Posts Tagged ‘equity’

Equity News Update

DOMESTIC NEWS

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Economy

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•The Food Price index increased 13.75 per cent in the week ended October16, sharply lower that the previous week’s annual rise of 15.53 per cent,mainly as vegetables continued to exert downward pressure on account ofa base effect.

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Power

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•Reliance Power Ltd has placed order for 30,000 MW capacity of Boiler,Turbine, Generator Packages (BTG) for its coal based power plants withShanghai Electric Group Co Ltd, the leading global supplier of powerequipments.

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Realty/ Construction

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•Nagarjuna Construction has bagged four projects worth 540 crore in thestates of Tamil Nadu and Uttar Pradesh.

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Capital Goods

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•BGR Energy Systems has bagged a 2,168-crore balance of plant (BoP)contract from Hyderabad-based Thermal Powertech Corporation of IndiaLtd. The project is funded by Rural Electrification Corporation (REC) as thelead lender with consortium of banks.

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Automobile

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•Maruti Suzuki India (MSI) is planning to ramp up its service centres by amassive 1,500 outlets by 2015 in line with its expansion of productioncapacity to over 17 lakh units annually. This enhancement is expected toresult in additional employment of about 22,000 people by the servicenetwork operators.Information Technology

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•Wipro Ltd, India’s No 3 software services provider, secured an IT servicescontract from Electricity North West Ltd, which operates the electricitydistribution network in north-west England.

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•Tata Consultancy Services announced an ASP (application service provider)initiative with Strate, the licensed Central Securities Depository (CSD) inSouth Africa. This joint venture with TCS, for the TCS BaNCS SecuritiesProcessing solution, will provide best-in-class and leading-edgetechnology to mid-tier players in the South African market.

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Pharmaceuticals

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•Strides Arcolab has received tentative approval from US Food and DrugAdministration (FDA) for one new drug application (ANDA) for fixed dosecombination of Lamivudine and Zidovudine tablets 150mg/300mg underthe expedited review provisions of the President’s Emergency Plan for AIDSRelief (PEPFAR).

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•Biocon will invest $161 million in a facility in Malaysia, joining a number ofIndian companies that have chosen to establish facilities in the South-EastAsian country.

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Oil & Gas

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•Petronet LNG plans to set up a 1,200-MW gas-based power plant linked toits Dahej terminal and will seek the approval of its board in a month. Theproject would be financed through internal accruals and debt. Thecompany has already acquired about 50 hectares of land for the project.

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INTERNATIONAL NEWS

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•US third quarter GDP expanded at a 2.0 percent annualized pace, followinga 1.7 percent rise the prior quarter. The latest figure matched analysts’projections for a 2.0 percent gain. Year-on-year, real GDP in the secondquarter is up 3.1 percent, compared 3.0 percent in the second quarter.

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•US new home sales rose 6.6 percent to an annual rate of 307,000 inSeptember from an annual rate of 288,000 in August. hile new home salesremain at relatively low levels, the annual rate has moved well off therecord low of 282,000 set in May. Nonetheless, the annual rate of newhome sales in September is still 21.5 percent below the rate seen in thesame month a year ago.

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•US New factory orders for durable goods in September rebounded 3.3percent, following a 1.0 percent decrease in August. The gain inSeptember came in significantly above the consensus forecast for a 1.6percent boost. Excluding transportation, new durables orders fell back 0.8percent, following a 1.9 percent increase in August.

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•US initial claims fell steeply to 434,000 in an October 23 week that isn’tskewed by special factors. The level is the lowest since July as is the fourweekaverage of 453,250. Given that July’s data were distorted byadjustment problems tied to auto retooling, the latest batch of data isperhaps the best so far of the recovery.

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Equity News Round Up 11th – 15th October

DOMESTIC NEWS

Economy

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•Food inflation eased marginally to 16.24% for the week ended September 25, from 16.44% in the previous week, as improved supplies lowered prices.

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Capital Goods

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•BHEL has bagged a `3,700-crore from Karnataka Power Corporation Ltd for setting up the 700 MW Bellary Thermal Power Station in Karnataka.

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•Lanco Infratech informed that its Vidarbha power project based in Maharashtra, has achieved financial closure. The company has raised debt to the tune of `5,549 crore to fund the project which has an estimated cost of around `6,936 crore. The rest of requirement is funded by equity of `1,387 crore.

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•Larsen & Toubro (L&T) has bagged `1,585 crore orders in July-September period from the construction segment. Of the `1,585 croreorders, `435 crore order is for construction of building projects fromleading developers while `781 crore orders is from “clients forconstruction of hotel, office building and add on orders from its ongoing airport and commercial building projects”.

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Automobile

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•Hero Honda has launched a limited edition of its 100cc motorcyclePassion Pro, priced at `46,300 (ex-showroom Delhi).

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Realty/ Construction

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•IVRCL Infrastructure and Projects said its various divisions have wonorders worth `1,120 crore from sectors including power and transportation. The company’s water division bagged the highest `451crore order, followed by `440 crore by building divisions,`136 crore by transportation division and `92 crore by power division.

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•Punj Lloyd Group has bagged a `539-crore contract from the state owned gas utility GAIL India for laying a natural gas pipeline from Dabholto Bangalore. The project will be executed over a period of 13 months.

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Pharmaceutical

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•Cadila has got approval from US health regulator to market high blood pressure treatment tablets, Losartan Potassium and Losartan Potassium and HCTZ in the American market. The US Food and Drug Administration approval has been granted to the firm’s subsidiary Zydus Cadila, for Losartan Potassium tablets in the strengths of 25 mg, 50 mg and 100 mg and for Losartan Potassium and Hydrochlorothiazide tablets in the strengths of 50/ 12.5 mg and 100/25 mg.

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Power

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•NTPC may invest over `10,000 crore to set up a 2,640 megawatt (Mw)thermal power project at Gidarbaha in Punjab. The Project shall be setup as regional power project by NTPC and would also be the company’s first in the state.

INTERNATIONAL NEWS

•US Pending Home Sales Index jumped more than four percent for asecond straight month, to 82.3 in August (2001 = 100). The prior month was revised to 78.9, shaving July’s gain to 4.5 percent. The readings point to a second straight jump for existing home sales which surged nearly eight percent in August.

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•US non-farm payroll employment fell by 95,000 jobs in September following a revised decrease of 57,000 jobs in August. Economists had expected employment to come in flat compared to the loss of 54,000 jobs originally reported for the previous month.

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•UK output price index rose 4.4% annually in September, compared with a4.7% gain in August. The increase was a touch higher than the expected 4.3% rise. Output prices gained 0.3% month-on-month after stagnating in August. Excluding food, beverages, tobacco and petroleum, output prices increased 4.6% annually.

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•The Japanese Cabinet approved a 5.05 trillion yen ($62 billion) new stimulus package to boost the economy amid widespread concerns that it could slip back into recession. The new package, which will befinanced by an extra budget, is aimed at addressing labor market issues,social welfare and healthcare services. The government is trying to finalize this additional budget by the end of this month.

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Domestic Economy Rolls as Corporate India Offers 40% More Bonus Shares

Domestic Economy Rolls as Corporate India Offers 40% More Bonus Shares

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Issue of bonus shares by Corporate India to its shareholders in the first 10 months of the fiscal has shot up 40% over the total during the fiscal ended March ‘09, after declining for two straight years.

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This interesting jump in bonus issues indicates positive sentiment of the corporate sector to serve a larger equity base.

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Companies like Britannia, TCS, Reliance Industries, Adani Enterprises, Jindal Steel, Divi’s Lab, JP Associates etc  have  issued bonus shares in the April ‘09-January ‘10 period.

There are as many as 61 companies which have done so.

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Jagannadham Thunuguntla, equity head with Delhi-based merchant bank SMC Capitals, said:  “The increase in companies doling out bonus equity to its shareholders reflects that the domestic economy is on the path of recovery.”

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Corporate India has got the confidence to expand equity capital base and issue bonus shares owing to the fact that they have performed very well this fiscal.

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Bonus issue is an offer of free additional shares to existing shareholders.

This is one of the ways of rewarding shareholders, who largely benefit from capital gains.

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A company may decide to distribute further shares as an alternative to increasing the dividend payout.

It is also known as a “scrip issue” or “capitalization issue”.

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The number of companies issuing bonus shares declined more than a quarter after hitting a peak in 2006-07 to 72 firms in 2007-08 and shrunk further to just 44 companies for the year ended March ‘09.

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This came after three consecutive years of rise in number of bonus issues, when more listed firms announced a bonus bonanza in line with the bull run of the stock market.

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Bonus shares are issued by companies through capitalization of their free reserves.

When a company announces bonus issue, it is an indication of its management’s confidence to serve a larger equity base.

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🙂

Retail Investors Turn Cautious Towards IPOs

Retail Investors Turn Cautious Towards IPOs

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Aggressive IPO pricing and poor post-listing performances have made retail investors extremely cautious this year.

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😦

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Of the Rs 18,407 crore collected through IPOs, the retail investor portion was subscribed 1.86 times on an average, according to a research report by SMC Capital.

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Qualified institutional buyers‘ portion was subscribed by 11.42 times and high net worth individuals’ portion by 8.49 times.

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IPOs this year were subscribed 7.64 times.

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Of the 19 IPOs, the retail portions of five issues were not even fully subscribed, while five just about managed to get subscribed.

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Many retail Investors have decided against putting money into recent IPOs after looking at the post-listing performances of stocks that were listed earlier.

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Only shares of six companies are trading above their issue prices – these include Mahindra Holidays, Oil India and Cox and Kings (India).

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A lot of investors had saved up, especially for the NHPC IPO.  But when it listed poorly these investor must have suffered hugely.

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As per the market experts , a lot of the IPOs that came out this year have been highly priced, which has made the already skeptical retail investor stay away from the primary market.

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Bunch of retail investors are looking at “short-term gains”, so they now prefer to invest their money in the secondary markets rather than in IPOs, market experts feel.

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If one goes by the DRHPs filed with SEBI, there are approximately Rs 29,000 crore worth of IPOs in the pipeline, said Mr Jagannadham Thunuguntla, Equity Head at SMC Capital.

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🙂

Points to Remember while Selling Stocks – Part 1

Hello Friends here we come up with our another write up on “SMC Gyan Series”. 🙂


Points to remember while selling stock

Points to remember while selling stock

 

Buying a stock is simple, but Selling is actually harder as it requires regulation, understandable thoughts, and a tight rein on one’s emotions.

The ongoing optimism, slow economic revival, positive signs on the global front and high expectations from the stable government at home have forced bulls to give up their lethargic activities and to march northward.

Many investors who had seen the value of their stocks hit rock bottom and are now facing dilemma whether to sell or should they hold on? :O

Investors often face problems to take right decisions in volatile market as markets could head either way.

Wouldn’t it be disheartening if the markets rallied northwards, the day after you sold your stocks?

What if the markets come crashing down tomorrow, depriving you of the opportunity to enhance profits?

So, the decision to sell is critical.

🙂

Some of the points when to sell your stocks:

Prima facie, if there is any drastic change in fundamental of a company, this should be the only reason to sell stock.

But a depth research has to be done before taking any decision.

Changes includes;

-restructuring of its business model,

-different business focus and directions.

🙂

FIRST THREE POINTS :

1. Margins Crashed

Margins are the profit that a company makes on its sales.

Rising gross margins tell us that a company is reducing production costs or raising prices.

Conversely, deteriorating margins say either that production costs are increasing and the company can’t raise prices proportionally or that the company is cutting prices in an attempt to maintain marketshare.

If there are expenses related to a new product’s introduction then margins might fall for inoffensive reasons.

Falling margins, either gross or operating, often signal a declining competitive position. Thus it’s important to check both.

🙂

2.Is There Any Drastic Change In Company’s Management?

If people in top management of the company say director or president who are liable for a company’s success begin to go away, there might be a few negative implications for the future outlook of that company as an investor.

You must look into and find out the root cause and also to see how much it could impact you.

If negative prospects, investor should sell the stock and should relocate the funds into a similar company that has stronger and more constant management.

🙂

3. What First Fascinated You To The Stock, No Longer Applies

For example, let’s suppose that you bought a stock of a health care company because of its innovative products in the pharmaceutical field and all of a sudden, it loses a crucial patent for a life-saving medicine.

This may result in a decrease of market share in its industry, which might lead to a reduction in future profits (resulting in a decline in the value of its stock).

🙂

Stay Tuned for more on this where we would touch upon other major points needed to keep in mind by investors before making any Buy and sell decision.

Note : For More Finance Gyan, Latest Industry, Stock Market, Economy News and Updates, please click here

PORTFOLIO REBALANCING TO STAY ON TRACK

Portfolio re balancing is the process of bringing the different asset classes back into appropriate proportion following a significant change in one or more.
PORTFOLIO REBALANCING TO STAY ON TRACK
Over the time, as different asset classes produce different returns, the portfolio’s asset allocation changes. To recapture the portfolio’s original risk and return characteristics, the portfolio must be rebalanced to its original asset allocation.

The primary purpose of rebalancing is to maintain a consistent risk profile. Periodic rebalancing will help to avoid counterproductive temptations in the market.

For example, in this seemingly falling market, rather than an investor

Tempted to follow the crowd, who are busy dumping popular stocks; the imbalance created by erosion of the equity component can be used to book profits on debt portion and buy into equities to bring back the allocation to the original ratio.

The balancing act

To get the entire asset classes back to their original allocation percentages would entail the following:

·Selling part of the equities and investing the proceeds into debt and cash and vis-a-versa.

·Putting in fresh one-time investments into debt and cash to raise the allocation in the portfolio.

·Start a systematic investment plan skewed towards debt and cash.

Rebalancing controls risk

The investments in a portfolio will perform according to the market. As time goes on, a portfolio’s current asset allocation can move away from an investor’s original target asset allocation.

If left un-adjusted, the portfolio could either become too risky, or too conservative.

The goal of rebalancing is to move the current asset allocation back in line to the originally planned asset allocation.

How often should one rebalance?

Though the frequency is entirely dependent on the investor, the portfolio size as well as market conditions will impact the overall returns’ expectation of the portfolio.

The main idea is that the periodic interval between successive rebalancing acts should be constant.

Some of the other factors affecting the rebalancing are:

Cost of transactions

If one decides to rebalance the portfolio once in six months, he needs to factor in short term capital gains, brokerages and entry exit loads. Hence, it is advisable to rebalance annually the long term portfolios and rebalance semi annually for the short term portfolios.

Volatility

High return volatility increases the fluctuation of the asset class weights around the target allocation and increases the risk of significant deviation from the target.

Greater volatility implies a greater need to rebalance. In the presence of time-varying volatility, rebalancing occurs more often when volatility rises.

Investors can also employ another trigger for asset rebalancing. They can decide to rebalance their portfolio, not according to time, but rather only when any asset class changes in allocation due to market movements, over a certain percentage.

Conclusion

Portfolio rebalancing is an important part of sticking to your game plan. You should look at your portfolio at least quarterly in terms of rebalancing and more frequently if you have had a significant gain or loss in any asset class.

At last asset rebalancing is a very important exercise for any disciplined investor who wishes to approach their investing in a systematic manner, while realizing their financial goals that they have set out to achieve.

Portfolio rebalancing is the process of bringing the different asset classes back into appropriate proportion following a significant change in one or more. Over the time, as different asset classes produce different returns, the portfolio’s asset allocation changes.

To recapture the portfolio’s original risk and return characteristics, the portfolio must be rebalanced to its original asset allocation.

The primary purpose of rebalancing is to maintain a consistent risk profile. Periodic rebalancing will help to avoid counterproductive temptations in the market. For example, in this seemingly falling market, rather than an investor tempted to follow the crowd, who are busy dumping popular stocks, the imbalance created by erosion of the equity component can be used to book profits on debt portion and buy into equities to bring back the allocation to the original ratio.

India Crossed the $100 Billion Mark in FDI :)

Amidst of the global crisis, India crossed the $100 billion milestone in foreign direct investment (FDI)

Amidst of the global crisis, India crossed the $100 billion milestone in foreign direct investment (FDI)

Amidst of the global crisis, India crossed the $100 billion milestone in foreign direct investment (FDI) through equity confirming its rising profile as a safe and sound investment objective.

🙂

However, 44% of the money came through Mauritius as investors wanted to take advantage of India’s double taxation avoidance treaty with the island nation.

🙂

Moreover, the cumulative FDI inflows since 2000 and up to July 2009 amounted to $100.33 billion while the inflows in the first 4 months of the current fiscal were $10.49 billion and the other big investors included Singapore, the US, UK and the Netherlands.

🙂

Additionally, it is said that FDI’s main impact comes from new technology, new managerial capabilities and new benchmarks in corporate functioning whereas India reached the $100 billion mark at a time when the global financial crisis has had a dampening impact on FDI flows which are expected to fall this year.

Further, it is said that the global FDI flows will decline by 30% in 2009 reviving only marginally during the next year.

Although declining, FDI flows to developing countries proved to be more flexible than other capital flows such as portfolio investment and bank lending, the main reasons being that FDI is more of a long term nature than capital flows.

🙂

On the other hand, India’s services sector received 23% of the cumulative equity FDI inflows followed by computer software, hardware, telecommunication and real estate.

🙂