Aug 31, 2009

Market Outlook and Tips for 31st Aug 2009

On Friday, the 28th August 2009, the markets opened with a gap up positive opening but soon turned volatile and traded extremely choppy backed by mixed cues from the Asian Markets.

The Nifty faced stiff resistance at 4698 mark and profit booking emerged every time it traded above this level unless after the mid session it made a strong recovery from the days lows to end on a positive note on fresh buying coming in with the strong opening of the European markets.

However, it traded with positive bias and managed to end the day on the green side.

Nifty finally closed at 4732.35 gaining 44 points or 0.94 %.

For Monday, the 31st August 2009, the Intraday Support for the Nifty shall be 4686 & 4648 while the market will experience resistance at 4774 & 4816.

Trading Tips for 31 Aug, 2009:

Buy SUZLON above 94 with a Stop Loss 93 for a target of 97.

Buy IDEA buy above 82 with a Stop Loss of 80 for a target of 84.

Sell BHEL below 2315 with a Stop Loss of 2340 for a target of 2274.

Sell BPCL below 491 with a Stop Loss of 498 for a target of 484.


Aug 29, 2009

What are Futures and Options? - Saturday Classroom

In addition to the technical terms like Stocks, Shares, Mutual Funds, IPOs, P/E Ratio, EPS, Dividends, and so on..., you must have many a times came across yet another term every other day in the NewsPapers, News, TV Channels called "Futures and Options" But what is this term about? What are the technical aspects and how can we make use of Futures and Options to make the most using them

This article will answer all your queries about the Futures and Options.

Futures and options represent two of the most common form of what is called as "Derivatives". Derivatives are financial instruments that derive their value from an 'underlying'. The underlying can be a stock issued by a company, a currency, Gold etc. The derivative instrument can be traded independently of the underlying asset.

In simple words, Futures and options are forms of exchange-regulated forward trading in which you enter into a transaction today, the settlement of which is scheduled to take place at a future date. The settlement date is called the expiry of the contract.

The value of the instrument called derivative changes according to the changes in the value of the underlying.

Derivatives are of two types -- exchange traded and over the counter.

Exchange traded derivatives, as the name signifies are traded through organized exchanges around the world. These instruments can be bought and sold through these exchanges, just like the stock market. Some of the common exchange traded derivative instruments are futures and options.

Over the counter (popularly known as OTC) derivatives are not traded through the exchanges. They are not standardized and have varied features. Some of the popular OTC instruments are forwards, swaps, swaptions etc.

Now, as this article focuses mainly on the instruments called Futures and Options, we will discuss these in detail below.

A 'Future' is a contract to buy or sell the underlying asset for a specific price at a pre-determined time. If you buy a futures contract, it means that you promise to pay the price of the asset at a specified time. If you sell a future, you effectively make a promise to transfer the asset to the buyer of the future at a specified price at a particular time. Every futures contract has the following features:
  • Buyer
  • Seller
  • Price
  • Expiry
Some of the most popular assets on which futures contracts are available are equity stocks, indices, commodities and currency.

The difference between the price of the underlying asset in the spot market and the futures market is called 'Basis'. (As 'spot market' is a market for immediate delivery) The basis is usually negative, which means that the price of the asset in the futures market is more than the price in the spot market. This is because of the interest cost, storage cost, insurance premium etc., That is, if you buy the asset in the spot market, you will be incurring all these expenses, which are not needed if you buy a futures contract. This condition of basis being negative is called as 'Contango'.

Sometimes it is more profitable to hold the asset in physical form than in the form of futures. For eg: if you hold equity shares in your account you will receive dividends, whereas if you hold equity futures you will not be eligible for any dividend.

When these benefits overshadow the expenses associated with the holding of the asset, the basis becomes positive (i.e., the price of the asset in the spot market is more than in the futures market). This condition is called 'Backwardation'. Backwardation generally happens if the price of the asset is expected to fall.

It is common that, as the futures contract approaches maturity, the futures price and the spot price tend to close in the gap between them ie., the basis slowly becomes zero.

Options contracts are instruments that give the holder of the instrument the right to buy or sell the underlying asset at a predetermined price. An option can be a 'call' option or a 'put' option.

A call option gives the buyer, the right to buy the asset at a given price. This 'given price' is called 'strike price'. It should be noted that while the holder of the call option has a right to demand sale of asset from the seller, the seller has only the obligation and not the right. For eg: if the buyer wants to buy the asset, the seller has to sell it. He does not have a right.

Similarly a 'put' option gives the buyer a right to sell the asset at the 'strike price' to the buyer. Here the buyer has the right to sell and the seller has the obligation to buy.

So in any options contract, the right to exercise the option is vested with the buyer of the contract. The seller of the contract has only the obligation and no right. As the seller of the contract bears the obligation, he is paid a price called as 'premium'. Therefore the price that is paid for buying an option contract is called as premium.

The buyer of a call option will not exercise his option (to buy) if, on expiry, the price of the asset in the spot market is less than the strike price of the call. For eg: A bought a call at a strike price of Rs 500. On expiry the price of the asset is Rs 450. A will not exercise his call. Because he can buy the same asset from the market at Rs 450, rather than paying Rs 500 to the seller of the option.

The buyer of a put option will not exercise his option (to sell) if, on expiry, the price of the asset in the spot market is more than the strike price of the call. For eg: B bought a put at a strike price of Rs 600. On expiry the price of the asset is Rs 619. A will not exercise his put option. Because he can sell the same asset in the market at Rs 619, rather than giving it to the seller of the put option for Rs 600.

I hope that this article would be helpful to you and improve your understanding for "Futures and Options". In case you have any views or inputs to add to the topic, please comment below.


Aug 28, 2009

NHPC Listing on Exchanges on 1st September 2009

The State-run NHPC has decided to be listed on the stock exchanges on the 1st of September, 2009 which will make it the first public sector firm to be available to trade under
the second term of the Congress-led UPA government.

"From September 1, 2009, the equity shares of NHPC Ltd shall be listed and admitted to dealing in the exchange," the Bombay Stock Exchange (BSE) said in a statement today.

The issue price of NHPC shares has been fixed at the upper band of the IPO at Rs 36 a share.

The government run power producer raised Rs 6,000 crore through its initial public offer (IPO), which closed on August 12. It had come up with 167.73 crore shares in the primary market within the price band of Rs 30-36.

Over one-third stake is being held with the government in NHPC, which is the sole promoter of the company.

NHPC would use the IPO proceeds to part fund its ongoing investments in 11 projects. It also has plans to add 14,000 MW of power by 2020 for which it has either completed survey of projects or was in the process of surveying several others.

With an installed capacity of 4,815 MW, the company has 11 projects under construction aggregating to a total capacity of 4,622 MW. The new projects are likely to be commissioned by 2012.

With the completion of NHPC's IPO, the disinvestment programme of UPA-II has started on a high note as the IPO was over subscribed 23 times.

The previous tenure of the UPA government saw the listing of three power sector PSUs - PFC, PGCIL and REC.

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Aug 27, 2009

Rupee to get an Identification Symbol finally!!

The Indian rupee has never had a symbol and this is the reason why the Indian government has decided to invite designs from the Indian public and judge by the number of entries received. According to the reports, the response has been phenomenal.

Major currencies of the world like the US dollar, the pound sterling, the yen and the euro among others, have an identification symbol.

The Indian rupee, however, does not. In February this year, the Finance Ministry invited Indian residents to participate in a competition for designing a 'symbol for the Indian rupee'. Government officials have told CNBC-TV18 that as many 2,500 entries have been received from across the country.

While the designs are under the wraps for the moment, a seven-member committee will soon meet for the first time to short list five entries. The committee is headed by a Reserve Bank of India (RBI) Deputy Governor and will scrutinise the designs before choosing the final one.

The Finance Ministry has said that the symbol should represent the historical and cultural ethos of India and be widely accepted across the country. It has also said that the symbol should be applicable to a standard computer keyboard. The symbol will also have to be in the Indian national language script or a visual representation.

Finalising the chosen design will take a few months, but once the process is over, the Indian rupee will finally have a symbol - befitting its status as the currency of a rising economic power.

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Great Eastern Energy plans IPO Launch this fiscal Year

Great Eastern Energy Corporation Ltd plans to raise around Rs 400 crore through an initial public offering this fiscal to part-fund drilling of nearly 300 wells and distribution of gas for industrial purposes in West Bengal.

The Gurgaon-based company also plans to invest nearly Rs 2,825 crore in two phases in West Bengal to develop the hydrocarbon production.

The company is the country?s first private sector company engaged in exploration, development, production, distribution and sale of natural gas from coal-seams, commonly called coal-bed methane.

The Director-General of Hydrocarbons had given approval for drilling of 100 wells. The company proposes to drill another 200 before 2016.

With the IPO, Great Eastern would be diluting 10 per cent of equity to use the proceeds to fund drilling of wells in the CBM block it received through nomination in May 2001 for 35 years. Financial institutions own 35 per cent of the company, which has an equity base of Rs 203 crore.

Last year, SBI had sanctioned a loan of Rs 350 crore to Great Eastern. Great Eastern energy might bid for more CBM blocks, depending on evaluation and feasibility, in the fourth round of bidding. The company is focused on West Bengal?s coal-bearing areas where methane gas escapes into the atmosphere and damages the ozone.

It is expected to result in the demethanation of coal-beds and avoidance of emissions into the atmosphere. Great Eastern is exploring and developing production wells for CBM in Damodar Valley (Raniganj coal-field), near Asansol city in West Bengal. At present, 31 of its wells produce CBM from its Raniganj block spanning 210 where the gas-in-place is estimated to be 1.92 trillion cubic feet.

Great Eastern has completed 31 wells, while 22 are in various stages of completion. It has commissioned one gas-gathering station and nearly 110-km-long pipeline network is at various stages of development, reports The Hindu Business Line.


Pipavav Shipyard IPO to open on Sept 16, 2009

Pipavav Shipyard's initial public offering (IPO) will open for subscription on September 16 or 17, 2009, News sources revealed. The company may raise Rs 400-500 crore via IPO. Punj Lloyd currently holds 22.3% stake in the company.

As per the DRHP (draft red herring prospectus) filed with the SEBI, the company is coming out with a public issue of 86,850,000 equity shares of Rs 10 each. About 2,600,000 equity shares of Rs 10 each will be reserved in the issue for subscription by employees. The issue less the employee reservation portion shall be referred to as the net issue. The issue will constitute 13.04% of the fully diluted post-issue equity share capital of the company.

Proceeds from the issue will be used for construction of facilities for shipbuilding, ship repair and the Offshore Business, and margin for working capital.

The shares issued via IPO are proposed to be listed on the BSE and NSE. JM Financial Consultants Private Limited, Citigroup Global Markets India Private Limited and Enam Securities Private Limited are book running lead managers to the issue. Karvy Computershare Private Limited is the registrar.

Punj Lloyd bought 22.34% stake in the company at Rs 350 crore. Sea King Infra and Punj Lloyd are co-promoters, which hold 45.5% stake.


Jindal Cotex IPO opens for subscription today

Jindal Cotex has opened for subscription with an initial public offering (IPO) of 1,24,53,894 equity shares of face value of Rs 10 each for cash at a price of Rs 70-75 per equity share aggregating Rs 87.18-93.40 crore.

The issue will close on September 1, 2009. The issue comprises of promoters? contribution of 12,03,894 equity shares and reservation of 5,00,000 equity shares for eligible employees. So, the net issue to the public is of 1,07,50,000 equity shares. The net issue shall constitute 43% of the post issue paid up capital of the company. At higher price of band, the company will raise Rs 93.40 crore; out of which, the promoters will receive around Rs 9 crore.

The proceeds from the issue (excluding public issue expenses) will be used for setting up a new facility for manufacturing of cotton yarn, yarn dyeing and garments and investment in subsidiaries namely Jindal Medicot & Jindal Specialty Textiles.

The company is engaged in the business of manufacturing of acrylic, polyester, and polyester-viscose, polyester cotton, combed and carded yarns, which are appropriate for apparels, suitings and knitted fabrics. The yarns produced by the company are used for made ups in apparels, hosiery & garment industry.

It has current installed capacity of 23,472 spindles for acrylic, cotton blended and polyester yarns with a manufacturing capacity of 6500 TPA. It manufactures and sell yarns under the trade name ?JINDAL?.

The issue has been graded by Brickwork Ratings India Private Limited and has been assigned a grade of 3/5 indicating average fundamentals.

For the quarter ended June 2009, the company reported net sales of Rs 29.08 crore and net profit of Rs 1.84 crore. For the year ended March 31, 2009, it has reported net sales of Rs 138.58 crore and net profit of Rs 4.34 crore.

Equity shares issue via IPO are proposed to be listed on the Bombay Stock Exchange Limited (BSE) and on the National Stock Exchange of lndia Limited (NSE).

Saffron Capital Advisors Private Limited is the book running lead manager to the issue and Bigshare Services Private Limited is registrar to the issue.


Market Outlook and Tips for 27th Aug 2009

On Wednesday, the 26th August, 2009, the markets spotted a positive gap up opening but soon turned volatile and traded extremely choppy throughout the day ahead of the FnO (Futures and Options) expiry. The Nifty faced stiff resistance exactly at 4698 level.

However, it traded with a positive bias and managed to end the day on a positive note.

Nifty finally closed at 4680.85 gaining 21 points or 0.46 % at the close of the session.

Trading Strategy for 27th Aug, 2009:

Buy AMBUJA CEM Above 99 with a Stop Loss of 97 for a target of 103.
Buy IDEA Above 81 with a Stop Loss of 79 for a target 83.
Sell HDFC BANK Below 2500 with a Stop Loss of 2525 for a Target of 2446.
Sell MARUTI below 1398 with a Stop Loss of 1413 for a target of 1371.


Aug 26, 2009

NHPC IPO : Basis of Allotment

NHPC, a large hydro-power generation company and government owned entity, has fixed the issue price of Rs 36, at higher end of the price band.

The company garnered Rs 6,038.55 crore from the issue; out of which, the government received Rs 2,012.85 crore and that will be used for infrastructure projects. The rest of the amount i.e. Rs 4,025.7 crore, the company will use for its power projects.
Shares of NHPC are expected to be listed by the first week of September, merchant bankers to the issue said.

(Subscription under Employee quota have been allocated to QIB/HNI/Retail in 60:10:30 ratio)

NHPC IPO - Basis of allotmentIt had launched its initial public offering (IPO) of 1,67,73,74,015 equity shares of Rs 10 each with a price band of Rs 30-36 per equity share. NHPC IPO opened during August 7 and August 12, 2009. The issue received overwhelming response from all categories of investors and was subscribed 23.74 times.

Qualified institutional investors (QIBs) were the major supportive investors with their portion being subscribed 29.16 times. Non-institutional and retail investors' portion subscribed 26.7 times and 3.87 times, respectively.

The issue constituted 13.64% of the post-issue capital of NHPC. After the issue, the shareholding of the President of India shall be approximately 86.36% of the post-issue paid-up equity share capital of the company.

The proceeds of the fresh issue (after deducting the proportionate underwriting and issue management fees, selling commissions and other expenses associated with the fresh issue) will be used to part finance the construction and development costs of certain of projects, namely, Subansiri Lower, Uri – II, Chamera - III, Parbati – III, Nimoo Bazgo, Chutak, and Teesta Low Dam - IV.


Aug 25, 2009

HCL Tech Q4 net profit up 51% at Rs 330 cr; stock gains!

HCL Technologies has announced its Q4FY09 numbers. Its net profit increased 51.3% to Rs 330 crore versus Rs 218.1 crore and revenues rose 1.63% to Rs 2,908 crore from Rs 2,861.5 crore, QoQ. Reacting to the results, the share was quoting at Rs 309.75, up Rs 19.75, or 6.81% at 10.09 am.

In dollar terms, its Q4 revenues were up 7.6% to $ 607.2 million versus $ 564.4 million. It was best among all peers this quarter. Constant currency growth was at 3.95%.


Market Outlook and Tips for 25th Aug 2009

On Monday, the 24th August, 2009, the markets opened with a huge gap up on strong cues from the global markets. Strong buying thereon, led the markets to maintain its gain throughout the day, however investors churned their positions while markets ended on a strong note.

At the end of the session, the Nifty finally closed at 4642.80 gaining 114 points or 2.52 %

For 25th August, 2009 the Intraday Support for the Nifty shall be 4596 & 4552 while the market will experience resistance at 4684 & 4723.

Trading Tips for 25th Aug, 2009:

Buy AMBUJA CEM Above 100 with a Stop Loss of 98 for a target of 103.
Buy POWER GRID Above 109 with a Stop Loss of 107 for a target of 112.
Sell SUZLON Below 88 with a Stop Loss of 90 for a Target of 86.
Sell SUN PHARMA Below 1184 with a Stop Loss of 1196 for a Target of 1162.

Our FREE Intraday Tips for 24 AUG 2009:
POWER GRID Buy Above 108 SL 106 Target 110 Exited @ 109.20
TATASTEEL Buy Above 447 SL 443 Target 453 Target Achieved.


Aug 24, 2009

IPO Index Launched by BSE

The BSE (Bombay Stock Exchange) announced the launch of a new BSE IPO index that will track the value of companies for two years after listing subsequent to successful completion of their initial public offering (IPO).

Robust growth of the Indian economy at 6.7% in 2008-09, and the expectation of higher growth in the future are expected to boost the primary market. For this and other reasons, it is an appropriate time to introduce to the market an indicator that will track primary market conditions in the Indian capital market.

BSE continues to introduce index innovations with the launch of the IPO index, by introducing ceiling (capping) on weightings of index constituents. Market capitalisation weightings of index constituents will be limited to 20%. If a constituent?s market capitalization would result in a higher weighting, the company?s weight will be suitably adjusted to ensure that no single company has a weight in excess of 20% in the index. However, between any rebalancing, weightage of any index constituent can exceed 20%.

Summary of guidelines followed for BSE IPO index are as follows:

1. A company seeking listing on the Exchange after completion of IPO shall be considered eligible for inclusion in the index. Follow-on public issues shall not be considered for inclusion in the index.

2. A scrip must have the minimum free-float market capitalisation of Rs 100 crore on its first day of listing.

3. A scrip will be included in the index on the third day of its listing (T+2) subject to fulfillment of the minimum free-float market capitalisation criteria stated above.

4. A scrip will be excluded from the index on the second Monday of the month after completion of two years of listing.

5. At all time a minimum of 10 scrips shall be maintained in the index. In case, there are less than 10 companies on account of possible exclusion after two years, the exclusion of such company shall be delayed till such time new inclusion is made in the index.

6. The maximum weight of any scrip shall be capped at 20%. The constituent weightage shall be reviewed at the time of inclusion/exclusion of a scrip and on monthly rebalancing. However, between any rebalancing, weightage of any index constituent can exceed 20%

7. Base date of the index is May 3, 2004; while base index value is set to 1000 points. Index value on August 21, 2009 is 1901.67.

8. The index would be calculated and disseminated on a real-time basis through BOLT effective August 24, 2009 and shall also be available on our website.

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Pyramid Saimira to consider demerger on Aug 25, 2009

Pyramid Saimira Theatre Ltd has announced that a meeting of the Board of Directors of the Company will be held on August 25, 2009, to consider International offering of securities.

The Board will also consider de-merger of subsidiary Company. The stock was trading at Rs.23.40, up by Rs.1.10 or 4.93%. The stock hit an intraday high of Rs.23.40 and low of Rs.23.40.

The total traded quantity was 15332 compared to 2 week average of 55718.


Should I invest in L & T Finance NCD Issue?

Investments can be considered in L&T Finance’s secured non-convertible debentures (NCD), especially the longer-term options as they offer attractive rates and provide a hedge against the interest rate volatility over a 10-year period. With banks’ term deposit rates hovering in the 6.5-8 per cent range across comparable tenures, the rates offered by the debenture appear attractive.

However, investors can give the five-year quarterly and semi-annual options a skip. For one, they offer lower rates of interest compared to many fixed deposit options with similar or marginally higher credit risk.

Locking into the shorter term options also appears unattractive given the expectation that interest rates will trend up over the next few quarters.

The NCD has received LAA+ and CARE AA+ ratings (both indicating ‘investment grade’) from ICRA and CARE respectively. This apart, diversified revenue stream, high proportion of capital adequacy and reasonable growth prospects of segments such as commercial vehicles, micro-financing, where the company has recently set foot and which have high yields, are the key investment arguments.

About the company
L&T Finance was set up 15 years ago as a SME financing company to fund its parent company’s vendors and distributors. Today, it has evolved into a full-fledged NBFC that provides equipment financing, tractor and commercial-vehicle financing, micro-financing and lending against shares. The company has 311 branches and points of presence.

L&T Finance had an advance book size of Rs 5,218 crore. Ninety per cent of the loans are secured by assets. The advances book is divided into corporate finance group (37 per cent of loans) and retail finance group (63 per cent of loans). Construction equipment, other retail financing such as tractor and farm equipment financing, CV financing are major segments in that order, according to the management. Most of its borrowings come from bank loans (69 per cent) followed by commercial paper and NCDs.

In the previous fiscal, the company’s interest income grew 38.3 per cent over 2007-08 to Rs 830 crore but due to the prevailing slowdown the profits fell 14 per cent to Rs 98 crore.

The interest spread is 2.7 per cent for the company, which has fallen due to increase in the borrowing costs and higher provisioning for the NPAs (non-performing assets). After providing for Rs 22 crore, the net NPA ratio is at 2.04 per cent, up from 0.7 per cent in 2007-08.

The company has a comfortable capital adequacy of 16 per cent and debt-equity ratio (post issue) of 6.68 times. .

Choosing the best option :

The issue is secured by the receivables of the company and 50 per cent of the capital raised in NCD is set aside as debenture redemption reserve.

Of the four options, the 88-month cumulative and the 10-year semi-annual one are good investment options. In the light of the new Tax Code that is expected to come into force from 2011, the post-tax returns of these longer-term options appear more attractive. For instance, for an individual earning Rs 6 lakh per annum, the cumulative option which gives pre-tax yield of 9.5 per cent on an accrued basis may yield only 7.2 per cent as he is in the 30 per cent tax bracket.

However, if the new Tax Code comes into force, the post-tax yield will increase to 8.7 per cent as he would be in the 10 per cent tax bracket. Investors can consider the cumulative option as it reduces the re-investment risk as the accrued interest continues to grow at the same rate, maintaining the yield-to-maturity at relatively higher levels.

The other instrument with similar tenor is Kisan Vikas Patra, which has 1.55 percentage points lower spread over the NCD.

The semi-annual 10-year option, on the other hand, is a one of its kind for the retail investors issued by any NBFC which provides an annualised return of 10.24 per cent, semi annually over a period of 10 years. The only other retail option for such a long tenor is a 10-year government bond with a coupon rate of 6.94 per cent.

A cumulative option is attractive for those who do not require a periodic payout. Investors seeking regular payout may choose the interest payout options.

One advantage of the current NCD issue is that it can be traded on the NSE which makes the bonds liquid. Any major increase in the price of the NCD would present the investor with an opportunity to cash out, especially if interest rates reach a ‘trough’. But investors do not face downside risk. Even if the price of the NCD falls in the secondary market, investors can redeem it at par value on maturity.

For example, the Tata Capital NCD (option 4), with a coupon rate of about 12 per cent and face value of Rs 1000, trades at Rs 1,130 giving an annualised return of more than 25 per cent because of the fall in yields of most debt instruments.

Apart from the exit option that enables selling the NCD in NSE, company may also announce buybacks from time to time and investors can voluntarily retire their NCD.

The limited track record of L&T Finance in some of its segments may create business risk. There are signs of revival in segments in which L&T Finance has exposure, but it is uncertain if the recovery will uncertain.

The NPAs have continuously trended up for the last four years from 0.1 per cent to 2 per cent and may continue to put pressure on company’s earnings for next few quarters.

Keep visiting EquiTipz for more updates on this NCD issue.

Source: Hindu Business Line


Market Outlook and Tips for 24 Aug 2009

On Friday, 21st August, 2009, the markets opened weak on negative cues from Asian markets but strong buying came in from Domestic Funds and FIIs at lower levels which pulled the markets sharply up to end on a strong note.

Nifty finally closed at 4528.80 gaining 75 points or 1.69 % approximately.

Market Outlook for 24th August 2009:

Intraday Support for the market shall be 4482 & 4438 while the market will experience resistance at 4574 & 4617.

Trading Tips for 24th Aug, 2009:

Buy POWER GRID Above 107 with a Stop Loss of 105 for a target of 111.

Buy TATASTEEL Above 446 with a Stop Loss of 443 for a target of 45.

Sell AMBUJA CEMENT Below 97 with a Stop Loss of 99 for a Target of 95.

Sell HDFC BANK Below 1457 with a Stop Loss of 1472 for a Target of 1435.


New US economic data set to test Wall Street bull run

New US economic data in the coming week will test the resilience of Wall Street US shares scaled fresh highs for the year on upbeat remarks by Federal Reserve chief Ben Bernanke and buoyant housing data.

All three major market indexes were resting at new 2009 peaks at the end of trading Friday, buoyed by a record jump in existing-home sales in July and Bernanke's comments that recovery prospects "appear good" in the near term for the United States and the rest of the world after the worst slump in six decades.

The blue-chip Dow Jones Industrial Average was up 184.56 points or 1.9 per cent for the week to finish at 9,505.96 on Friday. The blue-chip index had not finished above 9,500 since early November and has now climbed about 45 per cent from its March low.

The tech-heavy Nasdaq composite leapt 35.38 points (1.7 per cent) to 2,020.90 and the broad-market Standard & Poor's 500 index advanced 22.04 points (2.1 per cent) to 1,026.13 - the third consecutive weekly close atop the millennium level.

Analysts said new data next week, including a second preliminary estimate of US gross domestic product (GDP) for the second quarter on Thursday, would be critical in guaging market resilience.

The initial estimate showed the US economy contracting 1.0 per cent in the April-June period following a severe 6.4 per cent contraction in the first quarter.

Most analysts expect the new estimate to show a greater contraction of 1.4 per cent.


Aug 23, 2009

Indiabulls Power prices pre-IPO placement at Rs 44/sh

Indiabulls Power, a subsidiary of Indiabulls Real Estate has begun its pre-IPO placement with strategic investors.

The indicative pre-IPO price is in the range of Rs 44 a share. The pre-IPO placement could fetch Indiabulls Power about Rs 600 crore. The company will offer 39 crore shares in the IPO.

At indicative price of Rs 44/share, the IPO issue could be valued at Rs 1,700 crore. At the pre-IPO price, the company could see valuation of around Rs 8700 crore.

The company has four leading projects in the pipeline, which add up to over 5200 mega watt (MW) of power projects. The projects included 1,335 MW in Nashik and 1,320 MW in Chhattisgarh, Amravati and Bhaiyathan.


Cox and Kings prepares for IPO Issue again

With the signs of revival shown by the primary market, one of India’s oldest tour operators, Cox & Kings, has initiated the process for its initial public offering (IPO) and has filed the preliminary draft prospectus with market regulator SEBI. The travel company had earlier planned to go for an IPO last year but was forced to shelve down its plans because of the unfavourable market conditions.

The scenario has now improved with Indian companies having raised over Rs 9,000 crore so far this year. Cox & Kings expects to raise $100 million through the IPO.

If the IPO materialises, Cox & Kings will be the third well-known listed company in the travel space. Interestingly, unlike travel industry’s sibling—hotels—not too many travel services are listed.

The other publicly quoted travel firms include Thomas Cook and International Travel House. While Thomas Cook trades at Rs 53, International Travel House, owned by ITC, on Friday closed at Rs 97.65 on BSE.

Cox & Kings median sale of 18.49 million shares would comprise a fresh issue of 15.45 million shares and sale of 3.04 million shares by its current financial investors, Lehman Brothers, Deutsche Securities and Merrill Lynch. The company has also reserved two lakh equity shares for its employees.

The issue would constitute 29.4% of the fully diluted post-issue paid-up capital of the company, Cox & Kings said in a media statement. It added that it was considering a pre-IPO placement. India Infoline is the sole book running lead manager to the issue.

Source : Economic Times


Aug 22, 2009

OIL IPO to hit the market on 7th Sep 2009

Oil India IPO is ready to hit the capital markets on the 7th of September 2009. Oil India is the second state-run oil firm after the big ONGC offering. OIL IPO is likely to be priced around Rs 1,00o to 1,100 per share.

OIL is seeking to price its initial public offering (IPO), closer to the prevailing share price of Oil and Natural Gas Corp (ONGC).

According to sources, Oil India Ltd believes its earnings per share (EPS) and book value are better than ONGC and so it is looking at pricing the issue in the range Rs 1,000-1,100.

The price band will, however, be fixed by a Group of Ministers in the last week of August. OIL India IPO subscription will begin on September 7 and close on September 11.OIL IPO Listing date is fixed on September 29. The OIL management is currently holding an investor meeting in Hong Kong and Singapore.

Through OIL IPO, 2.64 crore-equity shares or 11 per cent will be offered to the public , while the Government will simultaneously sell 10 per cent of its stake in the company to state refiners.

More information, reviews, subscription details and the listing information of OIL- Oil India Ltd IPO will be posted here soon. Do check our site later for OIL India Limited IPO Analysis.


Aug 21, 2009

NHPC IPO - Adani Power Listing Impact?

Adani Power listed on the stock exchanges yesterday, the 20th August, 2009 but met with a lukewarm response. Experts say that the next power company queued up for listing, government-owned NHPC, will see a definite impact, especially on its grey market premium.

Even as the two companies were fundamentally different, they would prefer to buy NTPC, which was at lower levels. NHPC's grey market premium, which was trading close to Rs 6-7 yesterday, dropped to Rs 5 immediately after Adani Power's listing.

However, NHPC has an expertise over the hyrdo power sector, so there is a growth factor that gives a terminal value to all these government utilities hopefully the NHPC IPO will be far better than this one Adani Power.

The dealmaker for both IPOs, Vallabh Bhanshali of Enam Securities, however is optimistic. "Both of them will eventually make a lot of value for investors", he said. "People like Adani, who have come to the market again and again and the government who have probably a long pipeline of issues are very conscious that they have to leave value for investors. Yes, if you leave more value on the table investors are happy, more issues can come to the market. But I am also conscious that the promoters also take a lot of risk and a lot of effort to build companies and bring them to level where NHPC and Adani both are."


Adani Power :: Should you buy the stock now?

Adani Power witnessed a lacklustre listing on the markets yesterday. The stock listed at Rs 108 on the NSE but was quick to slip and even fell below its issue price of Rs 100 during the day. This, inspite of the broader markets being in the green. Most analysts were disappointed as they were expecting it to list at a premium of 10-15%.

Vallabh Bhanshali, Chairman of Enam Securities, which was the lead manager to the issue, said that Adani Power's poor performance could be attributed to two reasons; market volatility and a slew of upcoming IPOs. "It was always difficult to arrive at the right price for an IPO when the market was volatile," he added. However he said both NHPC and Adani Power would make good money for investors.

According to the experts, Adani Power is expected to trade between Rs 79 and Rs 95 per share.

Udayan Mukherjee, Managing Editor, CNBC-TV18 said that the stock's net present value (NPV) would range from Rs 70-90. According to him, its fair value would be between Rs 100 and Rs 120.


Aug 19, 2009

How to Short Sell: Earn in the Falling Markets?

As a matter of fact you can earn more money in a falling market than in a rising one because when the market rises, it rises like a bull climbing the stairs but when it falls, it falls like a bear thrown out of the window. But the question that comes into picture is how? The simple answer to this question is short selling.

What is short selling?
Short selling means selling the shares which you do not own i.e. First you sell the shares at a higher price and then buy them in the same quantity at a lower price. Basically, in simple words it means you are selling the shares at a higher price which you normally do, but the difference is that the shares which you are selling are not owned by you. You will buy these shares later at a suitable lower price. The margin between the buying and selling is your profit.

What is the right way to short sell?
Short selling should be done when you are sure that the market is going to fall. But how can you know that for sure? There are times when it is almost certain that markets will fall, such as conditions like global market meltdown, corrections etc. These are the best times to short sell as the market along with most of the stocks falls heavily in such conditions. If you do it right you would earn quite more than what you could have earned in a rising market.

Also Read: 3 important things to know as a new investor!!!

You can also insure yourself in case the trend reverses by purchasing options such as call or put depending upon whether you are going long or short. These options tend to limit your losses to the level which you have decided no matter where the stock price is.
(I would be explaining Call and Put Options in the forthcoming Posts. You can get them in your mail by Subscribing here)

Which companies should you short sell?
When a market crashes almost all the stocks fall. But to maximize your earnings you will have to pick some stocks which fall the most. Such stocks can be of two types one which are high growth stocks and other which are speculative stocks.

The high growth stocks: These have huge investor interest and so when the market starts falling huge selling is seen in these stocks. Also as these are trader's favorite, shorts are opened in these stocks earlier than in the others which pull the stock prices further downwards.

Speculative Stocks: These have no fundamental foundation. The stock price of such companies is controlled by the traders and hence when the market falls these tend to have high selling and build up of shorts which pull the stock price down.

So the next time when the market crashes you know what to do. Just keep a cool head and look out for stocks which fall the highest and just enjoy your profits as the markets fall.

Please put your Comments below for the article.


Market Outlook and Tips for 19th August 2009

On Tuesday, the 18th August, 2009, the markets rallied strongly after opening flat in the initial morning trade. Both the Investors and traders went in for bargain hunt on the frontline stocks after Monday's sharp fall in the market.

Markets traded in an extremely bullish mood with strong buying seen coming in. The European markets further added to the positive sentiment of the traders. Following have been the stats at the end of the day.

The Nifty finally closed at 4458.90 gaining 71 points or 1.62 %.

For 19th August, the Intra day support for the market shall be 4401 & 4466 while the market will experience resistance at 4506 & 4548.

Trading Tips for 19th Aug, 2009

Buy AXIS BANK above 834 with a Stop Loss of 825 for a Target of 848.

Buy HERO HONDA above 1402 with a Stop Loss of 1380 for a Target of 1428.

Sell HINDALCO below 105 with a Stop Loss of 107 for a Target of 104.

Sell SUZLON below 87 with a Stop Loss of 89 for a Target of 85.


Aug 18, 2009

Adani Power listing on Bourses :: August 20

Adani Power a power project development company, (whose IPO was recently open for public subscriptoin) promoted by Adani Enterprises will list its equity shares on the bourses on August 20, 2009.

The company has fixed the issue price at Rs 100 per equity share for its initial public offering of 301,652,031 equity shares of Rs 10 each.

The price band for Adani Power IPO was Rs 90 to Rs 100 per equity share. The issue got subscribed 21.64 times with the Qualified institutional buyers (QIBs) portion being subscribed 39.47 times; the non-institutional portion was subscribed 8.62 times; and the retail portion was subscribed 2.96 times as per the data released on the NSE website. The issue had opened on July 28, 2009 and closed on July 31, 2009.

The company raised Rs 3,016.52 crore via this IPO. It intends to utilize the net proceeds of the issue to part finance the construction and development of Mundra Phase IV Power project for 1,980 MW and fund equity contribution in its subsidiary, Adani Power Maharashtra Limited, to part finance the construction and development cost of power project for 1,980 MW at Tiroda, Maharashtra.

The net issue constituted 13.47% of the post-issue paid-up equity share capital of the company.

Now, we have to wait until Thursday, the 20th of August, 2009 when the issue gets listed, to see if the investors get lucky with the listing gains... What do you think... Please put your comments below...


Market Outlook and Tips for 18th August 2009

The US markets have ended in deep red for the last session of trade.
The European markets also followed the same trend.
Asia has opened Flat.

We can expect the Indian Markets to open flat to positive.

NIFTY Technicals :
Current Spot : 4387.9
Supports : 4341.6 & 4295.4
Resistance : 4467 & 4546.2

Day Trading Tips:

DLF : Buy above 368 for targets of 375 and 379. SL of 359

ICICI Bank : Buy above 705 for targets of 715 and 722. SL of 699

RNRL : Buy above 79 for targets of 81 and 83. SL of 77.50


Aug 17, 2009

Week Starts with Panic Monday; Nifty below 4400

On the start of a new week the Sensex fell 626 points to close at 14,785 while the Nifty lost 192 points to close the day at 4,388.

It happened to be a shattering start of the week as the Indian markets kept trading in the red in the second consecutive session mirroring Friday.

The Benchmark Index Sensex has lost over 700 points in the last couple of trading days.

The 6% downfall in the Chinese markets was the major sentiment shatterer on Monday as the Shanghai Composite index in China witnessed the biggest down fall for the first time since November last year.

The cues from the rest of the world were also not at all encouraging. Selling pressure was seen in the equity marets across Asia, Europe and also the US Futures markets.

Now Coming back to India, it was an all round selling seen on the Indian bourses.

Even the Mid-Cap and the Small-indices ended in deep red. The BSE Mid-Cap index fell 3.7% and the Small-Cap index declined 3%.

The BSE Sensex slipped by 626 points at 14,785. The index opened at 15,284 which was an intra-day high for Sensex and a later hit a low of 14,740. On the other hand, the NSE Nifty lost 192 points to close at 4,388.

All the 30-components of Sensex ended in the red. The major losers were Reliance Industries, ICICI Bank, L&T, ITC, Infosys and SBI.

In the broader market, major losers included HDIL, IFCI, United Phosphorous, LITL, Videocon Industries and Jet Airways.


NTPC approves filing Special Leave Petition in RIL case

The gas battle is bubbling under pressure from all sides. Reliance Industries in a letter to the power and oil secretaries on August 12 has said all issues have been resolved with NTPC for signing gas sales and purchase agreements (GSPAs) for four power plants that are not in dispute.

The NTPC board has discussed the Solicitor General's view on the RIL case and had approved the filing of a special leave petition (SLP) in the Supreme Court.

The SLP will be finalised post the ministerial panel meet and filed sometime this week.


Aug 16, 2009

Market Outlook and Tips for 17th August 2009

On Friday, 14th August, 2009, the markets closed weak after a day long volatility amidst profit booking after previous days rally.

The Nifty traded extremely volatile within the range of 4561 and 4615 with support at 4560 and resistance at 4610

Nifty finally closed at 4580.05 losing 25 points or approx. 0.54 %

The Intraday Support for the Nifty shall be 4530 & 4488 which the resistance can be seen at 4630 & 4674.

Trading Tips for 17th Aug, 2009:

Buy BHEL above 2210 with a Stop Loss of 2190 for a target 2248.

Buy NTPC above 208 with a Stop Loss of 204 for Target 211

Sell ACC below 827 with a Stop Loss of 833 for a Target 810.

Sell ONGC below 1215 with a stop Loss of 1226 for a Target 1191.


Aug 15, 2009

Happy Independence Day to all Indians!!! wishes a Happy Independence Day to all the Indians especially our Readers on the eve of the 62nd Independence Day (15th August, 2009) of INDIA. The day has remarkable importance in the Indian history. It reminds us, the contribution, sacrifice and commitment of our martyrs for our independence.

After facing slavery of more than 300 years, India got independence on August 15, 1947. We got our dignity back along with the right to live without any external interference. We progressed leaps and bounds in the last 62 years. Now we are among the few fastest developing countries in the world. We have a different identification of being the largest democracy in this universe. Our growth rate in terms of Science and Technology, Space and Military Research, Information Technology and Telecommunication is competing with several developed countries.

Our vision of Unity in Diversity, Secularism and Global peace is ideal for the whole world. We are proud of our values today. However, we need to act accordingly to continue the rich legacy of our ancestors. As a true Indian we have to understand our responsibility and duties. Together we are responsible for carrying our rich cultural heritage, customs, and religious values to our next generation, so that they can feel proud in being and Indian.

Indian has the potential to excel and develop as a leader in all segments. We need to do our best to conserve the sovereignty, pride and feeling of being a part of such a glorious country.

It is possible only if, we will perform our duties well and fulfill all responsibilities of being a true Indian to make it a more prosperous, developed and self dependent country.

Wishing You All A Very Happy Independence Day Once Again from EquiTipz !!!

Happy Investing and Happy Earning for the upcoming year in our own free INDIA... :-)


Aug 13, 2009

Market Outlook and Tips for 13th August 2009

On Wednesday 12th August, 2009, the markets saw strong buying at lower levels after opening weak and initially going below 4300 levels. Aggressive buying pulled the markets up as the investors made entry at lower levels below 4300.

As predicted yesterday (Stock Advice and Market Outlook for 12th August 2009), for nifty 4385 proved to be the intraday support and though it slipped below it for some time but witnessed heavy buying at those levels.

To end the day, Nifty finally closed at 4457.50 losing 14 points or approximately 0.31 %

In today's session, the following targets were achieved as per Our Call:

BHEL No Profit No Loss
NTPC No Profit No Loss
SUZLON Target Achieved
MARUTI Target Achieved
ACC Target Achieved

Trading Tips for 13th August, 2009:

Buy Tips:

Buy TATA STEEL above 445 with a Stop Loss of 441 for a target of 452

Buy NTPC above 211 with a Stop Loss of 206 for target of 212

Buy SUZLON above 86 with a Stop Loss of 84 for a target 89

Sell Tips:

Sell BHARTI AIRTEL below 403 with a Stop Loss of 407 for a target of 396

Sell ACC below 824 with a Stop Loss of 833 for a target of 810

Sell UNITECH below 88 with a Stop Loss of 88 for a Target 84.


Aug 12, 2009

NHPC IPO Closes today, oversubscribed 23 times!

The initial public offering (IPO) of India's biggest hydroelectric power generator, NHPC, that opened for Subscription on the 07th of August, 2009, closed today for subscription. The issue has received a brilliant response from all the categories of investors.

Also Read:
Subscribe to the NHPC IPO : Experts

According to the data released on the NSE website, the NHPC IPO has already been subscribed for a whopping 23.44 times so far. It has received bids for more than 3,932 crore shares as against the issue size of 167.73 crore shares.

However, this great response to an issue on the last day of listing has not been uncommon on the history of IPOs.

Till 14 hours IST today itself, the qualified institutional investors were the major supportive investors with their portion being subscribed 23 times. Non-institutional and retail investors' portion subscribed close to 4.4 times and 2 times, respectively.

The issue opened with an initial public offering (IPO) of 1,67,73,74,015 equity shares of Rs 10 each for cash at a price of Rs 30-36 per equity share aggregating Rs 5,032-6,039 crore. The price band has been fixed at Rs 30-36 per equity share of face value Rs 10 each.

The issue comprised a fresh issue of up to 1,11,82,49,343 equity shares by NHPC and an offer for sale of 55,91,24,672 equity shares by the President of India acting through the Ministry of Power, Government of India. The issue comprised a net issue to the public of 1,63,54,39,665 equity shares and a reservation of 4,19,34,350 equity sharess for subscription by eligible employees at the issue price.

The issue shall constitute 13.64% of the post-issue capital of NHPC. After the issue, the shareholding of the President of India shall be approximately 86.36% of the post-issue paid-up equity share capital of the company. NHPC will raise around Rs 6,038.55 crore from the issue at Rs 36/share, a higher price band. Out of which, the government will receive Rs 2,012.85 crore and will be used for infrastructure projects. The rest of the amount i.e. Rs 4,025.7 crore , the company will use for its power projects.

Aided by the very good response from the investors, the issue had been oversubscribed 7 times on the first day itself.


Aug 11, 2009

Stock Advice and Market Outlook for 12th August 2009

On Tuesday, 11th August, 2009, the markets witnessed strong buying at lower levels after opening flat in the early trades. Aggressive buying pulled the markets back to a somewhat high level after a free fall in the last 3 consecutive sessions of trade as the investors made entry at very attractive lower levels.

As predicted in the yesterday' article (Stock Advice and Market Outlook for 11th August 2009), 4387 proved to be the intraday support for the nifty and 4494 came out to be the intraday resistance for the market.

Nifty finally closed at 4471.35 gaining 34 points or approximaltely 0.76 %

We proudly say that in today's session, the following targets were achieved as per Our Call:

ABAN Offshore Target Achieved

AXIS BANK Target Achieved
SUZLON Energy Target Achieved
ICICI BANK Target Achieved

AMBUJA CEMENT Target Achieved

Trading Tips for 12th Aug, 2009

If Nifty Trades above 4488 then Buy:

Buy ABAN Offshore above 1080 with a Stop Loss of 1065 for a target of 1120.

Buy BHEL above 2157 with a Stop Loss of 2134 for a target of 2202.

Buy NTPC above 209 with a Stop Loss of 206 for a target of 213.

Buy SUZLON above 85 with a Stop Loss of 82 for a target of 87.

If Nifty Trades below 4452 then Sell:

Sell MARUTI below 1286 with a Stop Loss of 1306 for a target of 1267.

Sell ACC below 814 with a Stop Loss of 823 for target of 801.

Sell AMBUJA CEMENT below 98 with a Stop Loss of 100 for a target of 96


Aug 10, 2009

Stock Advice and Market Outlook for 11th August 2009

On Monday, 10th August 2009, the markets witnessed extreme volatility aided by heavy selling pressure across all the counters. Intense profit booking on a positive opening and huge selling by FIIs (Foreign Institutional Investors) on poor monsoon expectations pulled the markets down.

As predicted yesterday 4432 proved to be the intraday support for the Nifty and 4542 proved to be the intraday resistance for Nifty.

Nifty finally closed at 4437.65 losing 44 points or approximately 0.98 %

Intraday Support for the market shall be 4385 & 4340 while the market will experience a resistance at 4490 & 4530.

Trading Tips for 11th Aug, 2009:

If Nifty Trades above 4455 then Buy-

Buy ABAN Offshore above 1040 with a Stop Loss of 1022 for a target of 1090.

Buy BHEL above 2158 with a Stop Loss of 2135 for a target of 2200.

BuyAXIS BANK above 846 with a Stop Loss of 840 for a Target of 865

Buy SUZLON above 81 with a Stop Loss of 81 for a Target 85

If Nifty Trades below 4415 then Sell-

Sell MARUTI below 1240 with a Stop Loss of 1255 for a Target of 1218.

Sell ICICI BANK below 714 with a Stop Loss of 723 for a Target 704.

Sell AMBUJA CEMENT below 98 with a Stop Loss of 102 for a Target of 96

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Stock Advice and Market Analysis for 10th August 2009

On Friday, 7th August 2009, the markets witnessed heavy selling pressure across all the counters, with the worries over poor monsoons this year across the country.

4480 proved to be the intraday support for the Nifty.

Nifty finally closed at 4481.40 after losing 104 points or approx. 2.27 %.

Intraday Support for the market shall be between 4432 and 4385 while the resistance can be seen at 4542 & 4588.

Best Strategy for the day shall be to:-

Buy above 4505 with a Stop Loss of 4450.

Sell below 4460 with Stop Loss of 4510.

Trading Tips for 10th Aug, 2009:

If Nifty Trades above 4506 then Buy

Buy BHEL above 2192 with a Stop Loss of 2165 for a Target of 2235.

Buy AXIS BANK above 821 with a Stop Loss of 811 for a Target 831.

Buy GAIL above 322 with a Stop Loss of 317 for a Target of 326.

If Nifty Trades below 4458 then Sell

Sell MARUTI below 1285 with a Stop Loss of 1302 for a Target of 1264.

Sell ICICI BANK below 733 with a Stop Loss of 743 for a Target of 722.

Sell RCOM below 392 with a Stop Loss of 393 for a Target of 383.

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Aug 8, 2009

What is an IPO? :: What, How and Why of an IPO

With the market conditions being worse during the last couple of months, we did not see any company coming out with an Initial Public Offer (IPO).

But now that the things are getting back to normal, we keep on listening to the IPO talk all around us with the companies again coming in to collect money from the Public.

We all keep listening about this term all the time. But after all, What is an IPO?
This article will answer all your questions about IPOs. So, just read on...

An Initial Public Offering (IPO) is essentially the birth of a company in its public form. It changes many things about the way that management runs the firm. IPOs are more common during the bull markets like the one that seems to be ongoing with the market about doubled in a period of 2-3 months.

In cases when a private firm is in need of capital for requirements that exceed its ability to self-finance, there are a few other ways the management and the firm's ownership can utilize to provide this needed capital. These entities include debt, private investment or a public investment through an IPO. Each of these alternatives is evaluated based on the current and projected needs of the company in cash.

In an Initial Public Offering, a company's owners sell a portion of the firm to the public investors. The company negotiates a sale of its stock to one or more investment banks that act as an underwriter for the offering. The small number of underwriters further sell their stock to the much larger number of investors in the public markets.

The Underwriters are in turn, compensated through the fees and underpricing in the stock that is being sold to them by the firm. The Underwriters are in a way taking a risk that they will be able to sell the stock they bought from the firm for more than that they paid to the firm.

The underwriter provides value to the firm by making large purchase and organizing an orderly sale of their initial stock.

Other institutional and retail investors can purchase the stock from the public market but it is totally not strange for an IPO to lead to a large and fast runup in the stock's price in case there is a demand more than the supply. On the contrary, selling pressure can push prices back down and a lot of volatility is very common as was seen for the Reliance Power IPO that was listed in the Indian Markets.

There is statistical evidence available to suggest that investing in new IPO's can definitely outperform a generic stock index.

Historical performance and financial data is not as easily available for a company issuing a new IPO as it is for a company that has been already been available in the public for a long time. This increases the number of things that are not known about the firm and can make these investments very risky. However, there is some information available about the firm through the public filings made before the offering.

However, despite the risks, it is likely that IPOs will continue to attract the investors because they are usually issued when the companies are in a transitional phase. Companies in transitions are exciting and interesting to the investors. The prospects for a big win and the possibility of becoming another "IPO-millionaire" can be very attractive.

Usually for IPOs as the history depicts, the IPOs have registered listing profits for the investors on back of the high demand wihch leads to oversubscriptions. But I would definitely suggesy you to understand the risks before you take a chance.

Happy Investing... :)

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Aug 7, 2009

NHPC IPO oversubscribed 7 times on the first day!!

The NHPC's (National Hydroelectric Power Corporation) initial public offering (IPO) that opened today, was oversubscribed a little over seven times according to the data available with the NSE (National Stock Exchange).

Most of the bids were received from institutional investors The company had offered 167.73 crore shares with a face value of Rs.10 each. The price band of the IPO was fixed between Rs.30-36.

The portion kept for qualified institutional buyers got overbid a little over six times, while retail individual investors' bid went oversubscribed by 0.09 percent.

Being a public sector firm, it got attention from various categories of investors. With this IPO, the company has plans to raise over Rs. 6,000 crores from the market, the second largest public offering after Reliance Power.

This is the first stake sale by a state-run company in the last one and a half years, after REC raised over Rs 1,600 crore in February.

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Market closes 350 points lower at 15,150 on 7th August 2009

Today the Indian markets closed sharply lower for a second consecutive day as investors booked profits after a sharp rise in the country's benchmarks Sensex and the Nifty. Poor monsoon and weak global markets played the role of making the things worse for the Markets on second day in a row.

Bombay Stock Exchanges Sensex closed at 15152.69, down 361.34 points or 2.33 per cent. The index touched an intra-day low of 15104 and an high of 15501.94.

National Stock Exchanges Nifty ended at 4474.35, down 111.15 points or 2.42 per cent. The broader index hit a low of 4463.95 and high of 4591.90.

BSE MidCap Index was down 2.36 per cent and BSE Smallcap Index declined 2.01 per cent.

Amongst the sectoral indices, BSE Auto Index fell 4.03 per cent, BSE Realty Index slipped 3.31 per cent and BSE Bankex declined 2.88 per cent.

Reliance Communications (-6.12%), Maruti Suzuki (-5.87%), Mahindra & Mahindra (-5.56%), Jaiprakash Associates (-5.53%) and Tata Power (-5.06%) were amongst the Sensex losers.

NTPC (0.38%) was the only Sensex gainer in the Todays Session.

Market breadth was negative on the BSE with 1919 declines and 748 declines.

(All figures are provisional)

News Source: Economic Times

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Aug 6, 2009

Mutual Funds :: Advantages of Investing

As an investor, you would like to get maximum returns on your investments, but you may not have the time to continuously study the stock market to keep track of them. You need a lot of time and knowledge to decide what to buy or when to sell. A lot of people take a chance and speculate, some get lucky, most donot. This is where mutual funds come in. Mutual funds offer you the following advantages:

Professional management. Qualified professionals manage your money, but they are not alone. They have a research team that continuously analyses the performance and prospects of companies. They also select suitable investments to achieve the objectives of the scheme. It is a continuous process that takes time and expertise which will add value to your investment. Fund managers are in a better position to manage your investments and get higher returns.

Diversification. The cliche, "don't put all your eggs in one basket" really applies to the concept of intelligent investing. Diversification lowers your risk of loss by spreading your money across various industries and geographic regions. It is a rare occasion when all stocks decline at the same time and in the same proportion. Sector funds spread your investment across only one industry so they are less diversified and therefore generally more volatile.

More choice. Mutual funds offer a variety of schemes that will suit your needs over a lifetime. When you enter a new stage in your life, all you need to do is sit down with your financial advisor who will help you to rearrange your portfolio to suit your altered lifestyle.

Affordability. As a small investor, you may find that it is not possible to buy shares of larger corporations. Mutual funds generally buy and sell securities in large volumes which allow investors to benefit from lower trading costs. The smallest investor can get started on mutual funds because of the minimal investment requirements. You can invest with a minimum of Rs.500 in a Systematic Investment Plan on a regular basis.

Tax benefits. Investments held by investors for a period of 12 months or more qualify for capital gains and will be taxed accordingly (10% of the amount by which the investment appreciated, or 20% after factoring in the benefit of cost indexation, whichever is lower). These investments also get the benefit of indexation.

Liquidity. With open-end funds, you can redeem all or part of your investment any time you wish and receive the current value of the shares. Funds are more liquid than most investments in shares, deposits and bonds. Moreover, the process is standardized, making it quick and efficient so that you can get your cash in hand as soon as possible.

Rupee-cost averaging. With rupee-cost averaging, you invest a specific rupee amount at regular intervals regardless of the investment's unit price. As a result, your money buys more units when the price is low and fewer units when the price is high, which can mean a lower average cost per unit over time. Rupee-cost averaging allows you to discipline yourself by investing every month or quarter rather than making sporadic investments.

The Transparency. The performance of a mutual fund is reviewed by various publications and rating agencies, making it easy for investors to compare fund to another. As a unit holder, you are provided with regular updates, for example daily NAVs, as well as information on the fund's holdings and the fund manager's strategy.

Regulations. All mutual funds are required to register with SEBI (Securities Exchange Board of India). They are obliged to follow strict regulations designed to protect investors. All operations are also regularly monitored by the SEBI.

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Aug 5, 2009

Subscribe to the NHPC IPO : Experts

The Experts are coming out with their research reports on NHPC's initial public offering (IPO). NHPC will open for subscription with an IPO of 167.73 crore equity shares of Rs 10 each on August 7, 2009 and will close on August 12, 2009. The price band is fixed at Rs 30-36 per share.

The experts are recommending the investors to subscribe to the issue.

According to the research firms, the business model of NHPC is robust. There is a visibility in Power sector and significant expansion at NHPC. The long term investors should apply for the shares. The response for the recently opened Adani Power IPO indicates that there is potential for listing gains also.

The investors are recommended applying the IPO in the following way for Retail clients (applying upto Rs.1 Lakhs):

Fill all the 3 options at Rs.36, Rs.35 and Rs.33, with different No. of Shares that you Bid for. If the Government decides to allot at price lower than upper band, the Number of shares allotted will be higher.

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Aug 4, 2009

Stock Advice and Market Analysis for 04 August 2009

The US markets have ended higher in the last trading session.
European markets showed the same behaviour by ending in the green.
The Asian Markets have opened Positive.

After a good start to the week yesterday when the market closed just near to the 16,000 mark, today we can expect the Indian Markets to open positive (Higher) further and cross the 16,000 barrier today.

The support for the Sensex is 15800 and the logical technical target is at 16050-16500.

Nifty: (4711) the support for the Nifty is at 4620 and logical technical target at 4795-4930

Day Trading Tips:

NTPC : Buy above 218 for targets of 222 and 225. SL of 215

RNRL : Buy above 84.10 for targets of 85.50 and 86.90. SL of 83.25

Praj Ind : Buy above 100.10 for targets of 102.50 and 104.10. SL of 99.20

Aban Offshore : Buy close to 1110.50 for targets of 1150.00 and 1170. SL of 1070.50

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Aug 3, 2009

Nifty Crosses 4700; makes a new 52-week High

The markets moved northwards with the start of a new week and clearly mirrored the European markets and closed at 52-week highs, led by gains in auto, realty and metal stocks.

Indices turned choppy after a positive start as market lacked triggers from domestic front post earnings season. It got the push from European peers who also hit new highs of 2009 after earnings threw positive surprises.

Bombay Stock Exchange?s Sensex closed at 15,924.23, up 253.92 points or 1.62 per cent. The index hit a 52-week high of 15963.36 after touching a low of 15,608.40 in early trade.

National Stock Exchange?s Nifty settled at 4711.40, up 74.95 points or 1.62 per cent after hitting a new 52-week high of 4723.30.

Meanwhile, clearing the government?s stand on the gas dispute between Reliance Industries and Reliance Natural Resources, Petroleum Minister, Murli Deora said the government had no role in the Ambani family dispute. "We have nothing to do with the private dispute of two industries or industrialists. However, we have everything to do with protecting the interests of the government and public interest, this is our constitutional and legal obligation," he said. This saw shares of RIL close 2.96 per cent higher while RNRL was up 0.66 per cent.

The BSE Midcap Index surged 2.36 per cent and BSE Smallcap Index gained 1.74 per cent. Sector wise, BSE Auto Index surged 4.6 per cent, BSE Realty climbed 4.19 per cent and BSE Metal Index advanced 3.41 per cent.

Among sectors, auto makers expect the growth momentum in sales to continue in the next few months, especially in the upcoming festival season. And that after posting double-digit jump in sales in July. Car sales in the domestic market registered a 28% growth to 67,528 units in the month. The country?s largest car maker, Maruti Suzuki India (MSI), reported a 33% jump in sales to 78,074 cars. Utility vehicle major Mahindra & Mahindra?s sales grew 27% to 21,957 vehicles in July.

Market breadth was positive on the BSE with 1761 advances and 953 declines. The biggest Sensex gainers were Hindalco Industries (7.98%), Mahindra & Mahindra (6.88%), Reliance Communications (5.17%), BHEL (5.15%) and Tata Steel (4.52%).

Hindustan Unilever (-2.25%), ITC (-0.7%), HDFC Bank (-0.39%) and HDFC (-0.17%) were the losers.

In another development, Hindustan Unilever said it is planning to lease its famed headquarters in south Mumbai--to top corporate or banks. The company is understood to have mandated Jones Lang LaSalle Meghraj to handle the deal.

European markets were upbeat as positive earnings from corporates gave hopes of some recovery in the economy. At 5:15 pm, FTSE 100 was up 1.59 per cent, CAC 40 gained 1.55 per cent and DAX moved 1.63 per cent higher. US markets are also likely to have a gap-up opening. Dow Jones futures were up 0.95 per cent, S&P 500 futures gained 1 per cent and Nasdaq 100 moved 1.15 per cent higher.


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