martin:Plans to expand capacity to 1 million tpa by FY 2010.

133)Radico Khaitan:Confident of achieving 20% topline and bottomline growth for the year through organic growth.

134)Elecon Engineering:For FY08, the company expects sales of over Rs 1000 crores.

135)Subros:Targets to sell about 1 million units of A/C kits every year by 2012.

136)Asian Paints:Material prices are now stabilizing and further increases are not likely except in a few cases.

137)Sasken Communication:Expects Services business growth at 30-35% excluding Botnia.

138)Plastiblends India:Uttranchal Plant expansion will provide access to North India market apart from various tax incentives.

139)Thermax:Expects all business group to power revenue growth of over 30%.

140)Uni Abex Alloys:The company has set internal target of Rs 100 crore of revenues by Mar’10.

141)Gulshan Sugars and Chemicals:Intends to capitalize on demand from paper Industry.

142)Dhampur Sugar Mills:The company is looking for opportunities in Jamaica.

143)Navneet Publications:The growth in near future will be driven by some of the new initiatives such as introduction of non-paper stationery products, foray into Urdu publication and e-learning business.

144)Sanwaria Agro Oils Ltd:The company plans to go for backward integration, and is looking to undertake contract farming abroad.

145)Banco Products India Ltd:The company is expected to grow at 25-30% in the coming years and exploring opportunities to tap global OEMs.

146)Evinix Accessories Limited:plans to open 70 CUT stores and are looking at raising around Rs750mn by the end of March ‘09.

147)Bafna Pharmaceuticals Ltd:The company is intending to enter into the regulated market and towards that purpose has set up a new unit near Chennai, which would be a MHRA approved unit.

148)Arshiya International Ltd:The company has over 400 clients and top 5 contribute to 15% of the profits.

149)Tricom India Ltd:Tricom is in the process of finalising two acquisitions. One of them is a US company.

150)Magnum Ventures Ltd:By Jan 2009, the company expects the Sahibabad four-star hotel to get ready.

Some LINES should never be crossed on Bourses!!!

2008-07-14T21:11:00.000+05:30

I firmly believe that none of the technical works in a Bear mark. Still I feel some Lines should never be crosses on SENSEX. And the number is 12,800. If this line is crossed there is a consensus views in the market that it will tumble to 10,800. But as we all know there are reasons behind every advances and decline. I believe the only reason why 12,800 will be crossed has nothing to do with the global factors. The Bears (If come soaring) will be ignited by domestic factors only. If on 22^nd July there is a political turmoil these line will be surely crosses and we will witness a Bloodbath.

But in case, the “Congress Jugad” works, the markets would not be out of woods at least for a few months. We will surely see the 123 Agreement getting passed. And consequently a lot of Capital Goods and Power sector industry will soar to a new high. Market did a bounce back once Left was out of the government. We all understand that a lot of Reforms like Banking sector, Pension sector, Labor laws are likely to start. A lot of FDI caps are on the way.

Still I believe this is a very crucial time for SENSEX and some LINES shouldn’t be crossed at any point of time.

Jaane Tu …. Ya Jaane Naa …..

2008-07-07T00:27:00.001+05:30

I’m not here to discuss the movie off course. I’m just telling the various Strategies of Picking Stocks for people who are Tax payers like me (not that important) …..

Strategy 1: Buy only blue chip stocks at every dip. And keep holding the stock for a decade or half. Majority of old aged people and time strapped investors go for this. This is not a bad strategy but believe me this strategy will never give more than 15% per annum return. Not bad still better than a lot of debt related fund.

Strategy 2: Buy momentum stocks at every dip and sell at every high. The best way to go about. This is how majority of stock traders make money in market. Bourses are all about Money rotation. But this raises the basic issue “Whether a retail investor can Time the market.”

Strategy 3: Follow the recommendations of Stock analyst and advisors and make money. The worst strategy!!! Try this and believe me you will end up booking huge losses. The strategy goes worst if you are a Margin Trader. Usually, you will buy the stocks at higher price and sell it at lower price.

Strategy 4: Park 25% of your money in blue chip and 50 % money in MIDCAP. Keep the rest 25% of the money in CASH. Remember cash is the king. And if you are cash rich irrespective of the situation of market you have the Buying and most importantly Averaging power.

Strategy 5: Go for a SIP of stocks. Just follow the Systematic Investment Plan of Mutual Fund. Select one or two stock and fix a particular date of month. Keep buying a fixed quantity of that stock on that specified date. Even layman like me will not loose money. I BET ON THIS…..

Some Funny Abbreviation's

2008-07-06T20:54:00.002+05:30

The latest abbreviated forms:-

1)PE - Plunge Endless

2)EBITDA- Exit Before It Tumbles Down Again

3)QIB - Quixotic Indian Blunder

4)HNI - Has No Idea

5)FII - Furious Impoverished Investors

6)PMS - Premeditated Scam

7)SIP - Suicide by Investing Patiently

8)Fund Manager - Last year’s ace stock picker now locked up in an asylum

9)Investor - Someone who is broke

10)Broker - Worse off than an investor

11)Correction - The next day after you bought shares

12)Momentum buying - The fine art of buying high and selling low

13)Value buying - The art of buying low and selling even lower

Why I like bear market!!!

2008-07-03T21:54:00.000+05:30

This is again my personal view. You guys must be having a different take on this issue. So guys share you views as comment to this post.

The reasons why I still like bear market even though I m sitting on huge losses is as follows:

For young and new investors like us it gives a great buying opportunity.
I remember before Jan ’08, I just use to see the share price of Blue Chip and thought these are not my cup of tea. Suddenly five months down the line, I am buying Blue Chip like Reliance and L&T.
The bear market takes the poison of “overvaluation” out of the stocks.
During the BULL run, you find a lot of analysts and advisor deluging there recommendation. Never in a bear run have I got any recommendation. So you have a lot of time to apply your brain and heart to select a stock.
The bear market makes you understand the value and meaning of PROFIT BOOKING. Lot of long turn investor, say an investor who invested three year back, must have got nothing for his patience. If he had thought of rotating his money after every completed year. He would have made a lot. Rotating and booking PROFIT is an art which an investor need to learn. Putting the money and forgetting it is not the best of strategies.
A bear market exemplifies the saying “CASH is KING”.
If one knows how to deal with derivatives, he can make a lot of money by trading PUT strategy.
The best is part is that you know….. the Morning is near….. and Bulls will return sooner…. So guys take this as an opportunity and believe me LOSS is not loss until its realized. The same holds true for PROFIT…..

Rising FD rates to cheer depositors

2008-07-02T00:17:00.000+05:30

There is some good news for retired persons and those dependent on interest income as banks have started increasing their fixed deposit rates following the decision of the RBI to hike the short term lending rate by 0.25%.
Oriental Bank of Commerce has revised its fixed deposit rates for various maturities and raised the rates for its special deposit scheme Asha Kiran (FDs for 400 days) to 9.75% for senior citizens.
This is probably the highest interest rate being offered by the city based public sector lender on 13-month deposit.
Though the senior citizens would get a rate of 9.75%, others will receive 9.25% for 400-day fixed deposit from OBC.
Even the new generation private sector lender Yes Bank increased the deposit rates by 0.5% across all maturities.
After the recent revision of interest rates by Yes Bank, senior citizens would get a maximum of 10% on fixed deposits with a maturity of one year to 18 months. The others would receive a return of 9.5%.
Country's largest public sector lender, State Bank of India, also revised fixed deposit rates upward by up to 0.5% for selected tenures effective June 1.
SBI increased fixed deposits rate for 5-10 years by 0.5% to 9% while 3-5 years tenure was hiked by 0.35%. Senior citizens will get 0.5% more.
Another Mumbai-based lender Bank of India also increased deposit rates up to 0.5% for various maturities.
For deposits having a maturity of one year to less than two years, the revised rate stands at 9.15%, against the earlier rate of 8.50%, while for deposits ranging from two to three years, the new rate is 9.25% as against earlier rate of 8.75%.
Similarly, fixed deposits of Bank of India having a maturity of three to five years will earn 9.50% interest, against the earlier 8.75%.
"The rates have been revised with a view to mobilise funds from deposits in the beginning of the financial year. We will review our rates by June 30, after which they might be revised again," the BOI official had said.
There would be a case for further upward revision of fixed deposit rates in case the inflation, as projected by many analysts, goes up to 10%.
Moreover, the banks would have to raise fixed deposit rates to retain the deposit base, says brokerage firm Edelweiss Capital in its recent analysis on impact of repo rate hike on the banking sector.
The study further pointed out that following recent hike in repo rate, bottomline of those banks which are dependent on wholesale money market for funds would come under pressure.
New Delhi: There is some good news for retired persons and those dependent on interest income as banks have started increasing their fixed deposit rates following the decision of the RBI to hike the short term lending rate by 0.25%.
Oriental Bank of Commerce has revised its fixed deposit rates for various maturities and raised the rates for its special deposit scheme Asha Kiran (FDs for 400 days) to 9.75% for senior citizens.
This is probably the highest interest rate being offered by the city based public sector lender on 13-month deposit.
Though the senior citizens would get a rate of 9.75%, others will receive 9.25% for 400-day fixed deposit from OBC.
Even the new generation private sector lender Yes Bank increased the deposit rates by 0.5% across all maturities.
After the recent revision of interest rates by Yes Bank, senior citizens would get a maximum of 10% on fixed deposits with a maturity of one year to 18 months. The others would receive a return of 9.5%.
Country's largest public sector lender, State Bank of India, also revised fixed deposit rates upward by up to 0.5% for selected tenures effective June 1.
SBI increased fixed deposits rate for 5-10 years by 0.5% to 9% while 3-5 years tenure was hiked by 0.35%. Senior citizens will get 0.5% more.
Another Mumbai-based lender Bank of India also increased deposit rates up to 0.5% for various maturities.
For deposits having a maturity of one year to less than two years, the revised rate stands at 9.15%, against the earlier rate of 8.50%, while for deposits ranging from two to three years, the new rate is 9.25% as against earlier rate of 8.75%.
Similarly, fixed deposits of Bank of India having a maturity of three to five years will earn 9.50% interest, against the earlier 8.75%.
"The rates have been revised with a view to mobilise funds from deposits in the beginning of the financial year. We will review our rates by June 30, after which they might be revised again," the BOI official had said.
There would be a case for further upward revision of fixed deposit rates in case the inflation, as projected by many analysts, goes up to 10%.
Moreover, the banks would have to raise fixed deposit rates to retain the deposit base, says brokerage firm Edelweiss Capital in its recent analysis on impact of repo rate hike on the banking sector.
The study further pointed out that following recent hike in repo rate, bottomline of those banks which are dependent on wholesale money market for funds would come under pressure.

Why the market is tumbling down???

2008-07-01T00:58:00.002+05:30

Guys, finally I m posting my personal views on this issue. Now go though the reasons and see if they satisfy you.

Uncertain Governments of India and USA. USA would be going for elections in a couple of months. That’s why many of the IT and export based companies are doubtful about the renewal of their license. McCain and Obama are two different ends of the pole. Thus companies are waiting for the elections to be over. In India, until the Nuclear deal issue is solved, a lot of uncertainty is likely to prevail. Moreover until the result of Lok Sabha poll is out, market will remain gloomy.
Rising Crude Oil Prices. We all know that the price of crude oil is not decided on the demand and supply factor. And I firmly believe if in future there is going to be a nuclear war, it would be for Oil. There is no denying the fact that Crude will touch $ 200/barrel and will keep haunting the global indices.
Rising Inflation. Inflation is a global phenomenon now. Even though the method of calculating headline inflation varies from country to country, we all are witnessing it. This time inflation has hit hard. The raw material prices have gone high. Be it any sector, they are under tremendous pressure, even Nano is feeling the heat. Taming inflation will require improving supply-side economics.
Sub-prime Mortgage. Each one of us know that bourses are the slaves of big players like Mutual Fund, Brokerage Firms and HNIs. The Sub-prime mortgage has hit all MNC banks and big players in a big manner. Trillion dollars have been lost. The big players like CITY, Hedge Funds etc are in tremendous pressure.
Weakening Dollar. Dollar has weakened against majority of currencies in the world. As a result currencies like Rupee, Yen have appreciated creating the problem.
Election Year. Last but not the least, since this is an election year, government lacked in making policies which are in favor of corporate. May it be ECB, Monetary policy, Exemption in IT, FDI et al. So, the result is evident.
Business Cycle. Like every business, markets also follow a cycle….. this is for sure the recessionary phase….. After every night there is a fresh morning…. So guys donn loose your heart…

A word of Caution: Beware of mushrooming financial planners

2008-06-30T10:01:00.001+05:30

Nowadays a lot of agents, blogger, financial distributors and banks try and call themselves financial planners. They generously also use the term financial planning/wealth management as and when it pleases them. Consumers are confused about the various terminologies used and hence do not actually question what a particular designation means. A person will always go for a Certified Financial Advisor or Certified Senior Financial & Investment Specialist, 95 % of the time, for advice. Incidentally, both these certifications are fake.

First of all, how detailed and comprehensive was the data gathering interview? Did the financial planner make notes of the information that you did not have and ask you to get back with this information. Did he take in information about you , your family, your aspirations, goals , income, expenses, cashflows, assets , liabilities, insurances, investments, powers of attorneys and information that might be relevant. Did he take information about your behavior towards risks and how you react in bullish & bearish situations? Did he understand the mistakes that you have committed in the past and how were they committed?

A good financial planner should take anywhere between 3-5 hours including social chat over 1 or 2 sessions to complete this data gathering process. Secondly, look closely at how the planner discusses risks and returns with you? Does he promise the moon and tells you how good he is and that he has provided the highest returns. No good financial planner in his right mind will ever do so and this is the kind of person you should look at working with. Does he take you through a proper risk profiling exercise, and tell you that the long-term return of the stock market is around 12% and therefore one should not count too heavily on 30% returns?

Thirdly, don’t opt blindly for the brand because it is the advisor and not the bank that matters. Most of the Relationship Managers in Banks are sales people always on the lookout for selling more and more products to clients.

Fourthly, does the financial planner take you through estate planning matters, retirement planning, different offerings as might be suitable to you and any other issues? He might not deal directly in any of those things but most good planners will at least give you an overview of what you need and refer you to someone competent. Finally, the composition and presentation of financial plans can vary immensely. The groups most notorious for doing rudimentary financial planning are banks and big distributors of financial products.

A nice ET Article!!!!

2008-06-27T17:40:00.002+05:30

This is one of the articles published in Economic Times. The reason why I m putting it here is coz not only the article is interesting and relevant. In order to understand the views of Analyst and Advisors, one needs to understand the product. I can proudly say that my blog has explained majority of the financial products in laymen language.

Where to invest in times of inflation?

In a period of high inflation the big question is: Where could you park your funds, which are both safe and offer productive returns? With the two popular avenues of investment usually used to beat inflation - equity and realty - not doing well, it's no wonder then if the retail investor is at a loss as to where to park his/her funds.

While the Indian stock markets are plummeting, there is a lull in the real estate market too. Obviously, anyone with a little market sense would advice against real estate at the moment. Moreover, it also calls for huge sums. So, where should you invest?

Experts also aver that the stock markets also may not give positive returns in the next 12-15 months owing to two factors. One, the current political situation and two, the high oil prices.

"As long as the oil price does not stabilise, the markets cannot give much positive returns," points out Kancheti Surendra, director, SK Wealth Creators Pvt Ltd, a wealth management advisory.

"Don’t put all your assets in any one basket, as none is the best in these times. Spread your assets," is the advice most experts gave.

Investing in systematic investment plans (SIPs) of mutual funds, whereby you invest a certain quantum every month, is a good idea, according to many investment counsellors. "The SIP products help you average your investment against the vagaries of the market conditions and inflation," says C Parthasarathy, chairman of Karvy Stock broking Ltd.

If you have Rs 100 to invest, put in Rs 70 in balance fund schemes of mutual funds, which balance investments in equity and debt, through the SIP route. The rest, divide Rs 15 each in gold and realty, he advises. Concurs Surendra. "Actually, SIPs of mutual funds are diversified largecap funds and according to me this is the best instrument in an uncertain market," he adds.

"Buy Gold" or gold funds is the advice most investment counsellors are giving their clients, to protect the value of their hard-earned money, though one has been witnessing some dip in gold prices recently after an earlier rise.

According to Quantum Asset Management Company Private Limited, gold has historically been a good hedge against both falling stock markets and rising inflation and continues to give that “double hedge advantage” even today.

"Equity is still the best instrument to tackle inflation and saving the value of your money from depreciating," said a senior official of a leading private bank’s investment advisory division. However, you have to stay invested in stock markets or buy fresh equity with a longterm view, at least for two years, to get good returns, he said. According to him, your Rs 100 should be allocated 40 per cent to debt instruments with fixed maturity plans (FMPs), 30 per cent in equity, 20 per cent to real estate and 10 per cent to gold.

While it may be a good idea to increase allocation to real assets like gold and commodities, as against financial assets, it must be remembered that it is still a speculative activity and may fall with inflation, said Parthasarathy. Interestingly, this is also a good time to pick up stocks.

But the caveat according to Surendra is, "Only when one is well educated. That is, when they understand the underlying risk, this period of one year will give an opportunity to pick up quality stocks. So identify some quality stocks and buy them on panic days when the markets fall by 500-600 points."

According to Renu Challu, managing director of State Bank of Hyderabad (SBH), it still makes sense to spread part of the investment to fixed deposits, in the interest of easy liquidity and guaranteed returns. “We are also examining increasing our interest rates on fixed deposits by 25-50 basis points shortly,” she said.

While real estate market is not inching up, one may buy if the prices soften as it is likely to yield good returns in the future, said a personal finance expert.

Structured Products

In case you have surplus funds above Rs 25 lakh, structured products in equity-linked debentures make sense, as you get your capital back even when the markets go down and when they go up, you get multiplied returns, said a financial advisor.

How To Interpret Ratios?

2008-06-24T10:50:00.000+05:30

Sharpe Ratio:
Sharpe ratio gives a single value to be used for the performance ranking of various funds or portfolios . It measurse the risk premium of the portfolio relative to the total amount of risk in the portfolio. This risk premium is the difference between the portfolio's average rate of return and the riskless rate of return.

Formula	Rp- Irf
	SDp

where; Rp stands for return on portfolio;
Irf means Risk free rate of return which in India is considered either to be the bond rate or 181 days treasury bill.
SDp: Standard deviation of portfolio.Which is the total risk.

The advantage of sharpe ratio is that it assigns highest values to assets that have best risk adjusted average rate of return. It is also known as reward to volatility ratio.
Example: A company is considering the ranking of two industries based in India

Industry	Expected Return	Standard Deviation
FMCG	18%	2
Banking	12%	1.5

Risk free rate of return is 7%. and return on market portfolio is 16%.
Rank both these industries.

Putting the above mentioned formula we get

FMCG:	Rp- Irf
	SDp

we get (18-7)/2=5.5%
Similarly we get 3.33% for banking.
So FMCG industry is better because the return on risk taken is higher in comparison to Banking.

The greater the portfolio’s sharpe ratio, the better is the risk adjusted performance. In Simple terms, Sharpe Ratio indicates the clear difference between the portfolios created by two different funds. For eg. If XYZ Fund has given 50% returns in 1 year & has a Sharpe Ratio of 1 & there is another fund ABC which has given 35% return over the same period with a Sharpe ratio of 2, then on the basis of Sharpe ratio, ABC fund is a better choice as it comes with a lesser risk but higher risk adjusted performance.

Expense ratio:
It measures expenses incurred by the investment company to operate mutual funds. The costs of owning a fund are called the expense ratio. This is distinct from the costs of buying a fund, which are the sales loads. The expense ratio represents the percentage of funds assets that go purely towards the expense of running the fund. The expense ratio covers the fees paid to fund manger, costs incurred in record keeping, custodial services, taxes, legal expenses, audit fees, accounting fees.It is also known as management expense ratio.Operating expense includes the fees paid to fund manager, costs incurred in record keeping; custodial services , taxes, legal expenses, audit fees.accounting fees

Alpha:
Alpha takes the volatility in price of a mutual fund and compares its risk adjusted performance to a benchmark index. The excess return of the fund relative to the returns of benchmark index is a fund’s ALPHA.
It is calculated as a return which is earned in excess of the return generated by CAPM.
Alpha is often considered to represent the value that a portfolio manager adds to or subtracts from a fund's return.
A positive alpha of 1.0 means the fund has outperformed its benchmark index by 1%. Correspondingly, a similar negative alpha would indicate an underperformance of 1%.
If a CAPM analysis estimates that a portfolio should earn 35% return based on the risk of the portfolio but the portfolio actually earns 40%, the portfolio's alpha would be 5%. This 5% is the excess return over what was predicted in the CAPM model. This 5% is ALPHA.

Beta:
Beta measures the sensitivity of the stock to the market. For example if beta=1.5; it means the stock price will change by 1.5% for every 1% change in sensex.
It is also used to measure the systematic risk. Systematic risk means risks which are external to the organisation like competition, government policies. They are non-diversifiable risks. Beta of the market is always 1. The best index fund will have beta value equal to the market namely 1.

If beta>1 then aggressive stocks
If beta<1 then defensive stocks
If beta=1 then neutral

Price to Earnings ratio:

Popularly known as P\E Ratio.

It shows how much an investor is willing to pay for every Rupee earned by the company. A P\E ratio of a stock is 14, it means an investor is willing to pay Rs.14/- for every
Re 1/- earnings by the company. It also tells lot about the future growth/ earnings of the stock.

Formula:=	Market price per share =P\E ratio.
	Earnings Per share

Eg: Consider the share price of reliance(RIL) to be Rs.500/-;Earnings of the company be RS.500000/- and number of outstanding shares be 5000

Where EPS=	Rs500000= Rs100/-
	5000

Then P\E=	500 = 5.
	100

Conclusion: an investor is willing to pay Rs 5/- for every rupee company would be earning in future.

Important point: If the P\E of two stocks A & B is:
A 20
B 10

It does not mean that stock A is overvalued and stock B is undervalued. It just means that the investors have more confidence in the growth story of stock A rather than stock B.

However, the P/E ratio doesn't tell us the whole story by itself. It's usually more useful to compare the P/E ratios of one company to other companies in the same industry, to the market in general or against the company's own historical P/E. It would not be useful for investors using the P/E ratio as a basis for their investment to compare the P/E of a technology company to a consumer goods company as each industry has much different growth prospects.

The biggest drawback in case of P\E valuation is that the Earnings in the denominator is an accounting concept which is prone to manipulation by the company.

Price-to-Book Ratio:
A ratio used to compare a stock's market value to its book value. It is calculated by dividing the current closing price of the stock by the latest quarter's book value per share.
It measures how aggressively the market values the firm.
A lower P/B ratio could mean that the stock is undervalued. However, it could also mean that something is fundamentally wrong with the company.

Price –To-Sales Ratio:
It is a ratio which is used to value start-up firms, since they do not have profit to show so sales is considered. Price to sales is calculated by dividing a stock's current price by its revenue per share for the trailing 12 months
A low P/S ratio is better since the investor would be paying less for each unit of sales

Price Earnings to Growth ratio:
Commonly known as PEG ratio.
It measures the value of the firm while taking into account the earnings growth.

PEG Ratio = Price earnings ratio
Annual EPS Growth

Investors prefer to use PEG ratio to value the firm instead of P/E ratio because PEG takes into consideration the factor called growth.

A lower PEG means that the stock is undervalued.

Keep in mind that the numbers used are projected and, therefore, can be less accurate. Also, there are many variations using earnings from different time periods (i.e. one year vs five year). Be sure to know the exact method your source is using.

Willing to Link your Blog with LaymansFinanceBlog?

2008-06-21T01:27:00.001+05:30

Lets exchange links!!

Just leave your URL (blog link) as comment to this post, and your mail id (Will not be disclosed to anybody, except for me of course!).

If you are interested in getting more number of clicks, then i this is your chance.

Understanding Systematic Transfer Plan

2008-06-20T16:58:00.002+05:30

While investing in a debt fund normally assures you of fairly consistent returns, equities have the potential to create wealth. But the unpredictability in equity funds can be quite a deterrent when you make a choice. To combine the best of both worlds, there is another plan in the market called Systematic Transfer plan.

Under this plan Investors invest a specific amount for a continuous period, at regular intervals. By doing this, the investor has the advantage of rupee cost averaging and also helps him save compulsorily save a fixed amount each month. When you opt for SIP, you automatically participate in the market swings. Yomaur amount of investment remaining the same, you buy more number of units in a declining market and less number of units in a rising market so that you do not panic in turbulent market conditions. As said earlier, SIP results in rupee cost averaging, which means that, when you invest consistently the same amount at regular intervals, your average cost per unit will always remain lower than the average market price, irrespective of how the market is - rising, falling or fluctuating. Where as this will not be true for a one-time investment. An SIP investor gets phenomenal rate of return compared to a one-time investor.

It is very easy to become a systematic investor. All you need to do is plan your savings effectively and set aside some amount of money every month for investing in a fund - ideally a diversified equity fund or balanced fund, since SIP is a long-term investment plan. The procedure involved is also very simple. All you need to do is, give post dated checks to the fund house. There is another advantage for the investor. He is at a liberty to enter or exit from the scheme whenever he wishes to, depending on the market conditions. So, if you want to stay calm and sail smoothly in turbulent times go for Systematic Investment Plans.

Understanding the basics of Mutual Fund?

2008-06-19T00:59:00.004+05:30

A mutual fund is a professionally-managed investment that offers diversity, liquidity and convenience. Each mutual fund is made up of individual stocks, bonds, or money market securities. Because a mutual fund pools the money of many individuals, it has the buying power to invest in hundreds of different securities at once. In exchange for your money invested in a mutual fund, the fund gives you units in the fund that represent your participation in the fund.

Types of Funds

Funds can have different investment objectives such as long-term growth, high current income or stability of principal. Depending upon its objective, a fund might invest in cash investments, bonds or equities, or in some cases a combination of these.

Equity funds: Invest in common shares of companies.

Bond or Debt funds: Invest in the fixed income securities of companies or the Government of India.

Money market funds: Hold cash investments like short-term commercial paper issued by companies.

Other terms that describe types of funds are:

Ratio between Debt and Equity Securities

Balanced funds: Typically, such funds invest in a combination of debt and equity securities, such that they can provide the stability of principal and income of debt investments, but also the growth and capital appreciation of equity securities. Usually, debt is 35% and equity is 65% of the portfolio, but that can change depending upon market conditions

Funds based on Size of the Companies Invested in

Large cap funds:Funds that invest in companies whose total market cap is above Rs40bn

Mid cap funds: Funds that invest in companies whose market cap is between Rs20-40bn

Small cap funds: Funds that invest in companies whose market cap is below Rs20bn

Duration and Liquidity of the Fund

Closed end fund: Usually for three or more years. You can buy this fund only during the NFO period and these cannot be freely bought or sold thereafter. Sometimes, close end fund can convert into open end funds after the initial period of three to five years.

Open end fund: Unlike closed end funds, these can be bought and sold freely and they do not have any limitation on the holding period.

Dividend or Growth Funds

Dividend funds: These funds provide dividends to unit holders that can serve as a source of regular income to investors. The companies they invest in are companies that pay dividends and these dividends are then passed on to the ultimate unit holders. Investors can choose a dividend reinvestment option where the dividends received are used to buy additional units in the investor's names

Growth funds: Do not have an income option, because often they are invested in companies that do not pay or pay less dividends because they are on a high growth path that need cash to be re-invested in the business itself

Mutual Funds and Taxes

2008-06-18T01:10:00.003+05:30

Different types of Mutual Funds attract different types of taxes. Here is all you would want to know about taxes applicable on Mutual Funds in India.

Taxation	Equity Funds	Liquid funds/Money Market Funds	Debt fund/liquid plus Funds
Short Term Capital Gain Tax	*16.995%	As per Income Tax Slab	As per Income Tax Slab
Long Term Capital Gain Tax	Nil	Less of 10% without indexation or 20% with indexation	Less of 10% without indexation or 20% with indexation
Dividend Distribution Tax	Nil	**28.325%	**14.163%

80C benefits through ELSS: Under the current tax laws, you can get an annual income tax benefit of up to Rs. 1Lakh if you invest in Equity Linked Savings Schemes, ELSS. However, the minimum term for these schemes is 3 years and you cannot withdraw your money before that time

*There would be an additional surcharge of 10% of Short Term Capital Gain Tax if the individuals income is more than 10 lacs per annum. Further, the education cess of 3% shall be levied on all investors.

*Short Term Capital Gain Tax indicated above is inclusive of surcharge and education cess

**Dividend Distribution Taxes indicated above are inclusive of additional surcharge and cess.

Understanding SIPs!!!

2008-06-18T00:07:00.002+05:30

Are the daily ups and downs in the market giving you sleepless nights…one moment you think you should jump in and start buying the next you have thoughts of selling. A volatile or consolidating market creates just these sentiments among investors.

Wouldn’t it be great if you can actually buy more into the market when the prices are low (market is down) and buy lesser when the prices rise (markets are up). The simple step to do this is get into an investing method called Systematic Investment Plans (SIPs) in Mutual Funds.

Systematic Investment Plan

A Systematic Investment Plan (SIP) is a method of investing a fixed sum, on a regular basis, in a mutual fund scheme. It is similar to a regular saving schemes like a recurring deposit.

Buy low, sell high. Just four words sum up a winning strategy in the stock market. But timing the market is not easy, even for experts. Therefore, rather than timing the market, investing regularly month after month will ensure that one is invested at the high and the low, and make the best out of an opportunity that could be tough to predict in advance. Therefore, for a small investor, there is a huge risk in making large investments at one time. An SIP actually reduces this risk, by spreading the investments over a longer period of time, at various levels of the market.

Some points to consider before deciding on a SIP

Ascertain your investment horizon.
Decide on the periodicity of investment.
Determine the amount you can comfortably invest in a SIP periodically.
Pick a scheme according to your risk profile.
Invest for long term.

“Just Rs. 1500 per month invested for 17 years @10% would grow to Rs. 8 lacs.could be used for your daughter's marriage.”

Calculating Your Income Tax Liability 2008-09

2008-06-17T00:01:00.002+05:30

The income tax which is charged to you is based on the tax slabs declared by the Government in its annual budget every year. The following table encapsulates the tax slabs applicable this year. (Financial Year 2008-2009 )

Taxable Income Slab	Tax Slab
Upto Rs. 1,50,000 Up to Rs. 1,80,000 (for women) Up to Rs. 2,25,000 (for residents, 65 years or above)	Nil
Rs. 1,50,000 – Rs. 2,50,000	10%
Rs. 2,50,001 – Rs. 5,00,000	20%
Rs. 5,00,001 – Rs. 10,00,000	30%
Above Rs. 10,00,001	30% + 10% surcharge on tax
Note: In addition, an education cess of 3% is charged on the entire tax amount including surcharge

Please note that the taxable income is arrived at after adding all your different sources of income and subtracting the deductions that you have taken advantage of under Section 80.

Lets take a few examples to illustrate how you can calculate taxes based on these slabs.

Example 1:
Sarla is a salaried employee, her annual income is Rs. 2,40,000. She has made no tax savings investments during the year.
Let us calculate her income tax liability.

Heads		Amounts
Gross Total Income		Rs. 240,000
Deductions		Nil
Taxable Income		Rs. 240,000
Income Tax Calculations		Tax
Tax on Income upto Rs 180,000	0%	Zero
Tax on the remaining Rs 60,000	10%	Rs.6,000
Total Income Tax Due		Rs. 6,000
Educational Cess @ 3%		Rs. 180
Total Tax Payable		Rs. 6,180

Example 2:
Vinod is a salaried employee. His annual income is Rs. 3,25,000.His home loan interest payment is Rs 1,20,000 and his home loan principal repayment is Rs. 80,000.He has made an investment of Rs. 50,000 in NSC.
Let us calculate Vinod's interest liability.

Heads		Amounts
Income from Salary		Rs. 325,000
Income from House Property (Section 24 Deduction for Home loan interest repayment)		Rs.120,000
Gross Total Income		Rs. 205,000
Section 80 C Deductions		Rs.100,000
NSC Investment	Rs. 50,000
Home Loan Principal Repayment	Rs.80,000
Total	Rs. 130,000
Taxable Income		105,000
Total Tax Due		Rs. 0

Example 3:
Ram is a salaried employee who earned Rs.12,00,000. He has bought a health insurance policy for himself worth Rs 10,000. Ram has also bought ELSS funds for Rs. 80,000 and has also paid a LIC premium of Rs. 20,000.He has also donated Rs. 20,000 to the Prime Minister's Relief Fund.
Let us calculate Ram's tax liability.

Heads		Amounts
Gross Total Income		Rs. 1,200,000
Section 80 C Deductions		Rs.100,000
LIC Premium	Rs. 20,000
Home Loan Principal Repayment	Rs. 80,000
Total	Rs. 100,000
Other Donations		Rs. 30,000
Section 80D Health Insuance Premium	Rs. 10,000
Section 80G Donation To A Charity	Rs. 20,000
Total Taxable Income		1,070,000
Income Tax Calculations		Tax
Tax on Income upto Rs 150,000	0%	Zero
Tax on the next Rs 100,000 (Slab 150,001 to 250,000)	10%	Rs.10,000
Tax on the next Rs 250,000 (Slab Rs. 250,001 to Rs. 500,000)	20%	Rs.50,000
Tax on the Tax on next Rs. 570,000 (above 500,001)	30%	Rs. 171,000
Income Tax Due		Rs. 231,000
Surcharge on total tax (Surcharge is applicable if the taxable income is above Rs.1,000,000)	10%	Rs. 23,100
Income Tax Due		Rs. 254,100
Educational Cess @ 3%		Rs.7,623
Total Tax Payable		Rs.261,723