The Indian Investor's Blog

sir, thanks for the good work. kindly post your vi...

2009-11-03T14:31:41.774+05:30

sir,
thanks for the good work.
kindly post your views on guareenteed NAV for 10 policy years from birla life insurance(platinum plus)
thanks in advance

I guess you get most of your comments on twitter t...

2009-11-01T21:34:15.869+05:30

I guess you get most of your comments on twitter these days, but I am old fashioned.

There seems to a minor bull run in real estate from what I can see. Since I know the prices of L&T properties, these are the current prices,
L&T South City Baneerghatta road B'lore (3175/sq. ft)
L&T Eden Park Chennai OMR (to draw a parallel from B'lore, think of say, 15 Kms away from outskirts of the city) (3600/sq. ft), Hiranandani here is about 4200/sq. ft, which makes L&T sound like a great deal.
A decent grocery store from these places in Chennai is a good 7-9 kms. I am not sure how true this is, but I heard per capita income in B'lore is higher than Chennai. If so, then how come prices in Chennai are so much higher than B'lore (if we assume supply/demand is actually at play here)

These sort of prices seem atrocious for areas which don't have proper facilities, but there are people buying in droves, whose answer seem to be I am buying a piece of New (insert city here).

How do you actually value Land/Apartment prices? I mean with stocks you have some sort of hard data (which could be medium, well-done or rare, cooked I mean) ,but Land prices? How do you arrive at them? Do you think there is a collusion between builders themselves?

Thank you very much for your simplest way of expla...

2009-10-31T18:04:55.891+05:30

Thank you very much for your simplest way of explanation. Before reading this i don't know anything but it has given me an idea about this

Gharoa Adda: thanks - that's useful. Didn't know b...

2009-10-31T02:48:02.198+05:30

Gharoa Adda: thanks - that's useful. Didn't know bonus stripping was not applicable for stocks, so there is a use for it, I guess!

Vikas: the ex-date has not yet been announced. Meaning, the bonus has not yet been given (only said they will do it, don't know when). On the "ex-date" the share will halve.

But the way it's going it seems to want to go down to half of it's high anyway!

I agree with the article completely that the share...

2009-10-29T16:42:54.529+05:30

I agree with the article completely that the share price will reduce to half. However, when I check the closing stock price from 1st Oct thru 20th Oct this is not case. RIL made the announcement on 7-Oct. The question is why the price has not reduced to half?

thank you for explaining the diff between mutual f...

2009-10-29T12:29:49.133+05:30

thank you for explaining the diff between mutual funds and shares.... this could be so helpful for beginners like Me in trade marketting

Financial freedom, why do banks stand to lose mone...

2009-10-25T00:15:22.884+05:30

Financial freedom, why do banks stand to lose money from housing loans?

Loan is for 20 years, at 9%. After 2 years, customer found another bank giving 8%, customer switches to the other bank. The original bank got its 9% for 2 years. How does the bank stand to lose money?

It has lost business to a better bank, but that is supposed to be a good thing, right?

Thanks its really helpful to me. But my question i...

2009-10-24T23:01:22.298+05:30

Thanks its really helpful to me.
But my question is about returns of mutual funds and direct investment in shares. Is mutual funds growth never be less than 20%? AND is mutual fund's investment haven't any loss?
Please reply me on:

technosml@gmail.com

MONU, SHMILA

Hi Deepak, Refer the blog you wrote regarding Bo...

2009-10-23T03:37:35.790+05:30

Hi Deepak,

Refer the blog you wrote regarding Bonus Stripping. I found the following :

What you propose to do is typically known as bonus stripping. You may note that there are some restrictions in Section 94(8) to prevent tax avoidance through bonus stripping.

(a) any person buys or acquires any units within a period of three months prior to the record date;

(b) such person is allotted additional units without any payment on the basis of holding of such units on such date;

(c) such person sells or transfers all or any of the units referred to in clause (a) within a period of nine months after such date, while continuing to hold all or any of the additional units referred to in clause (b),

then, the loss, if any, arising to him on account of such purchase and sale of all or any of such units shall be ignored for the purposes of computing his income chargeable to tax and notwithstanding anything contained in any other provision of this Act, the amount of loss so ignored shall be deemed to be the cost of purchase or acquisition of such additional units referred to in clause (b) as are held by him on the date of such sale or transfer.]

definition of "units" doesn't include shares.

(b) “unit” means unit of a mutual fund specified under clause (23D) of section 10 or of the Unit Trust of India;

This Section, however, would only apply to units of mutual funds and would not apply to transactions in shares. The transaction as stated by you, therefore, appears to be quite legitimate with no provision prohibiting the same.

The capital loss that you book on the sale of the original shares, which is a short-term capital loss would be available for adjustment against short-term capital gain on sale of property in the same year.

Deepak, How about shorting your predictions, again...

2009-10-22T19:23:19.115+05:30

Deepak,
How about shorting your predictions, again?
Just kidding, keep up... well, you might just win the nobel prize for economics (as you said, you never know thesedays).

Just a note on Axis bank car loan that I have avai...

2009-10-22T14:46:31.272+05:30

Just a note on Axis bank car loan that I have availed, they charge 10% fine if closed with in 6 months, and 5% after that. I am sure RBI regulation will help curb such greediness from private banks..

After a long time i m getting back in to trading ...

2009-10-21T16:20:48.273+05:30

After a long time i m getting back in to trading wondering . how smooth is the entire system.. was using reliance money.. .. will get back to it and know some more.. about it..

Banks need to enforce a prepayment penalty otherwi...

2009-10-20T19:04:47.505+05:30

Banks need to enforce a prepayment penalty otherwise they will stand to lose money from giving out housing loans.

It will be good news though if the mortgage prepayment penalty is really removed.

DS, a 30% drop in Nifty? 3000 Nifty....Why do you ...

2009-10-18T15:41:52.609+05:30

DS, a 30% drop in Nifty? 3000 Nifty....Why do you believe this would happen? The markets are currently not even giving a meaningful 200 points correction, so a 2000 points drop on Nifty seems like way away. Any particular reason?

You must have included something about nuke weapon...

2009-10-18T13:14:03.840+05:30

You must have included something about nuke weapons in your predictions, to be even considered for one ;)

Happy Diwali!

Starting a trading account is quite simple and eas...

2009-10-16T10:00:34.858+05:30

Starting a trading account is quite simple and easy.. and i think deepak would be explaining..you more about it.. i am using reliance money through which it has been a good experience for me.

Bingo: agreed, for a very small investor perhaps. ...

2009-10-14T23:39:05.143+05:30

Bingo: agreed, for a very small investor perhaps. At 750 bucks a month the commissions will kill him!

Venkat: Yes of course - a 10:1 meaning 10 shares for every 1. Mistake,shall correct, thanks for noting.

Sachin: Market price - it comes by half by the market itself, on the ex-date. You can check every single share also - in fact even the fat-finger price limits are set on that day according to the half price (plus all strike prices of options are halved while lot sizes are doubled etc.)

5:1 is better only because teh stock becomes moer affordable, which helps small investors in certain stocks where liquidity at the retail level is a problem.

Hi Deepak. I'm a new follower of your blog the la...

2009-10-14T17:39:54.923+05:30

Hi Deepak.

I'm a new follower of your blog the last few months and I really appreciate your articles!

This one was very nice... and it also led me to another nice (older) article on "Of Shares, IPOs and Stock Markets".

1) I have a query on what you said here:
'The share price will come down by half, and the number of shares will double, on the announced "ex-date"'

Will the face value of the share become half or are you talking about market price? If you meant market price, the price being driven by market, how can you say that it will halve?

2) And also, how will a 1:5 bonus be better for a current share holder than a 1:1 if the market price would then be 1/5th?

Thanks

When you said "For Reliance this is a HUGE amount ...

2009-10-13T11:53:07.250+05:30

When you said "For Reliance this is a HUGE amount - since they have been immensely profitable over the years. They can even give a 1:10 bonus and still have reserves left over", I think you meant to say 10:1 bonus.

The Article by RBI Gov. is well written. But in th...

2009-10-13T08:48:46.825+05:30

The Article by RBI Gov. is well written. But in the real world India has to follow the orders of US. Even if RBI wants to increase the rates, PM will not allow. He is a puppet of FED policy. India will follow the policy of export led growth atleast for the short term. That means inflation has to be accepted.

MK

Anon: SoS time will come, I think, when there is n...

2009-10-12T23:58:02.339+05:30

Anon: SoS time will come, I think, when there is no looking back; I'm a little concerned if this is still the right time. But yes, it is overvalued, and deserves some downside move.
Deepak: Agree with you that the RBI has more "pull" on interest rates on the way up.

Harikrishna: Let me clarify. We have been sterilizing since 2004. The big years were 06 and 07, in which the dollar fell, consistently, so it didn't help.
When it was no longer necessary, the RBI didn't do anything to stop the dollar rising dramatically (contributed to silly rise in inflation) which hurt everyone that hedged at the 38-42 levels. Then they have to pay interest on the MSS bonds, which is a fiscal problem, and they don't get anywhere close to enough on the forex reserves. So the whole sterilization thing had serious costs and didn't do much to actually help (i.e. the rupee appreciated anyhow).

Just found a nice RGE monitor article on it.

Hi Deepak, Apropos your comment that sterlization...

2009-10-12T23:09:40.569+05:30

Hi Deepak,

Apropos your comment that sterlization "doesn't seem to help," did you mean to say that it failed to work (as in failed to damp/restrict INRUSD exchange rate movements) or that it harmed its intended beneficiaries (or other innocent bystanders)?

In any case, thanks for this fantastic interpretation of governerspeak. May the Mighty FSM shower many thousand Kindles on you.

Hi Deepak, Good to have regular posts from you. ...

2009-10-12T13:08:38.640+05:30

Hi Deepak,

Good to have regular posts from you. I think monetary transmission is broken only on the way down in India, on the way up it works faster. We will hear the same cribs of a floor set my small savings and all that but that has not led to higher rate on savings, banks have lowered the cost of deposits but still seeing inflow, most borrowers will still be paying upwards of 10% on loans. While I have huge respect for RBI as a regulator they seem to have kids gloves when it comes to customer rights with banks, but yeah I will take RBI anyday over IRDA!!!

Hello Deepak, I feel it felt lonely for the pragma...

2009-10-12T08:56:01.569+05:30

Hello Deepak,
I feel it felt lonely for the pragmatic you over the last few monthy on the blogosphere, with everyone talking about catch-the-tail-for-a-bull-ride. I have been puzzled (though gladly had a few stocks running in my portfolio, which I have started to exit one by one), and your older posts reflect the same thinking.
I do not understand even now, how could our markets virtually double, and real estate prices stayed where they were (well, ~@80%) when in all probability we are entering the next possible bubble. Time to revive your SOS?

Prashanth

good to learn. i relied on SBI bank for legal fo...

2009-10-12T00:27:44.900+05:30

good to learn.

i relied on SBI bank for legal for buying flat. and fortunately, it seems fine "SO FAR" (i touch wood).

by the way, how can i rely on lawyer also. he also can do NO CHECKS and say to me everything is OK. as there is saying "there is no difference b/w lawyer and liar". in that case only person i can rely on is ME and i only will have to check all legal myself.