GOLD ETF Mutual Funds - Most Hassle-free Option To Invest In Gold

Gold has suddenly become a preferred investment option thanks to economic turmoil. Not surprising, as it was always considered a safe hedge against such developments.

However, it need not necessarily come into your investment radar only during uncertainty. According to investment experts, gold should always be part of the portfolio of a person who wants to preserve his wealth.

Diversification is an important to tool to preserve ones wealth over a long period. When we talk to our clients we tell them fixed deposits, corporate deposits, stocks, gold... all should be part of their portfolio , says a wealth manager with a bank. We explain to them that spreading their investments across asset classes will help them withstand the bad performance of a particular investment.

For example, recently investments in gold fetched handsome returns when stocks were faring badly , he adds. However, the new crop of investors have left financial advisors a worried lot. They say most new investors have unrealistic expectations from gold. Most remember that gold had given very high returns a few months ago. They believe it would happen often, says the wealth manager.

Transcend Consulting director Kartik Jhaveri says, Investors should not focus on such sporadic returns. It is mainly because of volatility. For example, the dollars weakness, crude prices going up, uncertainties in the global economy would have a positive impact on gold prices. He says, Over a long period gold would give around 6-8 % returns. If you look at the returns in 10 years, it would just about beat inflation. Another dilemma faced by investors, point out consultants, is that they dont have a definitive idea about which is the ideal form of investing in gold. Many investors apparently would still prefer buying gold coins and bars sold by reputed banks (if not jewellery) and safe-keep them in their bank locker.

This method, according to investment experts , is the least preferred and inefficient option . This because most banks dont buy back gold and the investor must then turn to retailers to strike a good deal. Meanwhile in the retail market, often jewellers prefer exchanging the coins or bars with ornaments itself rather than pay cash to such customers. So, if you are investing in physical gold, be prepared for some hiccups when it comes to liquidating it. Jhaveri says it is better for investors to go for exchange-traded gold funds, especially if they are looking for a hassle-free investment option. These are mutual fund schemes investing in gold that you can buy and sell in a stock exchange. Since you dont own gold in the physical form, you dont have to worry about liquidating it. You can sell the units of the scheme in a stock exchange at prevailing prices. Though it may look the most convenient form of owning gold, the idea is yet to catch up with common investors, say financial consultants.

If you are a bit more adventurous, then you may consider directly owning stocks of some gold mining companies. Sure, they carry more risk, but they can also reward you, says Jhaveri. If you have even more appetite for risk, you may even consider trading in gold futures in the commodity market.

Small Cap Stock To Buy - A Multibagger Potential

Have a look at this low valued small cap stock which could be a multibagger once economic condtions change. You may buy stocks of this company as small part of your portfolio to make gains whenever the business comes back on track and stock gets re-rated in stock markets.

How much would it cost to set up a company manufacturing 6,600 tonnes of calcium hypochlorite, 9,900 tonnes of stable bleaching powder, 2,400 tonnes of monochloro acetic acid, 49,500 tonnes of sulphuric acid, 33,000 tonnes of chlorosulphonic acid, 65 tonnes of bromine across four factories in Andhra Pradesh and Tamil Nadu and allied services like a 9MW biomass power project? Certainly not Rs14 crore, which would hardly cover the cost of land, factory and office buildings and a few basic facilities. The cost would probably run into Rs100 crore. But just Rs14 crore is the market-cap of SRHHL (formerly Sree Rayalaseema Hi-Strength Hypo Ltd).

Market Cap 96.79
EPS (TTM) 6.78
P/E 2.12
P/C 1.24
* Book Value 23.81
Price/Book 0.60
Div(%) 0.00
Div Yield(%) -
Market Lot 1.00
Face Value 10.00
Industry P/E 7.56

Nearly 45% of SRHHL’s total turnover comes from calcium hypochlorite which is exported all over the world. The company belongs to the prosperous TGV group of Andhra Pradesh which has other businesses such as caustic chlorine (Sree Rayalaseema Alkalies and Allied Chemicals), a three-star hotel, theatres and educational institutions.The problem is that the com-pany’s turnover for 2007-08 hardly budged from Rs115 crore to Rs121 crore. Also, it reported a lower profit after tax of Rs4.75crore, down from Rs5.61 crore.

The EPS (earning per share) was Rs4.66 but SRHHL skipped dividend ostensibly because the company was expanding the capacities of all its production units and needed to conserve cash. It has now increased its production capacities but demand has turned sluggish. You would think that it would be saddled with higher capacity for a while. Interestingly, over the nine months of the current year, sales and profits have been rocketing. The turnover was Rs163 crore, which was 135% of the entire turnover of 2007-08. Profit after tax over nine months was Rs12.88 crore, a surprisingly large jump. The improved performance has been possible due to higher volumes and better realisation in exports due to a weak rupee. For 2008-09, the company should post sales of Rs210 crore; and net profit should be Rs20.75 crore, translating into an EPS of Rs20.36.

Apparently, thepromoters have been increasing their stake by acquiring shares from the open market. At the current market price of Rs14, the market-cap is just Rs14.4 crore, although gross block alone is Rs65 crore and net block is Rs55crore. The stock is trading at just 0.72 times its EPS of 2008-09.

Shareholding pattern
Promoters: 41.57%
Financial institutions / Banks: 42.20%
Public shareholding: 16.24%

Small companies always suffer from low valuations but a PE ratio of 0.7 looks just too cheap.Listed on both the BSE and the NSE, the scrip is probably going cheap due to the poor investment climate at present and investor ignorance about this company. Worth a bet but not a stock for the long term, given the way the company’s financials are gyrating.

Stocks Trading At All-Time High P/E Ratio

Some of the stocks are trading at their all-time high price to earning ratio. Rise in stock price in a declining market normally passes off as a sign of healthy fundamentals. But when the Indian and global markets were into a free fall last year, there was almost no stock in the domestic market that bucked the trend on the basis of business performance. Should you buy stocks at very high P/E ratio? Let's try finding it out.

Even though NIfty at 4400 levels is still 50-60 per cent short of its all-time high of 6287 on 8 January 2008, market exuberance has led to many companies’ share prices raising their price to earnings (P/E) ratios — number of times the market price is more than the ‘earnings per share’ — to extremely high levels.

While in the western markets, P/Es don’t go above 100 even at the peak of a bull run, in India P/Es are already going past the 100 mark even though the market is nowhere near its peak. Between 1 May and 10 June, the rampage in the market has caused at least 10 P/Es to go past 100 (see ‘Significant Numbers’), the reigning leader being MMTC. Another 11 stocks had P/Es between 50 and 100, including Aditya Birla Nuvo, Kotak Mahindra Bank, IRB Infrastructure Developers, Jai Corp., Adani Enterprises and Television Eighteen India. P/Es aside, the traded prices of five Sensex or Nifty stocks and 10 BSE-200 index stocks have crossed their earlier all-time highs during this period. “Five index stocks out of 50 total index stocks is a decent number to warrant notice,” says Anand Tandon, head of equities at Brics Securities.


Fundamentals can only partly explain the euphoric sentiments. “It may be due to performance over expectations by the market from these companies in the next two years,” says Nandan Chakraborty, vice president-research at Enam Securities. The stocks reaching their all-time P/E or traded peaks are not from two or three sectors alone. They are spread out across five or six sectors. But sectors such as consumer goods and pharmaceuticals, which were not exactly the darlings of the stockmarket in the bull rally of 2006-07, are standing out in the ongoing current rally much more than others.

So are some other sectors. Realty and infrastructure stocks are still registering extreme valuations similar to what they did about two years ago. In two-wheelers, Hero Honda touched an all-time high of Rs 1,588 on 19 May. “In cement and auto sectors, the demand growth has been outstanding,” says Chakraborty. “Such sectors relatively did not participate in the 2007 bull rally and in last year’s bear phase, they got knocked out like every other stock.”


So, should investors buy stocks at P/Es of 50 and above? Is there any further momentum left in these stocks? Under the current circumstances, restraint may be better than adventurism to avoid the blood bath of the recent past.
Source: Businessworld Issue Dated 16-22 June 2009

Nile Ltd - Multibagger

Nile is an ISO 9001 certified Company manufacturing world class Glass Lined Equipment, Pressure Vessels, Lead and Lead Alloys. Check out this small cap to consider buying stocks in small chunk to add in your portfolio.
Nile is a different class of company; it operates in the capital goods space and also into commodity space.It manufactures the glass line reactors and pressure vessels particularly for the pharma industry and is also into processing of lead and lead alloys from waste lead. It has a tie up with Amar Raja for supplying lead.It is uniquely positioned company with very low equity. It is positioned ideally for a take off from here. Somewhere down the line, value addition would come to the company’s bottomline in a very big way both from glass line reactors and pressure vessels and lead.

In 2-4 years time period, Nile can be a multi-bagger stock.

Market Cap 19.48
EPS (TTM) -
P/E -
P/C -
* Book Value 84.38
* Price/Book 0.77
Div(%) 40.00
Div Yield(%) 6.16
Market Lot 1.00
Face Value 10.00
Industry P/E 23.20

Shareholding pattern
Promoters shareholding: 45.55%
FI's/Banks: 12.20
Public shareholding: 42.25%

India Is In Long Term Bull Run - Rakesh Jhunjhunwala On Stock Markets

The last three months have seen markets rebound wordwide. India has also joined the party. The election results have further fuelled the rally and raised expectations of reform and change in India. It has reaffirmed faith in India’s democracy and political system.

The rise in India has been accompanied by tremendous breadth and volumes. Going by technical factors, in the short term, we are most likely headed higher. I think the rally will also be driven by the rise in the risk appetite worldwide as is demonstrated by the weakness in the US dollar. In the medium term, what happens in the market will depend, in a large measure, upon the performance of the international markets and the extent to which the new Indian government meets expectations. In the long term, I’m of the firm opinion that the Indian bull market is very much alive and kicking. I think the triggers for the market going ahead can be broadly classified into domestic and international factors.

Domestically, the most important aspect is government policy, mainly the thrust on reforms. I will first discuss reforms which, to my mind, are most important for India and its economy and, by extension, our stock markets over the longer term. Top of my list is a comprehensive review of the subsidy regime in India. In my opinion, all subsidies should be relooked at with an open mind. One possible alternative could be to give cash compensation every month to a lady in each needy household.

This will put an end to the misuse of the subsidy regime and will allow for free pricing and competition in many sectors. Agriculture, too, I feel, requires special attention. We have to work towards a second green revolution as I feel there will be a surge in demand globally for agricultural products. Then, we need to frame policies which facilitate investment and economic activity. We need to do away with the hurdles in land acquisition for vital projects by having an effective legislation. It should be ensured that environmental policies do not become unnecessary impediments to projects. We must speedily review some of our archaic laws like the Indian Telegraph Act, 1884. Then, technology can be used to cut through the bureaucratic red tape.

In the short to medium term, the triggers for the market would be a change in FDI laws in insurance and banking, PSU disinvestment, labour law reforms and introduction of GST by April 1, 2010 as planned. Markets are also hoping for a review in the guidelines for foreign investment in stock markets. We need to allow any foreign entity, including individuals, to invest in our stock markets with a simple declaration certified by a qualified banker’s “know your client” rules.

International events, too, would influence the market. India’s relationships with its unstable neighbours, the stability of the international financial system and the value of the dollar, the pace and the quantum of economic recovery worldwide, especially in the developed world, would all be reflected in the gyrations of the Sensex and the Nifty. In the end, let me point out that in the last 6-7 years, Indian stock market has outperformed the markets across the world. I feel this will continue over the long term as India will remain one of the fastest-growing economies in the world. Also, India has one of the highest saving rates in the world coupled with a very well organised and regulated stock market.

Very little of this savings today comes into the stock markets. With the development of telecommunications, spread of television and growth in literacy, more of these savings will find their way into the equity markets. I think most analysts are vastly underestimating the effect of this mountain of savings entering the stock market over a longer term horizon.
Source: Article In BusinessToday By Rakesh Jhunjhunwala

ATUL Ltd - Multibagger

Atul Ltd is a diversified Specialty chemical company, engaged in manufacturing of - agrochemicals, Bulk chemicals, Dyes, intermediates and polymers. It is also undertaking toll manufacturing of herbicides & custom manufacturing of bulk drugs for large MNCs. Company is also increasing capacities of various products mainly by de-bottlenecking, so as to involve less capital expenditure. It is also expanding capacities of - bulk chemicals & Intermediates; Vat & Reactive dyes; Pharma & Intermediates and in polymers divisions. They will mostly go on stream in current year and thus lead to significant growth for company from current year onwards.

To add value, Atul is moving up from basic building block kind of chemicals to niche value added down stream products in each category. It is increasing the sales of branded products significantly.

Company is world's largest manufacturer of - Para cresol, Para Anisic aldehyde, Para Anisyl alcohol and curing agent. It is also second largest manufacturer of - high performance colourant and Vat dyes. Its third largest manufacturer of - Indoxcarb insecticides and fourth largest for 2,4-D herbicides. [see details of products on next page.]

Company is technologically very advanced and has perfected a number of difficult chemical processes/technologies e.g. Phosgenation, Hydrogenation, Bromination and Sulfonation. The research led technology improvements and cost reduction in these processes, makes it quite competitive and quality producer of a number of key products.

Attractive Valuations:
Based on current year's earnings outlook, which is quite robust, the stock is available at about 2.5X 2010 earnings.

If we go by Price to book value, stock is again available at less then half of the 2010 expected book value of about Rs 140/-.

If we go by sales to Mkt cap valuations, the stock is available at 1/6th of the valuation, while recent sale of Mfg assets of Gwalior Chem was valued at around 1:1 to sales.

Further if we value company's Mfg assets, R&D assets and other non core assets [residential & land in Atul town] the total replacement costs may come to many times of present Mkt cap.

From the CMP of Rs 63, the stock can easily touch Rs 150 to Rs 180 within the next 18 months.

Zee + Dish TV + Sun TV - Coverage by Goldman Sachs

According to a report by Goldman Sachs, the media sector is now nearer to the start of a cyclical recovery. Indeed, bottom-up data from India's largest media spenders indicates the possibility of a sequential pickup of 10%-12% for the second half of FY2010 (ending March 2010) and a return to five-year median industry growth thereafter (which was about 14% over past 5 years).

With the digital subscription market having expanded by 29% over the past three months- with only moderate incremental pressure on ARPUs. Even with stocks under coverage having risen an average 67% over past 3 months, valuations remain close to midcycle.

Zee should expand on the strength of its content pipeline (has kept an average 18% market share over the last year, despite increased competition) and higher quality of its revenues as digitization takes off.

Goldman raises 12-month P/E-based target price to Rs229 from Rs190, as we roll over to FY2011 EPS, but retain our 16X mid-cycle multiple.

Goldman downgraded Sun TV (SUTV.BO) to Neutral, as current valuations price in the structural strength in Sun TV's business model. Raises 12-month P/E-based target price to Rs264, from Rs216, as we roll over to FY2011 EPS, but retain our 18X mid-cycle multiple.

Downgrade Dish TV to sell as the best is behind us. 12-m DCF-based target price to Rs30, from Rs24.

Sintex Industries Consistent Performance

The UPA government's focus on increased investment in infrastructure, education and healthcare will likely drive demand for Sintex's building products segment. We believe higher allocation to schemes such as Bharat Nirman, Sarva Siksha Abhiyan and other similar schemes will drive demand for pre-fabricated structures and monolithic
constructions. Signs of early revival in the economy indicate faster growth in demand for composites from the automotive and electrical industries.

As per management the various subsidiaries are expected to show stable performance with demand scenario not deteriorating further.

Existing Investors of Sintex Industries can hold on to the stock and others can Add on Decline sub-200 levels for a target price of Rs 280. The company is expected to report a fully diluted EPS of Rs 25 for FY10 and Rs 28 for FY 2011.

The average trading multiple for Sintex over the last five years has been around 10X one-year forward EPS.

Sun Pharma - FDA seizure to affect US sales

On the back of the FDA's product seizures at Sun's US subsidiary, Caraco on June
25th, Analysts across the street have lowered revenue and earnings estimates by 8-10% across FY2010E-2012E to reflect the impact on Sun's US sales. As a consequence of declining earnings (19% decline in FY10 vs. FY09) and lowered returns in FY10, Goldman's Returns-based TP is reduced by 18% to Rs947 and we downgrade the stock to a Sell with a potential downside of 17%.

Time Technoplast - Multibagger

Kotak Sec has initiated coverage on Time Technoplast with a BUY rating. IT is a market leader in the industrial packaging segment with more than 75% market share. These are used as barrels or containers for packing by users in specialty chemicals, paints, inks, pharmaceutical intermediates, FMCG intermediates, construction chemicals, additives, lube oils and food industry among others.

The company has a technical collaboration with Mauser Germany for packaging products. TTL has key strengths in polymers, technology and innovation. Based on this, it has successfully diversified into high-end polymer based innovative applications for infrastructure, healthcare, auto components, and lifestyle products that typically enjoy higher margins. It has also diversified into telecom battery business and formed a JV with Schoeller Arca Systems for material handling solution and systems.

TTL has diversified into telecom battery business by acquiring Hyderabad based NED energy systems and Bahrain based Gulf Powerbeat WLL. Through the acquisitions, TTL plans to leverage NED's technology in automotive batteries to achieve significant growth for its well established automotive segment where it enjoys strong relationships with major OEMs as Tier-I supplier.

The recently commissioned new plants in India, Poland and Sharjah, expansions, acquisitions and a strong product pipeline would lead to 21.9% growth in revenues and 33.8% growth in profitability for the company in FY10E.

Kotak is positive on the long term growth prospects of TTL and is initiating coverage with a BUY recommendation on TTL with a price target of Rs.60 (50% upside potential) over a 12-month horizon.

Investment & Investing

Investment refers to the concept of deferred consumption, which involves purchasing an asset, giving a loan or keeping funds in a bank account with the aim of generating future returns. Various investment options are available, offering differing risk-reward trade offs. An understanding of the core concepts and a thorough analysis of the options can help an investor create a portfolio that maximizes returns while minimizing risk exposure.
Types of Investments

The various types of investments are:

* Cash investments: These include savings bank accounts, certificates of deposit (CDs) and treasury bills. These investments pay a low rate of interest and are risky options in periods of inflation.

* Debt securities: This form of investment provides returns in the form of fixed periodic payments and possible capital appreciation at maturity. It is a safer and more 'risk-free' investment tool than equities. However, the returns are also generally lower than other securities.

* Stocks: Buying stocks (also called equities) makes you a part-owner of the business and entitles you to a share of the profits generated by the company. Stocks are more volatile and riskier than bonds.

* Mutual funds: This is a collection of stocks and bonds and involves paying a professional manager to select specific securities for you. The prime advantage of this investment is that you do not have to bother with tracking the investment. There may be bond, stock- or index-based mutual funds.

* Derivatives: These are financial contracts the values of which are derived from the value of the underlying assets, such as equities, commodities and bonds, on which they are based. Derivatives can be in the form of futures, options and swaps. Derivatives are used to minimize the risk of loss resulting from fluctuations in the value of the underlying assets (hedging).

* Commodities: The items that are traded on the commodities market are agricultural and industrial commodities. These items need to be standardized and must be in a basic, raw and unprocessed state. The trading of commodities is associated with high risk and high reward. Trading in commodity futures requires specialized knowledge and in-depth analysis.

* Real estate: This investment involves a long-term commitment of funds and gains that are generated through rental or lease income as well as capital appreciation. This includes investments into residential or commercial properties.

Capital, Capital Accumulation

Capital is wealth that may be in the form of money or property (including real estate, stocks and bonds) owned by an entity (a person or business). In the world of investing, the term capital can be used for assets that are invested in order to gain from a rise in their value. Capital accumulation is the growth in the total value of the capital.

Capital: Related Terms

Here are some terms associated with the concept of capital:

Capital Asset: Any asset used for wealth creation.

Capital Gains: The profits made on selling an asset.

Capital Market: This is the marketplace for securities, such as shares and bonds, where businesses try to raise long term funds.

Financial Instruments: Contracts of various combinations of capital assets, serving as a store of value, unit of account, medium of exchange or standard of deferred payment.

• Capital Budgeting: Also known as investment appraisal, it is the planning process that determines the profitability of long term investments.


• Cost of Capital: The cost to a borrower when they are loaned money, or the interest rate on a principal amount that has been loaned.


• Capital Appreciation: The rise in the market value of an asset above the original investment in it.


• Capital Risk: The risk of losing the whole or part of the principal amount spent on an investment.

Connotations of Capital Accumulation

The term capital accumulation can have various connotations in different contexts:

* spending less than what one earns (accumulation in the form of savings).

* making investments in physical assets such as plants, equipment, machinery and raw materials.

* investing in contracts of assets on paper.

* training human capital and increasing its skill base.

There is always a possibility that the return on an investment will differ from expectations. The amount of risk that investors are willing to take is directly proportional to the potential returns on their investments. This is because investors have to be rewarded for taking additional risk. For example, US Treasury bonds are one of the safest and lowest yielding investments. The capital appreciation on stocks is much higher, since they are much more risky (a corporation is more likely to declare bankruptcy than the US government).

Investing Guides, Investment Guide, How To Invest

Investing guides are the resource materials that focus on all aspects of how to invest, from determining the investing budget to deciding what to buy and from understanding the risks involved to identifying investment options with potential.

Types of Investing Guides

On the basis of the location of investment, investing guides may be grouped into two categories. These include guides for investing:

• Domestically: The emphasis is on teaching how to identify high return and low risk financial instruments.


• Internationally: These focus on the upcoming sectors of the economy that have the potential for high growth.

For example, a guide for investing internationally may lead prospective investors towards opportunities in resource-rich erstwhile Soviet Republics such as Belarus and Kazakhstan, which have high potential for growth.

Investing guides can also be categorized according to the nature of investors. Investment guides can be for:

• Beginners: These guides cover the fundamentals of the market, covering issues such as the working of the financial market, available financial instruments and the methods of investing.


• Advanced investors: They can be further divided into passive investors (going for low return low risk) and aggressive investors (aspiring for high return high risk gains). Investment guides may focus on either of these two categories.

Investment guides may center on a particular investment strategy, covering it from all aspects, loaded with techniques used by financial managers. There may also be financial guides in the form of case studies. These investing guides are biographical in nature, based on successful investors who have used effective strategies to succeed in investing.

Features of Investing Guides

A good investing guide should cover the following areas of finance:

• Ways to strike a balance between income and expenditure.


• Insight into the intricacies of investment markets.


• Reliable methods of investing and managing personal finance.


• Elementary tools of preserving capital.


• Deciphering financial advertising and avoiding traps.


• Methods of using the history of market data.


• Methodologies of good investing through illustrations and case studies.


• Important tools of technical analyses.


• Important investment strategies.

Investing Guides: Advantages

An investing guide:

• Helps amateur investors avoid unnecessary risks.
  
• Increases an investor’s awareness of various investment instruments and their pros and cons.


• Introduces investors to the basics of analysis and how to identify good investments.


• Makes investors aware of market volatility and how to cope with it.


• Guides advanced investors in strategies of investment.

Investing guides that propose extremely complex methodologies of investing should be avoided. An amateur should avoid laborious techniques. Such teachings, apart from being expensive, may prove highly unreliable.

Economy to grow 7% if rains are normal: Expert

The Indian economy is expected to grow at around 7 per cent in the current financial year (2009-10) if the monsoons do not suffer further delay, said Suresh Tendulkar, chairman of Prime Minister's Economic Advisory Council.

"The delay in monsoons, as of now, is not of major concern and would not have any dramatic effect on the economy," Tendulkar told reporters at a press conference here. He also stated that the economy would start recovering by September this year.

Last week, the India Meteorological Department downgraded its monsoon forecast to 'below normal'. This has led to fears whether it would affect agricultural output and bring down India's growth in the current fiscal. The agriculture sector contributes around 17 per cent to the gross domestic product and employs around 60 per cent of the nation's total workforce.

"If the monsoons get delayed by another two weeks or so, only then will it have major effects on the economy and its major indicators," said Pronab Sen, chief statistician of India.

Moreover, normal rainfall in the central regions of the country is likely to bring down the prices of pulses and oil seeds.

Essential food items like pulses and cereals have registered double-digit inflation rates, as measured by the wholesale price index in the past months even though overall inflation had hovered around zero rate to enter the negative territory two weeks ago. The current headline inflation rate is at -1.14 per cent for the week ended June 13.

"I expect the inflation rate to stay below zero for another 45 days. Crude oil and high food prices will pull the inflation up and neutralise the high base effect," added Sen.

Tendulkar predicted the inflation rate as measured by the WPI for the year at around 5 per cent and said that the consumer price index, which is at around 10 per cent, will come down if the rains do not post further delay.

To the cuts made by various public sector banks in lending rates, Suresh Tendulkar said that the bank rates are finally reflecting the various key policy rate cuts by the Reserve Bank of India.

Since September last year, the central bank has reduced repo rate by 4.25 percentage points. State Bank of India, the country's largest lender, and Allahabad Bank have recently announced a 50-basis-point and 25-basis-point cut in benchmark lending rates, respectively.

"I do not see a further cut in bank lending rates without reduction in deposit rates," added Tendulkar.

Business Standard

Tips to select a Good Trading Broker that will make you a Successful Trader in a long run!!

How to find a right and affordable stock broker:

When you begin trading, it is very important for you to research and make sure that you find the broker that is right for you. When you don’t pay attention to the type of broker that you get, you can end up paying a lot more than you ever imagined. Below, we have written some questions that you should ask before you decide on a broker.

1. The first question you should ask is if this broker holds a license or not. You should make sure that this broker knows what they are doing. If they do not have a license, you should keep looking.

2. You need to find out what tools the broker will provide you with. Ask if they will provide you with the latest news and charts. It is necessary to have these tools to get the most out of your trading experience, so you should find a broker that offers it.

3. You need to ask them how fast they do work the stock orders. The faster that a broker can put through your stock orders, the more control you have over your orders.

4. Look into weather or not the broker gets paid for sending your orders to market makers. This would be a very bad idea to get involved in.

5. Learn about the broker’s terms and policy and make sure that it is right for you.

6. The best brokers have a trading demo that you can download and make sure that you are comfortable with it.

7. Pay close attention to the software that you download. Make sure that it is easy for you to use and fast. You can lose a lot of profit due to slow software.

8. Ask the broker if they offer stop losses. This is very important if you want to control your risk.

9. Ask about the time frame that the broker trades. You need to make sure that it fits your schedule.

10. Ask these brokers if there are any other hidden fees that you should know about. Sometimes if brokers show low fees, they charge high fees in other areas.

If you ask all of these questions and the broker is right for you, you have found your broker.

Tips to become a better trade, both in swing and day trading:

Find what kind of stock trading you would like to get into. This decision should not be made over night. You should do your research and really find what is right for you. Day trading is stock trading during the day in which you close out all of your positions at the end of each day. Short-term stock trading is when you hold your positions for a few days at a time. Long-Term trading is when a position is help for weeks, months, or years. You should take your lifestyle into account when you are deciding and it is wise to chose one before you begin trading.

1. The trading style you choose should fit your lifestyle. With day trading, you will need to sit at the computer for hours during the day and give your complete attention to it. With longer-term trading, you don’t have to spend much time at all because it doesn’t take much of your attention.
2. Choose the right broker for you. There are different brokers depending of the type of stock trading you decide on. A day trader will need a broker with fast tools because he is the most active. It is best to use discount brokers with longer-term trading.
3. Choose a good trading strategy. Stock trading is risky no matter what strategy you have. Beginners seem to lose a lot when first starting out until they develop the strategy that is best for them. Whatever strategy you develop, make sure that it is one that helps your control your own risks.
4. Your trading strategy should work for you in every market. The stock market has its ups and its downs. You need to learn how to profit from both.
5. Learn how to pick your stocks. In order to pick the right stock, you will need to do a lot of research and develop skills to help you. If you are beginning and you have not done loads of research, it is advised that you ask a professional’s help.
6. Pick your sell time. When beginners start trading. They do all the research they can on when to buy a stock, but they need to search when to sell a stock just as much. Your profits are only yours when you sell. If you don’t learn when to sell, you can end up waiting too long and lose a lot of profit.
7. Draw the line. You need to think about how much you can win to make you a winner and how much will make you a loser. Learn about yourself and how you would consider yourself if your won or lost certain amounts. Make sure that you never let it go too far.
8. Inform and educate yourself as much as possible. Beginner traders seem to think that they can do better than everyone else without studying. Then they end up losing. It is very important to study and learn as much as possible before entering the market. Some education will be expensive, but it is well worth it.
9. Talk to traders. You will need as much help as you can get. The best way to go is to talk to those who have been where you are. Try to talk to experienced traders who are into the same type of trading you are into.

Indian Stock Market – A Strong Emerging Market in Asia.!

The Indian stock market has always been a wonderful avenue for all those investors who wish to reap exponential growth and returns on their stock portfolio. India has recently been a solid emerging market, and the future of India definitely looks strong. With this view, we thought of brining you an article that depicts about what India’ stock market is all about. So all those beginners who wish to invest money in India, may treat this article as a tutorial about Indian stock market, to hone their investment knowledge.

To begin: The Indian stock market has many stock exchanges, but prominently the 2 big ones are:
1. National Stock Exchange – Also known as NSE.
2. Bombay Stock Exchange – Also known as BSE, located at the Dalal Street in Mumbai.

The Bombay stock exchange (BSE):

This stock exchange is located in Bombay, India. It is the largest and the oldest Indian stock exchange. Seventy percent of India’s trading is done at this exchange. SENSEX is the index that was made for the Bombay stock exchange. Its job is to reflect when the stocks go up and down for India and abroad. SENSEX is now very important to the Indian market. SENSEX and The Bombay stock exchange are the reasons for the Indian market growing so rapidly.

The National stock exchange (NSE):

This stock exchange is located in Delhi, India (the nation’s capital). It is the oldest market dealing with bonds. They deal with many different types of bonds, but mainly bonds and governmental bonds. Like SENSEX was the index made for the BSE, Nifty is the index that was made for the National stock exchange. Nifty takes care of around fifty percent of all the bond trades that happen at the NSE. The NSE is trying hard to make equal opportunities for the people not in India to trade. The NSE differs from the other stock exchanges in India because it pays taxes.

What is Sensex and Nifty indexes?

Because SENSEX is the index for the BSE, if the SEXSEX gets higher, that means that the shares of the companies in BSE have gotten higher. It is the same concept if the Sensex gets lower, which means that the shares of the companies in BSE have gotten lower. Nifty does the same thing for the National stock exchange.

There are many different stock exchanges in India, but these two are the most popular ones. Within these two stock exchanges, the majority of the trading is done. This means that the most trading is done within SENSEX and Nifty, making them the most popular indexes in India.

Investing in India made easy for NRIs & Foreign nationals/citizens.

You can invest in many different assets including: Stocks, Bonds, Equity, Currency, Commodities, Real Estate, etc. Gold is so much more pricy than we are used to. Investing in equity is becoming the best idea for investment. You would need to have a zero percent interest rate.

Why Indians living abroad should invest in India: The Benefits & Advantages:

There are many reasons why you should invest in India; here is a list of the major ones mentioning how India is NOT affected by this recession.

· India is doing surprisingly better than anyone else during this recession. This is because they have a lot of savings unlike the United States and United Kingdom.

· India’s population of young adults is outstanding. While other countries are ageing, India will have the majority of young people. This means that a very large percent of India will speak English, the world wide language.

· India has high GDP and low imports and exports, which is another reason why the recession is not hitting them hard.

· The recession has caused car companies all over the United States to shut down and file for bankruptcy, yet the car companies in India are doing really good. This means that people in India have the money to purchase cars during the recession.

The future of the Indian stock market:

Any true trader/investor will tell you that the higher the risk, the higher the reward. The Indian stock market future is very risky as well as any other market. Obviously, there will be times when the market is up and when the market is down. The Indian market is growing faster than many other markets across the world. This portrays an image of a very bright future for the Indian stock market.

Tips to Investing in the Stock Markets of India:

Here is the biggest tip for you if you would like to start investing in India.

• Never let your emotions get to you when you are investing. You need to keep your focus and always pay attention to your losses. Keep them small. Never lose control. You always need to have complete control over when you buy and sell as share. Try your best to never let the losses get to you, try to shrug them off. The main key is to keep your losses small and your winnings big.
• When you invest your money, only invest the amount you can afford to lose. If you decide to invest a bigger amount than you can afford, you emotions will kick in and it is very hard to concentrate and come out with profit at that point. Try your hardest possible to keep your emotions away for trading/investing.

Oil companies: Sliding on subsidies

Raghuvir Srinivasan

THE red ink splashed across the balance-sheets of the four major oil companies — Indian Oil, BPCL, HPCL and IBP — in the first quarter may have dried but the underlying causes for the losses have certainly not gone away. So, are these companies headed for an encore in the second quarter?

At best, these companies may manage to post a minor profit with the help of some imaginative accounting; at worst, they may end up posting losses yet again, albeit a smaller quantum. But, make no mistake, the bad times are far from over for these companies.

It all boils down to this single question: what does a company do when its input cost rises by more than 50 per cent in a year but is able to pass on only a small portion of that to its customers? It begins to lose money. And that is exactly what is happening to these four companies, which are forced to absorb big losses in marketing margins, because of government policy.

Killing "under-recoveries"

The story is well worn. The government is exercising strict control over these companies, preventing them from setting market-related prices for their main products — petrol, diesel, cooking gas and kerosene — and asking them to share more than 90 per cent of the subsidy burden on the latter two products.

Added to this is the so called "under-recovery" on petrol and diesel, which is nothing but the difference between the selling price of the two products and the price paid to the refineries for the same.

Due to the non-revision of retail prices of petrol and diesel at periodic intervals in tune with the market, the oil companies have been incurring a loss as they have been forced to sell at a price lower than what they pay the refineries.

For instance, Indian Oil suffered a loss of Rs 1,188 crore on this account in 2004-05 and a further Rs 1,362 crore in the first quarter of 2005-06, ended June 30.

Just consider these numbers. The average price of the Indian basket of crude oil (which is the relevant comparison and not Brent or WTI, which sell at a premium) in the first three weeks of this month was $59.91 a barrel compared to $39.15 exactly a year ago — a rise of 53 per cent. And how much have the retail prices of petrol and diesel increased in the same period? The retail selling price of petrol was hiked by 18 per cent, and that of diesel 25 per cent.

Refineries are better off

The refineries have not been affected by this asymmetry as much as the marketing companies. For one, they are paid for their output on landed cost, which is based on the prevailing international price and, second, this includes a 10 per cent duty on petrol and diesel, which straightaway beefs up their margins.

Therefore, the stand-alone refining companies — Chennai Petroleum, Kochi Refineries, Bongaigaon Refinery and Petrochemicals and Mangalore Refinery and Petrochemicals — have been spared the troubles of the refining and marketing companies. This shows in their relative performance in the last four quarters (see infographic).

This is also why Reliance Industries, which operates the country's largest refinery with a capacity of 31 million tonnes, has been unaffected.

With global oil prices rising sharply, the refining margin (the difference between the selling price of the refined products such as petrol and diesel and the cost of crude oil) has been very healthy, at $5-10 per barrel for all these refineries.

Again, the stand-alone refining companies, as indeed Reliance Industries, have been spared from sharing the subsidy burden on cooking gas and kerosene, which was shared among the three refining and marketing companies and ONGC, Gail and Oil India.

However, as part of the policy changes of the last fortnight, henceforth, these companies will also be sharing a part of the subsidy burden. As per the new framework decided, Reliance Industries will offer up to Rs 750 crore as discounts on the two products to the marketing companies.

This may come as marginal relief to the refining and marketing companies — Indian Oil, BPCL and HPCL — which are reeling under the twin impact of under-recoveries on petrol and diesel and the huge subsidy on cooking gas and kerosene.

The oft-repeated argument against these three companies is that they enjoy superior refining margins and can, hence, afford to take a loss in marketing margins. The truth is that these companies sell more than what they produce by procuring products from the standalone refineries and Reliance Industries.

Therefore, they stand to lose on the marketing margins on the quantum of products that they procure from others. They pay the landed cost for these products to the refineries but sell them at the artificially fixed lower prices in the market.

For instance, almost 27 per cent of Indian Oil's product sales in 2004-05 was from products procured from refineries other than its own. The corresponding figures for HPCL and BPCL are 25 per cent and 43 per cent respectively. IBP, which procures 100 per cent of its products from other refineries, is naturally the biggest loser among all these companies.

In other words, the gains in refining margins are not enough to compensate for the loss in marketing margins.

Losses fuelled by subsidy

The second factor weighing down the financial performance of these companies is the subsidy on cooking gas and diesel. The numbers are revealing. In fiscal 2004-05, the total subsidy on the two products was Rs 21,400 crore.

Of this, the government's budgetary contribution was just Rs 3,550 crore, or 17 per cent, with the remaining 83 per cent coming from the oil companies. Indian Oil and ONGC, as the largest of the lot, had to bear the brunt of this.

The projections for the current fiscal are scary. The subsidy bill is expected to shoot up to Rs 40,000 crore, of which the government share will remain at Rs 3,640 crore, or about 10 per cent. The burden of this subsidy is sure to weigh heavily on the balance sheets of all the oil companies except Gail, whose share is relatively minor.

ONGC will bear about Rs 12,000 crore, roughly equivalent to the gains it would make in terms of higher crude oil prices. Therefore, the net loss for the company may not be substantial.

However, Indian Oil, BPCL, HPCL and IBP are likely to suffer despite the burden being shared by ONGC and the standalone refining companies.

The issue of oil bonds is unlikely to be of much help in boosting their cash flows, which have begun to sag in the last four months. Indian Oil, for example, was forced to borrow Rs 1,000 crore from the bond market last fortnight to tide over its cash-flow problems.

The scene at the other refining and marketing companies are not too good, either. The bonds may at best result in a reclassification of assets from receivables to investments.

The increasing borrowings will push up financing costs for the companies, which are already talking of postponing their major investments for better times.

Though these threats are largely nothing more than that, the fact is that if the current liquidity crunch continues, these companies may indeed be forced to go slow on their investments, which is not good news for the country's energy security.

IndianOil leads India Inc. in Fortune's 'Global 500' listing

IndianOil yet again clinched the top slot amongst the seven Indian companies featured in the Fortune's 'Global 500' listing of the world's largest companies for 2008 released by the US business magazine, Fortune. All made possible by a 32000 - strong team of IndianOilPeople.

IndianOil is the top-ranked Indian company among both private and public sectors at 116th position in the worldwide list, topped by retail giant Wal-Mart. Reliance Industries Ltd. (RIL) at 206th position is ranked second after IndianOil among all the Indian companies and followed by Bharat Petroleum (287), Hindustan Petroleum (290), Tata Steel (315), ONGC (335), and State Bank of India (380).

IndianOil jumped 19 places from last year's ranking of 135 to 116, creating an enviable position for itself as one of the top-ranked Indian companies. It has also moved up two places among the world's largest petroleum companies to occupy the 18th place under the 'Petroleum Refining' category, whilst the other Indian companies like Reliance is placed at 23rd position, Bharat Petroleum at 28th and Hindustan Petroleum at 29th position.

IndianOil's leap forward in the oil & gas sector, with a well laid-out road map through vertical integration - upstream into oil exploration & production (E&P) and downstream into petrochemicals - and diversification into natural gas marketing, besides globalisation of its downstream operations, represents the growth of the Indian corporate sector as well, thus carving a niche for itself in the global arena.

For the past 14 years, the 'Global 500' has been the premier list of the world's largest companies. And 2008 is no exception except the bar has been set higher to make it to the list. It is one of the best snapshots of the business world today.

The current list shows fewer American businesses (153) in more than a decade and confirms the rising prominence of the emerging markets. Less than 10 years ago, India, Mexico, and Russia had only one company each on the 'Global 500' list. This year's list includes seven from the subcontinent and five firms each from Mexico and Russia.