Make an exit from All Banks and Real Estate Stocks

- Please make a safe exit from all Real Estate and Banks Stock.You will see 25% to 30% more fall in next 2 weeks.
- Crude oil will touch $60 and you will see price drop in petrol and diesel in india as well.
- Gold will also come down to 9,500 or 9,000 level.
Stock Alert
- Vijaya Bank: Target Rs. 15
- Reliance Industries: Target Rs. 830

Estate buyers are on hold till price and interest rate cut

Real estate developers will need to cut prices sharply in the second half of the financial year to convert demand into actual sales, as potential buyers continue to wait on the sidelines, industry watchers say.
Read More...

New Stock Market Targets

Latest Targets*
- SENSEX: After this triangular rally upto 12250 (max.) , Market will slide to 10,000 again and my final revised target is 7370 (Time: 4 to 5 months)
- NIFTY: Ultimate Target 2985
- SAIL: Below 124 Stock will see free fall upto 56
- NALCO: Below 342, Target 1: 310 and then free fall upto 110. company will have very bad results
*Note: Target will be achieved before 31st Jan 2009

Friday,10th Oct 2008

- Today we may see biggest one day loss in SENSEX/NIFTY.
- Don't enter at this level too because you will see more lows in 1 month.

5 must things for your Portfolio

Sandeep Shanbhag: The only 5 things you need in your portfolio

Gujarat And Narendra Modi Rocking !!!!

Gift to Narendra Modi on 7 years completion - Tata to roll out Nano from Gujarat

FMP - Fixed Maturity Plans

Fixed maturity plans (FMPs) seem to have a lot going for them. Indicative yields have risen to as high as 11.5% of late, giving them a clear edge over fixed deposits (FDs) and drawing in ever more investors. By some estimates, almost Rs 1,00,000 crore has been invested in these schemes since the beginning of this year.

Let's try to understand what makes these instruments so popular.

What is an FMP?

An FMP is a closed-ended mutual fund, which invests in debt securities. Thus, unlike open-ended mutual funds where an investor can enter and exit at will, one can invest in an FMP only during the new fund offer period. Every FMP has a certain maturity period, varying from a month to 3 years. Investors who want to exit before maturity typically need to pay an exit load of 2%.

What kind of returns do FMPs give?

FMP returns vary depending on the state of the debt market. If interest rates are on the higher side, then the returns offered by FMPs are also high. This is because FMPs invest in debt securities issued by corporates and if the interest rates offered on these securities are high, the FMP returns also go up.

Currently, returns offered on FMPs of one-year maturity are between 10.5% and 11.5%. FMPs typically give out indicative yields to their distributors at the time of launch - this is the annualised return they hope to earn.

How do FMPs indicate yields in advance?

Mutual funds have a fair idea of the debt securities on offer and the interest rates going on them. They try and match the tenure of the debt securities chosen for investment by them with the period of maturity of the FMP. This way, they are able to lock in the return at the very beginning and thus calculate the indicative yield.

Is higher indicative yield the only criterion for selecting an FMP?

There is no simple answer to that as the yield has been projected on the assumption that every debt security the FMP invests in will pay up at the end of the tenure. In a bid to offer a higher indicative yield, some mutual funds end up investing in highly risky debt securities. Since the risk involved is higher, the interest offered on these FMPs is also higher, and so is the indicative yield.

Investors should check up on the portfolio of investments planned by the FMP before taking the plunge. If it lists a lot of debt securities with ratings of less than AA, it is best to avoid investing. Remember, AAA is the highest rating.

How is the tax calculated?

Like other mutual funds, returns on FMPs are categorised as capital gains.

If you invest in an FMP with a maturity of less than one year, the entire capital gain is lumped on to your income for the year and taxed according to the tax bracket you fall into. So, if you are in the top tax bracket of 33.99%, the short-term capital gain on an FMP will be taxed at that rate.

For FMPs with maturity of one year or more, one needs to pay long-term capital gain tax, which is charged at 10% without indexation or 20% with indexation, whichever is lower. Say you invest Rs 50,000 in an FMP of one-year maturity at Rs 10 per unit and hence get 5,000 units. The indicative yield on the FMP is 11%.

At the time of maturity, the FMP meets that yield and so at maturity, the net asset value of one unit stands at Rs 11.10 (Rs 10 + 11% of Rs 10), which takes the total value of 5,000 units to Rs 55,500 (5,000 x Rs 11.10). This means a long-term capital gain of Rs 5,500 (Rs 55,500 - Rs 50,000), on which tax at the rate of 10% works out to Rs 550. So, the net gain would be Rs 4,950 (Rs 5,500 - Rs 550).

The indexation method takes into account inflation while calculating the purchasing price. For this, the government issues index numbers every year. These numbers are available in the instructions accompanying Indian Income Tax Return forms.

Say the index number for the year in which the investment is made is 600 and the index number in which the investment matures is 650. One can divide 650 by 600 and multiply the resultant multiple (1.083) with the cost of purchasing the units (Rs 50,000) to arrive at the indexed cost (Rs 54,167). So the capital gain is Rs 833 (Rs 55,000 - Rs 54,167).

Tax on Rs 833 at the rate of 20% works out to Rs 167, which is lower than Rs 550 arrived at by taking the 10% rate without indexation, and is the tax to be paid. The post-tax capital gain thus works out to Rs 5333 (Rs 5,500 - Rs 167), giving a post-tax yield of 10.67%.

Are returns on FMPs higher than on FDs?

The interest earned on a fixed deposit (FD) is lumped with the remaining income for the year and taxed according to the highest tax bracket the individual is in, irrespective of whether the FD has a maturity of less than one year or equal to or more than one year. Given this, FDs of one year or more give a much lower rate of return than FMPs.

Take an FD, which matures in one year and gives an interest of 11% (similar to the indicative yield of the FMP). If the individual is in the top tax bracket, the post-tax return works out to 7.26% (11% - 33.99% of 11%). This is much lower than the indicative yield on the FMP. Even in the lowest tax bracket of 10.3%, the post-tax return of an FD stands at 9.86% (11% - 10.3% of 11%).

Most one-year FDs offer much lower interest rates than the indicative yields on FMPs. But then, the returns on FMPs are at best indicative andnot guaranteed, which makes FDs a safer bet.

Under license from www.3dsyndication.com

Insurance Term Plan Comparison

Best Term plans to choose from

What are ETFs?

ETFs are a basket of securities that are listed and traded on a recognised stock exchange. Simply put, they are mutual funds, whose units can be bought and sold on the stock exchange. ETFs can be either passively managed or actively managed.

A passively managed ETF attempts to replicate the performance of its underlying benchmark index (like the S&P CNX Nifty, for instance). It invests in the same stocks as the index and in the same weightage as well. The intention is to track the index as closely as possible (i.e. with least deviation).

On the contrary, an actively managed ETF can freely invest in stocks/securities, within the guidelines laid down by its investment mandate. In other words, the fund has no obligation to invest in the same stocks/securities as its benchmark index. The intention is to outperform the benchmark index.

However, it must be noted that the defining feature of ETFs is not whether they are passively or actively managed, but that they are traded on the stock exchange.

ETFs in India

ETFs first made their presence felt in India in the year 1994 with the launch of Morgan Stanley Growth Fund, a close-ended, actively managed, diversified equity fund. However, the dismal track record of the fund combined with a price history that was trading perpetually at discount to the NAV, gave investors the wrong signal as far as ETFs were concerned. Investors began perceiving ETFs as poorly managed and felt short-changed when they sold their units at a steep discount to the NAV.

Things changed after the launch of Nifty Benchmark Exchange Traded Scheme-Nifty BeES (launched in December 2001), an open-ended, passively managed fund. It would be fair to say that the fund set the records straight for ETFs in the country. Since then, the ETF segment has grown slowly but steadily. Recently, the launch of gold ETFs has provided the much needed zing to the segment, thus attracting many investors.

ETFs at present have a fair variety to offer. For example, among others, there are ETFs like Quantum Index Fund and ICICI SPIcE Fund that track broad indices such as the S&P CNX Nifty and the BSE Sensex respectively. Then there is Bank BeES (from Benchmark Mutual Fund), an ETF that tracks CNX Bank Index. On the debt side, there is Liquid BeES that invests in a basket of call money, short-term government securities and money market instruments. And there are several gold ETFs to choose from. Going forward, investors can only expect the bouquet of ETF offerings to grow.

How ETFs function
Given that an ETF is traded on the stock exchange, its price may not necessarily be the same as the NAV of the underlying portfolio. In other words, an ETF could have an NAV distinct from its market price. The reason being that the market price is usually driven by the demand and supply of units. Hence there is a distinct possibility of an ETF’s units trading at a premium or discount to its NAV.

Unlike regular mutual funds, where the investor deals directly with the AMC (asset management company), in case of ETFs, a bulk of the buying and selling is done over the stock exchange. Direct dealing with the AMC is possible only if the transaction is done in specified lot sizes known as ‘creation units’. Since the creation units are comprised of a large number of units, they are not viable propositions for retail investors. It is possible only for institutions and wealthy individuals to deal directly with the AMC. While dealing with the AMC, such investors can avail of ETF units by delivering the stocks (assuming that the ETF tracks a stock index) that make up the underlying index; also ETF units can be exchanged for the underlying stocks.

AMCs attempt to keep the market price of the ETF close to its NAV; for this purpose, they appoint institutions commonly referred to as market makers. These market makers try to benefit from any premium or discount between the ETF’s market price and its NAV, by performing an arbitrage between the ETF and its underlying portfolio. So how does this mechanism work? If an ETF is trading at a discount to its NAV, then the market maker will buy ETF units from the stock market and then sell the same to the AMC (in creation units); after taking delivery of the underlying stocks, the market maker will sell the same in the stock markets, thereby benefiting from the arbitrage opportunity. The converse will be done when an ETF is trading at a premium to its NAV. The arbitrage mechanism helps to keep the market price of an ETF close to its NAV.

Let us now look at some of the advantages and disadvantages associated with ETFs.

Advantages of ETFs

1. ETFs tend to be more cost-effective vis-a-vis comparable mutual funds. For instance, while the expense ratio of a passively managed ETF (tracking a benchmark index) would normally be in the range of 0.50%-1.00%; for an index fund, it can be as high as 1.50%.

2. Another important advantage with ETFs is that they provide more flexibility to investors than regular mutual funds. Since they are traded on the stock exchange, they are available to investors any time during the trading hours. So investors can buy and sell units of an ETF on a real time basis, unlike regular mutual funds, which can be transacted only at end-of-day NAV.

3. Since ETFs witness most of the buying/selling on the exchange, the interests of the long-term investor are not compromised. Take a regular equity fund where units are bought and sold at the AMC’s end – when a significant amount of money enters and exits the fund rather quickly, the long-term investor could suffer as a result of the costs (trading costs, registrar costs and opportunity loss, if the fund manager is forced to sell his best stocks) associated with this quick inflow/outflow.

With an ETF, since the trading investor does not approach the AMC at all and only interacts with other investors over the exchange, his quick entry/exit does not compromise the interests of the long-term investor.

4. Given ETFs are traded on the stock exchange, and can be bought/sold on a real time basis; they tend to have low tracking error (deviation of ETF's performance from that of the underlying index) as compared to index funds.

Disadvantages of ETF

1. Investors need to have a demat and a trading account, with a SEBI registered stockbroker, for investing in ETFs. For investors, who do not trade in stocks, this could be a bit of a deterrent. Also, maintaining a demat account entails paying annual fees (approximately Rs 500), however the same varies across stockbrokers. For investors, who invest in stocks, this will not pinch as the maintenance charge of the demat account will be spread across the stock and ETF investments.

2. While investors have to incur entry/exit loads at the time of making/redeeming investments in mutual funds, for ETFs they have to pay a brokerage (usually around 0.50%) to the stockbroker, along with other applicable charges (STT for instance), every time ETF units are bought or sold. For a trader who frequently trades, this can have a significant impact on the net returns. But for long-term investors, these expenses hold little relevance.

What investors must doIt is evident that ETFs offer a different investment proposition vis-à-vis conventional mutual funds. ETFs may appeal to investors who want to track the performance of a particular benchmark index (such as S&P CNX Nifty or BSE Sensex); similarly, the ETF route can also appeal to investors who are desirous of investing in asset classes such as gold. The allure of ETFs will only grow given the expanding bouquet of offerings.

Investors on their part would do well to thoroughly understand the pros and cons of ETFs; this will help them make informed investment decisions. Also, investors must consult their investment advisors/financial planners to determine the suitability of an ETF in their investment portfolios.

Next Sensex and Nifty Levels

Sensex : Break down below 12235 will result in 11705- and then 11455.
Nifty : Break down below 3800 will result in 3650 and then 3435.

What does share/stock mean?

A share or stock is a document issued by a company, which entitles its holder to be one of the owners of the company. A share is issued by a company or can be purchased from the stock market.
By owning a share you can earn a portion and selling shares you get capital gain. So, your return is the dividend plus the capital gain. However, you also run a risk of making a capital loss if you have sold the share at a price below your buying price.

A company's stock price reflects what investors think about the stock, not necessarily what the company is "worth." For example, companies that are growing quickly often trade at a higher price than the company might currently be "worth." Stock prices are also affected by all forms of company and market news. Publicly traded companies are required to report quarterly on their financial status and earnings. Market forces and general investor opinions can also affect share price.

How does one trade in shares ?

Every transaction in the stock exchange is carried out through licensed members called brokers. To trade in shares, you have to approach a broker However, since most stock exchange brokers deal in very high volumes, they generally do not entertain small investors. These brokers have a network of sub-brokers who provide them with orders. The general investors should identify a sub-broker for regular trading in shares and palce his order for purchase and sale through the sub-broker. The sub/broker will transmit the order to his broker who will then execute it.

Short and Long Term Call

Sesa Goa : If break below 2819 with volumes then will take to 2250. Exit all long positions.

Heartbreaking Tips

Suzlon Energy : Exit all Long. It will touch 222-218 and there after it can touch 185 to 180 levels.

IPO TERMINOLOGY

What is the difference between public issue and private placement?

When an issue is not made to only a select set of people but is open to the general public and any other investor at large, it is a public issue. But if the issue is made to a select set of people, it is called private placement. As per companies Act, 1956, an issue becomes public if it results in allotment to 50persons or more. This means an issue can be privately placed where an allotment is made to less than 50 persons.

What is an Initial Public Offer (IPO)?

An Initial Public Offer (IPO) is the selling of securities to the public in the primary market. It is when an unlisted company makes either a fresh issue of securities or an offer for sale of its existing securities or both for the first time to the public. This paves way for listing and trading of the issuer's securities. The sale of securities can be either through book building or through normal public issue.

Who decides the price of an issue?

Indian primary market ushered in an era of free pricing in 1992. Following this, the guidelines have provided that the issuer in consultation with Merchant Banker shall decide the price. There is no price formula stipulated by SEBI. SEBI does not play any role in price fixation. The company and merchant banker are however required to give full disclosures of the parameters which they had considered while deciding the issue price. There are two types of issues, one where company and Lead Merchant Banker fix a price (called fixed price) and other, where the company and the Lead Manager (LM) stipulate a floor price or a price band and leave it to market forces to determine the final price (price discovery through book building process).

What does 'price discovery through Book Building Process' mean?

Book Building is basically a process used in IPOs for efficient price discovery. It is a mechanism where, during the period for which the IPO is open, bids are collected from investors at various prices, which are above or equal to the floor price. The offer price is determined after the bid closing date.

What is the main difference between offer of shares through book building and offer of shares through normal public issue?

Price at which securities will be allotted is not known in case of offer of shares through Book Building while in case of offer of shares through normal public issue, price is known in advance to investor. Under Book Building, investors bid for shares at the floor price or above and after the closure of the book building process the price is determined for allotment of shares. In case of Book Building, the demand can be known everyday as the book is being built. But in case of the public issue the demand is known at the close of the issue.

What is Cut-Off Price?

In a Book building issue, the issuer is required to indicate either the price band or a floor price in the prospectus. The actual discovered issue price can be any price in the price band or any price above the floor price. This issue price is called "Cut-Off Price". The issuer and lead manager decides this after considering the book and the investors' appetite for the stock.

What is the floor price in case of book building?

Floor price is the minimum price at which bids can be made.

What is a Price Band in a book built IPO?

The prospectus may contain either the floor price for the securities or a price band within which the investors can bid. The spread between the floor and the cap of the price band shall not be more than 20%. In other words, it means that the cap should not be more than 120% of the floor price. The price band can have a revision and such a revision in the price band shall be widely disseminated by informing the stock exchanges, by issuing a press release and also indicating the change on the relevant website and the terminals of the trading members participating in the book building process. In case the price band is revised, the bidding period shall be extended for a further period of three days, subject to the total bidding period not exceeding ten days.

Who decides the Price Band?

It may be understood that the regulatory mechanism does not play a role in setting the price for issues. It is up to the company to decide on the price or the price band, in consultation with Merchant Bankers.

What is minimum number of days for which a bid should remain open during book building?

The Book should remain open for a minimum of 3 days.

Can open outcry system be used for book building?

No. As per SEBI, only electronically linked transparent facility is allowed to be used in case of book building.

Can the individual investor use the book building facility to make an application?
Yes.

How does one know if shares are allotted in an IPO/offer for sale? What is the timeframe for getting refund if shares not allotted?

As per SEBI guidelines, the Basis of Allotment should be completed with 15 days from the issue close date. As soon as the basis of allotment is completed, within 2 working days the details of credit to demat account / allotment advice and despatch of refund order needs to be completed. So an investor should know in about 15 days time from the closure of issue, whether shares are allotted to him or not.

How long does it take to get the shares listed after issue?

It would take around 3 weeks after the closure of the book built issue.

What is the role of a 'Registrar' to an issue?

The Registrar finalizes the list of eligible allottees after deleting the invalid applications and ensures that the corporate action for crediting of shares to the demat accounts of the applicants is done and the dispatch of refund orders to those applicable are sent. The Lead Manager coordinates with the Registrar to ensure follow up so that that the flow of applications from collecting bank branches, processing of the applications and other matters till the basis of allotment is finalized, dispatch security certificates and refund orders completed and securities listed.

Does NSE provide any facility for IPO?

Yes. NSE's electronic trading network spans across the country providing access to investors in remote areas. NSE decided to offer this infrastructure for conducting online IPOs through the Book Building process. NSE operates a fully automated screen based bidding system called NEAT IPO that enables trading members to enter bids directly from their offices through a sophisticated telecommunication network.

Book Building through the NSE system offers several advantages:

The NSE system offers a nation wide bidding facility in securities It provide a fair, efficient & transparent method for collecting bids using the latest electronic trading systems Costs involved in the issue are far less than those in a normal IPO
The system reduces the time taken for completion of the issue process
The IPO market timings are from 10.00 a.m. to 3.00 p.m. On the last day of the IPO, the session timings can be further extended on specific request by the Book Running Lead Manager.

What is a Prospectus?

A large number of new companies float public issues. While a large number of these companies are genuine, quite a few may want to exploit the investors. Therefore, it is very important that an investor before applying for any issue identifies future potential of a company. A part of the guidelines issued by SEBI (Securities and Exchange Board of India) is the disclosure of information to the public. This disclosure includes information like the reason for raising the money, the way money is proposed to be spent, the return expected on the money etc. This information is in the form of 'Prospectus' which also includes information regarding the size of the issue, the current status of the company, its equity capital, its current and past performance, the promoters, the project, cost of the project, means of financing, product and capacity etc. It also contains lot of mandatory information regarding underwriting and statutory compliances. This helps investors to evaluate short term and long term prospects of the company.

What does 'Draft Offer document' mean?

'Offer document' means Prospectus in case of a public issue or offer for sale and Letter of Offer in case of a rights issue which is filed with the Registrar of Companies (ROC) and Stock Exchanges (SEs). An offer document covers all the relevant information to help an investor to make his/her investment decision.
'Draft Offer document' means the offer document in draft stage. The draft offer documents are filed with SEBI, atleast 21 days prior to the filing of the Offer Document with ROC/SEs. SEBI may specify changes, if any, in the draft Offer Document and the issuer or the lead merchant banker shall carry out such changes in the draft offer document before filing the Offer Document with ROC/SEs. The Draft Offer Document is available on the SEBI website for public comments for a period of 21 days from the filing of the Draft Offer Document with SEBI.

What is an 'Abridged Prospectus'?

'Abridged Prospectus' is a shorter version of the Prospectus and contains all the salient features of a Prospectus. It accompanies the application form of public issues.

Who prepares the 'Prospectus'/'Offer Documents'?

Generally, the public issues of companies are handled by 'Merchant Bankers' who are responsible for getting the project appraised, finalizing the cost of the project, profitability estimates and for preparing of 'Prospectus'. The 'Prospectus' is submitted to SEBI for its approval.

What does one mean by 'Lock-in'?

'Lock-in' indicates a freeze on the sale of shares for a certain period of time. SEBI guidelines have stipulated lock-in requirements on shares of promoters mainly to ensure that the promoters or main persons, who are controlling the company, shall continue to hold some minimum percentage in the company after the public issue.

What is meant by 'Listing of Securities'?

Listing means admission of securities of an issuer to trading privileges (dealings) on a stock exchange through a formal agreement. The prime objective of admission to dealings on the exchange is to provide liquidity and marketability to securities, as also to provide a mechanism for effective control and supervision of trading.

What is a 'Listing Agreement'?

At the time of listing securities of a company on a stock exchange, the company is required to enter into a listing agreement with the exchange. The listing agreement specifies the terms and conditions of listing and the disclosures that shall be made by a company on a continuous basis to the exchange.

What does 'Delisting of securities' mean?

The term 'Delisting of securities' means permanent removal of securities of a listed company from a stock exchange. As a consequence of delisting, the securities of that company would no longer be traded at that stock exchange.

What is SEBI's Role in an Issue?

Any company making a public issue or a listed company making a rights issue of value of more than Rs 50 lakh is required to file a draft offer document with SEBI for its observations. The company can proceed further on the issue only after getting observations from SEBI. The validity period of SEBI's observation letter is three months only i.e. the company has to open its issue within three months period.

Does it mean that SEBI recommends an issue?

SEBI does not recommend any issue nor does take any responsibility either for the financial soundness of any scheme or the project for which the issue is proposed to be made or for the correctness of the statements made or opinions expressed in the offer document. SEBI mainly scrutinizes the issue for seeing that adequate disclosures are made by the issuing company in the prospectus or offer document.

Does SEBI tag make one's money safe?

The investors should make an informed decision purely by themselves based on the contents disclosed in the offer documents. SEBI does not associate itself with any issue/issuer and should in no way be construed as a guarantee for the funds that the investor proposes to invest through the issue. However, the investors are generally advised to study all the material facts pertaining to the issue including the risk factors before considering any investment. They are strongly warned against relying on any 'tips' or news through unofficial means.

Foreign Capital Issuance

Can companies in India raise foreign currency resources?

Yes. Indian companies are permitted to raise foreign currency resources through two main sources: a) issue of foreign currency convertible bonds more commonly known as 'Euro' issues and b) issue of ordinary shares through depository receipts namely 'Global Depository Receipts
(GDRs)/American Depository Receipts (ADRs)' to foreign investors i.e. to the institutional investors or individual investors.

What is an American Depository Receipt?

An American Depositary Receipt ("ADR") is a physical certificate evidencing ownership of American Depositary Shares ("ADSs"). The term is often used to refer to the ADSs themselves.

What is an ADS?

An American Depositary Share ("ADS") is a U.S. dollar denominated form of equity ownership in a non-U.S. company. It represents the foreign shares of the company held on deposit by a custodian bank in the company's home country and carries the corporate and economic rights of the foreign shares, subject to the terms specified on the ADR certificate. One or several ADSs can be represented by a physical ADR certificate. The terms ADR and ADS are often used interchangeably. ADSs provide U.S. investors with a convenient way to invest in overseas securities and to trade non-U.S. securities in the U.S. ADSs are issued by a depository bank, such as JPMorgan Chase Bank. They are traded in the same manner as shares in U.S. companies, on the New York Stock Exchange (NYSE) and the American Stock Exchange (AMEX) or quoted on NASDAQ and the over-the-counter (OTC) market. Although ADSs are U.S. dollar denominated securities and pay dividends in U.S. dollars, they do not eliminate the currency risk associated with an investment in a non-U.S. company.

What is meant by Global Depository Receipts?

Global Depository Receipts (GDRs) may be defined as a global finance vehicle that allows an issuer to raise capital simultaneously in two or markets through a global offering. GDRs may be used in public or private markets inside or outside US. GDR, a negotiable certificate usually represents company's traded equity/debt. The underlying shares correspond to the GDRs in a fixed ratio say 1 GDR=10 shares.

Short Term Calls - Dont try to ignore it

• Sell it: ICICI Bank Below 770, will see support at 725 and once break below 725 it will kiss 675 and then 565
• Sell it: Mahindra & Mahindra below 640 exit from all long positions. Below this stock will touch 455.
  

Developing Contries will have 25-30% decrement in GDP rate in 2008-09

Indian Share Market Prediction

• SENSEX 1st Target: 13030 ( Next 3 months )
• SENSEX 2nd Target: 9400 ( By Sept-Oct... Hope for the Best and pray it should not happen )
• SENSEX Trading below 200 DMA
• NSE: 3 consecutive close below 4630 will take it to 4420 and then it will touch 4347 level
  
• Watch collapse of 2 Private Banks and 2 or more Leading Share Trading Brokerage Houses
• Growth Rate: Indian GDP will be 5.5% to 5% in next 3 to 4 months
• Weak US economy and Weak Dollar

Advice

• Avoid all long positions till OCT 2008
• Any rise in Stocks, Just exit without taking care about your Profits otherwise you will lose your Principals
• For Traders Only: Avoid Day Trading and try focusing on Weekly or 2 weekly trades.
  
• Stocks to Buy/Sell ( 1 to 2 Year Vision )
  
• HOEC: 92 will be the bottom level start accumulation.
• PunjLlyod: Buy below 278
  
• BHEL: Buy Its too cheap ( You can wait for 1 more drop )
• LIC Housing: Sell if you have positions because you will get it below 220 in 1 or 2 weeks. Collect it below 220 level as its one of the blue chips.
  
• Reliance Capital: Buy below 1100 level.
• Avoid All Bank stocks becoz next 2 years are like blood path for banks.
• Invest in FMCG and Pharma, The Safer with less return ( Just like your FD :-) )
  

Understanding Capitals Gains for Taxation

Tax Law says, "Short-term capital losses for the year can be set off against any capital gains, short or long term, reported under the head, income from capital gains. In case the gains are lower than the losses, the excess short-term capital losses can be carried forward and set off against capital gains for eight successive assessment years.However long-term capital losses on security transactions liable to securities transaction tax cannot be offset against any income, and cannot be carried forward for offsetting against any future gains. Investors have to bear in mind that short-term capital loss (STCL) first has to be adjusted with any short-term capital gains and only then with long term capital gains on transactions not liable to STT (like sale of gold, real estate, etc)"

Tips 4th March Only

(BloodPath) Free Fall To Continue...in NF will slide to kiss 4746-4702 or 4634 in 2 to 3 sessions
It is good opportunity for Real Investor as Large Caps are at discounted price.
AirTel
On Rise..........Sell Sell Sell !!
Stock will slide to kiss 762-------747 & there after expect a level of 701 ,686 level.

DLF
Break below 700.......Last Hope is 683 level.(Sell Your Delivery holding too )
Will Crash to kiss Rs.500

SBI
Stock will slide to kiss 1860-1820 level in this fall. Exit on every rise

ICICI Bank
Stock will kiss the level of 995-975 & there after.....Bloodbath will start.

Kotak Mahindra Bank
Sell at current level

RCOMM
Will touch 509 and then 493 too in short time

RCapitals
Below 1633......will slide to kiss 1503-1460 level.

Reliance
Any Rise...Just exit.
Stock will slide to kiss 2240-2215 in this fall.

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Asia's 20 best For Future Investor Return: RIL, Reliance Capitals

Seven Indian companies have neem announced among Asia Pacific's 20 best companies in terms of expected investor returns over next five years ( By Morgan Stanley )
1. Reliance Capitals ( Anil Ambani Company )
2. Reliance Industries ( Mukesh Ambani Company )
3. Bharti Airtel ( Telecom )
4. Larsen & Toubro ( Engineering and Construction )
5. Pantaloon Retail ( Kishore Biyani )
6. IDFC ( Infrastructure Company )
7. Sobha Developers ( Real Estate Firm )

Personal Taxation For Financial Year 2008/09

Exemption slab raised to Rs 1.5Lakhs
Exemption limit for women at Rs 1.8 Lakhs
10% income tax for income exceeding Rs 1.5Lakhs but less than / equal 3 Lakhs
20% income tax for income exceeding Rs 3Lakhs but less than/ equal to 5 Lakhs
30% income tax for income exceeding Rs 5Lakhs

· Levy of Security transaction Tax (STT) on only options premium
· To Introduce commdities transaction tax, in line with the STT
· STT rates unchanged
· Banking cash transaction withdrawn

Only Bad Thing For Stock Traders
· Short term capital gain hiked to 15% from 10%

Gold Demand Low In India

MUMBAI (Reuters) - India's gold demand was low on Thursday despite a dip in prices as buyers waited for the metal to ease further so they could cover short positions, dealers said.

"A little more correction is needed -- say to about $950 an ounce -- then there could be a little buying," said Prithviraj Kothari, director at Riddisiddhi Bullions Ltd in Mumbai.

Another trader, Ganesh Agarwal of Shiv Sahai & Sons in Chennai, also said buyers were waiting for prices to fall by a few dollars.

"It is all because they have to cover their shorts. There is no major physical demand as such," said Agarwal.

Gold prices eased overseas after touching an all-time high of $964.70 an ounce on Wednesday, as investors took profits.

But the metal's bullish streak remained alive on concerns over U.S. economic growth, rising inflation and bigger fund allocations for commodities.

Kothari said in Mumbai's Zaveri Bazaar, scrap sales had slowed down, reducing the gap between imported and locally recycled gold to 50 rupees per 10 grams.

However, the gap in Chennai was at 100 rupees, Agarwal said.

Sale of scrap gold jewellery and bars by consumers has dominated the market since gold started rallying late last year, making locally recycled gold cheaper than imported stocks.

Most of the recycled gold is being bought for the current wedding season that will last till the end of May.

What is PE and EPS Ratio?

The EPS is profits (after tax and everything else) divided by the number of shares in issue. It is the amount of the company’s profits that belong to a single ordinary share. Companies are required to publish the statutory (also called “basic”) EPS but there are a number of adjusted EPS numbers which can be more useful to analysts.

Headline EPS
It is common to use the headline or adjusted EPS rather than the statutory EPS. The usual adjustment is adding back goodwill amortisation and exceptional costs to profits. Amortisation is excluded because it is non-cash and has no impact on future cash flows. Exceptional items are excluded because they are intrinsically one-off items and distort underlying trends - and therefore again do not help investors estimate future cashflows.

Companies often disclose the headline EPS and analysts forecasts are usually of the headline EPS as well. However the exact definition varies and different companies and analysts use different adjustments.

The IIMR (Institute of Investment Management and Research) has set out a widely used definition of headline EPS which excludes certain items (of an exceptional nature) which are excluded regardless of whether the company concerned has classified them as exceptionals or not, thus allowing fair comparisons of companies which may have different approaches to classifying expenses as exceptional or not.

Diluted EPS
The statutory EPS is calculated using the weighted average number of shares in issue during the period. A diluted EPS is calculated using all shares in issue and those due to be issued (e.g. under share option schemes). A fully diluted EPS is calculated using all shares issued, due to be issued and which could be issued if all existing options are exercised, convertible bonds are converted to equity etc.

When we use the term EPS without qualification we usually mean headline/adjusted EPS, diluted where it is practicable or particularly relevant.

PE Ratio
The price/earnings ratio, usually abbreviated to PE, is the most commonly used valuations measure. It compares the price of a share to the company’s earnings (net profit) per share. It directly relates the price of a share to the proportion of the company’s profits that belong to the owner of that share.

One of the reasons for the popularity of the PE ratio is its simplicity. It can be calculated simply by dividing the share price by the earnings per share (EPS). It is common to use the headline or adjusted EPS rather than the basic EPS.

The other common adjustment is the use of a diluted EPS, which is the share of profits of each share taking into account shares that are expected to be issued - for example as a result of share options or the conversion of convertible bonds.

A higher PE means that the same share of a company’s profits will cost a prospective shareholder more. There are usually reasons for a higher PE, which may reflect faster expected earnings growth, or lower risk earnings.
Prospective PE vs Historical PE
As investors are primarily interested a company’s future profits it is common to calculate the PE based on forecast earnings. To distinguish between these the PE calculated using the previous financial year’s earnings is called the historical PE, and that using the current financial year’s forecast earnings the prospective PE. Both of these and PEs based on another year’s earnings may be referred to by giving the year the earnings of which (actual or forecast) are used.

Trailling PE
The trailing twelve months PE is the PE for the most recent 12 months for which results are available rather than the last full year for which results are available. For example if a company reports half yearly the trailing 12 months PE would be the calculated by adding the PEs of the two most recent half years for which results are announced. If a company reports quarterly it would be the sum of the four most recent quarters. It shares with the historical PE the advantage of being a certain number rather than the forecast, but it is more up to date than the historical PE.

Relative PE
PE comparisons are more meaningful if they are made between similar companies. They are very often used to compare companies in the same sector, which are presumed to have similar long term growth prospects.

Taking this further the PE can be divided by the average PE for the companies the comparison is being made with. Most often a company PE is divided by the PE of its sector, or of the market as a whole to show how expensive the company is in comparison. Market and sector PEs are calculated as:

Total market capitalisation ÷ total net profits

Using PE
A lower PE does not necessarily mean a share is a better buy than another with a higher PE. Investors need to ask what justifies paying more for the more expensive (higher PE) company - does it have better growth? is it lower risk?
Although PE is the most widely used valuation ratio and has the advantage of being comparatively simple it is not the only valuation ratio and investors should use other as well. Its close relative the PEG ratio provides a crude adjustment for growth, while EV/EBITDA is distorted by financial structure (how indebted, or not, a company is) while PE is. Discounted cashflows are theoretically the most correct form of valuation but are harder to do.