* Simplex Casting has bagged a good order from Indian Railways for supply of coco bogies taking its total order book position to over Rs.130 cr. Accumulate at declines.
TOWER TALK
* Some serious accumulation is on in Jupiter Bioscience as it closed 4% higher with decent volumes at a time when the Sensex is down by more than 400 points.
* Royal Orchid Hotels has entered a joint venture with the Parsvnath group to develop ten hotels at an investment of Rs.500 cr. Scrip is available fairly cheap and is a good bet at the current level.
* Although marketmen have turned bullish on Reliance Power on the bonus announcement, investors may do well to exit this scrip and shift to better options like Numeric Power, Indo Asian Fusegear, Easun Reyrolle, ICSA, KLG Systel, Asian Electronics etc.
* Vakrangee Software has held out in the recent carnage. It seems the scrip is in stronger hands and may shoot up sharply once the sentiment improves. A solid bet.
* Centurion Bank of Punjab is a good buy because of its merger proposal with HDFC Bank.
* Bihar Tubes has planned aggressive expansion by inorganic growth. A good stock to accumulate at declines.
* Bodal Chemicals is quoting at a single digit P/E and has a rights issue which is like a mini bonus. The share is languishing at Rs.93 and offers rights at Rs.10 premium. Record date is in March 2008.
* Will the bonus in Reliance Power change the mood of the market? Next week is crucial for the direction of the market.
* Himachal Futuristic is to be rechristened as Dynamic Infotel Ltd. and is likely to reduce its equity capital to offset heavy losses. A scrip to watch in coming years.
* Reliance’s gas find in the Krishna Godavri deepwater blocks will be a real money spinner for RIL.
* Elder Healthcare joins the trimming game with Vandana Luthra.
* Essar Shipping with its refocus on offshore is a great scrip in the making.
* Crompton Greaves, BHEL, Siemens and ABB are in for a stupendous rise in the capital goods segment.
4
* TVS Motors’ electric scooters for Rs.32,500 from will give Hero Honda, Bajaj Auto and Kinetic a tough time.
* Jain Irrigation Systems’ tie-up with Mekorot Water Co. from Israel for hydro infra projects will add a new dimension to its growth.
* Jaiprakash Associates’ ad campaign empowers its scrip. Around Rs.230, it offers a great opportunity for long-term investors.
* Kohinoor Broadcasting Corp. plans to launch KBC News, its Hindi News Channel by 15th April.
* Ennore Coke will start heating the metallurgical coke (metcoke) plant mid-March with production scheduled in the first week of April. The way metcoke prices are shooting up, the scrip is sure to head northward.
* The grey market premium on Rural Electrification Corporation has shot up to Rs.22/24.
Wednesday, February 27, 2008
Pepper
Pepper: Skyrocketing on good export enquiries
Pepper price is to keep its bullish run in coming days on increase export enquiries...
Pepper price is to keep its bullish run in coming days on increase export enquiries...
Tuesday, February 26, 2008
BHEL bags order for 350MW power plant
New Delhi, Feb 26: Power equipment supplier Bharat Heavy Electricals Ltd on Tuesday has bagged a Rs 1,075 crore order for setting up a 350MW power plant in Gujarat.
Gujarat State Energy Generation Ltd has placed the engineering, procurement and construction order for the gas turbine-based combined cycle power plant to be installed at Hazira in Gujarat, BHEL said in a statement.
The project is slated for completion in 27 months, the company said.
Scope of work for the project includes supply and commissioning of a gas turbine generator set, one steam turbine generator set and heat recovery steam generator along with associated auxiliaries.
The gas turbine would be manufactured at BHEL's Hyderabad plant, while the HRSG would be supplied by the company's Trichy plant.
The company had recently won a similar contract from Reliance Industries for setting up a 345 MW gas turbine-based combined cycle power plant at Nagothane in Maharashtra.
Bureau Report
Gujarat State Energy Generation Ltd has placed the engineering, procurement and construction order for the gas turbine-based combined cycle power plant to be installed at Hazira in Gujarat, BHEL said in a statement.
The project is slated for completion in 27 months, the company said.
Scope of work for the project includes supply and commissioning of a gas turbine generator set, one steam turbine generator set and heat recovery steam generator along with associated auxiliaries.
The gas turbine would be manufactured at BHEL's Hyderabad plant, while the HRSG would be supplied by the company's Trichy plant.
The company had recently won a similar contract from Reliance Industries for setting up a 345 MW gas turbine-based combined cycle power plant at Nagothane in Maharashtra.
Bureau Report
Stocks impacted by the Railway Budget
It was Lalu’s last lap (fifth Railway Budget) which saw strong thrust on technology and infrastructure. Stocks from steel, technology, capital goods and infrastructure stocks saw some positive impact.
50 big terminals are being planned in Mumbai, Pune, Gaziabad. Concor will set up 8 depots,which saw the stock move up. The Railway Budget sees annual steel traffic aim of 200 mt in 2011 versus 120 mt now, which saw steel SAIL gaining over 2%. 25-30 tonne axle load trains to be started.
Budget sees strong revenues coming from comoditiy transportation. FY08 coal freight loading seen at 336 mt. The budget has also planned 200 mt tariff from cement in 2011-12. SPV for links to Mundra, Kandla, Krishnapatnam ports. The budget has an ambitious plan to set up 20,000 km high density network. It plans to upgrade infrastructure in 7 years at Rs 75,000 crore.
The budget sees excess freight loading target of 310 mt in next 4 years. To up auto ticket sale machines to 6,000 in 2 years. The Budget plans to produce only stainless steel coaches after FY10. It also plans for new coaches in all Shatabdi trains by 2011. It plans to start making steel coaches from FY09. It also plans new coaches in all rajdhani trains by 2010.
Clear thrust was seen on technology; TCS, Wipro, Satyam were up on account of IT upgradation order. The budget will have online control of trains in 2 years. It plans to link trains via software communication by 2009. It plans to start ticket confirmation via mobile phones. The Budet is planning 'smart card' based ticket system. SMART CARDS will benefit Bartronics.
The other measures to be positively impact stocks are automated signalling to benefit Kernex Micro. ETA display in long-run trains to benefit Mic Electronics. CCTV, metal detectors installation is expected to benefit Zicom . Anti-fire protection to benefit Nitin Fire Protection.
50 big terminals are being planned in Mumbai, Pune, Gaziabad. Concor will set up 8 depots,which saw the stock move up. The Railway Budget sees annual steel traffic aim of 200 mt in 2011 versus 120 mt now, which saw steel SAIL gaining over 2%. 25-30 tonne axle load trains to be started.
Budget sees strong revenues coming from comoditiy transportation. FY08 coal freight loading seen at 336 mt. The budget has also planned 200 mt tariff from cement in 2011-12. SPV for links to Mundra, Kandla, Krishnapatnam ports. The budget has an ambitious plan to set up 20,000 km high density network. It plans to upgrade infrastructure in 7 years at Rs 75,000 crore.
The budget sees excess freight loading target of 310 mt in next 4 years. To up auto ticket sale machines to 6,000 in 2 years. The Budget plans to produce only stainless steel coaches after FY10. It also plans for new coaches in all Shatabdi trains by 2011. It plans to start making steel coaches from FY09. It also plans new coaches in all rajdhani trains by 2010.
Clear thrust was seen on technology; TCS, Wipro, Satyam were up on account of IT upgradation order. The budget will have online control of trains in 2 years. It plans to link trains via software communication by 2009. It plans to start ticket confirmation via mobile phones. The Budet is planning 'smart card' based ticket system. SMART CARDS will benefit Bartronics.
The other measures to be positively impact stocks are automated signalling to benefit Kernex Micro. ETA display in long-run trains to benefit Mic Electronics. CCTV, metal detectors installation is expected to benefit Zicom . Anti-fire protection to benefit Nitin Fire Protection.
inflation
The troika of-government spending, Chindia, and a bullish supply/demand dynamic-give you the impression that inflation may well and truly take off in 2008.
In January Australian investors sold stocks and wiped over $170 billion from the share market. America sneezed and the ASX got blown over. What's worse, inflation in America is rising at the fastest rate in 17 years. It is far from over, something wicked this way comes...
Yet if you look past the shocking figures and negative sentiment, there's good reason to believe that 2008 may be kind to Australia's epic resource boom. There is one simple reason why, which I'll explain in a moment. But here's the important thing...
If I am right and we are quickly entering a new and volatile phase in the global economy...you can still make money from resource shares.
The bad news is that the easy money has already been made. But the good news is that the biggest money may still be out there. Let me explain...
From Gloom to Boom
Beyond the bear market in credit and the collapse of the housing bubble...one theme will dominate in 2008: the rise of epic inflation.
If my forecast is correct, food and fuel prices will continue to rise. Inflation will bleed into other commodities...especially agricultural commodities and precious metals.
In January Australian investors sold stocks and wiped over $170 billion from the share market. America sneezed and the ASX got blown over. What's worse, inflation in America is rising at the fastest rate in 17 years. It is far from over, something wicked this way comes...
Yet if you look past the shocking figures and negative sentiment, there's good reason to believe that 2008 may be kind to Australia's epic resource boom. There is one simple reason why, which I'll explain in a moment. But here's the important thing...
If I am right and we are quickly entering a new and volatile phase in the global economy...you can still make money from resource shares.
The bad news is that the easy money has already been made. But the good news is that the biggest money may still be out there. Let me explain...
From Gloom to Boom
Beyond the bear market in credit and the collapse of the housing bubble...one theme will dominate in 2008: the rise of epic inflation.
If my forecast is correct, food and fuel prices will continue to rise. Inflation will bleed into other commodities...especially agricultural commodities and precious metals.
Thursday, February 21, 2008
RPL refinery achieves 82% overall progress in just two years
Reliance Petroleum Limited (“RPL”) has successfully
completed the second year of implementation of its complex refinery, coming up in a Special
Economic Zone at Jamnagar. RPL has achieved 82% overall progress in just 24 months
since commencement of the Project. Based on the progress so far, RPL is on course to
complete the project ahead of its initial schedule of December 2008.
During the quarter, project implementation gained further momentum and led to achievement
of several significant milestones, including the following;
• Engineering activities are nearing completion.
• Overall procurement progress exceeded 97%.
• More than 75% of equipments and tagged items already received at site.
• Deliveries of over dimensional cargos (ODC) and super ODCs are nearing completion.
• Over 40% of equipments have been erected; Project skyline changed dramatically.
• Overall construction progress crossed the 60% mark for the complex.
• Structural and pipe fabrication activities progressing at an accelerated pace.
• Sufficient site infrastructure mobilised to sustain equipment installation and fabrication
activities on the fast track.
During the quarter, the project engineering activities were completed with all drawings for
concreting, structural steel, underground piping as well as electrical and instrumentation
released for construction. Residual engineering activities to support ongoing construction are
continuing. Successful completion of this massive engineering effort in less than two years
has set a new global record in the refining sector. It also reflects the success of a team effort
that involved over 7,500 engineers, working from several interconnected locations across the
world.
The quarter witnessed near completion of procurement activities for the project as well. The
procurement and contracting for equipments, tagged items and bulk materials is now
complete. Equipment deliveries have gained enhanced momentum with over 3,800
equipments, including several ODCs and super heavy equipments, delivered at site already.
completed the second year of implementation of its complex refinery, coming up in a Special
Economic Zone at Jamnagar. RPL has achieved 82% overall progress in just 24 months
since commencement of the Project. Based on the progress so far, RPL is on course to
complete the project ahead of its initial schedule of December 2008.
During the quarter, project implementation gained further momentum and led to achievement
of several significant milestones, including the following;
• Engineering activities are nearing completion.
• Overall procurement progress exceeded 97%.
• More than 75% of equipments and tagged items already received at site.
• Deliveries of over dimensional cargos (ODC) and super ODCs are nearing completion.
• Over 40% of equipments have been erected; Project skyline changed dramatically.
• Overall construction progress crossed the 60% mark for the complex.
• Structural and pipe fabrication activities progressing at an accelerated pace.
• Sufficient site infrastructure mobilised to sustain equipment installation and fabrication
activities on the fast track.
During the quarter, the project engineering activities were completed with all drawings for
concreting, structural steel, underground piping as well as electrical and instrumentation
released for construction. Residual engineering activities to support ongoing construction are
continuing. Successful completion of this massive engineering effort in less than two years
has set a new global record in the refining sector. It also reflects the success of a team effort
that involved over 7,500 engineers, working from several interconnected locations across the
world.
The quarter witnessed near completion of procurement activities for the project as well. The
procurement and contracting for equipments, tagged items and bulk materials is now
complete. Equipment deliveries have gained enhanced momentum with over 3,800
equipments, including several ODCs and super heavy equipments, delivered at site already.
Gold
The correction from the April 2007 high in gold gave us an extraordinary opportunity last summer to accumulate mining shares while they were truly undervalued. Simplicity, our premier gold timing model, was the key. Nevertheless, gold and silver investments still remain all but undiscovered by the mainstream investment community.
The most underbelieved asset class today is precious metals, but they are beginning to gain serious investor attention again as gold moves to all-time highs over $850. The next major move is just beginning. Once the current rally takes a brief rest, gold will advance to at least $1,000 during 2008 on its way to eventually hitting $1,600.
Gold will soon become popular cocktail conversation as the mainstream begins to catch on.
This August, we received a rare buy signal from our gold timing model, “Simplicity.” The previous time Simplicity gave a buy signal was in May 2005 when gold was $440. The average annualized gain after Simplicity buy signals is 89.6% … and they say no one rings a bell!
The time is ripe again for precious metals.
Fundamentally, gold and silver couldn’t be more bullish. The U.S. dollar is weak; and as the dollar falls, gold will rise. That is cast in stone.
China (as I mentioned) is on a buying spree with billions of dollars in excess cash. To come up to speed with the rest of the central banking world, it is estimated they will need to purchase 2,000 to 3,000 tonnes of gold.
Although the mainstream has not warmed up to the metals yet, we are experiencing the third great gold bull market of the last 100 years. The first was from 1929 to 1932 where we saw the price of the average mining stock increase 650%. In the second, from 1969 to 1980, the typical mining stock appreciated by 1,000%.
The third secular bull market in gold is under way (it's far from over), yet the Philadelphia Gold and Silver Index (XAU) has but barely begun to perform. You will likely see the XAU double this year and appreciate 300% from current levels by the decade’s end.
The most underbelieved asset class today is precious metals, but they are beginning to gain serious investor attention again as gold moves to all-time highs over $850. The next major move is just beginning. Once the current rally takes a brief rest, gold will advance to at least $1,000 during 2008 on its way to eventually hitting $1,600.
Gold will soon become popular cocktail conversation as the mainstream begins to catch on.
This August, we received a rare buy signal from our gold timing model, “Simplicity.” The previous time Simplicity gave a buy signal was in May 2005 when gold was $440. The average annualized gain after Simplicity buy signals is 89.6% … and they say no one rings a bell!
The time is ripe again for precious metals.
Fundamentally, gold and silver couldn’t be more bullish. The U.S. dollar is weak; and as the dollar falls, gold will rise. That is cast in stone.
China (as I mentioned) is on a buying spree with billions of dollars in excess cash. To come up to speed with the rest of the central banking world, it is estimated they will need to purchase 2,000 to 3,000 tonnes of gold.
Although the mainstream has not warmed up to the metals yet, we are experiencing the third great gold bull market of the last 100 years. The first was from 1929 to 1932 where we saw the price of the average mining stock increase 650%. In the second, from 1969 to 1980, the typical mining stock appreciated by 1,000%.
The third secular bull market in gold is under way (it's far from over), yet the Philadelphia Gold and Silver Index (XAU) has but barely begun to perform. You will likely see the XAU double this year and appreciate 300% from current levels by the decade’s end.
Hexaware Technologies reports net loss of Rs 72.92 crore
Hexaware Technologies reports net loss of Rs 72.92 crore in the December
2007 quarter
Sales rise 18.54% to Rs 127.39 crore
Hexaware Technologies reported net loss of Rs 72.92 crore in the quarter
ended December 2007 as against net profit of Rs 42.82 crore during the
previous quarter ended December 2006. Sales rose 18.54% to Rs 127.39 crore
in the quarter ended December 2007 as against Rs 107.47 crore during the
previous quarter ended December 2006.
For the full year, net loss reported to Rs 10.76 crore in the year ended
December 2007 as against net profit of Rs 118.66 crore during the previous
year ended December 2006. Sales rose 13.60% to Rs 468.80 crore in the year
ended December 2007 as against Rs 412.69 crore during the previous year
ended December 2006.
CAPMKT
2007 quarter
Sales rise 18.54% to Rs 127.39 crore
Hexaware Technologies reported net loss of Rs 72.92 crore in the quarter
ended December 2007 as against net profit of Rs 42.82 crore during the
previous quarter ended December 2006. Sales rose 18.54% to Rs 127.39 crore
in the quarter ended December 2007 as against Rs 107.47 crore during the
previous quarter ended December 2006.
For the full year, net loss reported to Rs 10.76 crore in the year ended
December 2007 as against net profit of Rs 118.66 crore during the previous
year ended December 2006. Sales rose 13.60% to Rs 468.80 crore in the year
ended December 2007 as against Rs 412.69 crore during the previous year
ended December 2006.
CAPMKT
Platinum Goes Ballistic crosses $ 2174 an Ounce
Platinum Shines, Will Gold Follow Suit?
Natural resources markets exploded higher yesterday. Crude oil closed above the $100-a-barrel mark for the first time. And platinum's move was even more dramatic ... the price soared to a record high of $2,173!
Watching platinum has been like watching a missile take off. The metal's run-up has been nothing short of astonishing — 41% so far in 2008 and about 75% in the past 12 months!
And as high as platinum is right now, some analysts are now calling for the metal to hit $3,000 per ounce by the end of the year!
I think what's happening in platinum could be foreshadowing of what will soon happen to other precious metals like gold. More on that in a moment.
First ...
What's Driving Platinum?
That's the question traders and end users are asking themselves right now. Is this a short-term blowout or a long-term shift in pricing?
Robin Bhar, a respected metals analyst at UBS, recently summed up the dramatic move in platinum this way:
'It's panic, panic, panic. If you are a platinum
consumer, you are not going to sleep at night. The price move shows you the unprecedented nature of the market. People can see actual physical shortages somewhere down the road and prices moving away from them. It's not a case of just speculation. There is genuine demand coming through.'
Other analysts say the platinum deficit could widen to more than 400,000 ounces by the end of 2008, compared with about 265,000 ounces in 2007. The market had a surplus of 65,000 ounces in 2006, following seven successive years of deficits. Inventories are at historically low levels.
There is no doubt that the supply/demand squeeze in platinum is real! Platinum prices are fueled by inelastic industrial demand as well as from investment demand. (Jewelry demand for platinum is pretty flat, and should go down as the price of the metal goes through the roof.
The industrial demand is for catalytic converters for diesel engines. Until very recently, platinum was the only metal that could be used for this purpose, and the number of diesel vehicles around the world is growing dramatically. In 2000, diesel accounted for only 18% of global production of light vehicles. By 2007, 24% of vehicles were diesels.
And while there is no platinum ETF in the U.S., there is one in Britain. The metal held by London-based ETFS Physical Platinum (PHPT on the London Stock Exchange) rose by 42,000 ounces in a week to 267,000 ounces — an 18% climb in just one week. If growth continues at half of this recent rate, then the ETF will hold a million ounces in the fourth quarter of 2008.
THAT is how you get to $3,000-an-ounce platinum!
There Is Also a Crisis
On the Supply Side
South Africa produces about 75% of the world's platinum, and it is in the grips of a power crisis that is punishing the mining industry.
The South African state power utility, Eskom, has to build enough power plants to keep up with South Africa's growing economy and increasingly plugged-in population.
Power demand has increased 50% since apartheid ended in 1994 as the government provided more homes with electricity.
South Africa is also boosting infrastructure spending on roads, railways and stadiums as it prepares to host the 2010 soccer World Cup.
As a result, Eskom is now chronically short about 1.5 gigawatts of electrical generation (about 1 and a half good-sized power plants). Eskom expects the power outages to continue until at least 2013.
Eskom's solution is rolling power outages that result in about a 25% national power outage per month. In practical terms, this is a forced reduction in power usage of 10% for big users like mines. The mines were completely shuttered for five days last month!
This means on those days, the mines are unable to pump excess ground water from deep shafts while other maintenance programs are cut back. And how would you like to be a miner caught underground when random power cuts hit, stopping elevators and bringing ventilation to a halt? That kind of brown-out could lead to a deadly accident.
Bottom line: South African platinum miners were ratcheting down their production forecasts anyway, and the power outages are hastening the slide.
Sure, a lot more platinum is being recovered from junked catalytic converters. And new advances in fuel technology should allow palladium to substitute for up to about 25% of the platinum used in catalysts for diesel-powered engines.
But neither of these developments is going to completely solve the platinum crunch anytime soon. So platinum prices could go much higher.
More importantly ...
This Supply/Demand Squeeze Shows
You How Quickly Metals Prices Can Soar!
Here's Why Gold Might Be Next in Line ...
If $2,000 platinum is rocking the markets, imagine how shocking $2,000 gold would be? Well, we might not have to wait too long to find out.
Because the fact is, like platinum, gold has longer-term supply/demand fundamentals that are very bullish, including ...
Global gold production fell to a 10-year low of 2,444 metric tonnes in 2007, according to Gold Fields Mineral Service. This year production will likely drop again. While China is producing more gold — up 12% — South Africa's output is falling off a cliff, down 8.1%.
Exchange traded funds that hold gold are an important new force in the market. The most active gold ETF, the streetTracks Gold Shares (GLD), held 630 tonnes of gold at the end of January — more than the European Central Bank or China's central bank. What's more, a new gold ETF in India is planned for this year, after 4 successful ETFs came into being in FY08.
The U.S. Federal Reserve is likely going to keep cutting interest rates. This in inherently inflationary — and inflation is bullish for gold. We're already seeing more inflation in the U.S., with producer and consumer prices skyrocketing. And now we're importing inflation from China. U.S. import prices reached a record high in January, up 1.7% — twice as much as had been expected.
The best part is that gold hasn't really taken off yet. Let me explain ...
Look at the chart I made. You can see that gold is consolidating after its most recent rally.
I expect we could see more consolidation before gold takes off, but, when it finally breaks out, it should rally and rally hard.
So rather than chase platinum, I would use this consolidation to add to gold positions in anticipation of their upside breakout. That way, you're in before any meteoric rise!
Statement:
Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
Nothing in this article is, or should be construed as, investment advice.
Natural resources markets exploded higher yesterday. Crude oil closed above the $100-a-barrel mark for the first time. And platinum's move was even more dramatic ... the price soared to a record high of $2,173!
Watching platinum has been like watching a missile take off. The metal's run-up has been nothing short of astonishing — 41% so far in 2008 and about 75% in the past 12 months!
And as high as platinum is right now, some analysts are now calling for the metal to hit $3,000 per ounce by the end of the year!
I think what's happening in platinum could be foreshadowing of what will soon happen to other precious metals like gold. More on that in a moment.
First ...
What's Driving Platinum?
That's the question traders and end users are asking themselves right now. Is this a short-term blowout or a long-term shift in pricing?
Robin Bhar, a respected metals analyst at UBS, recently summed up the dramatic move in platinum this way:
'It's panic, panic, panic. If you are a platinum
consumer, you are not going to sleep at night. The price move shows you the unprecedented nature of the market. People can see actual physical shortages somewhere down the road and prices moving away from them. It's not a case of just speculation. There is genuine demand coming through.'
Other analysts say the platinum deficit could widen to more than 400,000 ounces by the end of 2008, compared with about 265,000 ounces in 2007. The market had a surplus of 65,000 ounces in 2006, following seven successive years of deficits. Inventories are at historically low levels.
There is no doubt that the supply/demand squeeze in platinum is real! Platinum prices are fueled by inelastic industrial demand as well as from investment demand. (Jewelry demand for platinum is pretty flat, and should go down as the price of the metal goes through the roof.
The industrial demand is for catalytic converters for diesel engines. Until very recently, platinum was the only metal that could be used for this purpose, and the number of diesel vehicles around the world is growing dramatically. In 2000, diesel accounted for only 18% of global production of light vehicles. By 2007, 24% of vehicles were diesels.
And while there is no platinum ETF in the U.S., there is one in Britain. The metal held by London-based ETFS Physical Platinum (PHPT on the London Stock Exchange) rose by 42,000 ounces in a week to 267,000 ounces — an 18% climb in just one week. If growth continues at half of this recent rate, then the ETF will hold a million ounces in the fourth quarter of 2008.
THAT is how you get to $3,000-an-ounce platinum!
There Is Also a Crisis
On the Supply Side
South Africa produces about 75% of the world's platinum, and it is in the grips of a power crisis that is punishing the mining industry.
The South African state power utility, Eskom, has to build enough power plants to keep up with South Africa's growing economy and increasingly plugged-in population.
Power demand has increased 50% since apartheid ended in 1994 as the government provided more homes with electricity.
South Africa is also boosting infrastructure spending on roads, railways and stadiums as it prepares to host the 2010 soccer World Cup.
As a result, Eskom is now chronically short about 1.5 gigawatts of electrical generation (about 1 and a half good-sized power plants). Eskom expects the power outages to continue until at least 2013.
Eskom's solution is rolling power outages that result in about a 25% national power outage per month. In practical terms, this is a forced reduction in power usage of 10% for big users like mines. The mines were completely shuttered for five days last month!
This means on those days, the mines are unable to pump excess ground water from deep shafts while other maintenance programs are cut back. And how would you like to be a miner caught underground when random power cuts hit, stopping elevators and bringing ventilation to a halt? That kind of brown-out could lead to a deadly accident.
Bottom line: South African platinum miners were ratcheting down their production forecasts anyway, and the power outages are hastening the slide.
Sure, a lot more platinum is being recovered from junked catalytic converters. And new advances in fuel technology should allow palladium to substitute for up to about 25% of the platinum used in catalysts for diesel-powered engines.
But neither of these developments is going to completely solve the platinum crunch anytime soon. So platinum prices could go much higher.
More importantly ...
This Supply/Demand Squeeze Shows
You How Quickly Metals Prices Can Soar!
Here's Why Gold Might Be Next in Line ...
If $2,000 platinum is rocking the markets, imagine how shocking $2,000 gold would be? Well, we might not have to wait too long to find out.
Because the fact is, like platinum, gold has longer-term supply/demand fundamentals that are very bullish, including ...
Global gold production fell to a 10-year low of 2,444 metric tonnes in 2007, according to Gold Fields Mineral Service. This year production will likely drop again. While China is producing more gold — up 12% — South Africa's output is falling off a cliff, down 8.1%.
Exchange traded funds that hold gold are an important new force in the market. The most active gold ETF, the streetTracks Gold Shares (GLD), held 630 tonnes of gold at the end of January — more than the European Central Bank or China's central bank. What's more, a new gold ETF in India is planned for this year, after 4 successful ETFs came into being in FY08.
The U.S. Federal Reserve is likely going to keep cutting interest rates. This in inherently inflationary — and inflation is bullish for gold. We're already seeing more inflation in the U.S., with producer and consumer prices skyrocketing. And now we're importing inflation from China. U.S. import prices reached a record high in January, up 1.7% — twice as much as had been expected.
The best part is that gold hasn't really taken off yet. Let me explain ...
Look at the chart I made. You can see that gold is consolidating after its most recent rally.
I expect we could see more consolidation before gold takes off, but, when it finally breaks out, it should rally and rally hard.
So rather than chase platinum, I would use this consolidation to add to gold positions in anticipation of their upside breakout. That way, you're in before any meteoric rise!
Statement:
Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
Nothing in this article is, or should be construed as, investment advice.
Refinery report
Govt to consider refinery project at Allahabad: Deora
Rae Bareli (UP), Feb 20: With the general elections approaching, the government will consider reviving the long pending project to set up a refinery at Allahabad in Uttar Pradesh.
"We will discuss the possibility of setting up of the refinery in the next one week and a decision will be taken," Petroleum Minister Murli Deora said at the foundation stone laying ceremony of Rajiv Gandhi Institute of Petroleum Technology here.
Bharat Petroleum Corporation Ltd had in early 1990s proposed to set up a six million tonne refinery at Allahabad to feed the northern market.
However, the project was put on cold storage with domestic refining capacity far exceeding the full demand in the country. Against a demand of 119 million tons of fuel in 2006-07, the refining capacity in the country was 147 million tons.
BPCL is also setting up a six million tonne refinery at Bina in Madhya Pradesh to feed the central and northern markets. The project is to be completed by 2011.
HPCL is also setting up a 9 million tonne refinery at Bhatinda in Punjab; to complete by 2011-12, that will make the northern region surplus in capacity.
Deora said the prospect of the refinery in Allahabad will be studied in the next one week and a decision will be taken based on the study.
Bureau Report
Rae Bareli (UP), Feb 20: With the general elections approaching, the government will consider reviving the long pending project to set up a refinery at Allahabad in Uttar Pradesh.
"We will discuss the possibility of setting up of the refinery in the next one week and a decision will be taken," Petroleum Minister Murli Deora said at the foundation stone laying ceremony of Rajiv Gandhi Institute of Petroleum Technology here.
Bharat Petroleum Corporation Ltd had in early 1990s proposed to set up a six million tonne refinery at Allahabad to feed the northern market.
However, the project was put on cold storage with domestic refining capacity far exceeding the full demand in the country. Against a demand of 119 million tons of fuel in 2006-07, the refining capacity in the country was 147 million tons.
BPCL is also setting up a six million tonne refinery at Bina in Madhya Pradesh to feed the central and northern markets. The project is to be completed by 2011.
HPCL is also setting up a 9 million tonne refinery at Bhatinda in Punjab; to complete by 2011-12, that will make the northern region surplus in capacity.
Deora said the prospect of the refinery in Allahabad will be studied in the next one week and a decision will be taken based on the study.
Bureau Report
41% rise in net direct tax collections
The Centre’s direct tax revenues continued to be buoyant, with collections during the period April 1, 2007 to February 15, 2008 recording 41.4 per cent increase to Rs 2,28,745 crore. This collection level constituted 85 per cent of the budgeted direct tax target of Rs 2,67,490 crore for 2007-08.
The strong growth in direct tax collections so far in the current fiscal has raised hope among taxpayers that the Finance Minister, Mr P Chidambaram, would moderate direct tax rates in the forthcoming budget.
While corporate tax collections grew 38.78 per cent for the period under review at Rs 1,38,073 crore, up from Rs 99,488 crore in the same period during the previous fiscal, personal income tax (including FBT, STT and BCTT) grew by 45.64 per cent at Rs 90,356 crore, up from Rs 62,040 crore.
An official statement said that securities transaction tax (STT) collections recorded 84.64 per cent growth to Rs 7,878 crore (Rs 4,267 crore). Fringe benefit tax (FBT) collections were up 29.75 per cent to Rs 5,216 crore (Rs 4,020 crore). Banking cash transaction tax (BCTT) collections grew 16.81 per cent to Rs 478 crore (Rs 409 crore)
The strong growth in direct tax collections so far in the current fiscal has raised hope among taxpayers that the Finance Minister, Mr P Chidambaram, would moderate direct tax rates in the forthcoming budget.
While corporate tax collections grew 38.78 per cent for the period under review at Rs 1,38,073 crore, up from Rs 99,488 crore in the same period during the previous fiscal, personal income tax (including FBT, STT and BCTT) grew by 45.64 per cent at Rs 90,356 crore, up from Rs 62,040 crore.
An official statement said that securities transaction tax (STT) collections recorded 84.64 per cent growth to Rs 7,878 crore (Rs 4,267 crore). Fringe benefit tax (FBT) collections were up 29.75 per cent to Rs 5,216 crore (Rs 4,020 crore). Banking cash transaction tax (BCTT) collections grew 16.81 per cent to Rs 478 crore (Rs 409 crore)
Asian market up on 21 feb 2008
Stocks rallied on Thursday as solid earnings and expectations of further US interest rate cuts outweighed worries about inflation even as oil hit a record high above $101 a barrel. Gold also hit a record above $945 an ounce, and silver touched a 27-year high, as funds poured into a wide range of commodities, betting they will outperform in an environment where growth is slowing and prices are rising.
Data on Wednesday showed a faster-than-expected rise in US consumer prices last month and further weakness in the housing market there.
"The US is entirely focused on the economic data that is coming out and we're getting revised forecasts for their economic growth in the downward trend," said Savanth Sebastian, equities economist at CommSec in Sydney. "(The Federal Reserve) will have to cut rates and the possibility of that is boosting sentiment."
The weak housing market and problems in the credit market prompted the Fed to lower its 2008 US economic growth forecasts on Wednesday, with analysts interpreting comments as paving the way for further reductions in borrowing costs. Japan's benchmark Nikkei rose 2.1 per cent, trimming most of Wednesday's losses, while MSCI's index of other Asian stocks gained 1.2 per cent by 0247 GMT.
Since tumbling more than 10 per cent in January, Asia stocks have endured choppy, volatile trade and investors are wary of calling an end to that. "It's like a Japanese saying about a winter season around this time; three cold days and four warm days," said Katsuhiko Kodama, senior strategist at Toyo Securities.
Taiwan stocks rose 1.6 per cent, in line with Hong Kong, but Shanghai fell more than 2 per cent on concerns about further new share issues flooding the market. Australian stocks added 1 per cent, helped by solid earnings from phone company Telstra, pallet maker Brambles and national carrier Qantas.
Data on Wednesday showed a faster-than-expected rise in US consumer prices last month and further weakness in the housing market there.
"The US is entirely focused on the economic data that is coming out and we're getting revised forecasts for their economic growth in the downward trend," said Savanth Sebastian, equities economist at CommSec in Sydney. "(The Federal Reserve) will have to cut rates and the possibility of that is boosting sentiment."
The weak housing market and problems in the credit market prompted the Fed to lower its 2008 US economic growth forecasts on Wednesday, with analysts interpreting comments as paving the way for further reductions in borrowing costs. Japan's benchmark Nikkei rose 2.1 per cent, trimming most of Wednesday's losses, while MSCI's index of other Asian stocks gained 1.2 per cent by 0247 GMT.
Since tumbling more than 10 per cent in January, Asia stocks have endured choppy, volatile trade and investors are wary of calling an end to that. "It's like a Japanese saying about a winter season around this time; three cold days and four warm days," said Katsuhiko Kodama, senior strategist at Toyo Securities.
Taiwan stocks rose 1.6 per cent, in line with Hong Kong, but Shanghai fell more than 2 per cent on concerns about further new share issues flooding the market. Australian stocks added 1 per cent, helped by solid earnings from phone company Telstra, pallet maker Brambles and national carrier Qantas.
ADAG wins 6000 cr order
Anil Amabni group company Reliance Energy today outbid elder brother Mukesh's consortium to win the prestigious Rs 6,000-crore trans-harbour link project in Mumbai.
Only Reliance Energy and a consortium led by Mukesh Ambani were in the fray for the prestigious project.
Anil's bid was first rejected by the state government on technical grounds at the pre-qualification stage but the government had to issue the bid document to him after a directive from the Supreme Court.
The 22-km long bridge that will connect Sewri in Mumbai with Nhava-Sheva across the harbour will be the second longest seaway in the world, next to the one in China which is about 36 km long.
Earlier, Reliance Energy had won the the Rs 3,800 crore metro link project for connecting the New Delhi Railway Station and the Indira Gandhi International airport. In the previous year, the company had Maharashtra's Minister for Public Works Anil Deshmukh told reporters that the work on the five-year project is expected to start by December this year.
Only Reliance Energy and a consortium led by Mukesh Ambani were in the fray for the prestigious project.
Anil's bid was first rejected by the state government on technical grounds at the pre-qualification stage but the government had to issue the bid document to him after a directive from the Supreme Court.
The 22-km long bridge that will connect Sewri in Mumbai with Nhava-Sheva across the harbour will be the second longest seaway in the world, next to the one in China which is about 36 km long.
Earlier, Reliance Energy had won the the Rs 3,800 crore metro link project for connecting the New Delhi Railway Station and the Indira Gandhi International airport. In the previous year, the company had Maharashtra's Minister for Public Works Anil Deshmukh told reporters that the work on the five-year project is expected to start by December this year.
Rcom in global market
Reliance Communications Ltd on February 21, 2008 has announced the acquisition of Uganda based Anupam Global Soft (U) Ltd a Company holding Public Infrastructure Provider License (PIPL) and Public Service Provider License (PSPL) issued by Uganda Communications Commission. The acquisition, made through a subsidiary of Reliance Communications Ltd, marks the first step in the Company's plans in the International Mobile market.
Under the existing Licenses, Reliance Communications targets to offer Mobile, Fixed Line, Internet, National and International Long Distance services, in addition to WiMax and Wifi services in Uganda.
This Company has received Spectrum allocation and plans to launch its Mobile services by end of 2008. Reliance Communications Group is targeting to invest upto US$ 500 million (Rs 2000 crore) in establishing a high quality, fully-IP enabled integrated telecom network in Uganda to capture the significant growth potential in this emerging African market.
Punit Garg, President, Global Business, Reliance Communications said, "Uganda telecom market is similar to what India was 8 years back. Our expertise in managing among worlds largest integrated telecom network, and deep understanding of diverse consumer segments makes us confident to achieve a significant position to add further value for our 2 million shareholders."
The Company plans to connect the African continent with rest of the world by laying a submarine cable system through its arm Reliance FLAG plans to spend USD1.5 Billion (Rs 6000 crore) in building a 1,15,000 Kms fully-IP enabled optic network to reach 2/3rd of World population.
Reliance Communications has ambitious global expansion plans and is concentrating on opportunities in emerging Asian and African markets. The Company has established a pan-India, next generation, integrated (wireless and wireline), convergent digital network that is capable of supporting best-of-class services spanning the entire Infocomm value chain.
Uganda has a population of approx. 30 million with a significant literacy rate of approx. 62%. There were 3.016 million mobile subscribers by end-March 2007 (source: UCC), equivalent to a penetration rate of 10%, providing ample scope of expansion. The existing telecom players have been witnessing healthy subscriber and ARPU growth recently.
Under the existing Licenses, Reliance Communications targets to offer Mobile, Fixed Line, Internet, National and International Long Distance services, in addition to WiMax and Wifi services in Uganda.
This Company has received Spectrum allocation and plans to launch its Mobile services by end of 2008. Reliance Communications Group is targeting to invest upto US$ 500 million (Rs 2000 crore) in establishing a high quality, fully-IP enabled integrated telecom network in Uganda to capture the significant growth potential in this emerging African market.
Punit Garg, President, Global Business, Reliance Communications said, "Uganda telecom market is similar to what India was 8 years back. Our expertise in managing among worlds largest integrated telecom network, and deep understanding of diverse consumer segments makes us confident to achieve a significant position to add further value for our 2 million shareholders."
The Company plans to connect the African continent with rest of the world by laying a submarine cable system through its arm Reliance FLAG plans to spend USD1.5 Billion (Rs 6000 crore) in building a 1,15,000 Kms fully-IP enabled optic network to reach 2/3rd of World population.
Reliance Communications has ambitious global expansion plans and is concentrating on opportunities in emerging Asian and African markets. The Company has established a pan-India, next generation, integrated (wireless and wireline), convergent digital network that is capable of supporting best-of-class services spanning the entire Infocomm value chain.
Uganda has a population of approx. 30 million with a significant literacy rate of approx. 62%. There were 3.016 million mobile subscribers by end-March 2007 (source: UCC), equivalent to a penetration rate of 10%, providing ample scope of expansion. The existing telecom players have been witnessing healthy subscriber and ARPU growth recently.
Rate cut
State Bank of India, the country's biggest lender, said on Wednesday it had cut its prime lending by 25 basis points to 12.25 percent from February 27, lowering the rate for the second time this month.
Last week, the government-run bank had said it had reduced the rate by a quarter point to 12.50 percent from February 16.
Last week, the government-run bank had said it had reduced the rate by a quarter point to 12.50 percent from February 16.
parsvanath
Parsvnath Developers Ltd on February 21, 2008 has announced the beginning of construction of its prestigious Mall at Rohini christened as "Parsvnath Mall". Parsvnath will invest approx. Rs 280 crores in the project. The Company performed the earth-breaking ceremony today.
Spread over Lower Ground, Ground and five floors, Parsvnath mall is located at a strategic location of North West Delhi at Twin District Centre of Rohini. Parsvnath mall is spread over a total area of approximately 7,300 sq. meters offering a saleable area of approx. 2.63 lac sq. ft. Parsvnath had won the bid for land in an auction by Delhi Development Authority (DDA) last year.
The Parsvnath Mall along with basic amenities will also offer the facility of an exclusive club with provisions for fitness centre, spas, swimming pool besides making the mall an ideal place for shopping, entertainment with elaborate food courts.
The mall will be equipped with banquet and will be an ideal place for holding seminars, workshops and conferences. It will also host festivals, carnivals and will be a finest avenue for exhibitions, launch events and cultural events.
Apart from Parsvnath Mall, Parsvnath Developers is also developing malls on six DMRC stations on BoT basis in the city and has successfully handed over 7 DMRC Projects.
Spread over Lower Ground, Ground and five floors, Parsvnath mall is located at a strategic location of North West Delhi at Twin District Centre of Rohini. Parsvnath mall is spread over a total area of approximately 7,300 sq. meters offering a saleable area of approx. 2.63 lac sq. ft. Parsvnath had won the bid for land in an auction by Delhi Development Authority (DDA) last year.
The Parsvnath Mall along with basic amenities will also offer the facility of an exclusive club with provisions for fitness centre, spas, swimming pool besides making the mall an ideal place for shopping, entertainment with elaborate food courts.
The mall will be equipped with banquet and will be an ideal place for holding seminars, workshops and conferences. It will also host festivals, carnivals and will be a finest avenue for exhibitions, launch events and cultural events.
Apart from Parsvnath Mall, Parsvnath Developers is also developing malls on six DMRC stations on BoT basis in the city and has successfully handed over 7 DMRC Projects.
Japan grows
Japan's export growth unexpectedly quickened in January, as rising demand for cars and steel from China and Russia made up for falling U.S. sales.
Exports, the engine that drove almost half of the economy's expansion last quarter, rose 7.7 percent, from December's 6.9 percent gain, the Finance Ministry said today in Tokyo. The median estimate of 18 economists surveyed by Bloomberg was for a 6.6 percent increase.
Shipments to Asia and Europe rose to records for the month, as growing consumer classes in China, India and Russia create new customers for exporters including Mitsubishi Motors Corp. and Matsushita Electric Industrial Co. Exports to the U.S. fell for a fifth month amid the worst housing slump in 26 years.
``The good news is the destinations for Japan's export products have become far more diversified,'' said Jan Lambregts, head of Asia research at Rabobank International in Hong Kong. The bad news is that ``a protracted U.S. recession would be much harder to shelter from.''
The yen was little changed, trading at 108.10 per dollar at 12:13 p.m. in Tokyo from 107.99 before the report was published.
The International Monetary Fund last month forecast emerging economies will expand 6.9 percent in 2008, compared with 1.5 percent growth in the U.S. China will expand 10 percent.
Waning demand in the U.S., the world's biggest economy, will eventually take its toll on the emerging markets where Japan ships about half its goods, Economic and Fiscal Policy Minister Hiroko Ota said last week.
Exports, the engine that drove almost half of the economy's expansion last quarter, rose 7.7 percent, from December's 6.9 percent gain, the Finance Ministry said today in Tokyo. The median estimate of 18 economists surveyed by Bloomberg was for a 6.6 percent increase.
Shipments to Asia and Europe rose to records for the month, as growing consumer classes in China, India and Russia create new customers for exporters including Mitsubishi Motors Corp. and Matsushita Electric Industrial Co. Exports to the U.S. fell for a fifth month amid the worst housing slump in 26 years.
``The good news is the destinations for Japan's export products have become far more diversified,'' said Jan Lambregts, head of Asia research at Rabobank International in Hong Kong. The bad news is that ``a protracted U.S. recession would be much harder to shelter from.''
The yen was little changed, trading at 108.10 per dollar at 12:13 p.m. in Tokyo from 107.99 before the report was published.
The International Monetary Fund last month forecast emerging economies will expand 6.9 percent in 2008, compared with 1.5 percent growth in the U.S. China will expand 10 percent.
Waning demand in the U.S., the world's biggest economy, will eventually take its toll on the emerging markets where Japan ships about half its goods, Economic and Fiscal Policy Minister Hiroko Ota said last week.
Intra day trading stocks for 21st Feb, 2008
GMR Infrastructure, Buy around Rs 173, Target1 -Rs180, Target 2 - Rs. 185, Stop Loss- Rs 170
Gujrat NRE Coke, Buy around Rs 157, Target 1- Rs. 164, Target 2- Rs 167, Stop Loss- Rs 152
Gujrat NRE Coke, Buy around Rs 157, Target 1- Rs. 164, Target 2- Rs 167, Stop Loss- Rs 152
Wednesday, February 20, 2008
Reliance Communications drops after large acquisition buzz
Meanwhile the BSE Sensex was down 152.84 points or 0.85% on weak cues from
the global markets. US stocks dropped on Thursday, 14 February 2008, as the
credit crunch surfaced unexpectedly in the municipal bond market and after
the Federal Reserve Chairman Ben Bernanke said that he sees sluggish
economic growth ahead.
On BSE, 1.25 lakh shares of the scrip were traded. The stock had an average
daily volume of 17.57 lakh shares on BSE in past one quarter.
The scrip had touched a high of Rs 605 and a low of Rs 595 so far during the
day. The stock had hit a 52-week high of Rs 844 on 10 January 2008 and a
52-week low of Rs 371.25 on 16 March 2007.
The large-cap scrip had underperformed the market over the past one month
till 14 February 2008, declining 16.66% compared to the Sensex's decline of
10.58%. It also underperformed the market in the past one quarter, declining
13.85% compared to Sensex's fall of 9.81%.
India's second largest listed telecom firm by sales has an equity capital of
Rs 1032 crore. Face value per share is Rs 5.
At the current price of Rs 599.50, the scrip trades at a PE multiple of
70.86, based on Q3 December 2007 annualised EPS of Rs 8.46.
As per reports, Reliance Communications is interested in building a
significant IT business and acquisition of Capgemini would give it access to
a client base in continental Europe and catapult it among the world's top
ten IT groups by market share. The media reports said that both Reliance
Communications and Capgemini declined to comment.
Reliance Communications' net profit fell 43.4% to Rs 436.48 crore on
11.8%rise in sales to Rs
3403.52 crore in Q3 December 2007 over Q3 December 2006.
Reliance Communication provides telecommunication services. The company
provides wireless, wire line, voice, data and Internet communication
services.
Source: Capital Market
the global markets. US stocks dropped on Thursday, 14 February 2008, as the
credit crunch surfaced unexpectedly in the municipal bond market and after
the Federal Reserve Chairman Ben Bernanke said that he sees sluggish
economic growth ahead.
On BSE, 1.25 lakh shares of the scrip were traded. The stock had an average
daily volume of 17.57 lakh shares on BSE in past one quarter.
The scrip had touched a high of Rs 605 and a low of Rs 595 so far during the
day. The stock had hit a 52-week high of Rs 844 on 10 January 2008 and a
52-week low of Rs 371.25 on 16 March 2007.
The large-cap scrip had underperformed the market over the past one month
till 14 February 2008, declining 16.66% compared to the Sensex's decline of
10.58%. It also underperformed the market in the past one quarter, declining
13.85% compared to Sensex's fall of 9.81%.
India's second largest listed telecom firm by sales has an equity capital of
Rs 1032 crore. Face value per share is Rs 5.
At the current price of Rs 599.50, the scrip trades at a PE multiple of
70.86, based on Q3 December 2007 annualised EPS of Rs 8.46.
As per reports, Reliance Communications is interested in building a
significant IT business and acquisition of Capgemini would give it access to
a client base in continental Europe and catapult it among the world's top
ten IT groups by market share. The media reports said that both Reliance
Communications and Capgemini declined to comment.
Reliance Communications' net profit fell 43.4% to Rs 436.48 crore on
11.8%rise in sales to Rs
3403.52 crore in Q3 December 2007 over Q3 December 2006.
Reliance Communication provides telecommunication services. The company
provides wireless, wire line, voice, data and Internet communication
services.
Source: Capital Market
REC Report
It's a difficult time to be recommending a SUBSCRIBE on any IPO, but REC (Rural Electrification Corporation) seems to be a deserving exception. Here's an IPO note on the company.
Mandated by the government of India to lend to the power sector, REC's focus so far has been on the T&D space as opposed to its larger cousin PFC's generation focus. Growing its loan book is definitely not a worry for this company, as the power sector is a key thrust area for the 11th and 12th five year plans. I would expect a minimum of 25% loan book growth, and high asset quality.
And this in spite of the fact that it lends almost entirely to PSUs. Why ? Simple, after years of loss making operations, most SEBs are aggressively reforming with generation, transmission and distribution operations sliced out into different entities. Financial and operational reform are the two pillars on which may sick SEBs are being revived. Add growth to this situation, and you have a sweet spot for lenders. Let's face it : there's nothing more attractive for lenders than ten straight years of growth and almost no worry on asset quality.
My worry is on sustainability of spreads. The company's NIMs (net interest margins) are very healthy, at over 3%. The offered reason is the long tenure lending that it does, aided in ample measure by the tax free bonds that it can issue to depositors. Some of this charm will get eroded now that government has mandated a ceiling of Rs 50 lacs for any entitiy investing in these bonds. The company claims that interest margins will still not erode significantly, since fee incomes will begin soon and it will borrow from banks at competitive rates. This is possible, because banks' provisioning is stricter for direct lending to projects as compared to the lenient provisioning norms when they lend to REC, PFC, etc. Let's see how this pans out for REC's interest margins...
Meanwhile, REC's basic return to shareholders (RoE) is consistently high at well above 20%. This is likely to level off to a shade under 20%, but remember there's headroom (debt : equity likely to fall to under 7 from over 8.9 in FY07, after the recent fund raising) to borrow more and push up RoE. After the encouraging half yearly showing and the IPO, REC's adjusted book value per share will rise to over Rs 58, so you are buying this stock for less than 2X ABV on an immediate basis. Even if H2 is the same as H1, REC should add at least six rupees per share to this ABV. And if in FY09 the company merely replicates its FY08 showing, it will have an ABV of over Rs 76.
All in all, a good company with a bright future, going public in relatively troubled times. If you can detach yourself from the near term market worries, you will see REC's business shining through and feel like applying. That's exactly what I intend doing !
Mandated by the government of India to lend to the power sector, REC's focus so far has been on the T&D space as opposed to its larger cousin PFC's generation focus. Growing its loan book is definitely not a worry for this company, as the power sector is a key thrust area for the 11th and 12th five year plans. I would expect a minimum of 25% loan book growth, and high asset quality.
And this in spite of the fact that it lends almost entirely to PSUs. Why ? Simple, after years of loss making operations, most SEBs are aggressively reforming with generation, transmission and distribution operations sliced out into different entities. Financial and operational reform are the two pillars on which may sick SEBs are being revived. Add growth to this situation, and you have a sweet spot for lenders. Let's face it : there's nothing more attractive for lenders than ten straight years of growth and almost no worry on asset quality.
My worry is on sustainability of spreads. The company's NIMs (net interest margins) are very healthy, at over 3%. The offered reason is the long tenure lending that it does, aided in ample measure by the tax free bonds that it can issue to depositors. Some of this charm will get eroded now that government has mandated a ceiling of Rs 50 lacs for any entitiy investing in these bonds. The company claims that interest margins will still not erode significantly, since fee incomes will begin soon and it will borrow from banks at competitive rates. This is possible, because banks' provisioning is stricter for direct lending to projects as compared to the lenient provisioning norms when they lend to REC, PFC, etc. Let's see how this pans out for REC's interest margins...
Meanwhile, REC's basic return to shareholders (RoE) is consistently high at well above 20%. This is likely to level off to a shade under 20%, but remember there's headroom (debt : equity likely to fall to under 7 from over 8.9 in FY07, after the recent fund raising) to borrow more and push up RoE. After the encouraging half yearly showing and the IPO, REC's adjusted book value per share will rise to over Rs 58, so you are buying this stock for less than 2X ABV on an immediate basis. Even if H2 is the same as H1, REC should add at least six rupees per share to this ABV. And if in FY09 the company merely replicates its FY08 showing, it will have an ABV of over Rs 76.
All in all, a good company with a bright future, going public in relatively troubled times. If you can detach yourself from the near term market worries, you will see REC's business shining through and feel like applying. That's exactly what I intend doing !
Kohinoor Broadcasting
*KOHINOOR BROADCASTING CORPORATION LIMITED*
*BSE Code: 531336*
*Book Value: Rs.15.95*
*Market Cap: Rs.104.14 Cr*
*Face Value: Rs.10*
*Market Performance: Out-performer*
*Target: Rs.70--Rs.80 in 12 -18 months time frame*
**
*Introduction: Kohinoor Broadcasting Corporation Ltd was incorporated by a
group of professionals with Mr. Harjinder Singh and Mr. Mangal Singh as key
promoters of the Company since its incorporation on 11 October 1994. During
2003 the Board decided to establish facilities for production of
advertisements, TV programmes music programmes and certain other
entertainment related activities. The Company is currently engaged in the
media and entertainment industry with a particular focus on the TV sector or
Visual Media *
*The Company has diversified in the production of TV programmes including
current affairs, music, serialised drama and other entertainment
programmes.The Company has got approval from Ministry of Broadcasting for
setting up earth station for up-linking the television channels. The Company
is setting up earth station and news studios at Rajpura and remote studios
in India at Delhi, Mumbai, Calcutta, Chennai and Jammu and outside India at
Dubai and London. In this regard, the designs have been finalised and the
equipment has been brought. The consultants have been appointed and they are
sourcing the space at the locations.*
*The Company shall also set up fifteen mobile studios for better coverage of
the events, which would be moving from one part to another. It is proposed
that each region shall have three mobile studios to cover on the spot. *
*Besides, the Company would have six mini vans cum mobile studio to cover
offices of the Chief Ministers of Punjab, Haryana, Himachal, Jammu & Kashmir
and Delhi in the first stage. The equipments have been identified. The
orders shall be placed in due course. The supply period is three months. *
*Shareholding Pattern: The promoter holding is at present very less and is
more or less managed by the Board of Directors like may other established
companies, who are doing well. But due to the high prospects of the company
going forward, the promoters are proposing to increase their stake through
private placements. The company has already informed about its desire to
offer, issue and allot up to 100,000,000 Equity Shares of Rs 10/- each on
private placement basis in one or more trenches to person resident outside
India, by way of Global Depository Receipts/American Depository Receipts or
Foreign Currency Convertible Bonds on such terms and conditions as may be
fixed by the Directors of the Company, subject to necessary provisions &
approvals. This is a very positive news on the company, since if a company
did not have fundamentals then it shoud not have gone for GDRs.*
*Financials: The company came out with excellent consolidated results (the
results including its overseas subsidiaries in Dubai and UK) for the
December, 2007 quarter
Though the total income of the Company in Q3FY08, remained flat to
Rs.52.05lakhs against
Rs.59.62 Cr in the same period previous year, but PBDT (Profit before tax
and depreciation) jumped to Rs.6.02 Cr as against Rs.1.09 Cr in the same
period previous year. For the nine months ended 31st December, 2008, the
PBDT came out to be Rs.12.40 Cr as against Rs.3.04 Cr in the same period
previous year. *
*For the Q3FY08, the Net Profits of the company zoomed to Rs.5.46 Cr against
Rs.76 lakhs in the same period previous year. The EPS for the Q3FY08 is
Rs.6.21 against Rs.2.33 in Q3FY07. This is remarkable considering that the
company had an EPS of only Rs.2.22 in FY07. *
*Triggers:*
*1. The company has received the equipment for Teleport to be set up at
Rajpura involving a capital outlay of Rs.5 Cr.*
*2. The company has placed the orders for play-out station to be set up at
Rajpura involving a capital outlay of Rs.10 Cr.*
*3. The company is in the process of making large scale recruitments of
manpower approx. 60 people for the production of content for its
entertainment channel. *
*4. The company has started producing buffer content for its forthcoming
News and Entertainment Channels.*
*5. The Company is coming up with 4 (four) New Channels which are as
follows:*
*a) KBC News--The popular Hindi New Channel*
*b)KBC Plus---The popular Entertainment Channel*
*c)KBC Gold--The popular Hindi/English/Regional Movie Channel and*
*v) KBC Profit--The popular Business Channel like NDTV Profit. *
*6.The company in principle has taken over M/S Tagore Theatres Ltd, a
multiplex valued at Rs.100 Cr. The company has appointed reputed agencies to
decide the Swap ratio for the proposed take over. *
*7. The company is opening new subsidiaries in Japan, Singapore and the USA.
The top company's officials were in the USA last month to finalise a deal
there. *
*8. The Company is likely to benefit from the DTH and CAS, which is bringing
a revolution in the media sector as a whole. *
*9. The promoters of the company are expected to increase their stake in the
company through a private placement, if the sources are to be believed. The
company has already announced that it will be conducting an EGM on 4 th
March, 2008, to offer, issue and allot up to 100,000,000 Equity Shares of Rs
10/- each on private placement basis in one or more trenches to person
resident outside India, by way of Global Depository Receipts/American
Depository Receipts or Foreign Currency Convertible Bonds on such terms and
conditions as may be fixed by the Directors of the Company, subject to
necessary provisions & approvals.*
*10. The Company proposes to invest an aggregate sum not exceeding Rs 200
Crores, in the equity shares of the Wholly Owned Subsidiaries (WOS) of the
Company viz. Kohinoor Broadcasting Corporation FZE and other subsidiaries to
be incorporated world wide notwithstanding that Such investment together
with the investment in all other bodies corporate may exceed 60% of the paid
up capital and free reserves or 100% of its free reserves whichever is more,
subject to necessary provisions & approvals. HENCE THE MEETING OF 4TH MARCH,
2008 IS VERY IMPORTANT. *
*Conclusion: Considering all the points mentioned above including the last
quarter EPS of Rs.6.21, it has been found that the scrip of Kohinoor
Broadcasting Corporation Ltd is highly undervalued and could purchased at
the CMP of Rs.8.98 for a target of Rs.70-Rs.80 in 12 to 18 months time
frame. But if the company is able to lauch its new Channels a little early
than the proposed dates and is able to open its overseas subsidiaries within
a short time, then the scrip could cross Rs.100--Rs.120 in the stipulated
time. This is a hidden gem in the media sector and a turnaround case like
Ispat Industries Ltd*
*BSE Code: 531336*
*Book Value: Rs.15.95*
*Market Cap: Rs.104.14 Cr*
*Face Value: Rs.10*
*Market Performance: Out-performer*
*Target: Rs.70--Rs.80 in 12 -18 months time frame*
**
*Introduction: Kohinoor Broadcasting Corporation Ltd was incorporated by a
group of professionals with Mr. Harjinder Singh and Mr. Mangal Singh as key
promoters of the Company since its incorporation on 11 October 1994. During
2003 the Board decided to establish facilities for production of
advertisements, TV programmes music programmes and certain other
entertainment related activities. The Company is currently engaged in the
media and entertainment industry with a particular focus on the TV sector or
Visual Media *
*The Company has diversified in the production of TV programmes including
current affairs, music, serialised drama and other entertainment
programmes.The Company has got approval from Ministry of Broadcasting for
setting up earth station for up-linking the television channels. The Company
is setting up earth station and news studios at Rajpura and remote studios
in India at Delhi, Mumbai, Calcutta, Chennai and Jammu and outside India at
Dubai and London. In this regard, the designs have been finalised and the
equipment has been brought. The consultants have been appointed and they are
sourcing the space at the locations.*
*The Company shall also set up fifteen mobile studios for better coverage of
the events, which would be moving from one part to another. It is proposed
that each region shall have three mobile studios to cover on the spot. *
*Besides, the Company would have six mini vans cum mobile studio to cover
offices of the Chief Ministers of Punjab, Haryana, Himachal, Jammu & Kashmir
and Delhi in the first stage. The equipments have been identified. The
orders shall be placed in due course. The supply period is three months. *
*Shareholding Pattern: The promoter holding is at present very less and is
more or less managed by the Board of Directors like may other established
companies, who are doing well. But due to the high prospects of the company
going forward, the promoters are proposing to increase their stake through
private placements. The company has already informed about its desire to
offer, issue and allot up to 100,000,000 Equity Shares of Rs 10/- each on
private placement basis in one or more trenches to person resident outside
India, by way of Global Depository Receipts/American Depository Receipts or
Foreign Currency Convertible Bonds on such terms and conditions as may be
fixed by the Directors of the Company, subject to necessary provisions &
approvals. This is a very positive news on the company, since if a company
did not have fundamentals then it shoud not have gone for GDRs.*
*Financials: The company came out with excellent consolidated results (the
results including its overseas subsidiaries in Dubai and UK) for the
December, 2007 quarter
Though the total income of the Company in Q3FY08, remained flat to
Rs.52.05lakhs against
Rs.59.62 Cr in the same period previous year, but PBDT (Profit before tax
and depreciation) jumped to Rs.6.02 Cr as against Rs.1.09 Cr in the same
period previous year. For the nine months ended 31st December, 2008, the
PBDT came out to be Rs.12.40 Cr as against Rs.3.04 Cr in the same period
previous year. *
*For the Q3FY08, the Net Profits of the company zoomed to Rs.5.46 Cr against
Rs.76 lakhs in the same period previous year. The EPS for the Q3FY08 is
Rs.6.21 against Rs.2.33 in Q3FY07. This is remarkable considering that the
company had an EPS of only Rs.2.22 in FY07. *
*Triggers:*
*1. The company has received the equipment for Teleport to be set up at
Rajpura involving a capital outlay of Rs.5 Cr.*
*2. The company has placed the orders for play-out station to be set up at
Rajpura involving a capital outlay of Rs.10 Cr.*
*3. The company is in the process of making large scale recruitments of
manpower approx. 60 people for the production of content for its
entertainment channel. *
*4. The company has started producing buffer content for its forthcoming
News and Entertainment Channels.*
*5. The Company is coming up with 4 (four) New Channels which are as
follows:*
*a) KBC News--The popular Hindi New Channel*
*b)KBC Plus---The popular Entertainment Channel*
*c)KBC Gold--The popular Hindi/English/Regional Movie Channel and*
*v) KBC Profit--The popular Business Channel like NDTV Profit. *
*6.The company in principle has taken over M/S Tagore Theatres Ltd, a
multiplex valued at Rs.100 Cr. The company has appointed reputed agencies to
decide the Swap ratio for the proposed take over. *
*7. The company is opening new subsidiaries in Japan, Singapore and the USA.
The top company's officials were in the USA last month to finalise a deal
there. *
*8. The Company is likely to benefit from the DTH and CAS, which is bringing
a revolution in the media sector as a whole. *
*9. The promoters of the company are expected to increase their stake in the
company through a private placement, if the sources are to be believed. The
company has already announced that it will be conducting an EGM on 4 th
March, 2008, to offer, issue and allot up to 100,000,000 Equity Shares of Rs
10/- each on private placement basis in one or more trenches to person
resident outside India, by way of Global Depository Receipts/American
Depository Receipts or Foreign Currency Convertible Bonds on such terms and
conditions as may be fixed by the Directors of the Company, subject to
necessary provisions & approvals.*
*10. The Company proposes to invest an aggregate sum not exceeding Rs 200
Crores, in the equity shares of the Wholly Owned Subsidiaries (WOS) of the
Company viz. Kohinoor Broadcasting Corporation FZE and other subsidiaries to
be incorporated world wide notwithstanding that Such investment together
with the investment in all other bodies corporate may exceed 60% of the paid
up capital and free reserves or 100% of its free reserves whichever is more,
subject to necessary provisions & approvals. HENCE THE MEETING OF 4TH MARCH,
2008 IS VERY IMPORTANT. *
*Conclusion: Considering all the points mentioned above including the last
quarter EPS of Rs.6.21, it has been found that the scrip of Kohinoor
Broadcasting Corporation Ltd is highly undervalued and could purchased at
the CMP of Rs.8.98 for a target of Rs.70-Rs.80 in 12 to 18 months time
frame. But if the company is able to lauch its new Channels a little early
than the proposed dates and is able to open its overseas subsidiaries within
a short time, then the scrip could cross Rs.100--Rs.120 in the stipulated
time. This is a hidden gem in the media sector and a turnaround case like
Ispat Industries Ltd*
World Economy and Indian Markets
The price of gold will soon make a new high(Although I will sell if I see $938 in next couple of days on intraday basis) People around the globe are running towards precious metals. Platinium makes a new record daily. Silver is outperforming gold. This all could be the economic indicators that we are overlooking. The overall economic scenario around the world looks fragile.Is it too late too talk about this now? What will happen next? what about the India growth story?
The Indian growth story is very much intact I would say but, the world growth tale(fable) doesn't looks so great. So we thought that the subprime crisis gave us the bad times. Hello! this could just be the start. The losses till date reported have come from the sell side firms only which could be around say $400 billion ++. But what about those players who are on the buy side. what about those who have bought these structured products (credit derivatives). They are yet to show up. Even in India it was reported that few banks would have been carrying these items in there portfolio(reported by NDTV profit). Is it over? Not yet. As the grapevine goes we are into the corrective wave of the five way Indian bull market(Elliott wave theory) and not to mention the gap the charts showing gap at around 14500 on the sensex(Indian Index).
What I want to bring to the notice is that there will be some trigger which could take the world markets for the surprise (Dont forget commodity market is also rallying esp. Precious and base metals). So this all need to correct. This happened in 2006 may when all the markets corrected. This time the trigger could be anything inflation, more losses could come out, could be budjet or it could even be Kosovo-Serbia clash.
Some how all this is not fitting right. People should invest keeping all this in mind and be catious. Technically everything needs a correction. We just need to identify are we with the trend or with the correction of that trend.
Any views are most Welcomed
The Indian growth story is very much intact I would say but, the world growth tale(fable) doesn't looks so great. So we thought that the subprime crisis gave us the bad times. Hello! this could just be the start. The losses till date reported have come from the sell side firms only which could be around say $400 billion ++. But what about those players who are on the buy side. what about those who have bought these structured products (credit derivatives). They are yet to show up. Even in India it was reported that few banks would have been carrying these items in there portfolio(reported by NDTV profit). Is it over? Not yet. As the grapevine goes we are into the corrective wave of the five way Indian bull market(Elliott wave theory) and not to mention the gap the charts showing gap at around 14500 on the sensex(Indian Index).
What I want to bring to the notice is that there will be some trigger which could take the world markets for the surprise (Dont forget commodity market is also rallying esp. Precious and base metals). So this all need to correct. This happened in 2006 may when all the markets corrected. This time the trigger could be anything inflation, more losses could come out, could be budjet or it could even be Kosovo-Serbia clash.
Some how all this is not fitting right. People should invest keeping all this in mind and be catious. Technically everything needs a correction. We just need to identify are we with the trend or with the correction of that trend.
Any views are most Welcomed
Pension fund savings may get tax-free
Pradeep Thakur & Sidhartha | TNN
New Delhi: Soon, there could be another reason for you to save for old age. The government may completely exempt investments in pension funds from taxes.
While money parked in pension funds at present entitles investors to a tax rebate at the time of investment and during the period it earns returns, a tax is levied at the time of withdrawal.
As a sweetener aimed at encouraging people to invest and also blunt the Left's opposition to the new pension system, the Pension Fund Regulatory & Development Authority has approached the finance ministry to treat investments in these instruments at par with employees provident fund and public provident fund, which enjoy complete tax waiver.
Sources said that the pension regulator has also pushed for raising the overall investment limit under section 80C of the Income Tax Act beyond the present level of Rs 1.1 lakh.
At present, PFRDA's interest stems from the Rs 3,000 crore that is sitting with the government and could flow into the stock and the debt markets over the next six to eight weeks. The money has been contributed by government employees as part of the contributory system that kicked in for those who joined service from January 1, 2004.
Sources said that with the sixth pay commission's report also expected to be implemented later this year, the government seemed favourably inclined to accept the proposal as it would push up the overall savings rate too. As part of the push to create more jobs, both Prime Minister Manmohan Singh and finance minister P Chidambaram have repeatedly pushed for higher savings rate, estimated at 34.8% at the end of 2006-07, to raise the level of investment in the economy.
In addition, companies have argued that in the absence of a social security system for people working in the private sector, whose numbers are rising rapidly, there is enough reason to encourage people to save in long-term instruments like pension products which can also be deployed in bonds that mature after 25-30 years. These bonds could be used to finance infrastructure projects.
New Delhi: Soon, there could be another reason for you to save for old age. The government may completely exempt investments in pension funds from taxes.
While money parked in pension funds at present entitles investors to a tax rebate at the time of investment and during the period it earns returns, a tax is levied at the time of withdrawal.
As a sweetener aimed at encouraging people to invest and also blunt the Left's opposition to the new pension system, the Pension Fund Regulatory & Development Authority has approached the finance ministry to treat investments in these instruments at par with employees provident fund and public provident fund, which enjoy complete tax waiver.
Sources said that the pension regulator has also pushed for raising the overall investment limit under section 80C of the Income Tax Act beyond the present level of Rs 1.1 lakh.
At present, PFRDA's interest stems from the Rs 3,000 crore that is sitting with the government and could flow into the stock and the debt markets over the next six to eight weeks. The money has been contributed by government employees as part of the contributory system that kicked in for those who joined service from January 1, 2004.
Sources said that with the sixth pay commission's report also expected to be implemented later this year, the government seemed favourably inclined to accept the proposal as it would push up the overall savings rate too. As part of the push to create more jobs, both Prime Minister Manmohan Singh and finance minister P Chidambaram have repeatedly pushed for higher savings rate, estimated at 34.8% at the end of 2006-07, to raise the level of investment in the economy.
In addition, companies have argued that in the absence of a social security system for people working in the private sector, whose numbers are rising rapidly, there is enough reason to encourage people to save in long-term instruments like pension products which can also be deployed in bonds that mature after 25-30 years. These bonds could be used to finance infrastructure projects.
MphasiS cuts 200 jobs in Chennai
RETRENCHMENTS are taking its toll on the Indian IT industry and the latest to join the list is MphasiS. The IT & BPO services company, which is part of the $22-billion EDS, has reportedly shed around 200 people. According to sources, MphasiS has retrenched 200 employees at its Chennai centre and all this in a span of two days last week.
MphasiS, in response to this development, said in a statement: "The query is speculatory and as per policy, MphasiS, an EDS company, does not respond to rumours and speculation." It further added, "MphasiS continues to hire people to meet business demands. The company has grown from an 11,000-employee organisation in 2006 to over 27,000-strong in 2007 and the trend will be similar in 2008."
It was not clear whether this retrenchment was restricted to the Chennai centre or covered other locations. Sources said the retrenchment was largely centered around the performance issue and it has probably affected those who were on the bench.
The recent cases of retrenchment in IT majors like TCS and IBM have centered around performance issues. However, industry observers feel it is very difficult to pinpoint whether it is performance issue or the weakness in the market which are forcing companies to take this step. At the same time, there has been a lot of flab built into a lot many companies and this could be an opportune time to cut costs as employee compensation accounts for around 40% of a typical IT services company's revenue.
According to reports, EDS' quarterly profit fell 13%, hurt by the loss of key customer Verizon Communications, which decided to handle its own technology work. Sales in the Americas declined 8%, and operating profit in the region tumbled 28%. MphasiS was one of the first Indian IT services companies to be acquired by an MNC IT company. EDS also later merged its India operations with MphasiS.
MphasiS, in response to this development, said in a statement: "The query is speculatory and as per policy, MphasiS, an EDS company, does not respond to rumours and speculation." It further added, "MphasiS continues to hire people to meet business demands. The company has grown from an 11,000-employee organisation in 2006 to over 27,000-strong in 2007 and the trend will be similar in 2008."
It was not clear whether this retrenchment was restricted to the Chennai centre or covered other locations. Sources said the retrenchment was largely centered around the performance issue and it has probably affected those who were on the bench.
The recent cases of retrenchment in IT majors like TCS and IBM have centered around performance issues. However, industry observers feel it is very difficult to pinpoint whether it is performance issue or the weakness in the market which are forcing companies to take this step. At the same time, there has been a lot of flab built into a lot many companies and this could be an opportune time to cut costs as employee compensation accounts for around 40% of a typical IT services company's revenue.
According to reports, EDS' quarterly profit fell 13%, hurt by the loss of key customer Verizon Communications, which decided to handle its own technology work. Sales in the Americas declined 8%, and operating profit in the region tumbled 28%. MphasiS was one of the first Indian IT services companies to be acquired by an MNC IT company. EDS also later merged its India operations with MphasiS.
IPO terminology
What is the difference between public issue and private placement?
When an issue is not made to only a select set of people but is open to the general public and any other investor at large, it is a public issue. But if the issue is made to a select set of people, it is called private placement. As perCompanies Act, 1956, an issue becomes public if it results in allotment to 50persons or more. This means an issue can be privately placed where an allotment is made to less than 50 persons.
What is an Initial Public Offer (IPO)?
An Initial Public Offer (IPO) is the selling of securities to the public in the primary market. It is when an unlisted company makes either a fresh issue of securities or an offer for sale of its existing securities or both for the first time to the public. This paves way for listing and trading of the issuer's securities. The sale of securities can be either through book building or through normal public issue.
Who decides the price of an issue?
Indian primary market ushered in an era of free pricing in 1992. Following this, the guidelines have provided that the issuer in consultation with Merchant Banker shall decide the price. There is no price formula stipulated by SEBI. SEBI does not play any role in price fixation. The company and merchant banker are however required to give full disclosures of the parameters which they had considered while deciding the issue price. There are two types of issues, one where company and Lead Merchant Banker fix a price (called fixed price) and other, where the company and the Lead Manager (LM) stipulate a floor price or a price band and leave it to market forces to determi ne the final price (price discovery through book building process).
What does 'price discovery through Book Building Process' mean?
Book Building is basically a process used in IPOs for efficient price discovery. It is a mechanism where, during the period for which the IPO is open, bids are collected from investors at various prices, which are above or equal to the floor price. The offer price is determined after the bid closing date.
What is the main difference between offer of shares through book building and offer of shares through normal public issue?
Price at which securities will be allotted is not known in case of offer of shares through Book Building while in case of offer of shares through normal public issue, price is known in advance to investor. Under Book Building, investors bid for shares at the floor price or above and after the closure of the book building process the price is determined for allotment of shares. In case of Book Building, the demand can be known everyday as the book is being built. But in case of the public issue the demand is known at the close of the issue.
What is Cut-Off Price?
In a Book building issue, the issuer is required to indicate either the price band or a floor price in the prospectus. The actual discovered issue price can be any price in the price band or any price above the floor price. This issue price is called "Cut-Off Price". The issuer and lead manager decides this after considering the book and the investors' appetite for the stock.
What is the floor price in case of book building?
Floor price is the minimum price at which bids can be made.
What is a Price Band in a book built IPO?
The prospectus may contain either the floor price for the securities or a price band within which the investors can bid. The spread between the floor and the cap of the price band shall not be more than 20%. In other words, it means that the cap should not be more than 120% of the floor price. The price band can have a revision and such a revision in the price band shall be widely disseminated by informing the stock exchanges, by issuing a press release and also indicating the change on the relevant website and the terminals of the trading members participating in the book building process. In case the price band is revised, the bidding period shall be extended for a further period of three days, subject to the total bidding period not exceeding ten days.
Who decides the Price Band?
It may be understood that the regulatory mechanism does not play a role in setting the price for issues. It is up to the company to decide on the price or the price band, in consultation with Merchant Bankers.
What is minimum number of days for which a bid should remain open during book building?
The Book should remain open for a minimum of 3 days.
Can open outcry system be used for book building?
No. As per SEBI, only electronically linked transparent facility is allowed to be used in case of book building.
Can the individual investor use the book building facility to make an application?
Yes.
How does one know if shares are allotted in an IPO/offer for sale? What is the timeframe for getting refund if shares not allotted?
As per SEBI guidelines, the Basis of Allotment should be completed with 15 days from the issue close date. As soon as the basis of allotment is completed, within 2 working days the details of credit to demat account / allotment advice and despatch of refund order needs to be completed. So an investor should know in about 15 days time from the closure of issue, whether shares are allotted to him or not.
How long does it take to get the shares listed after issue?
It would take around 3 weeks after the closure of the book built issue.
What is the role of a 'Registrar' to an issue?
The Registrar finalizes the list of eligible allottees after deleting the invalid applications and ensures that the corporate action for crediting of shares to the demat accounts of the applicants is done and the dispatch of refund orders to those applicable are sent. The Lead Manager coordinates with the Registrar to ensure follow up so that that the flow of applications from collecting bank branches, processing of the applications and other matters till the basis of allotment is finalized, dispatch security certificates and refund orders completed and securities listed.
Does NSE provide any facility for IPO?
Yes. NSE's electronic trading network spans across the country providing access to investors in remote areas. NSE decided to offer this infrastructure for conducting online IPOs through the Book Building process. NSE operates a fully automated screen based bidding system called NEAT IPO that enables trading members to enter bids directly from their offices through a sophisticated telecommunication network.
Book Building through the NSE system offers several advantages:
The NSE system offers a nation wide bidding facility in securities It provide a fair, efficient & transparent method for collecting bids using the latest electronic trading systems Costs involved in the issue are far less than those in a normal IPO
The system reduces the time taken for completion of the issue process
The IPO market timings are from 10.00 a.m. to 3.00 p.m. On the last day of the IPO, the session timings can be further extended on specific request by the Book Running Lead Manager.
What is a Prospectus?
A large number of new companies float public issues. While a large number of these companies are genuine, quite a few may want to exploit the investors. Therefore, it is very important that an investor before applying for any issue identifies future potential of a company. A part of the guidelines issued by SEBI (Securities and Exchange Board of India) is the disclosure of information to the public. This disclosure includes information like the reason for raising the money, the way money is proposed to be spent, the return expected on the money etc. This information is in the form of 'Prospectus' which also includes information regarding the size of the issue, the current status of the company, its equity capital, its current and past performance, the promoters, the project, cost of the project, means of financing, product and capacity etc. It also contains lot of mandatory information regarding underwriting and statutory compliances. This helps investors to evaluate short term and long term prospects of the company.
What does 'Draft Offer document' mean?
'Offer document' means Prospectus in case of a public issue or offer for sale and Letter of Offer in case of a rights issue which is filed with the Registrar of Companies (ROC) and Stock Exchanges (SEs). An offer document covers all the relevant information to help an investor to make his/her investment decision.
'Draft Offer document' means the offer document in draft stage. The draft offer documents are filed with SEBI, atleast 21 days prior to the filing of the Offer Document with ROC/SEs. SEBI may specify changes, if any, in the draft Offer Document and the issuer or the lead merchant banker shall carry out such changes in the draft offer document before filing the Offer Document with ROC/SEs. The Draft Offer Document is available on the SEBI website for public comments for a period of 21 days from the filing of the Draft Offer Document with SEBI.
What is an 'Abridged Prospectus'?
'Abridged Prospectus' is a shorter version of the Prospectus and contains all the salient features of a Prospectus. It accompanies the application form of public issues.
Who prepares the 'Prospectus'/'Offer Documents'?
Generally, the public issues of companies are handled by 'Merchant Bankers' who are responsible for getting the project appraised, finalizing the cost of the project, profitability estimates and for preparing of 'Prospectus'. The 'Prospectus' is submitted to SEBI for its approval.
What does one mean by 'Lock-in'?
'Lock-in' indicates a freeze on the sale of shares for a certain period of time. SEBI guidelines have stipulated lock-in requirements on shares of promoters mainly to ensure that the promoters or main persons, who are controlling the company, shall continue to hold some minimum percentage in the company after the public issue.
What is meant by 'Listing of Securities'?
Listing means admission of securities of an issuer to trading privileges (dealings) on a stock exchange through a formal agreement. The prime objective of admission to dealings on the exchange is to provide liquidity and marketability to securities, as also to provide a mechanism for effective control and supervision of trading.
What is a 'Listing Agreement'?
At the time of listing securities of a company on a stock exchange, the company is required to enter into a listing agreement with the exchange. The listing agreement specifies the terms and conditions of listing and the disclosures that shall be made by a company on a continuous basis to the exchange.
What does 'Delisting of securities' mean?
The term 'Delisting of securities' means permanent removal of securities of a listed company from a stock exchange. As a consequence of delisting, the securities of that company would no longer be traded at that stock exchange.
What is SEBI's Role in an Issue?
Any company making a public issue or a listed company making a rights issue of value of more than Rs 50 lakh is required to file a draft offer document with SEBI for its observations. The company can proceed further on the issue only after getting observations from SEBI. The validity period of SEBI's observation letter is three months only i.e. the company has to open its issue within three months period.
Does it mean that SEBI recommends an issue?
SEBI does not recommend any issue nor does take any responsibility either for the financial soundness of any scheme or the project for which the issue is proposed to be made or for the correctness of the statements made or opinions expressed in the offer document. SEBI mainly scrutinizes the issue for seeing that adequate disclosures are made by the issuing company in the prospectus or offer document.
Does SEBI tag make one's money safe?
The investors should make an informed decision purely by themselves based on the contents disclosed in the offer documents. SEBI does not associate itself with any issue/issuer and should in no way be construed as a guarantee for the funds that the investor proposes to invest through the issue. However, the investors are generally advised to study all the material facts pertaining to the issue including the risk factors before considering any investment. They are strongly warned against relying on any 'tips' or news through unofficial means.
Foreign Capital Issuance
Can companies in India raise foreign currency resources?
Yes. Indian companies are permitted to raise foreign currency resources through two main sources: a) issue of foreign currency convertible bonds more commonly known as 'Euro' issues and b) issue of ordinary shares through depository receipts namely 'Global Depository Receipts
(GDRs)/American Depository Receipts (ADRs)' to foreign investors i.e. to the institutional investors or individual investors.
What is an American Depository Receipt?
An American Depositary Receipt ("ADR") is a physical certificate evidencing ownership of American Depositary Shares ("ADSs"). The term is often used to refer to the ADSs themselves.
What is an ADS?
An American Depositary Share ("ADS") is a U.S. dollar denominated form of equity ownership in a non-U.S. company. It represents the foreign shares of the company held on deposit by a custodian bank in the company's home country and carries the corporate and economic rights of the foreign shares, subject to the terms specified on the ADR certificate. One or several ADSs can be represented by a physical ADR certificate. The terms ADR and ADS are often used interchangeably. ADSs provide U.S. investors with a convenient way to invest in overseas securities and to trade non-U.S. securities in the U.S. ADSs are issued by a depository bank, such as JPMorgan Chase Bank. They are traded in the same manner as shares in U.S. companies, on the New York Stock Exchange (NYSE) and the American Stock Exchange (AMEX) or quoted on NASDAQ and the over-the-counter (OTC) market. Although ADSs are U.S. dollar denominated securities and pay dividends in U.S. dollars, they do not eliminate the currency risk associated with an investment in a non-U.S. company.
What is meant by Global Depository Receipts?
Global Depository Receipts (GDRs) may be defined as a global finance vehicle that allows an issuer to raise capital simultaneously in two or markets through a global offering. GDRs may be used in public or private markets inside or outside US. GDR, a negotiable certificate usually represents company's traded equity/debt. The underlying shares correspond to the GDRs in a fixed ratio say 1 GDR=10 shares.
Source:-NCFM
When an issue is not made to only a select set of people but is open to the general public and any other investor at large, it is a public issue. But if the issue is made to a select set of people, it is called private placement. As perCompanies Act, 1956, an issue becomes public if it results in allotment to 50persons or more. This means an issue can be privately placed where an allotment is made to less than 50 persons.
What is an Initial Public Offer (IPO)?
An Initial Public Offer (IPO) is the selling of securities to the public in the primary market. It is when an unlisted company makes either a fresh issue of securities or an offer for sale of its existing securities or both for the first time to the public. This paves way for listing and trading of the issuer's securities. The sale of securities can be either through book building or through normal public issue.
Who decides the price of an issue?
Indian primary market ushered in an era of free pricing in 1992. Following this, the guidelines have provided that the issuer in consultation with Merchant Banker shall decide the price. There is no price formula stipulated by SEBI. SEBI does not play any role in price fixation. The company and merchant banker are however required to give full disclosures of the parameters which they had considered while deciding the issue price. There are two types of issues, one where company and Lead Merchant Banker fix a price (called fixed price) and other, where the company and the Lead Manager (LM) stipulate a floor price or a price band and leave it to market forces to determi ne the final price (price discovery through book building process).
What does 'price discovery through Book Building Process' mean?
Book Building is basically a process used in IPOs for efficient price discovery. It is a mechanism where, during the period for which the IPO is open, bids are collected from investors at various prices, which are above or equal to the floor price. The offer price is determined after the bid closing date.
What is the main difference between offer of shares through book building and offer of shares through normal public issue?
Price at which securities will be allotted is not known in case of offer of shares through Book Building while in case of offer of shares through normal public issue, price is known in advance to investor. Under Book Building, investors bid for shares at the floor price or above and after the closure of the book building process the price is determined for allotment of shares. In case of Book Building, the demand can be known everyday as the book is being built. But in case of the public issue the demand is known at the close of the issue.
What is Cut-Off Price?
In a Book building issue, the issuer is required to indicate either the price band or a floor price in the prospectus. The actual discovered issue price can be any price in the price band or any price above the floor price. This issue price is called "Cut-Off Price". The issuer and lead manager decides this after considering the book and the investors' appetite for the stock.
What is the floor price in case of book building?
Floor price is the minimum price at which bids can be made.
What is a Price Band in a book built IPO?
The prospectus may contain either the floor price for the securities or a price band within which the investors can bid. The spread between the floor and the cap of the price band shall not be more than 20%. In other words, it means that the cap should not be more than 120% of the floor price. The price band can have a revision and such a revision in the price band shall be widely disseminated by informing the stock exchanges, by issuing a press release and also indicating the change on the relevant website and the terminals of the trading members participating in the book building process. In case the price band is revised, the bidding period shall be extended for a further period of three days, subject to the total bidding period not exceeding ten days.
Who decides the Price Band?
It may be understood that the regulatory mechanism does not play a role in setting the price for issues. It is up to the company to decide on the price or the price band, in consultation with Merchant Bankers.
What is minimum number of days for which a bid should remain open during book building?
The Book should remain open for a minimum of 3 days.
Can open outcry system be used for book building?
No. As per SEBI, only electronically linked transparent facility is allowed to be used in case of book building.
Can the individual investor use the book building facility to make an application?
Yes.
How does one know if shares are allotted in an IPO/offer for sale? What is the timeframe for getting refund if shares not allotted?
As per SEBI guidelines, the Basis of Allotment should be completed with 15 days from the issue close date. As soon as the basis of allotment is completed, within 2 working days the details of credit to demat account / allotment advice and despatch of refund order needs to be completed. So an investor should know in about 15 days time from the closure of issue, whether shares are allotted to him or not.
How long does it take to get the shares listed after issue?
It would take around 3 weeks after the closure of the book built issue.
What is the role of a 'Registrar' to an issue?
The Registrar finalizes the list of eligible allottees after deleting the invalid applications and ensures that the corporate action for crediting of shares to the demat accounts of the applicants is done and the dispatch of refund orders to those applicable are sent. The Lead Manager coordinates with the Registrar to ensure follow up so that that the flow of applications from collecting bank branches, processing of the applications and other matters till the basis of allotment is finalized, dispatch security certificates and refund orders completed and securities listed.
Does NSE provide any facility for IPO?
Yes. NSE's electronic trading network spans across the country providing access to investors in remote areas. NSE decided to offer this infrastructure for conducting online IPOs through the Book Building process. NSE operates a fully automated screen based bidding system called NEAT IPO that enables trading members to enter bids directly from their offices through a sophisticated telecommunication network.
Book Building through the NSE system offers several advantages:
The NSE system offers a nation wide bidding facility in securities It provide a fair, efficient & transparent method for collecting bids using the latest electronic trading systems Costs involved in the issue are far less than those in a normal IPO
The system reduces the time taken for completion of the issue process
The IPO market timings are from 10.00 a.m. to 3.00 p.m. On the last day of the IPO, the session timings can be further extended on specific request by the Book Running Lead Manager.
What is a Prospectus?
A large number of new companies float public issues. While a large number of these companies are genuine, quite a few may want to exploit the investors. Therefore, it is very important that an investor before applying for any issue identifies future potential of a company. A part of the guidelines issued by SEBI (Securities and Exchange Board of India) is the disclosure of information to the public. This disclosure includes information like the reason for raising the money, the way money is proposed to be spent, the return expected on the money etc. This information is in the form of 'Prospectus' which also includes information regarding the size of the issue, the current status of the company, its equity capital, its current and past performance, the promoters, the project, cost of the project, means of financing, product and capacity etc. It also contains lot of mandatory information regarding underwriting and statutory compliances. This helps investors to evaluate short term and long term prospects of the company.
What does 'Draft Offer document' mean?
'Offer document' means Prospectus in case of a public issue or offer for sale and Letter of Offer in case of a rights issue which is filed with the Registrar of Companies (ROC) and Stock Exchanges (SEs). An offer document covers all the relevant information to help an investor to make his/her investment decision.
'Draft Offer document' means the offer document in draft stage. The draft offer documents are filed with SEBI, atleast 21 days prior to the filing of the Offer Document with ROC/SEs. SEBI may specify changes, if any, in the draft Offer Document and the issuer or the lead merchant banker shall carry out such changes in the draft offer document before filing the Offer Document with ROC/SEs. The Draft Offer Document is available on the SEBI website for public comments for a period of 21 days from the filing of the Draft Offer Document with SEBI.
What is an 'Abridged Prospectus'?
'Abridged Prospectus' is a shorter version of the Prospectus and contains all the salient features of a Prospectus. It accompanies the application form of public issues.
Who prepares the 'Prospectus'/'Offer Documents'?
Generally, the public issues of companies are handled by 'Merchant Bankers' who are responsible for getting the project appraised, finalizing the cost of the project, profitability estimates and for preparing of 'Prospectus'. The 'Prospectus' is submitted to SEBI for its approval.
What does one mean by 'Lock-in'?
'Lock-in' indicates a freeze on the sale of shares for a certain period of time. SEBI guidelines have stipulated lock-in requirements on shares of promoters mainly to ensure that the promoters or main persons, who are controlling the company, shall continue to hold some minimum percentage in the company after the public issue.
What is meant by 'Listing of Securities'?
Listing means admission of securities of an issuer to trading privileges (dealings) on a stock exchange through a formal agreement. The prime objective of admission to dealings on the exchange is to provide liquidity and marketability to securities, as also to provide a mechanism for effective control and supervision of trading.
What is a 'Listing Agreement'?
At the time of listing securities of a company on a stock exchange, the company is required to enter into a listing agreement with the exchange. The listing agreement specifies the terms and conditions of listing and the disclosures that shall be made by a company on a continuous basis to the exchange.
What does 'Delisting of securities' mean?
The term 'Delisting of securities' means permanent removal of securities of a listed company from a stock exchange. As a consequence of delisting, the securities of that company would no longer be traded at that stock exchange.
What is SEBI's Role in an Issue?
Any company making a public issue or a listed company making a rights issue of value of more than Rs 50 lakh is required to file a draft offer document with SEBI for its observations. The company can proceed further on the issue only after getting observations from SEBI. The validity period of SEBI's observation letter is three months only i.e. the company has to open its issue within three months period.
Does it mean that SEBI recommends an issue?
SEBI does not recommend any issue nor does take any responsibility either for the financial soundness of any scheme or the project for which the issue is proposed to be made or for the correctness of the statements made or opinions expressed in the offer document. SEBI mainly scrutinizes the issue for seeing that adequate disclosures are made by the issuing company in the prospectus or offer document.
Does SEBI tag make one's money safe?
The investors should make an informed decision purely by themselves based on the contents disclosed in the offer documents. SEBI does not associate itself with any issue/issuer and should in no way be construed as a guarantee for the funds that the investor proposes to invest through the issue. However, the investors are generally advised to study all the material facts pertaining to the issue including the risk factors before considering any investment. They are strongly warned against relying on any 'tips' or news through unofficial means.
Foreign Capital Issuance
Can companies in India raise foreign currency resources?
Yes. Indian companies are permitted to raise foreign currency resources through two main sources: a) issue of foreign currency convertible bonds more commonly known as 'Euro' issues and b) issue of ordinary shares through depository receipts namely 'Global Depository Receipts
(GDRs)/American Depository Receipts (ADRs)' to foreign investors i.e. to the institutional investors or individual investors.
What is an American Depository Receipt?
An American Depositary Receipt ("ADR") is a physical certificate evidencing ownership of American Depositary Shares ("ADSs"). The term is often used to refer to the ADSs themselves.
What is an ADS?
An American Depositary Share ("ADS") is a U.S. dollar denominated form of equity ownership in a non-U.S. company. It represents the foreign shares of the company held on deposit by a custodian bank in the company's home country and carries the corporate and economic rights of the foreign shares, subject to the terms specified on the ADR certificate. One or several ADSs can be represented by a physical ADR certificate. The terms ADR and ADS are often used interchangeably. ADSs provide U.S. investors with a convenient way to invest in overseas securities and to trade non-U.S. securities in the U.S. ADSs are issued by a depository bank, such as JPMorgan Chase Bank. They are traded in the same manner as shares in U.S. companies, on the New York Stock Exchange (NYSE) and the American Stock Exchange (AMEX) or quoted on NASDAQ and the over-the-counter (OTC) market. Although ADSs are U.S. dollar denominated securities and pay dividends in U.S. dollars, they do not eliminate the currency risk associated with an investment in a non-U.S. company.
What is meant by Global Depository Receipts?
Global Depository Receipts (GDRs) may be defined as a global finance vehicle that allows an issuer to raise capital simultaneously in two or markets through a global offering. GDRs may be used in public or private markets inside or outside US. GDR, a negotiable certificate usually represents company's traded equity/debt. The underlying shares correspond to the GDRs in a fixed ratio say 1 GDR=10 shares.
Source:-NCFM
List of Group 'A' Companies (w.e.f. March 3, 2008)
Sr. No. Code Name
1 523204 Aban Offshore Ltd.
2 500002 ABB Ltd.
3 532682 ABG Shipyard Ltd.
4 500410 ACC Ltd.
5 512599 Adani Enterprises Ltd.
6 500303 Aditya Birla Nuvo Ltd.
7 532399 Adlabs Films Ltd.
8 532799 Akruti Nirman Ltd.
9 532480 Allahabad Bank
10 532309 Alstom Projects India Ltd.
11 500425 Ambuja Cements Ltd.
12 532418 Andhra Bank
13 500013 Ansal Properties & Infrastructure Ltd.
14 522275 Areva T&D India Ltd.
15 500477 Ashok Leyland Ltd.
16 500820 Asian Paints (India) Ltd.
17 532215 Axis Bank Ltd.
18 500490 Bajaj Auto Ltd.
19 500032 Bajaj Hindustan Ltd.
20 532134 Bank Of Baroda
21 532149 Bank of India
22 500048 Bharat Earth Movers Ltd.
23 500049 Bharat Electronics Ltd.
24 500493 Bharat Forge Ltd.
25 500103 Bharat Heavy Electricals Ltd.
26 500547 Bharat Petroleum Corpn. Ltd.
27 532454 Bharti Airtel Ltd.
28 500055 Bhushan Steel Ltd.
29 532523 Biocon Ltd.
30 500020 Bombay Dyeing & Mfg. Co. Ltd.
31 532929 Brigade Enterprises Ltd.
32 532792 Cairn India Ltd.
33 532483 Canara Bank
34 532885 Central Bank of India
35 532273 Centurion Bank of Punjab Ltd.
36 500040 Century Textiles & Industries Ltd.
37 500084 CESC Ltd.
38 500085 Chambal Fertilisers & Chemicals Ltd.
39 500110 Chennai Petroleum Corporation Ltd.
40 500087 Cipla Ltd.
41 500830 Colgate-Palmolive (India) Ltd.
42 531344 Container Corporation Of India Ltd.
43 500093 Crompton Greaves Ltd.
44 500480 Cummins India Ltd.
45 500096 Dabur India Ltd.
46 532747 Deccan Aviation Ltd.
47 532608 Deccan Chronicle Holdings Ltd.
48 532839 Dish TV India Ltd.
49 532488 Divi's Laboratories Ltd.
50 532868 DLF Ltd.
51 500124 Dr. Reddy's Laboratories Ltd.
52 532922 Edelweiss Capital Ltd.
53 532696 Educomp Solutions Ltd.
54 500840 EIH Ltd.
55 532178 Engineers India Ltd.
56 500134 Essar Oil Ltd.
57 500630 Essar Shipping Ltd.
58 500086 Exide Industries Ltd.
59 500469 Federal Bank Ltd.
60 526881 Financial Technologies (India) Ltd.
61 532155 Gail (India) Ltd.
62 509550 Gammon India Ltd.
63 500660 GlaxoSmithkline Pharmaceuticals Ltd.
64 532296 Glenmark Pharmaceuticals Ltd.
65 532754 GMR Infrastructure Ltd.
66 500164 Godrej Industries Ltd.
67 500300 Grasim Industries Ltd.
68 500620 Great Eastern Shipping Co. Ltd.
69 532786 Great Offshore Ltd.
70 532775 GTL Infrastructure Ltd.
71 532181 Gujarat Mineral Development Corporation
72 512579 Gujarat NRE Coke Ltd.
73 532702 Gujarat State Petronet Ltd.
74 532708 GVK Power & Infrastructure Ltd.
75 532281 HCL Technologies Ltd.
76 500180 HDFC Bank Ltd.
77 500182 Hero Honda Motors Ltd.
78 500440 Hindalco Industries Ltd.
79 500185 Hindustan Construction Co. Ltd.
80 500104 Hindustan Petroleum Corporation Ltd.
81 500696 Hindustan Unilever Ltd.
82 500188 Hindustan Zinc Ltd.
83 500191 HMT Ltd.
84 532873 Housing Development & Infrastructure Ltd.
85 500010 Housing Development Finance Corp. Ltd.
86 532174 ICICI Bank Ltd.
87 532822 Idea Cellular Ltd.
88 500106 IFCI Ltd.
89 532466 I-Flex Solutions Ltd.
90 530005 India Cements Ltd.
91 532636 India Infoline Ltd.
92 532544 Indiabulls Financial Services Ltd.
93 532832 Indiabulls Real Estate Ltd.
94 532814 Indian Bank
95 500850 Indian Hotels Co. Ltd.
96 530965 Indian Oil Corporation Ltd.
97 532388 Indian Overseas Bank
98 532187 IndusInd Bank Ltd.
99 500116 Industrial Development Bank of India Ltd.
100 500209 Infosys Technologies Ltd.
101 532659 Infrastructure Development Finance Company Ltd.
102 500305 Ispat Industries Ltd.
103 500875 ITC Ltd.
104 530773 IVRCL Infrastructures & Projects Ltd.
105 512237 Jai Corp Ltd.
106 532532 Jaiprakash Associates Ltd.
107 532627 Jaiprakash Hydro-Power Ltd.
108 532617 Jet Airways (India) Ltd.
109 500378 Jindal Saw Ltd.
110 532286 Jindal Steel & Power Ltd.
111 500228 JSW Steel Ltd.
112 500247 Kotak Mahindra Bank Ltd.
113 500252 Lakshmi Machine Works Ltd.
114 532778 Lanco Infratech Ltd.
115 500510 Larsen & Toubro Ltd.
116 500253 LIC Housing Finance Ltd.
117 500257 Lupin Ltd.
118 500108 Mahanagar Telephone Nigam Ltd.
119 500520 Mahindra & Mahindra Ltd.
120 500109 Mangalore Refinery & Petrochemicals
121 532500 Maruti Udyog Ltd.
122 500271 Max India Ltd.
123 532907 Maytas Infra Ltd.
124 513377 MMTC Ltd.
125 517140 Moser-Baer (India) Ltd.
126 500530 Motor Industries Co. Ltd.
127 500294 Nagarjuna Construction Co. Ltd.
128 500075 Nagarjuna Fertiliser & Chem. Ltd.
129 532234 National Aluminium Co. Ltd.
130 500790 Nestle India Ltd.
131 513683 Neyveli Lignite Corporation Ltd.
132 500302 Nicholas Piramal India Ltd.
133 532555 NTPC Ltd.
134 500312 Oil And Natural Gas Corporation Ltd.
135 532880 Omaxe Ltd.
136 500315 Oriental Bank Of Commerce
137 523574 Pantaloon Retail (India) Ltd.
138 532780 Parsvnath Developers Ltd.
139 532522 Petronet LNG Ltd.
140 503100 Phoenix Mills Ltd.
141 532810 Power Finance Corporation Ltd.
142 532898 Power Grid Corporation Of India Ltd.
143 522205 Praj Industries Ltd.
144 532693 Punj LLoyd Ltd.
145 532461 Punjab National Bank
146 531500 Rajesh Exports Ltd.
147 500359 Ranbaxy Laboratories Ltd.
148 524230 Rashtriya Chemicals & Fertilizers Ltd.
149 500111 Reliance Capital Ltd.
150 532712 Reliance Communications Ltd.
151 500390 Reliance Energy Ltd.
152 523445 Reliance Industrial Infrastructure
153 500325 Reliance Industries Ltd.
154 532709 Reliance Natural Resources Ltd.
155 532743 Reliance Petroleum Ltd.
156 532939 Reliance Power Ltd.
157 500366 Rolta India Ltd.
158 500376 Satyam Computer Services Ltd.
159 500295 Sesa Goa Ltd.
160 523598 Shipping Corporation Of India Ltd.
161 513349 Shree Precoated Steels Ltd.
162 511218 Shriram Transport Finance Co. Ltd.
163 500550 Siemens Ltd.
164 502742 Sintex Industries Ltd.
165 532784 Sobha Developers Ltd.
166 532863 Spice Communications Ltd.
167 500112 State Bank Of India
168 500113 Steel Authority of India Ltd.
169 500900 Sterlite Industries (India) Ltd.
170 524715 Sun Pharmaceutical Industries Ltd.
171 532733 Sun TV Network Ltd.
172 532667 Suzlon Energy Ltd.
173 500770 Tata Chemicals Ltd.
174 500483 Tata Communications Ltd.
175 532540 Tata Consultancy Services Ltd.
176 500570 Tata Motors Ltd.
177 500400 Tata Power Co. Ltd.
178 500470 Tata Steel Ltd.
179 500800 Tata Tea Ltd.
180 532371 Tata Teleservices (Maharashtra) Ltd.
181 532755 Tech Mahindra Ltd.
182 532299 Television Eighteen India Ltd.
183 500411 Thermax Ltd.
184 500114 Titan Industries Ltd.
185 532779 Torrent Power Ltd.
186 532356 Triveni Engineering & Industries Ltd.
187 532505 UCO Bank
188 532538 UltraTech Cement Ltd.
189 532477 Union Bank of India
190 507878 Unitech Ltd.
191 507458 United Breweries (Holdings) Ltd.
192 512070 United Phosphorus Ltd.
193 532432 United Spirits Ltd.
194 511389 Videocon Industries Ltd.
195 532401 Vijaya Bank
196 500575 Voltas Ltd.
197 532144 Welspun-Gujarat Stahl Rohren Ltd.
198 507685 Wipro Ltd.
199 532648 Yes Bank Ltd.
200 505537 Zee Entertainment Enterprises Ltd.
1 523204 Aban Offshore Ltd.
2 500002 ABB Ltd.
3 532682 ABG Shipyard Ltd.
4 500410 ACC Ltd.
5 512599 Adani Enterprises Ltd.
6 500303 Aditya Birla Nuvo Ltd.
7 532399 Adlabs Films Ltd.
8 532799 Akruti Nirman Ltd.
9 532480 Allahabad Bank
10 532309 Alstom Projects India Ltd.
11 500425 Ambuja Cements Ltd.
12 532418 Andhra Bank
13 500013 Ansal Properties & Infrastructure Ltd.
14 522275 Areva T&D India Ltd.
15 500477 Ashok Leyland Ltd.
16 500820 Asian Paints (India) Ltd.
17 532215 Axis Bank Ltd.
18 500490 Bajaj Auto Ltd.
19 500032 Bajaj Hindustan Ltd.
20 532134 Bank Of Baroda
21 532149 Bank of India
22 500048 Bharat Earth Movers Ltd.
23 500049 Bharat Electronics Ltd.
24 500493 Bharat Forge Ltd.
25 500103 Bharat Heavy Electricals Ltd.
26 500547 Bharat Petroleum Corpn. Ltd.
27 532454 Bharti Airtel Ltd.
28 500055 Bhushan Steel Ltd.
29 532523 Biocon Ltd.
30 500020 Bombay Dyeing & Mfg. Co. Ltd.
31 532929 Brigade Enterprises Ltd.
32 532792 Cairn India Ltd.
33 532483 Canara Bank
34 532885 Central Bank of India
35 532273 Centurion Bank of Punjab Ltd.
36 500040 Century Textiles & Industries Ltd.
37 500084 CESC Ltd.
38 500085 Chambal Fertilisers & Chemicals Ltd.
39 500110 Chennai Petroleum Corporation Ltd.
40 500087 Cipla Ltd.
41 500830 Colgate-Palmolive (India) Ltd.
42 531344 Container Corporation Of India Ltd.
43 500093 Crompton Greaves Ltd.
44 500480 Cummins India Ltd.
45 500096 Dabur India Ltd.
46 532747 Deccan Aviation Ltd.
47 532608 Deccan Chronicle Holdings Ltd.
48 532839 Dish TV India Ltd.
49 532488 Divi's Laboratories Ltd.
50 532868 DLF Ltd.
51 500124 Dr. Reddy's Laboratories Ltd.
52 532922 Edelweiss Capital Ltd.
53 532696 Educomp Solutions Ltd.
54 500840 EIH Ltd.
55 532178 Engineers India Ltd.
56 500134 Essar Oil Ltd.
57 500630 Essar Shipping Ltd.
58 500086 Exide Industries Ltd.
59 500469 Federal Bank Ltd.
60 526881 Financial Technologies (India) Ltd.
61 532155 Gail (India) Ltd.
62 509550 Gammon India Ltd.
63 500660 GlaxoSmithkline Pharmaceuticals Ltd.
64 532296 Glenmark Pharmaceuticals Ltd.
65 532754 GMR Infrastructure Ltd.
66 500164 Godrej Industries Ltd.
67 500300 Grasim Industries Ltd.
68 500620 Great Eastern Shipping Co. Ltd.
69 532786 Great Offshore Ltd.
70 532775 GTL Infrastructure Ltd.
71 532181 Gujarat Mineral Development Corporation
72 512579 Gujarat NRE Coke Ltd.
73 532702 Gujarat State Petronet Ltd.
74 532708 GVK Power & Infrastructure Ltd.
75 532281 HCL Technologies Ltd.
76 500180 HDFC Bank Ltd.
77 500182 Hero Honda Motors Ltd.
78 500440 Hindalco Industries Ltd.
79 500185 Hindustan Construction Co. Ltd.
80 500104 Hindustan Petroleum Corporation Ltd.
81 500696 Hindustan Unilever Ltd.
82 500188 Hindustan Zinc Ltd.
83 500191 HMT Ltd.
84 532873 Housing Development & Infrastructure Ltd.
85 500010 Housing Development Finance Corp. Ltd.
86 532174 ICICI Bank Ltd.
87 532822 Idea Cellular Ltd.
88 500106 IFCI Ltd.
89 532466 I-Flex Solutions Ltd.
90 530005 India Cements Ltd.
91 532636 India Infoline Ltd.
92 532544 Indiabulls Financial Services Ltd.
93 532832 Indiabulls Real Estate Ltd.
94 532814 Indian Bank
95 500850 Indian Hotels Co. Ltd.
96 530965 Indian Oil Corporation Ltd.
97 532388 Indian Overseas Bank
98 532187 IndusInd Bank Ltd.
99 500116 Industrial Development Bank of India Ltd.
100 500209 Infosys Technologies Ltd.
101 532659 Infrastructure Development Finance Company Ltd.
102 500305 Ispat Industries Ltd.
103 500875 ITC Ltd.
104 530773 IVRCL Infrastructures & Projects Ltd.
105 512237 Jai Corp Ltd.
106 532532 Jaiprakash Associates Ltd.
107 532627 Jaiprakash Hydro-Power Ltd.
108 532617 Jet Airways (India) Ltd.
109 500378 Jindal Saw Ltd.
110 532286 Jindal Steel & Power Ltd.
111 500228 JSW Steel Ltd.
112 500247 Kotak Mahindra Bank Ltd.
113 500252 Lakshmi Machine Works Ltd.
114 532778 Lanco Infratech Ltd.
115 500510 Larsen & Toubro Ltd.
116 500253 LIC Housing Finance Ltd.
117 500257 Lupin Ltd.
118 500108 Mahanagar Telephone Nigam Ltd.
119 500520 Mahindra & Mahindra Ltd.
120 500109 Mangalore Refinery & Petrochemicals
121 532500 Maruti Udyog Ltd.
122 500271 Max India Ltd.
123 532907 Maytas Infra Ltd.
124 513377 MMTC Ltd.
125 517140 Moser-Baer (India) Ltd.
126 500530 Motor Industries Co. Ltd.
127 500294 Nagarjuna Construction Co. Ltd.
128 500075 Nagarjuna Fertiliser & Chem. Ltd.
129 532234 National Aluminium Co. Ltd.
130 500790 Nestle India Ltd.
131 513683 Neyveli Lignite Corporation Ltd.
132 500302 Nicholas Piramal India Ltd.
133 532555 NTPC Ltd.
134 500312 Oil And Natural Gas Corporation Ltd.
135 532880 Omaxe Ltd.
136 500315 Oriental Bank Of Commerce
137 523574 Pantaloon Retail (India) Ltd.
138 532780 Parsvnath Developers Ltd.
139 532522 Petronet LNG Ltd.
140 503100 Phoenix Mills Ltd.
141 532810 Power Finance Corporation Ltd.
142 532898 Power Grid Corporation Of India Ltd.
143 522205 Praj Industries Ltd.
144 532693 Punj LLoyd Ltd.
145 532461 Punjab National Bank
146 531500 Rajesh Exports Ltd.
147 500359 Ranbaxy Laboratories Ltd.
148 524230 Rashtriya Chemicals & Fertilizers Ltd.
149 500111 Reliance Capital Ltd.
150 532712 Reliance Communications Ltd.
151 500390 Reliance Energy Ltd.
152 523445 Reliance Industrial Infrastructure
153 500325 Reliance Industries Ltd.
154 532709 Reliance Natural Resources Ltd.
155 532743 Reliance Petroleum Ltd.
156 532939 Reliance Power Ltd.
157 500366 Rolta India Ltd.
158 500376 Satyam Computer Services Ltd.
159 500295 Sesa Goa Ltd.
160 523598 Shipping Corporation Of India Ltd.
161 513349 Shree Precoated Steels Ltd.
162 511218 Shriram Transport Finance Co. Ltd.
163 500550 Siemens Ltd.
164 502742 Sintex Industries Ltd.
165 532784 Sobha Developers Ltd.
166 532863 Spice Communications Ltd.
167 500112 State Bank Of India
168 500113 Steel Authority of India Ltd.
169 500900 Sterlite Industries (India) Ltd.
170 524715 Sun Pharmaceutical Industries Ltd.
171 532733 Sun TV Network Ltd.
172 532667 Suzlon Energy Ltd.
173 500770 Tata Chemicals Ltd.
174 500483 Tata Communications Ltd.
175 532540 Tata Consultancy Services Ltd.
176 500570 Tata Motors Ltd.
177 500400 Tata Power Co. Ltd.
178 500470 Tata Steel Ltd.
179 500800 Tata Tea Ltd.
180 532371 Tata Teleservices (Maharashtra) Ltd.
181 532755 Tech Mahindra Ltd.
182 532299 Television Eighteen India Ltd.
183 500411 Thermax Ltd.
184 500114 Titan Industries Ltd.
185 532779 Torrent Power Ltd.
186 532356 Triveni Engineering & Industries Ltd.
187 532505 UCO Bank
188 532538 UltraTech Cement Ltd.
189 532477 Union Bank of India
190 507878 Unitech Ltd.
191 507458 United Breweries (Holdings) Ltd.
192 512070 United Phosphorus Ltd.
193 532432 United Spirits Ltd.
194 511389 Videocon Industries Ltd.
195 532401 Vijaya Bank
196 500575 Voltas Ltd.
197 532144 Welspun-Gujarat Stahl Rohren Ltd.
198 507685 Wipro Ltd.
199 532648 Yes Bank Ltd.
200 505537 Zee Entertainment Enterprises Ltd.
Petronet
Petronet LNG is looking at buying liquefied natural gas (LNG) from a proposed 6.3 million tonnes a year project in Papua New Guinea, its Director of Finance, Amitava Sengupta said on Tuesday.
Indian Stock Market may open weak today.
Asian markets which opened today before the indian stock market are trading in losses. US Markets also declined yesterday due to increase in prices of crude oil per barrel as higher energy costs may result in higher inflation rate. Rise in the prices of crude oil may affect the inflation rate in india too.
Bang Overseas shares to list today
Bang Overseas, a player in fashion fabrics, retail and textile segment has come to the IPO market in the last week of January 2008. Bang Overseas shares are going to make its debut in Stock exchanges today. The price band fixed was Rs 200-207. It may list around Rs. 210-220.
Investors are advised not to take any positions in this stock. It may also go below the issue price due to poor market conditions today.
Investors are advised not to take any positions in this stock. It may also go below the issue price due to poor market conditions today.
Shriram EPC to debut today in Stock Exchanges
Chennai based Shiram EPC which is involved in engineering, integrated designing, construction and project management for renewable energy projects and metallurgy projects, will be making its debut in stock markets today. It came with its IPO in the market last month and alloted shares to the investors at Rs. 300. It may list at the issue price or below and may go down further. Investors are advised not to get involved in this share.
Tuesday, February 19, 2008
IT News
IT sector may get some regions to bloom once software parks scheme expires: Union budget 2008-2009 may announce some incentives for IT investment regions to replace the current software technology parks of India scheme, which will expire in 2009.Some main highlights of the policy are
* Government will set up exclusive investment regions which will be spread over at least 40 Sq km for development of IT sector.
* Company having any type of IT operation will be eligible to set shops in the proposed regions
* Government will be responsible for creation of ready made facility
* Government will set up exclusive investment regions which will be spread over at least 40 Sq km for development of IT sector.
* Company having any type of IT operation will be eligible to set shops in the proposed regions
* Government will be responsible for creation of ready made facility
Cni
CNI Research Ltd has informed BSE that the Company has signed a consulting agreement with Wakabayasbi Fund, LLC, a Japanese Limited Liability Company (the "Company"), a corporation organized and existing under the laws of the Japan., whose address is 2-6-2 Kamiosaki, Shinagawa-ku, Tokyo, Japan 141-0021.
The agreement is for liaison of Capital Funding and Institutional Relationship (non exclusive in India and overseas). The alliance will improve the top line of CNI Research Ltd which is a fully paid portal.
This agreement will strengthen the existing business of CNI Research in more than one way. Cni Research is in talks for more such alliances with few leading overseas investment bankers.
The agreement is for liaison of Capital Funding and Institutional Relationship (non exclusive in India and overseas). The alliance will improve the top line of CNI Research Ltd which is a fully paid portal.
This agreement will strengthen the existing business of CNI Research in more than one way. Cni Research is in talks for more such alliances with few leading overseas investment bankers.
OnMobile Global makes its debut at the issue price
OnMobile Global, a Bangalore based company, a provider of telecommunication value added products and services made its debut and opened at the issue price of Rs. 440. The stock recieved a good buying support because of the strong sentiments in the market today and it touched a high of Rs. 470 and also hit a low of Rs 411 on NSE.
On BSE it has touched a high of Rs 472 and a low of Rs 421.
On BSE it has touched a high of Rs 472 and a low of Rs 421.
Rural Electrification Corporation
Rural Electrification Corporation, February 19-22, 2008 Offer Price - Rs. 90-105 Would advise investors to invest in this IPO as it is reasonably priced after couple of IPOs were withdrawn from the market. REC is a very good company to invest and one should apply as there are chances to get decent allotment of these share and making reasonable gains.
Monday, February 18, 2008
ANZ Sinks On Sub-Prime Losses-Real Estate Developer Defaults
Shares of Australia & New Zealand Banking Group dove 6% Monday morning after Australia's third-largest lender said the deterioration in the credit markets and raised loss provisions would cancel out profit growth in 2008.
Gold: May stay lacklustre
Gold on Friday moved in a narrow channel of $909-911 almost throughout the day. However when the New York market opened it went through extra gyrations...
Thursday, February 14, 2008
Singapore way
SINGAPORE - Forget about graphs, charts and economic forecasts. Wary investors in Asia are turning to feng shui masters to tell them which way the markets will head in the Chinese Year of the Rat.
Perhaps not surprisingly for investors already burnt by recent stock market slides, feng shui experts are predicting a gloomy year for shares, not good news for those hoping for a rebound in global markets hit by worries over the U.S. economy.
"The rat will become aggressive at the tail end of the year and its underlying water element will cool the stock market," said Vincent Koh, a feng shui master at Singapore Feng Shui Centre.
Perhaps not surprisingly for investors already burnt by recent stock market slides, feng shui experts are predicting a gloomy year for shares, not good news for those hoping for a rebound in global markets hit by worries over the U.S. economy.
"The rat will become aggressive at the tail end of the year and its underlying water element will cool the stock market," said Vincent Koh, a feng shui master at Singapore Feng Shui Centre.
Nonchalant rupee rise:-IT feel the heat
BANGALORE/MUMBAI/NEW DELHI: The rising rupee has brought fresh worry lines for the Indian IT sector and impact was felt at the bourses on Thursday with the IT indices on NSE moving southward by 2.17% despite the market being in the bull phase.
The rupee appreciating below the 40 levels will put further pressure on the industry’s top line and operating margins. Nasscom president Kiran Karnik said, "Large IT companies with robust margins may suffer an impact on their bottom line, but are in a good position to absorb or even counter the effect. However, the BPO segment and small companies, which have lower margins, will be hard hit."
For every 1% appreciation in the rupee, the operating margins (OPM) falls by 40-50 basis points (bps). During the first quarter of current fiscal, Wipro’s OPM was impacted by 3.4% while Infosys took a knock of 3.5% and Tata Consultancy Services 2.5%.
Infosys could not comment on this rise as they are under the mandatory silent period. Anil Chanana, CFO, HCL Technologies, said, "for every 1% appreciation in rupee, the impact on EBIT margins is different on business lines. Our overall impact on EBIT margins would be 40 bps."
HCL has a forward cover to $1.7 billion for the next four quarters. However, it is the BPO industry which has been the hardest hit as it works on a completely offshore model. WNS CEO Neeraj Bhargava said, "we are a lot better prepared for this appreciation with our hedging policies. I also believe that the rupee is not headed one way and a balance would be struck".
The industry has also been talking about various levers to combat appreciating rupee like higher utilisation levels, better offshore-onsite mix and hike in billing rates. Gaurav Dua, analyst, Sharekhan said: "Many IT companies say they have more or less adjusted to the Rs 39-41 per dollar band. The consensus opinion seems to be that it is likely to be in this range for now. As long as it is in that range, I don’t think they will make any big change in strategy."
Infosys has taken the rupee guidance at 40.58 for the entire fiscal and has, in fact, raised its forward cover to $925 million while TCS has a cover of $2.5 billion. But many expect the rupee to swing both ways and feel that it would not be prudent to go for extra forward cover as it would prove to be counter productive.
The strongest hit will be the small and medium IT companies, who are saddled with lesser number of clients and higher input costs like wages and infrastructure. Investment banking firm Avendus Advisors managing director Ranu Vohra said, "while large IT companies are very focused, mid-sized firms would be able to negotiate higher prices with their clients, the ones most impacted by the rupee appreciation would be mid-cap companies with no differentiation as these would not be able to ask for higher billing rates."
Arup Roy, senior research analyst - IT services, Gartner, "if the rupee continues to strengthen, it will add a new dimension to the threats faced by the Indian IT services providers."
The rupee appreciating below the 40 levels will put further pressure on the industry’s top line and operating margins. Nasscom president Kiran Karnik said, "Large IT companies with robust margins may suffer an impact on their bottom line, but are in a good position to absorb or even counter the effect. However, the BPO segment and small companies, which have lower margins, will be hard hit."
For every 1% appreciation in the rupee, the operating margins (OPM) falls by 40-50 basis points (bps). During the first quarter of current fiscal, Wipro’s OPM was impacted by 3.4% while Infosys took a knock of 3.5% and Tata Consultancy Services 2.5%.
Infosys could not comment on this rise as they are under the mandatory silent period. Anil Chanana, CFO, HCL Technologies, said, "for every 1% appreciation in rupee, the impact on EBIT margins is different on business lines. Our overall impact on EBIT margins would be 40 bps."
HCL has a forward cover to $1.7 billion for the next four quarters. However, it is the BPO industry which has been the hardest hit as it works on a completely offshore model. WNS CEO Neeraj Bhargava said, "we are a lot better prepared for this appreciation with our hedging policies. I also believe that the rupee is not headed one way and a balance would be struck".
The industry has also been talking about various levers to combat appreciating rupee like higher utilisation levels, better offshore-onsite mix and hike in billing rates. Gaurav Dua, analyst, Sharekhan said: "Many IT companies say they have more or less adjusted to the Rs 39-41 per dollar band. The consensus opinion seems to be that it is likely to be in this range for now. As long as it is in that range, I don’t think they will make any big change in strategy."
Infosys has taken the rupee guidance at 40.58 for the entire fiscal and has, in fact, raised its forward cover to $925 million while TCS has a cover of $2.5 billion. But many expect the rupee to swing both ways and feel that it would not be prudent to go for extra forward cover as it would prove to be counter productive.
The strongest hit will be the small and medium IT companies, who are saddled with lesser number of clients and higher input costs like wages and infrastructure. Investment banking firm Avendus Advisors managing director Ranu Vohra said, "while large IT companies are very focused, mid-sized firms would be able to negotiate higher prices with their clients, the ones most impacted by the rupee appreciation would be mid-cap companies with no differentiation as these would not be able to ask for higher billing rates."
Arup Roy, senior research analyst - IT services, Gartner, "if the rupee continues to strengthen, it will add a new dimension to the threats faced by the Indian IT services providers."
Wednesday, February 13, 2008
13/02/'08 - US Retail Sales On Tap.
Economic News
USD
The greenback drifted lower against the EUR and the GBP yesterday ahead of today's much anticipated Retail Sales report, which is expected to disappoint and therefore increase speculation that the U.S economy is headed towards a recession. It is highly unlikely that the Retail Sales figure will surprise on the upside amidst a slowing U.S economy, so traders already began to short the dollar yesterday ahead of today's report. There were no significant economic indicators released from the U.S yesterday, however there was some major market moving news as billionaire investor Warren Buffet offered to take a $800 billion state in municipal bonds guaranteed by troubled MBIA Inc., Ambac Financial Group Inc and FGIC Corp. in his attempt to control approximately 33% of the debt insurance market. This news bolstered U.S stocks as there was speculation that this move would ease credit markets and help prevent a slump in the value of municipal debt. Therefore it was not all doom and gloom for the greenback as it did manage to rally sharply against the JPY on the back of this news, due to the resulting momentary resumption of risk appetite among global investors. On the other hand this willingness to take risks among investors due to some real positive market news was another major reason why the greenback depreciated against the Sterling and the EUR yesterday. Since the interest rate gap between the U.S and Europe has widened substantially in recent weeks and so it now makes the greenback susceptible to carry trades. Also the dollar gains against the JPY were cut short as investors concluded that the so called “Buffet Plan” was insufficient to relieve the grey cloud surrounding the U.S economy.
Today, the only important data from the U.S will be the Retail Sales headline and core figures. Analysts expect a downside surprise amidst a slowing U.S economy and much of this speculation was already incorporated into yesterday's dollar slide. However, should Retail Sales drop far beyond expectations then this will throw the dollar back to the bears, any other outcome will result in a greenback consolidation after yesterday's sharp decline.
EUR
There was positive news yesterday for the EUR as both the German and Euro-zone ZEW Economic Sentiment released better-than-expected. These figures measure institutional investor sentiment and the monthly indicator reflects the difference between the share of investors that are optimistic and the share of investors that are pessimistic. Now although both the German and Euro-zone ZEW figures are still negative indicating that the share of pessismism outweighs the share of optimism, yesterday's figures nevertheless indicated an improvement in sentiment because there is declining pessimism. Therefore the EUR rallied against most of the majors, particularly versus the USD and the JPY on the back of the so called “Buffet Plan”. Also the negative speculation surrounding the greenback ahead of today's U.S Retail Sales report was another key contributing factor in the EUR's sharp rally versus the greenback. The EUR's rally versus the JPY was eventually capped as investors concluded that the “Buffet Plan” was not enough to remove the negative sentiment surrounding the U.S economy. Nevertheless, the EUR was able to maintain its gains versus the troubled U.S currency which faces another difficult day today with the looming Retail Sales figures.
Looking ahead to today, there should be more positive news for the EUR as Euro-zone Industrial Production is expected to release at 0.5%, which is significantly better than the previous figure of -0.5%. Therefore this is a very positive indication for the European economy as high levels of production are signs of a strong economy. So although the German economy is heavily reliant on exports, the Euro-zone economy is still showing resilience despite the strong EUR. We expect the EUR to continue its rally against the greenback today but much depends on how the U.S Retail Sales figures release.
JPY
The JPY declined all across the board yesterday after Warren Buffet's plan to shore $800 billion worth of municipal debts. This news sparked a risk appetite among investors and therefore carry trades were back in full swing, albeit temporarily. The JPY managed to recoup some of its losses as investors realized that this move was not enough to change the current negative sentiment surrounding the global economy. Earlier today during the Asian trading session the only news released from Japan was the Current Account and the CGPI figures. The Current account came in at 1.86T, which was slightly below the previous figure of 1.90T but still very strong. The CGPI figure, which measures the rate of inflation experienced by corporations when purchasing goods, released at 3.0% which was noticeably better than the forecasted figure of 2.7%. The JPY should continue to rebound today as risk fear resumes it's strangle hold on investor sentiment as the market now moves forward from yesterday's positive news. So with the outlook for the global economies remaining bleak, carry trades should continue to unwind and the JPY should maintain its positive momentum although a JPY level below 106.00 versus the greenback could dampen Japanese exports dramatically.
Technical News
EUR/USD
The daily chart indicates a relatively high bullish momentum as the slow stochastic is floating around the 50 level. The 4 hour chart is supporting the bullish notion yet it might be preferable to wait for a significant break above the 1.4600 in order for the next move to be validated.
GBP/USD
There is a very distinct downwards channel forming on the 4 hour chart as the cable now floats in the mid section of it. The momentum is locally bullish, and traders must wait for a breach beyond the upper level of the channel at 1.9620 in order for the correction move to be fully validated. A failed breach will keep the cable floating within the channel in a mild bearish movement.
USD/[B]JPY[/b]
The flat tight range is still in place, as the pair is showing very weak bullish momentum within the range. The Bollinger Bands are very tight on the daily chart which indicates that the break can't be very far away. The slow stochastic has a positive slope which might imply that the break could be beyond the 107.60.
USD/CHF
The bullish momentum is slowing down and the pair now consolidates around 1.1020. The daily chart is giving mixed signals, and the tight Bollinger bands and the doji formation are implying an upcoming strong move. The direction of the move is still vague, and traders are advised to hold for the break and swing into it.
The Wild Card
Gold
Gold is being traded within a very distinct channel on the daily chart, and is now floating at a strong key point of the bottom barrier. forex traders are advised to wait for a break beyond the 899.00 which will validate a sharp dropping move that might take gold prices into a deep abyss.
USD
The greenback drifted lower against the EUR and the GBP yesterday ahead of today's much anticipated Retail Sales report, which is expected to disappoint and therefore increase speculation that the U.S economy is headed towards a recession. It is highly unlikely that the Retail Sales figure will surprise on the upside amidst a slowing U.S economy, so traders already began to short the dollar yesterday ahead of today's report. There were no significant economic indicators released from the U.S yesterday, however there was some major market moving news as billionaire investor Warren Buffet offered to take a $800 billion state in municipal bonds guaranteed by troubled MBIA Inc., Ambac Financial Group Inc and FGIC Corp. in his attempt to control approximately 33% of the debt insurance market. This news bolstered U.S stocks as there was speculation that this move would ease credit markets and help prevent a slump in the value of municipal debt. Therefore it was not all doom and gloom for the greenback as it did manage to rally sharply against the JPY on the back of this news, due to the resulting momentary resumption of risk appetite among global investors. On the other hand this willingness to take risks among investors due to some real positive market news was another major reason why the greenback depreciated against the Sterling and the EUR yesterday. Since the interest rate gap between the U.S and Europe has widened substantially in recent weeks and so it now makes the greenback susceptible to carry trades. Also the dollar gains against the JPY were cut short as investors concluded that the so called “Buffet Plan” was insufficient to relieve the grey cloud surrounding the U.S economy.
Today, the only important data from the U.S will be the Retail Sales headline and core figures. Analysts expect a downside surprise amidst a slowing U.S economy and much of this speculation was already incorporated into yesterday's dollar slide. However, should Retail Sales drop far beyond expectations then this will throw the dollar back to the bears, any other outcome will result in a greenback consolidation after yesterday's sharp decline.
EUR
There was positive news yesterday for the EUR as both the German and Euro-zone ZEW Economic Sentiment released better-than-expected. These figures measure institutional investor sentiment and the monthly indicator reflects the difference between the share of investors that are optimistic and the share of investors that are pessimistic. Now although both the German and Euro-zone ZEW figures are still negative indicating that the share of pessismism outweighs the share of optimism, yesterday's figures nevertheless indicated an improvement in sentiment because there is declining pessimism. Therefore the EUR rallied against most of the majors, particularly versus the USD and the JPY on the back of the so called “Buffet Plan”. Also the negative speculation surrounding the greenback ahead of today's U.S Retail Sales report was another key contributing factor in the EUR's sharp rally versus the greenback. The EUR's rally versus the JPY was eventually capped as investors concluded that the “Buffet Plan” was not enough to remove the negative sentiment surrounding the U.S economy. Nevertheless, the EUR was able to maintain its gains versus the troubled U.S currency which faces another difficult day today with the looming Retail Sales figures.
Looking ahead to today, there should be more positive news for the EUR as Euro-zone Industrial Production is expected to release at 0.5%, which is significantly better than the previous figure of -0.5%. Therefore this is a very positive indication for the European economy as high levels of production are signs of a strong economy. So although the German economy is heavily reliant on exports, the Euro-zone economy is still showing resilience despite the strong EUR. We expect the EUR to continue its rally against the greenback today but much depends on how the U.S Retail Sales figures release.
JPY
The JPY declined all across the board yesterday after Warren Buffet's plan to shore $800 billion worth of municipal debts. This news sparked a risk appetite among investors and therefore carry trades were back in full swing, albeit temporarily. The JPY managed to recoup some of its losses as investors realized that this move was not enough to change the current negative sentiment surrounding the global economy. Earlier today during the Asian trading session the only news released from Japan was the Current Account and the CGPI figures. The Current account came in at 1.86T, which was slightly below the previous figure of 1.90T but still very strong. The CGPI figure, which measures the rate of inflation experienced by corporations when purchasing goods, released at 3.0% which was noticeably better than the forecasted figure of 2.7%. The JPY should continue to rebound today as risk fear resumes it's strangle hold on investor sentiment as the market now moves forward from yesterday's positive news. So with the outlook for the global economies remaining bleak, carry trades should continue to unwind and the JPY should maintain its positive momentum although a JPY level below 106.00 versus the greenback could dampen Japanese exports dramatically.
Technical News
EUR/USD
The daily chart indicates a relatively high bullish momentum as the slow stochastic is floating around the 50 level. The 4 hour chart is supporting the bullish notion yet it might be preferable to wait for a significant break above the 1.4600 in order for the next move to be validated.
GBP/USD
There is a very distinct downwards channel forming on the 4 hour chart as the cable now floats in the mid section of it. The momentum is locally bullish, and traders must wait for a breach beyond the upper level of the channel at 1.9620 in order for the correction move to be fully validated. A failed breach will keep the cable floating within the channel in a mild bearish movement.
USD/[B]JPY[/b]
The flat tight range is still in place, as the pair is showing very weak bullish momentum within the range. The Bollinger Bands are very tight on the daily chart which indicates that the break can't be very far away. The slow stochastic has a positive slope which might imply that the break could be beyond the 107.60.
USD/CHF
The bullish momentum is slowing down and the pair now consolidates around 1.1020. The daily chart is giving mixed signals, and the tight Bollinger bands and the doji formation are implying an upcoming strong move. The direction of the move is still vague, and traders are advised to hold for the break and swing into it.
The Wild Card
Gold
Gold is being traded within a very distinct channel on the daily chart, and is now floating at a strong key point of the bottom barrier. forex traders are advised to wait for a break beyond the 899.00 which will validate a sharp dropping move that might take gold prices into a deep abyss.
Tuesday, February 12, 2008
38 steps to become a trader
38 steps to becoming a trader
They are as follows:
1. We accumulate information - buying books, going to seminars and
researching.
2. We begin to trade with our 'new' knowledge.
3. We consistently 'donate' and then realise we may need more
knowledge or information.
4. We accumulate more information.
5. We switch the commodities we are currently following.
6. We go back into the market and trade with our 'updated' knowledge.
7. We get 'beat up' again and begin to lose some of our confidence.
Fear starts setting in.
8. We start to listen to 'outside news' and to other traders.
9. We go back into the market and continue to 'donate'.
10. We switch commodities again.
11. We search for more information.
12. We go back into the market and start to see a little progress.
13. We get 'over-confident' and the market humbles us.
14. We start to understand that trading successfully is going to
take more time and more knowledge than we anticipated.
MOST PEOPLE WILL GIVE UP AT THIS POINT,
AS THEY REALISE WORK IS INVOLVED.
15. We get serious and start concentrating on learning a 'real'
methodology.
16. We trade our methodology with some success, but realise that
something is missing.
17. We begin to understand the need for having rules to apply our
methodology.
18. We take a sabbatical from trading to develop and research our
trading rules.
19. We start trading again, this time with rules and find some
success, but over all we still hesitate when it comes time to
execute.
20. We add, subtract and modify rules as we see a need to be more
proficient with our rules.
21. We feel we are very close to crossing that threshold of
successful trading.
22. We start to take responsibility for our trading results as we
understand that our success is in us, not the methodology.
23. We continue to trade and become more proficient with our
methodology and our rules.
24. As we trade we still have a tendency to violate our rules and our
results are still erratic.
25. We know we are close.
26. We go back and research our rules.
27. We build the confidence in our rules and go back into the market
and trade.
28. Our trading results are getting better, but we are still
hesitating in executing our rules.
29. We now see the importance of following our rules as we see the
results of our trades when we don't follow the rules.
30. We begin to see that our lack of success is within us (a lack of
discipline in following the rules because of some kind of fear)
and we begin to work on knowing ourselves better.
31. We continue to trade and the market teaches us more and more
about ourselves.
32. We master our methodology and our trading rules.
33. We begin to consistently make money.
34. We get a little over-confident and the market humbles us.
35. We continue to learn our lessons.
36. We stop thinking and allow our rules to trade for us (trading
becomes boring, but successful) and our trading account
continues to grow as we increase our contract size.
37. We are making more money than we ever dreamed possible.
38. We go on with our lives and accomplish many of the goals we had
always dreamed of.
Most traders will identify with this list and should be able to place
themselves within these steps. Keep in mind that very few people
progress through these steps in an orderly fashion. Developing your
trading skills is an iterative process. For example, you may reach
Step 13., find that although you were making money, your basic
premise for trading was flawed (you might have been benefiting from
the bull market, rather than your own trading prowess and then have
been rudely awakened when the market entered a bear phase) and you
may drop back to Step 4. and start 'climbing' the steps again.
Having the proper mindset, attitude and psychological makeup becomes
increasingly important as you progress through the steps. The focus
of the earlier steps is on external issues, i.e. developing
proficiency in the mechanics of trading while the focus of the
latter steps (particularly from Step 30, on) is on internal issues,
i.e. improving ourselves mentally and psychologically, maturing as
trader
regards
Yatish
They are as follows:
1. We accumulate information - buying books, going to seminars and
researching.
2. We begin to trade with our 'new' knowledge.
3. We consistently 'donate' and then realise we may need more
knowledge or information.
4. We accumulate more information.
5. We switch the commodities we are currently following.
6. We go back into the market and trade with our 'updated' knowledge.
7. We get 'beat up' again and begin to lose some of our confidence.
Fear starts setting in.
8. We start to listen to 'outside news' and to other traders.
9. We go back into the market and continue to 'donate'.
10. We switch commodities again.
11. We search for more information.
12. We go back into the market and start to see a little progress.
13. We get 'over-confident' and the market humbles us.
14. We start to understand that trading successfully is going to
take more time and more knowledge than we anticipated.
MOST PEOPLE WILL GIVE UP AT THIS POINT,
AS THEY REALISE WORK IS INVOLVED.
15. We get serious and start concentrating on learning a 'real'
methodology.
16. We trade our methodology with some success, but realise that
something is missing.
17. We begin to understand the need for having rules to apply our
methodology.
18. We take a sabbatical from trading to develop and research our
trading rules.
19. We start trading again, this time with rules and find some
success, but over all we still hesitate when it comes time to
execute.
20. We add, subtract and modify rules as we see a need to be more
proficient with our rules.
21. We feel we are very close to crossing that threshold of
successful trading.
22. We start to take responsibility for our trading results as we
understand that our success is in us, not the methodology.
23. We continue to trade and become more proficient with our
methodology and our rules.
24. As we trade we still have a tendency to violate our rules and our
results are still erratic.
25. We know we are close.
26. We go back and research our rules.
27. We build the confidence in our rules and go back into the market
and trade.
28. Our trading results are getting better, but we are still
hesitating in executing our rules.
29. We now see the importance of following our rules as we see the
results of our trades when we don't follow the rules.
30. We begin to see that our lack of success is within us (a lack of
discipline in following the rules because of some kind of fear)
and we begin to work on knowing ourselves better.
31. We continue to trade and the market teaches us more and more
about ourselves.
32. We master our methodology and our trading rules.
33. We begin to consistently make money.
34. We get a little over-confident and the market humbles us.
35. We continue to learn our lessons.
36. We stop thinking and allow our rules to trade for us (trading
becomes boring, but successful) and our trading account
continues to grow as we increase our contract size.
37. We are making more money than we ever dreamed possible.
38. We go on with our lives and accomplish many of the goals we had
always dreamed of.
Most traders will identify with this list and should be able to place
themselves within these steps. Keep in mind that very few people
progress through these steps in an orderly fashion. Developing your
trading skills is an iterative process. For example, you may reach
Step 13., find that although you were making money, your basic
premise for trading was flawed (you might have been benefiting from
the bull market, rather than your own trading prowess and then have
been rudely awakened when the market entered a bear phase) and you
may drop back to Step 4. and start 'climbing' the steps again.
Having the proper mindset, attitude and psychological makeup becomes
increasingly important as you progress through the steps. The focus
of the earlier steps is on external issues, i.e. developing
proficiency in the mechanics of trading while the focus of the
latter steps (particularly from Step 30, on) is on internal issues,
i.e. improving ourselves mentally and psychologically, maturing as
trader
regards
Yatish
quotes Warren Buffett
Quotes from Warren Buffett
Now is the time to look into retrospect, and have a close look at our investing triumphs & failures. And, what could be better than learning from the Master Stockpicker, Warren Buffett himself.
Here are some of his best quotes:
1. If past history was all there was to the game, the richest people would be librarians.
2. In the business world, the rearview mirror is always clearer than the windshield.
3. It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.
4. It's better to hang out with people better than you. Pick out associates whose behavior is better than yours and you'll drift in that direction.
5. It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.
6. Let blockheads read what blockheads wrote.
7. Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.
8. Of the billionaires I have known, money just brings out the basic traits in them. If they were jerks before they had money, they are simply jerks with a billion dollars.
9. Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years.
10. When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.
11. Why not invest your assets in the companies you really like? As Mae West said, "Too much of a good thing can be wonderful".
12. Wide diversification is only required when investors do not understand what they are doing.
13. You do things when the opportunities come along. I've had periods in my life when I've had a bundle of ideas come along, and I've had long dry spells. If I get an idea next week, I'll do something. If not, I won't do a damn thing.
14. You only have to do a very few things right in your life so long as you don't do too many things wrong.
15. Your premium brand had better be delivering something special, or it's not going to get the business.
16. Only when the tide goes out do you discover who's been swimming naked.
17. Our favorite holding period is forever.
18. Our favourite holding period is forever.
19. Price is what you pay. Value is what you get.
20. Risk comes from not knowing what you're doing.
21. Risk is a part of God's game, alike for men and nations.
22. Rule No.1: Never lose money. Rule No.2: Never forget rule No.1
23. Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.
24. The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective. The first rule is not to lose. The second rule is not to forget the first rule.
25. The investor of today does not profit from yesterday's growth.
26. The only time to buy these is on a day with no "y" in it.
27. The smarter the journalists are, the better off society is. For to a degree, people read the press to inform themselves-and the better the teacher, the better the student body.
28. Time is the friend of the wonderful company, the enemy of the mediocre.
29. Value is what you get.
30. We believe that according the name 'investors' to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a 'romantic.'
31. We enjoy the process far more than the proceeds.
32. We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.
33. When a management team with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.
34. A public-opinion poll is no substitute for thought.
35. Chains of habit are too light to be felt until they are too heavy to be broken.
36. I always knew I was going to be rich. I don't think I ever doubted it for a minute.
37. I am quite serious when I say that I do not believe there are, on the whole earth besides, so many intensified bores as in these United States. No man can form an adequate idea of the real meaning of the word, without coming here.
38. I buy expensive suits. They just look cheap on me.
39. I don't look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.
40. I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.
41. If a business does well, the stock eventually follows.
...and here comes my favorite!
* There seems to be some perverse human characteristic that likes to make easy things difficult.
Now is the time to look into retrospect, and have a close look at our investing triumphs & failures. And, what could be better than learning from the Master Stockpicker, Warren Buffett himself.
Here are some of his best quotes:
1. If past history was all there was to the game, the richest people would be librarians.
2. In the business world, the rearview mirror is always clearer than the windshield.
3. It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.
4. It's better to hang out with people better than you. Pick out associates whose behavior is better than yours and you'll drift in that direction.
5. It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.
6. Let blockheads read what blockheads wrote.
7. Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.
8. Of the billionaires I have known, money just brings out the basic traits in them. If they were jerks before they had money, they are simply jerks with a billion dollars.
9. Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years.
10. When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.
11. Why not invest your assets in the companies you really like? As Mae West said, "Too much of a good thing can be wonderful".
12. Wide diversification is only required when investors do not understand what they are doing.
13. You do things when the opportunities come along. I've had periods in my life when I've had a bundle of ideas come along, and I've had long dry spells. If I get an idea next week, I'll do something. If not, I won't do a damn thing.
14. You only have to do a very few things right in your life so long as you don't do too many things wrong.
15. Your premium brand had better be delivering something special, or it's not going to get the business.
16. Only when the tide goes out do you discover who's been swimming naked.
17. Our favorite holding period is forever.
18. Our favourite holding period is forever.
19. Price is what you pay. Value is what you get.
20. Risk comes from not knowing what you're doing.
21. Risk is a part of God's game, alike for men and nations.
22. Rule No.1: Never lose money. Rule No.2: Never forget rule No.1
23. Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.
24. The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective. The first rule is not to lose. The second rule is not to forget the first rule.
25. The investor of today does not profit from yesterday's growth.
26. The only time to buy these is on a day with no "y" in it.
27. The smarter the journalists are, the better off society is. For to a degree, people read the press to inform themselves-and the better the teacher, the better the student body.
28. Time is the friend of the wonderful company, the enemy of the mediocre.
29. Value is what you get.
30. We believe that according the name 'investors' to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a 'romantic.'
31. We enjoy the process far more than the proceeds.
32. We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.
33. When a management team with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.
34. A public-opinion poll is no substitute for thought.
35. Chains of habit are too light to be felt until they are too heavy to be broken.
36. I always knew I was going to be rich. I don't think I ever doubted it for a minute.
37. I am quite serious when I say that I do not believe there are, on the whole earth besides, so many intensified bores as in these United States. No man can form an adequate idea of the real meaning of the word, without coming here.
38. I buy expensive suits. They just look cheap on me.
39. I don't look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.
40. I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.
41. If a business does well, the stock eventually follows.
...and here comes my favorite!
* There seems to be some perverse human characteristic that likes to make easy things difficult.
10 rules
10 rules each from some financial market heavyweights... makes for some very very imteresting reading, and gives us insights into our own trading/ investing behaviour.
For a start: Larry Williams
Short-term trading and survival
1. It's all about survival.
No platitudes here, speculating is very dangerous business. It is not about winning or losing, it is about surviving the lows and the highs. If you don't survive, you can't win.
The first requirement of survival is that you must have a premise to speculate upon. Rumors, tips, full moons and feelings are not a premise. A premise suggests there is an underlying truth to what you are taking action upon. A short-term trader's premise may be different from a long-term player's but they both need to have proven logic and tools. Most investors and traders spend more time figuring out which laptop to buy than they do before plunking down tens of thousands of dollars on a snap decision, or one based upon totally fallacious reasoning.
There is some rhyme and reason to how, why and when markets move - not enough - but it is there. The problem is that there are more techniques that don't work, than there are techniques that do. I suggest you spend an immense and inordinate amount of time and effort learning these critical elements before entering the foray of financial frolics.
So, you have money management under control, have a valid system, approach or premise to act upon - you still need control of yourself.
2. Ultimately this is an emotional game - always has been, always will be.
Anytime money is involved - your money - blood boils, sweaty hands prevail, and mental processes are shortcircuited by illogical emotions. Just when most traders buy, they should have sold! Or, fear, a major emotion, scares them away from a great trade/investment. Or, their bet is way too big. The money management decision becomes an emotional one, not one of logic.
3. Greed prevails - proving you are more motivated by greed than fear and understanding the difference.
The mere fact you are a speculator means you have less fear than a 'normal' person does. You are more motivated by making money. Other people are more motivated by not losing.
Greed is the trader's Achilles' heel. Greed will keep hopes alive, encourage you to hold on to losing trades and nail down winners too soon. Hope is your worst enemy because it causes you to dream of great profits, to enter an unreal world. Trust me, the world of speculating is very real, people lose all they have, marriages are broken up, families tossed asunder by either enormous gains or losses.
My approach to this is to not take any of it very seriously; the winnings may be fleeting, always pursued by the taxman, lawyers and nefarious investment schemes.
How you handle greed is different than I do, so I cannot give an absolute maxim here, but I can tell you this, you must get it in control or you will not survive.
4. Fear inhibits risk taking - just when you should take risk.
Fear causes you to not do what you should do. You frighten yourself out of trades that are winners in deference to trades that lose or go nowhere. Succinctly stated, greed causes you to do what we should not do, fear causes us to not do what we should do.
Fear, psychologists say, causes you to freeze up. Speculators act like a deer caught in the headlights of a car. They can see the car - a losing trade, coming at them - at 120 miles per hour - but they fail to take the action they should.
Worse yet, they take a pass on the winning trades. Why, I do not know. But I do know this: the more frightened I am of taking a trade the greater the probabilities are it will be a winning trade. Most investors scare themselves out of greatness.
5. Money management is the creation of wealth.
Sure, you can make money as a trader or investor, have a good time, and get some great stories to tell. But, the extrapolation of profits will not come as much from your trading and investing skills as how you manage your money.
I'm probably best known for winning the Robbins World Cup Trading Championship, turning $10,000 into $1,100,000.00 in 12 months. That was real money, real trades, and real time performance. For years people have asked for my trades to figure out how I did it. I gladly oblige them, they will learn little there - what created the gargantuan gain was not great trading ability nearly as much as the very aggressive form of money management I used. The approach was to buy more contracts when I had more equity in my account, cut back when I had less. That's what made the cool million smackers - not some great trading skill.
Ten years later my 16-year-old daughter won the same trading contest taking $10,000 to $110,000.00 (The second best performance in the 20-year history of the championship). Did she have any trading secret, any magical chart, line, and formula? No. She simply followed a decent system of trading, backed with a superior form of money management.
6. Big money does not make big bets.
You have probably read the stories of what I call the swashbuckler traders, like Jesse Livermore, John 'bet a millions' Gates, Niederhoffer, Frankie Joe and the like. They all ultimately made big bets and lost big time.
Smart money never bets big. Why should it? You can win big on small bets, see #5 above, but eventually if you bet big you will lose - and you will lose big.
It's like Russian Roulette. You may well spin the chamber holding the bullet many times and never lose. But spin it often enough and there can be only one result: death. If you make big bets you are destined to be a big loser. Plunging is a loser's game; it can only set you up for failure. I never bet big (I used to - been there and done that and trust me, it is no way to live). I bet a small percent of my account, bankroll if you will. That way I have controlled loss. There can be no survival without damage control.
7. God may delay but God does not deny.
I never know when during a year I will make my money. It may be on the first trade of the year, or the last (though I hope not). Victory is there to be grasped, but you must be prepared to do battle for a long period of time.
Additionally, while far from a religious person, I think the belief in a much higher power, God, is critical to success as a trader. It helps puts wins and losses into perspective, enables you to persevere through lots of pain and punishment when you know that ultimately all will be right or rewarded in some fashion.
God and the markets is not a fashionable concept - I would never abuse what little connection I have with God to pray for profits. Yet that connection is what keeps people going in times of strife, in fox holes and commodity pits.
8. I believe the trade I'm in right now will be a loser.
This is my most powerful belief and asset as a trader. Most would be wannabes are certain they will make a killing on their next trade. These folks have been to some 'Pump 'em up, plastic coat their lives' motivational meeting where they were told to think positive thoughts. They took lessons in affirming their future would be great. They believe their next trade will be a winner.
Not me! I believe at the bottom of my core it will be a loser. I ask you this question - who will have their stops in and take right action, me or the fellow pumped up on an irrational belief he's figured out the market? Who will plunge, the positive affirmer or me?
If you have not figured that one out - I'll tell you; I will succeed simply because I am under no delusion that I will win. Accordingly, my action will be that of an impeccable warrior. I will protect myself in all fashion, at all times - I will not become run away with hope and unreality.
9. Your fortune will come from your focus - focus on one market or one technique.
A jack of all trades will never become a winning tradee. Why? Because a trader must zero in on the markets, paying attention to the details of trading without allowing his emotions to intervene.
A moment of distraction is costly in this business. Lack of attention may mean you don't take the trade you should, or neglect a trade that leads to great cost.
Focus, to me, means not only focusing on the task at hand but also narrowing your scope of trading to either one or two markets or to the specific approach of a trading technique.
Have you ever tried juggling? It's pretty hard to learn to keep three balls in the area at one time. Most people can learn to watch those 'details' after about 3 hours or practice. Add one ball, one more detail to the mess, and few, very few, people can make it as a juggler. It's precisely that difficult to keep your eyes on just one more 'chunk' of data.
Look at the great athletes - they focus on one sport. Artists work on one primary business, musicians don't sing country & western and opera and become stars. The better your focus, in whatever you do, the greater your success will become.
10. When in doubt, or all else fails - go back to Rule One.
For a start: Larry Williams
Short-term trading and survival
1. It's all about survival.
No platitudes here, speculating is very dangerous business. It is not about winning or losing, it is about surviving the lows and the highs. If you don't survive, you can't win.
The first requirement of survival is that you must have a premise to speculate upon. Rumors, tips, full moons and feelings are not a premise. A premise suggests there is an underlying truth to what you are taking action upon. A short-term trader's premise may be different from a long-term player's but they both need to have proven logic and tools. Most investors and traders spend more time figuring out which laptop to buy than they do before plunking down tens of thousands of dollars on a snap decision, or one based upon totally fallacious reasoning.
There is some rhyme and reason to how, why and when markets move - not enough - but it is there. The problem is that there are more techniques that don't work, than there are techniques that do. I suggest you spend an immense and inordinate amount of time and effort learning these critical elements before entering the foray of financial frolics.
So, you have money management under control, have a valid system, approach or premise to act upon - you still need control of yourself.
2. Ultimately this is an emotional game - always has been, always will be.
Anytime money is involved - your money - blood boils, sweaty hands prevail, and mental processes are shortcircuited by illogical emotions. Just when most traders buy, they should have sold! Or, fear, a major emotion, scares them away from a great trade/investment. Or, their bet is way too big. The money management decision becomes an emotional one, not one of logic.
3. Greed prevails - proving you are more motivated by greed than fear and understanding the difference.
The mere fact you are a speculator means you have less fear than a 'normal' person does. You are more motivated by making money. Other people are more motivated by not losing.
Greed is the trader's Achilles' heel. Greed will keep hopes alive, encourage you to hold on to losing trades and nail down winners too soon. Hope is your worst enemy because it causes you to dream of great profits, to enter an unreal world. Trust me, the world of speculating is very real, people lose all they have, marriages are broken up, families tossed asunder by either enormous gains or losses.
My approach to this is to not take any of it very seriously; the winnings may be fleeting, always pursued by the taxman, lawyers and nefarious investment schemes.
How you handle greed is different than I do, so I cannot give an absolute maxim here, but I can tell you this, you must get it in control or you will not survive.
4. Fear inhibits risk taking - just when you should take risk.
Fear causes you to not do what you should do. You frighten yourself out of trades that are winners in deference to trades that lose or go nowhere. Succinctly stated, greed causes you to do what we should not do, fear causes us to not do what we should do.
Fear, psychologists say, causes you to freeze up. Speculators act like a deer caught in the headlights of a car. They can see the car - a losing trade, coming at them - at 120 miles per hour - but they fail to take the action they should.
Worse yet, they take a pass on the winning trades. Why, I do not know. But I do know this: the more frightened I am of taking a trade the greater the probabilities are it will be a winning trade. Most investors scare themselves out of greatness.
5. Money management is the creation of wealth.
Sure, you can make money as a trader or investor, have a good time, and get some great stories to tell. But, the extrapolation of profits will not come as much from your trading and investing skills as how you manage your money.
I'm probably best known for winning the Robbins World Cup Trading Championship, turning $10,000 into $1,100,000.00 in 12 months. That was real money, real trades, and real time performance. For years people have asked for my trades to figure out how I did it. I gladly oblige them, they will learn little there - what created the gargantuan gain was not great trading ability nearly as much as the very aggressive form of money management I used. The approach was to buy more contracts when I had more equity in my account, cut back when I had less. That's what made the cool million smackers - not some great trading skill.
Ten years later my 16-year-old daughter won the same trading contest taking $10,000 to $110,000.00 (The second best performance in the 20-year history of the championship). Did she have any trading secret, any magical chart, line, and formula? No. She simply followed a decent system of trading, backed with a superior form of money management.
6. Big money does not make big bets.
You have probably read the stories of what I call the swashbuckler traders, like Jesse Livermore, John 'bet a millions' Gates, Niederhoffer, Frankie Joe and the like. They all ultimately made big bets and lost big time.
Smart money never bets big. Why should it? You can win big on small bets, see #5 above, but eventually if you bet big you will lose - and you will lose big.
It's like Russian Roulette. You may well spin the chamber holding the bullet many times and never lose. But spin it often enough and there can be only one result: death. If you make big bets you are destined to be a big loser. Plunging is a loser's game; it can only set you up for failure. I never bet big (I used to - been there and done that and trust me, it is no way to live). I bet a small percent of my account, bankroll if you will. That way I have controlled loss. There can be no survival without damage control.
7. God may delay but God does not deny.
I never know when during a year I will make my money. It may be on the first trade of the year, or the last (though I hope not). Victory is there to be grasped, but you must be prepared to do battle for a long period of time.
Additionally, while far from a religious person, I think the belief in a much higher power, God, is critical to success as a trader. It helps puts wins and losses into perspective, enables you to persevere through lots of pain and punishment when you know that ultimately all will be right or rewarded in some fashion.
God and the markets is not a fashionable concept - I would never abuse what little connection I have with God to pray for profits. Yet that connection is what keeps people going in times of strife, in fox holes and commodity pits.
8. I believe the trade I'm in right now will be a loser.
This is my most powerful belief and asset as a trader. Most would be wannabes are certain they will make a killing on their next trade. These folks have been to some 'Pump 'em up, plastic coat their lives' motivational meeting where they were told to think positive thoughts. They took lessons in affirming their future would be great. They believe their next trade will be a winner.
Not me! I believe at the bottom of my core it will be a loser. I ask you this question - who will have their stops in and take right action, me or the fellow pumped up on an irrational belief he's figured out the market? Who will plunge, the positive affirmer or me?
If you have not figured that one out - I'll tell you; I will succeed simply because I am under no delusion that I will win. Accordingly, my action will be that of an impeccable warrior. I will protect myself in all fashion, at all times - I will not become run away with hope and unreality.
9. Your fortune will come from your focus - focus on one market or one technique.
A jack of all trades will never become a winning tradee. Why? Because a trader must zero in on the markets, paying attention to the details of trading without allowing his emotions to intervene.
A moment of distraction is costly in this business. Lack of attention may mean you don't take the trade you should, or neglect a trade that leads to great cost.
Focus, to me, means not only focusing on the task at hand but also narrowing your scope of trading to either one or two markets or to the specific approach of a trading technique.
Have you ever tried juggling? It's pretty hard to learn to keep three balls in the area at one time. Most people can learn to watch those 'details' after about 3 hours or practice. Add one ball, one more detail to the mess, and few, very few, people can make it as a juggler. It's precisely that difficult to keep your eyes on just one more 'chunk' of data.
Look at the great athletes - they focus on one sport. Artists work on one primary business, musicians don't sing country & western and opera and become stars. The better your focus, in whatever you do, the greater your success will become.
10. When in doubt, or all else fails - go back to Rule One.
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