Data available for 377 companies shows that 131 of them have increased dividend for the year ended March 2009 or December 2008. The list of higher stock dividend paying companies also includes a few companies where the data is available for the year ended September 2008 or June 2008.
This is seen as some consolation to investors, given the bruising capital losses they have suffered because of last year’s stock market turmoil.
EID Parry, Coromandel Fertilisers, Stovec Industries, VST Industries, Crisil, ICI India, Sulzer India, Nestle India and Clariant Chemicals are among the companies, which paid the highest dividend. “If companies are paying higher dividend, it is a positive trend, as it would help in boosting morale of shareholders, particularly those who have been holding shares with a long-term point of view,” said an analyst with a Mumbai-based broking house.
Sugar company EID Parry paid out 1000% dividend for 2008-09, compared with 25% previous year. On a standalone basis, the company recorded a bumper profit of Rs 692 crore on sales of Rs 812 crore, compared with a loss of Rs 17 crore on sales of Rs 651 crore in 2007-08. Its earnings were boosted by large extraordinary income of Rs 750 crore earned in the form of a profit on sale of investments.
Coromandel Fertilisers hiked dividend from 175% to 500% last fiscal. The company’s sales jumped 150% to Rs 9,375 crore, while its net profit rose by 137% to Rs 496 crore, thanks to exceptional income of Rs 159 crore. Some analysts are of the view that even if a company pays exceptionally high dividend in a particularly year, factors such as the industry it operates in, the management’s background, cash flows and past dividend record should be considered before an investment call is made.
“It is important to see if a company is paying dividend out of normal profit or profit earned from extraordinary sources. In normal circumstances, higher dividend shows the management has a good confidence in prospects of the company,” said Anagram Stock Broking head of research VK Sharma. The broking firm expects public sector companies, including banks, to maintain their dividend track records in the coming years.
The list of high stock dividend paying companies, also includes multinational companies Sulzer India, Nestle India and Clariant Chemicals. The companies paid dividends of 350%, 425% and 190%, respectively, in the year ended December 2008, compared with 100%, 330% and 100%, respectively, in the previous year. In these cases, point out analysts, foreign promoters would be the major beneficiaries due to their large stakes in companies.
Source: EconomicTimes
Sectors & Stocks To Buy After Elections In India With UPA Government Win
These are the sectors and the stocks to buy, which we believe would benefit the most if the reelected Congress-led government succeeds in fulfilling its promises. But forget not, these are the long-term stocks to buy and hence are prone to the short-term fluctuations in stock markets!
CEMENT SECTOR
The cement sector during FY 09 had already benefited from rural housing and government-funded infrastructure projects, which helped total despatches rise 8% y - o-y to 181 million tonnes. And if the re-elected UPA government takes fresh steps to expand infrastructure and rural projects, cement companies will be the direct beneficiaries.
RECOMMENDED STOCKS TO BUY FROM CEMENT SECTOR
ACC (CMP: Rs 729, P/E: 11)
For instance, Holcim-controlled ACC, which is a pan India player and one of the leading players in the sectors, would benefit from such an infrastructural push by the government. During CY 08, this company had grown its despatches by 4.9 % y-o-y to 20.86 million tonnes.
BANKING SECTOR
The government's initiatives to infuse growth in rural infrastructure and to stabilise overall economy will have a trickle down effect on the banking sector. The government had earlier emphasised that public sector banks should have capital adequacy ratio of 12% to strengthen their operations.
RECOMMENDED STOCKS TO BUY FROM BANKING SECTOR
SBI (CMP: Rs 1731.7, P/E: 12.1)
Being the default banker to the government, State Bank of India (SBI) is expected to be a major beneficiary of the government's expansion plans. Also now that Congress led UPA government with other allies has a majority in the parliament, it will now be far easier for SBI to integrate its six associate banks with itself.
AUTO SECTOR
Companies in the auto sector that focus on entry level market of two and four wheelers meant for cost conscious customers would see buoyant demand scenario once the rural income gets a boost due to government's thrust on rural growth.
RECOMMENDED STOCKS TO BUY FROM AUTO SECTOR
Hero Honda (CMP: Rs 1294.1, P/E: 20.2), Maruti Suzuki (CMP: Rs 960, P/E: 22.8)
While Hero Honda leads the pack in the economical two wheeler segemts, Maruti Suzuki leads the market for entry level cars. Both the companies are expected to see higher demand from rural markets in near future.
TELECOM SECTOR
Mobile operators have been rapidly expanding their operations in rural India. The process will get a further boost given the government's focus on taking telecom services to the grass root level. UPA government has also promised in its manifesto to spread broadband services in the whole country in next three years. The sector can also expect further rationalisation in tariff rates and license fees, which may boost operational efficiencies.
RECOMMENDED STOCKS TO BUY FROM TELECOM SECTOR
Bharti Airtel (CMP: Rs 857.9, P/E: 21), Tata Comm (CMP: Rs 585.9, P/E: 61.3)
With over 60% share of rural penetration, Bharti is slated to be the biggest beneficiary of the government’s thrust on rural development. WiMax is a favoured technology to take broadband to rural areas. Tata Communications with its Wimax initiatives is likely to play a major role in this venture.
POWER SECTOR
Power sector is likely to get a big boost due to government's programme to electrify every nook and corner of the country. A thrust on nuclear energy and subsequent agreement with the US Department of energy to secure future fuel needs, suppliers to this segment would benefit.
RECOMMENDED STOCKS TO BUY FROM POWER SECTOR
Rural Electrification Corpn (CMP: Rs 138.6, P/E: 10.6)
Power Finance Corpn (CMP: Rs 200.3, P/E: 17)
NTPC (CMP: Rs 216.4, P/E: 24)
Areva T&D (CMP: Rs 317, P/E: 33.9)
CAPITAL GOODS SECTOR
The sector so far has been benefited by strong demand from government's infrastructure projects . This is likely to continue given the UPA's thrust on its 'Bharat Nirman' project, which includes development of roads, water resources, electricity and other nationwide infrastructure work.
RECOMMENDED STOCKS TO BUY FROM CAPITAL GOODS SECTOR
L&T (CMP: Rs 1301.4, P/E: 22.1)
Siemens (CMP: Rs 455.1, P/E: 16.1)
Bhel (CMP: Rs 1982, P/E: 33.4)
All the three companies are leaders in their segments . Being India's leading engineering and infrastructure company, L&T will gain from any government plans to expand infrastructure. The other two will be benefited from the reforms in the power generation sector.
PHARMA SECTOR
The sector will gain from government programme to aggressively expand healthcare facilities in the country. Moreover, improvement in infrastructure will also help in imporving the logistics and hence penetration of pharma companies in far flung areas.
RECOMMENDED STOCKS TO BUY FROM PHARMA SECTOR
Cipla (CMP: Rs 222.3, P/E: 22.5)
Glaxosmithkline Pharma (CMP: Rs 1094.4, P/E: 15.5)
These companies being leaders in domestic market are likely to be benefited with any government expenditure in the healthcare space.
FMCG SECTOR
The National Rural Employment Guarantee Scheme (NREGS) and Sixth Pay Commission have helped in boosting rural demand. This is likely to benefit the FMCG sector.
RECOMMENDED STOCKS TO BUY FROM FMCG SECTOR
Hindustan Unilever (CMP: Rs 231.9, P/E: 24.2)
Being India’s leading FMCG company, Hindustan Unilever will gain from any government expenditure.
AGRICULTURE SECTOR
The government has promised to achieve food security by enacting a ‘Right to Food’ Act. This will need a significant increase in food-grain production, which in turn will raise the demand for fertilisers and pesticides. UPA also expects to increase the total arable land area under irrigation over next few years. All such initiatives bode well for companies that cater to these segments.
RECOMMENDED STOCKS TO BUY FROM AGRICULTURE SECTOR
Coromandal Fertilisers (CMP: Rs 169.5, P/E: 4.5)
Rallis India (CMP: Rs 649.4, P/E: 10.9)
Jain Irrigation (CMP: Rs 567, P/E: 33.4)
Agro-chemicals manufacturer Rallies and fertilisers maker Coromandal are likely to be beneficiaries of UPA's food for all initatives. Jain Irrigation is well positioned to be benefited from the government's plan to bring more farm areas under micro irrigation.
STEEL SECTOR
The domestic steel demand seems to be intact and India is one of those few countries in the world which is expected to register a growth rate of 5-6 %. The UPA govt. initiatives in different rural development programs and higher spends on infrastructure would definitely boost the domestic steel demand.
RECOMMENDED STOCKS TO BUY FROM STEEL SECTOR
Sail (CMP: Rs 158.5, P/E: 9.3)
Sail is focused on domestic market where the demand is expected to remain stable. It has zero debt, no foreign operations, not expanded its capacity recently and is partially integrated. All these factors augur well for Sail during such challenging times.
RETAIL SECTOR
The retail sector's wait for opening up of the FDI route for foreign retailers seems to be coming to an end. As the UPA government would no longer need the support of the Left front, which was opposing the change in the FDI policy and allowing foreign players into the domestic industry, retail sector seems to be poised for growth.
RECOMMENDED STOCKS TO BUY FROM RETAIL SECTOR
Pantaloon (CMP: Rs 300.4, P/E: 38.5)
Being the largest player, Pantaloon Retail would benefit with the change in the FDI policy. Not only would this increase the fund flow into the sector but also help the industry gain from the experience of some of the established international player.
Source: EconomicTimes
CEMENT SECTOR
The cement sector during FY 09 had already benefited from rural housing and government-funded infrastructure projects, which helped total despatches rise 8% y - o-y to 181 million tonnes. And if the re-elected UPA government takes fresh steps to expand infrastructure and rural projects, cement companies will be the direct beneficiaries.
RECOMMENDED STOCKS TO BUY FROM CEMENT SECTOR
ACC (CMP: Rs 729, P/E: 11)
For instance, Holcim-controlled ACC, which is a pan India player and one of the leading players in the sectors, would benefit from such an infrastructural push by the government. During CY 08, this company had grown its despatches by 4.9 % y-o-y to 20.86 million tonnes.
BANKING SECTOR
The government's initiatives to infuse growth in rural infrastructure and to stabilise overall economy will have a trickle down effect on the banking sector. The government had earlier emphasised that public sector banks should have capital adequacy ratio of 12% to strengthen their operations.
RECOMMENDED STOCKS TO BUY FROM BANKING SECTOR
SBI (CMP: Rs 1731.7, P/E: 12.1)
Being the default banker to the government, State Bank of India (SBI) is expected to be a major beneficiary of the government's expansion plans. Also now that Congress led UPA government with other allies has a majority in the parliament, it will now be far easier for SBI to integrate its six associate banks with itself.
AUTO SECTOR
Companies in the auto sector that focus on entry level market of two and four wheelers meant for cost conscious customers would see buoyant demand scenario once the rural income gets a boost due to government's thrust on rural growth.
RECOMMENDED STOCKS TO BUY FROM AUTO SECTOR
Hero Honda (CMP: Rs 1294.1, P/E: 20.2), Maruti Suzuki (CMP: Rs 960, P/E: 22.8)
While Hero Honda leads the pack in the economical two wheeler segemts, Maruti Suzuki leads the market for entry level cars. Both the companies are expected to see higher demand from rural markets in near future.
TELECOM SECTOR
Mobile operators have been rapidly expanding their operations in rural India. The process will get a further boost given the government's focus on taking telecom services to the grass root level. UPA government has also promised in its manifesto to spread broadband services in the whole country in next three years. The sector can also expect further rationalisation in tariff rates and license fees, which may boost operational efficiencies.
RECOMMENDED STOCKS TO BUY FROM TELECOM SECTOR
Bharti Airtel (CMP: Rs 857.9, P/E: 21), Tata Comm (CMP: Rs 585.9, P/E: 61.3)
With over 60% share of rural penetration, Bharti is slated to be the biggest beneficiary of the government’s thrust on rural development. WiMax is a favoured technology to take broadband to rural areas. Tata Communications with its Wimax initiatives is likely to play a major role in this venture.
POWER SECTOR
Power sector is likely to get a big boost due to government's programme to electrify every nook and corner of the country. A thrust on nuclear energy and subsequent agreement with the US Department of energy to secure future fuel needs, suppliers to this segment would benefit.
RECOMMENDED STOCKS TO BUY FROM POWER SECTOR
Rural Electrification Corpn (CMP: Rs 138.6, P/E: 10.6)
Power Finance Corpn (CMP: Rs 200.3, P/E: 17)
NTPC (CMP: Rs 216.4, P/E: 24)
Areva T&D (CMP: Rs 317, P/E: 33.9)
CAPITAL GOODS SECTOR
The sector so far has been benefited by strong demand from government's infrastructure projects . This is likely to continue given the UPA's thrust on its 'Bharat Nirman' project, which includes development of roads, water resources, electricity and other nationwide infrastructure work.
RECOMMENDED STOCKS TO BUY FROM CAPITAL GOODS SECTOR
L&T (CMP: Rs 1301.4, P/E: 22.1)
Siemens (CMP: Rs 455.1, P/E: 16.1)
Bhel (CMP: Rs 1982, P/E: 33.4)
All the three companies are leaders in their segments . Being India's leading engineering and infrastructure company, L&T will gain from any government plans to expand infrastructure. The other two will be benefited from the reforms in the power generation sector.
PHARMA SECTOR
The sector will gain from government programme to aggressively expand healthcare facilities in the country. Moreover, improvement in infrastructure will also help in imporving the logistics and hence penetration of pharma companies in far flung areas.
RECOMMENDED STOCKS TO BUY FROM PHARMA SECTOR
Cipla (CMP: Rs 222.3, P/E: 22.5)
Glaxosmithkline Pharma (CMP: Rs 1094.4, P/E: 15.5)
These companies being leaders in domestic market are likely to be benefited with any government expenditure in the healthcare space.
FMCG SECTOR
The National Rural Employment Guarantee Scheme (NREGS) and Sixth Pay Commission have helped in boosting rural demand. This is likely to benefit the FMCG sector.
RECOMMENDED STOCKS TO BUY FROM FMCG SECTOR
Hindustan Unilever (CMP: Rs 231.9, P/E: 24.2)
Being India’s leading FMCG company, Hindustan Unilever will gain from any government expenditure.
AGRICULTURE SECTOR
The government has promised to achieve food security by enacting a ‘Right to Food’ Act. This will need a significant increase in food-grain production, which in turn will raise the demand for fertilisers and pesticides. UPA also expects to increase the total arable land area under irrigation over next few years. All such initiatives bode well for companies that cater to these segments.
RECOMMENDED STOCKS TO BUY FROM AGRICULTURE SECTOR
Coromandal Fertilisers (CMP: Rs 169.5, P/E: 4.5)
Rallis India (CMP: Rs 649.4, P/E: 10.9)
Jain Irrigation (CMP: Rs 567, P/E: 33.4)
Agro-chemicals manufacturer Rallies and fertilisers maker Coromandal are likely to be beneficiaries of UPA's food for all initatives. Jain Irrigation is well positioned to be benefited from the government's plan to bring more farm areas under micro irrigation.
STEEL SECTOR
The domestic steel demand seems to be intact and India is one of those few countries in the world which is expected to register a growth rate of 5-6 %. The UPA govt. initiatives in different rural development programs and higher spends on infrastructure would definitely boost the domestic steel demand.
RECOMMENDED STOCKS TO BUY FROM STEEL SECTOR
Sail (CMP: Rs 158.5, P/E: 9.3)
Sail is focused on domestic market where the demand is expected to remain stable. It has zero debt, no foreign operations, not expanded its capacity recently and is partially integrated. All these factors augur well for Sail during such challenging times.
RETAIL SECTOR
The retail sector's wait for opening up of the FDI route for foreign retailers seems to be coming to an end. As the UPA government would no longer need the support of the Left front, which was opposing the change in the FDI policy and allowing foreign players into the domestic industry, retail sector seems to be poised for growth.
RECOMMENDED STOCKS TO BUY FROM RETAIL SECTOR
Pantaloon (CMP: Rs 300.4, P/E: 38.5)
Being the largest player, Pantaloon Retail would benefit with the change in the FDI policy. Not only would this increase the fund flow into the sector but also help the industry gain from the experience of some of the established international player.
Source: EconomicTimes
Stock Markets (SENSEX) Could Go To 10000-12000 Levels Back - Marc Faber Opines
Marc Faber, Editor and Publisher of The Gloom, Boom & Doom Report, said he saw a correction of 25-30% in equities and that he expected the Sensex to retest 10000-12000 levels. Markets will correct as it becomes evident that the economic recovery is not as rapid as expected.
The US Federal Reserve will throw more money into the system as the economy deteriorates and so it would not be very favourable to be long on the US dollar, Faber added.
On commodities, Faber said that prices would continue to go up in the next couple of years, regardless of the global scenario as the supply of commodities could not be increased.
Commodity prices will find support due to excessive quantitative easing by the US and the global commodity prices will rise if economies improve.
Q: What is your own belief because as you said the camps have been split between what this looks like where the market might go? What do you believe for the Indian story?
A: It is not a question of what I believe. I was fortunate to essentially accumulate equities in December and then again in March and also play the rise in commodity prices as well as the rise in bond prices. At the moment I have to say when I look at the risk reward when the market was very oversold in March of this year, when the S&P was at 666 and the India at less than 8,000 then I compare it to today’s level. I am kind of neutral at the present time. I am leaning towards the view that we will get a correction now but most likely not new lows and then another move into July but the gravy is out of the markets at the present time. I don’t see a lot of opportunities right now where I would say the risk is very small and the opportunity is huge.
Q: So you are saying the next time there is a dip for whatever reason in global equity markets, it is a dip that should be bought into because whenever that dip happens, people will once again start talking about the fact that the bear market rally is over and we are now going back to retest the old lows of October or March? Would that be the right view or would it be the right view to buy into that dip whenever it comes?
A: I am not sure that it is the correct view but my sense is that the markets will correct now and they will correct for a variety of reasons partly because it will become obvious that the global economic recovery is not very strong or not taking place at all. Added to that, we have rising bond yields and renewed dollar weakness, we still have plenty of problems economically and financially. The markets should go down now and in this correction and as the economies kind of deteriorate once again, I am convinced that the US Fed will once again throw money at the system and there will be even larger deficits, more money printing and so the global economy may not recover much but asset markets due to the excess liquidity created by the Fed may hold.
Q: There has been a lot of talk even since crude bounced back close USD 60 per bbl that maybe crude is going back above USD 75-80 per bbl once again and it put a durable bottom in place around USD 35 per bbl. Do you agree with that?
A: There are some commodity bulls and they think that the oil price will continue to go up and there are some bears who believes that the commodity’s bull market that we had essentially since March when the CRB (Commodity Research Bureau) touched around 200 is just a bear market rally and that commodity price will collapse once again.
I am leaning towards the view that regardless of the global economy. If the global economy strengthens or is very strong the demand for commodities will go up and lift commodity prices and the weaker the global economy is, the more money Mr. Bernanke will print and this will lift commodity prices because the supply of commodities cannot be increased at the same rate as Mr. Bernanke’s money printing presses issue new bank notes. So, in general I would lean towards the view that oil prices and other commodity prices will move high over the next couple of years.
Q: There is a view here in conjunction with yours that markets may not go back to test the lows they saw earlier and perhaps they set a higher base for themselves. Would you agree with that when you say you are looking for a dip, how meaningful do you think that dip might be from current levels?
A: A lot of equities have gone up by more than 100% and so we could easily see in individual equities corrections of 25-30% or even more. But in general in the case of India we went from less than 8,000 to 14,000. I wouldn’t be surprised to see something like 10,000-12,000 in a correction but maybe it won’t happen. All I am saying is the risk reward today of buying equities is obviously not as favourable as it was in March when the markets were very depressed, very oversold and when sentiment was incredibly negative. Now sentiment has surprisingly turned very optimistic and most people think ‘the worst is behind us, let us pile into equities’.
The US Federal Reserve will throw more money into the system as the economy deteriorates and so it would not be very favourable to be long on the US dollar, Faber added.
On commodities, Faber said that prices would continue to go up in the next couple of years, regardless of the global scenario as the supply of commodities could not be increased.Commodity prices will find support due to excessive quantitative easing by the US and the global commodity prices will rise if economies improve.
Q: What is your own belief because as you said the camps have been split between what this looks like where the market might go? What do you believe for the Indian story?
A: It is not a question of what I believe. I was fortunate to essentially accumulate equities in December and then again in March and also play the rise in commodity prices as well as the rise in bond prices. At the moment I have to say when I look at the risk reward when the market was very oversold in March of this year, when the S&P was at 666 and the India at less than 8,000 then I compare it to today’s level. I am kind of neutral at the present time. I am leaning towards the view that we will get a correction now but most likely not new lows and then another move into July but the gravy is out of the markets at the present time. I don’t see a lot of opportunities right now where I would say the risk is very small and the opportunity is huge.
Q: So you are saying the next time there is a dip for whatever reason in global equity markets, it is a dip that should be bought into because whenever that dip happens, people will once again start talking about the fact that the bear market rally is over and we are now going back to retest the old lows of October or March? Would that be the right view or would it be the right view to buy into that dip whenever it comes?
A: I am not sure that it is the correct view but my sense is that the markets will correct now and they will correct for a variety of reasons partly because it will become obvious that the global economic recovery is not very strong or not taking place at all. Added to that, we have rising bond yields and renewed dollar weakness, we still have plenty of problems economically and financially. The markets should go down now and in this correction and as the economies kind of deteriorate once again, I am convinced that the US Fed will once again throw money at the system and there will be even larger deficits, more money printing and so the global economy may not recover much but asset markets due to the excess liquidity created by the Fed may hold.
Q: There has been a lot of talk even since crude bounced back close USD 60 per bbl that maybe crude is going back above USD 75-80 per bbl once again and it put a durable bottom in place around USD 35 per bbl. Do you agree with that?
A: There are some commodity bulls and they think that the oil price will continue to go up and there are some bears who believes that the commodity’s bull market that we had essentially since March when the CRB (Commodity Research Bureau) touched around 200 is just a bear market rally and that commodity price will collapse once again.
I am leaning towards the view that regardless of the global economy. If the global economy strengthens or is very strong the demand for commodities will go up and lift commodity prices and the weaker the global economy is, the more money Mr. Bernanke will print and this will lift commodity prices because the supply of commodities cannot be increased at the same rate as Mr. Bernanke’s money printing presses issue new bank notes. So, in general I would lean towards the view that oil prices and other commodity prices will move high over the next couple of years.
Q: There is a view here in conjunction with yours that markets may not go back to test the lows they saw earlier and perhaps they set a higher base for themselves. Would you agree with that when you say you are looking for a dip, how meaningful do you think that dip might be from current levels?
A: A lot of equities have gone up by more than 100% and so we could easily see in individual equities corrections of 25-30% or even more. But in general in the case of India we went from less than 8,000 to 14,000. I wouldn’t be surprised to see something like 10,000-12,000 in a correction but maybe it won’t happen. All I am saying is the risk reward today of buying equities is obviously not as favourable as it was in March when the markets were very depressed, very oversold and when sentiment was incredibly negative. Now sentiment has surprisingly turned very optimistic and most people think ‘the worst is behind us, let us pile into equities’.
Paper Industry Stocks - Sector Outlook From Investment Perspective
THE DOMESTIC paper industry, an underperformer till some time ago, is currently in the midst of a transformation, with improving operating efficiencies and a major capex binge. The industry has turned around in the past couple of years, as demand growth has started to outpace supply.
With the rapid rise in demand for newsprint from the print media and for paperboard from the FMCG industry, domestic paper manufacturers are recording strong revenue growth, which is backed by improving margins. The increased focus on education by the government, an increase in the general level of literacy and continued demand from user industries will further add to the growth prospects of this sector.
GROWTH DRIVERS:
The paper industry provides the basic input for most service sectors such as education, print media and packaging. With the rapid growth of the economy in the past few years, India is undergoing structural changes with greater urbanization, rise in disposable incomes leading to higher demand for high-end paper and hygiene paper products. As a result, there is a shift in demand from low-value paper products to the high-value segment. Further, a spurt in direct mailers and print media is creating an even greater demand for newsprint.
BUILDING IT UP:
Buoyed by the growth prospects, companies in the paper industry are in the midst of massive capacity expansion. According to CMIE data, the value of all the projects, which have either been announced or are currently underimplementation, is around Rs 9,000 crore. Most of these are newsprint, writing and printing paper projects. A number of big players like Ballarpur Industries, Tamil Nadu Newsprints & Papers and West Coast Paper have announced capacity expansion plans. Ballarpur Industries, with an installed capacity of 4,80,000 tonnes, is undertaking expansion at a cost of Rs 1,600 crore over the next two years to increase paper capacity by 400,000 tonnes. Further, Tamil Nadu Newsprint and West Coast Paper are also expanding capacity at a cost of Rs 350 crore and Rs 1,100 crore, respectively, over the next two years. Most domestic paper companies are already operating at 80-90% of their capacities. Since demand is expected to remain robust, the expanded capacities are unlikely to lead to a glut situation in the industry.
FUTURE PERFECT:
Going forward, the long-term growth outlook for this sector remains positive. As per industry estimates, the domestic paper sector is expected to grow at 6.6%, which is higher than the growth rate globally. Demand is encouraging due to high consumption across segments, while the value-added segment is acting as the main driver of growth. However, the consumption growth in the rest of the world (excluding India and China) remains almost negligible, which means that Indian producers will have to continue competing with imports. The domestic paper industry has emerged as a growth sector, taking in its stride problems such as rising costs of raw materials and fuel, as well as the threat of imports. As the demand remains robust, expansion plans are likely to give companies economies of scale and volume-led growth in the coming quarters.
With the rapid rise in demand for newsprint from the print media and for paperboard from the FMCG industry, domestic paper manufacturers are recording strong revenue growth, which is backed by improving margins. The increased focus on education by the government, an increase in the general level of literacy and continued demand from user industries will further add to the growth prospects of this sector.GROWTH DRIVERS:
The paper industry provides the basic input for most service sectors such as education, print media and packaging. With the rapid growth of the economy in the past few years, India is undergoing structural changes with greater urbanization, rise in disposable incomes leading to higher demand for high-end paper and hygiene paper products. As a result, there is a shift in demand from low-value paper products to the high-value segment. Further, a spurt in direct mailers and print media is creating an even greater demand for newsprint.
BUILDING IT UP:
Buoyed by the growth prospects, companies in the paper industry are in the midst of massive capacity expansion. According to CMIE data, the value of all the projects, which have either been announced or are currently underimplementation, is around Rs 9,000 crore. Most of these are newsprint, writing and printing paper projects. A number of big players like Ballarpur Industries, Tamil Nadu Newsprints & Papers and West Coast Paper have announced capacity expansion plans. Ballarpur Industries, with an installed capacity of 4,80,000 tonnes, is undertaking expansion at a cost of Rs 1,600 crore over the next two years to increase paper capacity by 400,000 tonnes. Further, Tamil Nadu Newsprint and West Coast Paper are also expanding capacity at a cost of Rs 350 crore and Rs 1,100 crore, respectively, over the next two years. Most domestic paper companies are already operating at 80-90% of their capacities. Since demand is expected to remain robust, the expanded capacities are unlikely to lead to a glut situation in the industry.
FUTURE PERFECT:
Going forward, the long-term growth outlook for this sector remains positive. As per industry estimates, the domestic paper sector is expected to grow at 6.6%, which is higher than the growth rate globally. Demand is encouraging due to high consumption across segments, while the value-added segment is acting as the main driver of growth. However, the consumption growth in the rest of the world (excluding India and China) remains almost negligible, which means that Indian producers will have to continue competing with imports. The domestic paper industry has emerged as a growth sector, taking in its stride problems such as rising costs of raw materials and fuel, as well as the threat of imports. As the demand remains robust, expansion plans are likely to give companies economies of scale and volume-led growth in the coming quarters.
IT Sector Analysis Based On Recent Financial Results
Investors are once again flocking to IT counters after shunning the sector for an entire year. The rebound in investor sentiment is evident from the fact that though IT indices have failed to provide returns over a 12-month horizon, they have by and large outperformed the broader market over one-month and three-month periods.
The renewed interest of investors despite not-so-encouraging results can be attributed to the weakening of the rupee against the dollar. Post the March quarter results and favourable trend in currency fluctuations, the time is right to take a look at the prospects of the IT sector. So far, over 100 large and small software and BPO companies have declared results for the March ''09 quarter and the picture at the aggregate level is not too encouraging.
The performance of the IT sector is even bleaker on the profit and profitability fronts. Growth in net profit for the sector during the March ''09 quarter was the slowest in the past several quarters. This is also true in case of profitability of the IT sector. The sombre performance has come on the back of an appreciating rupee and slower growth in the BFSI segment. For FY10, though IT companies have maintained their ''cautiously optimistic'' stand, the guidance given by large and mid-sized companies reflects their confidence in maintaining growth.During the June ''09quarter, depreciation in the rupee against the dollar may help companies post better margins.As per industry experts, every 1% fall in the rupee will improve companies'' operating profitability by over 30-35 bps.
Checkout:Stocks To Buy After Lok Sabha Elections 2009 Results
Most IT companies have hedged their future earnings in the currency forwards market.Companies typically hedge 30-75% of their future earnings. This reduces the impact of currency fluctuations on their revenues and profitability when the rupee is appreciating. But this will result in erosion of profitability when the rupee stars depreciating.Though a depreciating rupee will increase hedging losses, this may be more-than-compensated by gains on the operational front as companies have flexibility to rework their hedging strategies, depending upon the rupee''s fluctuation.
Over the long term, the IT sector is set to see moderate growth, given fattening revenue base of the sector and slowing US economy. This may be reflected in companies' current valuations. IT exporters with a strong business model and ability to take advantage of global sourcing opportunities by relocating their delivery base can tide through the bad patch. Also, companies that have India-centric strategies woven through niche market offerings look promising.Investors with a horizon of 2-3 years can accumulate scrips of top-tier companies, like TCS and Infosys, as well as niche players in the mid-tier space, such as Rolta, Mastek and Tulip Telecom.
The renewed interest of investors despite not-so-encouraging results can be attributed to the weakening of the rupee against the dollar. Post the March quarter results and favourable trend in currency fluctuations, the time is right to take a look at the prospects of the IT sector. So far, over 100 large and small software and BPO companies have declared results for the March ''09 quarter and the picture at the aggregate level is not too encouraging.The performance of the IT sector is even bleaker on the profit and profitability fronts. Growth in net profit for the sector during the March ''09 quarter was the slowest in the past several quarters. This is also true in case of profitability of the IT sector. The sombre performance has come on the back of an appreciating rupee and slower growth in the BFSI segment. For FY10, though IT companies have maintained their ''cautiously optimistic'' stand, the guidance given by large and mid-sized companies reflects their confidence in maintaining growth.During the June ''09quarter, depreciation in the rupee against the dollar may help companies post better margins.As per industry experts, every 1% fall in the rupee will improve companies'' operating profitability by over 30-35 bps.
Checkout:Stocks To Buy After Lok Sabha Elections 2009 Results
Most IT companies have hedged their future earnings in the currency forwards market.Companies typically hedge 30-75% of their future earnings. This reduces the impact of currency fluctuations on their revenues and profitability when the rupee is appreciating. But this will result in erosion of profitability when the rupee stars depreciating.Though a depreciating rupee will increase hedging losses, this may be more-than-compensated by gains on the operational front as companies have flexibility to rework their hedging strategies, depending upon the rupee''s fluctuation.
Over the long term, the IT sector is set to see moderate growth, given fattening revenue base of the sector and slowing US economy. This may be reflected in companies' current valuations. IT exporters with a strong business model and ability to take advantage of global sourcing opportunities by relocating their delivery base can tide through the bad patch. Also, companies that have India-centric strategies woven through niche market offerings look promising.Investors with a horizon of 2-3 years can accumulate scrips of top-tier companies, like TCS and Infosys, as well as niche players in the mid-tier space, such as Rolta, Mastek and Tulip Telecom.
Top 10 Banking Stocks to buy
Sector snapshot that looks into major gainers to help you make an best investment decision in bank sector stocks.
LARGE CAP
Sharekhan & Karvy Stock Broking
HDFC CMP: Rs 1,521
We believe, HDFC is among the better-diversified players in the Indian financial services space with leadership position in mortgage market and strong presence in other financial services (life insurance, asset management and banking). Operationally, HDFC’s fund mobilisation abilities and operational efficiency should help maintain healthy earnings momentum in a tough operating environment.
BANK OF BARODA CMP: Rs 275
We are increasing our FY2009 net earning estimates by 8% to Rs 18 billion and FT2010 net earning by 10% to Rs 22.8 billion. We are maintaining our price target of Rs 335. In our book value we have adjusted for Rs 721 million which is unprovided for the Accounting Standard (AS)-15 which we had not adjusted for earlier. The bank would amortise this amount over five years.
MID CAP
Angel Broking & Karvy Stock Broking
CORPORATION BANK CMP: Rs196
We are positive on Corporation Bank due to its efficient operations reflected in low operating expenses, as a percent to average assets, superior asset quality and proactive investments in modern distribution and payment systems. But the bank’s relatively small size and scope of operations as well as urban focus that subjects it to greater competition from private banks, temper the growth outlook on the key competitive parameters of CASA and fee income.
DENA BANK CMP: Rs 33
At current valuations, Dena Bank is the most attractively valued bank in our government banking universe, it is also the smallest. As a result of the wage hike provisions and lower other income we revise our FY2009 EPS to Rs 12.8 and FY2010 EPS to Rs 16.8. In FY2009 earnings would only increase by 2% y-o-y.
SMALL CAP
SMC Global
SOUTH INDIAN BANK CMP: Rs 57
Kerala-based South Indian Bank has drawn up a five-year plan to drive total business to Rs 75,000 crore by March 2013. Under the five-year plan, banks deposit are likely to grow to Rs 44,000 crore and advances to Rs 31,000 crore by March 2013. We believe that stock is undervalued to the future potential price.
KARNATAKA BANK CMP: Rs 80
Karnataka Bank has a dominant presence in the southern and western parts of India. With 12.17% capital adequacy as on March 2008, we believe the bank has sufficient capital to grow its loan book and comply with Basel II norms. With the implementation of Basel- II norms, the management expects a 100bps impact on its capital adequacy. We believe that stock is undervalued to the future potential price.
Source reference: Economic Times
LARGE CAP
Sharekhan & Karvy Stock Broking
HDFC CMP: Rs 1,521
We believe, HDFC is among the better-diversified players in the Indian financial services space with leadership position in mortgage market and strong presence in other financial services (life insurance, asset management and banking). Operationally, HDFC’s fund mobilisation abilities and operational efficiency should help maintain healthy earnings momentum in a tough operating environment.
BANK OF BARODA CMP: Rs 275
We are increasing our FY2009 net earning estimates by 8% to Rs 18 billion and FT2010 net earning by 10% to Rs 22.8 billion. We are maintaining our price target of Rs 335. In our book value we have adjusted for Rs 721 million which is unprovided for the Accounting Standard (AS)-15 which we had not adjusted for earlier. The bank would amortise this amount over five years.
MID CAP
Angel Broking & Karvy Stock Broking
CORPORATION BANK CMP: Rs196
We are positive on Corporation Bank due to its efficient operations reflected in low operating expenses, as a percent to average assets, superior asset quality and proactive investments in modern distribution and payment systems. But the bank’s relatively small size and scope of operations as well as urban focus that subjects it to greater competition from private banks, temper the growth outlook on the key competitive parameters of CASA and fee income.
DENA BANK CMP: Rs 33
At current valuations, Dena Bank is the most attractively valued bank in our government banking universe, it is also the smallest. As a result of the wage hike provisions and lower other income we revise our FY2009 EPS to Rs 12.8 and FY2010 EPS to Rs 16.8. In FY2009 earnings would only increase by 2% y-o-y.
SMALL CAP
SMC Global
SOUTH INDIAN BANK CMP: Rs 57
Kerala-based South Indian Bank has drawn up a five-year plan to drive total business to Rs 75,000 crore by March 2013. Under the five-year plan, banks deposit are likely to grow to Rs 44,000 crore and advances to Rs 31,000 crore by March 2013. We believe that stock is undervalued to the future potential price.
KARNATAKA BANK CMP: Rs 80
Karnataka Bank has a dominant presence in the southern and western parts of India. With 12.17% capital adequacy as on March 2008, we believe the bank has sufficient capital to grow its loan book and comply with Basel II norms. With the implementation of Basel- II norms, the management expects a 100bps impact on its capital adequacy. We believe that stock is undervalued to the future potential price.
Source reference: Economic Times
Mutual Funds To Build Your Retirement Corpus
Recently-introduced New Pension Scheme (NPS)from PFRDA India has generated a lot of interest among people about retirement planning—especially among those employed in the private sector without a pension cover for retirement. Consultants say most queries about NPS often turn to questions like “do you think I should put extra money for retirement’’ or “do you think I will have enough money on retirement’’.
Checkout: NPS - New Pension Scheme From PFRDA India - What Is It & Analysis
Financial experts, however, insist that people must take retirement planning seriously. “Even those who take retirement planning earnestly often go for wrong vehicles, as the market is flooded with many products from mutual funds and insurance companies,’’ says a financial consultant. “Don’t go by the name of the product. Examine it and figure out whether the objective suits your purpose.’’
The point, he wants to make, is don’t sign up for any products with a “retirement’’ tag.
Most financial advisors prefer to use mutual fund schemes as a vehicle to build their clients’ retirement corpus. The choice of the scheme would depend on the risk-taking ability of the client, they say. However, almost everyone vouches for equity schemes as the best vehicle to build the retirement corpus. They use the historical returns provided by the stock market benchmarks like sensex (and of course the theory that equity beats all other asset classes in the long run) to buttress their claim.
However, experts are a divided lot. Some swear by bluechip schemes (frontline stocks), others by diversified schemes (invest across market cap and sectors) and a minority roots for mid- and small- cap schemes and index schemes (portfolio mimics the index it follows).
“When we talk about retirement, we look 15 years ahead. I think it makes perfect sense to go for an index scheme,’’ says a mutual fund manager, who believes it would become extremely difficult to beat market benchmarks as Indian markets become more sophisticated. His argument is built upon the experience in the US, where many active fund managers fail to beat the broad index. He also cites that they are the most cost effective.
However, many investment experts disagree with him. They claim it is easy to beat the broad market in a developing economy like India. “Active fund management can still yield good returns. One can still spot multi-baggers (stocks that give many times the returns over the purchase cost) in the Indian market,’’ claims an investment expert. “When you have time on your side, you can bet on small & mid-cap stocks. They are risky, but can potentially beat frontline stocks,’’ he says. But make no mistake. It is a high risk and (possible) high reward game, with many ups and downs.
May be that is why many investors prefer to take the bluechip or diversified route to build a corpus for their sunset days. The basic idea is that they don’t want to take any undue risk, but still would prefer a bit of active fund managing to make some extra returns. Those who bet on frontline stocks claim these stocks mostly drive the market, and it are safer to stick to them. Votaries of diversified schemes believe it is better to give the fund manager the freedom to invest across different market cap and sectors to benefit from the ups and downs. Finally, you do’t have to stick to a particular kind of scheme. You can always also use a combination if it suits your risk appetite and objective.
Source: TOI
Checkout: NPS - New Pension Scheme From PFRDA India - What Is It & Analysis
Financial experts, however, insist that people must take retirement planning seriously. “Even those who take retirement planning earnestly often go for wrong vehicles, as the market is flooded with many products from mutual funds and insurance companies,’’ says a financial consultant. “Don’t go by the name of the product. Examine it and figure out whether the objective suits your purpose.’’
The point, he wants to make, is don’t sign up for any products with a “retirement’’ tag.
Most financial advisors prefer to use mutual fund schemes as a vehicle to build their clients’ retirement corpus. The choice of the scheme would depend on the risk-taking ability of the client, they say. However, almost everyone vouches for equity schemes as the best vehicle to build the retirement corpus. They use the historical returns provided by the stock market benchmarks like sensex (and of course the theory that equity beats all other asset classes in the long run) to buttress their claim.
However, experts are a divided lot. Some swear by bluechip schemes (frontline stocks), others by diversified schemes (invest across market cap and sectors) and a minority roots for mid- and small- cap schemes and index schemes (portfolio mimics the index it follows).
“When we talk about retirement, we look 15 years ahead. I think it makes perfect sense to go for an index scheme,’’ says a mutual fund manager, who believes it would become extremely difficult to beat market benchmarks as Indian markets become more sophisticated. His argument is built upon the experience in the US, where many active fund managers fail to beat the broad index. He also cites that they are the most cost effective.
However, many investment experts disagree with him. They claim it is easy to beat the broad market in a developing economy like India. “Active fund management can still yield good returns. One can still spot multi-baggers (stocks that give many times the returns over the purchase cost) in the Indian market,’’ claims an investment expert. “When you have time on your side, you can bet on small & mid-cap stocks. They are risky, but can potentially beat frontline stocks,’’ he says. But make no mistake. It is a high risk and (possible) high reward game, with many ups and downs.
May be that is why many investors prefer to take the bluechip or diversified route to build a corpus for their sunset days. The basic idea is that they don’t want to take any undue risk, but still would prefer a bit of active fund managing to make some extra returns. Those who bet on frontline stocks claim these stocks mostly drive the market, and it are safer to stick to them. Votaries of diversified schemes believe it is better to give the fund manager the freedom to invest across different market cap and sectors to benefit from the ups and downs. Finally, you do’t have to stick to a particular kind of scheme. You can always also use a combination if it suits your risk appetite and objective.
Source: TOI
Use an Systematic Bet on Index funds Small, A |
Gammon Infrastructure Projects Ltd - Mid Cap Stock From Infrastructure Sector
Gammon Infrastructure Projects Limited ("GIPL") is an infrastructure project development company incorporated by Gammon India Limited, to participate in the development of infrastructure projects on a public private partnership ("PPP") basis.All projects are promoted through the respective SPVs and GIPL acts as their holding company. It is currently working on projects in highways, ports, hydroelectric power and biomass power sectors on a PPP basis and plans to bid for projects in urban infrastructure, airports, mass rapid transit systems, power transmission lines and SEZs.
Its current portfolio includes 14 projects, of which, four projects (three in highways sector and one in ports) are already operational. Seven other projects are in development or construction phases. These include the 99.5-km stretch of road on NH-3 connecting Mumbai and Nasik, and construction and development of offshore container berths and container terminal at Mumbai Harbour for Mumbai Port Trust for an initial period of five years.
The company's past results were not encouraging but present fiscal may be much better, with expected commissioning of five more projects. By FY11, a total of 11 projects are expected to be operational. It is not much attractive stock at present levels, but looking at new UPA government's infrastructure policies in near future, it could prove a good stock to hold from longer term investment perspective. If it gets success in bagging new infrastructure projects, it's valuations would certainly be better than anticipated.
CMP: Rs. 91
Market Cap 1,332.75
EPS (TTM) 0.00
P/E 0.00
P/C 0.00
Book Value 32.66
Price/Book 2.82
Div(%) 0.00
Div Yield(%)-
Market Lot 1.00
Face Value 10.00
Industry P/E 82.76
(Data as on 20-05-2009)
Checkout: Other posts in Realty & Infrastructure sector.
What Should Small Investor Like You & Me Do Now?
Did you see the stock market rally on Monday in BSE and NSE? No one can say No! Everyone has seen it and everyone is wishing if he should have buy stocks before this rally. Albeit it could have been a gamble buying stocks before declaration of election results, it paid off for those who bought. Now that's history. Stock markets are going to be volatile for next few days. Today, i.e. on Tuesday, markets opened in red, went till 3oo points down, then recovered and went up to 500 points up and finally settled for flat closing. So what should a small investor do now? Should he buy stocks or should be selling stocks that he holds?Buy?
My answer: A big NO!
Why?
If you look at the SENSEX, it has gone of the roof by 50% in last two months alone. This has been primarily based upon projections of company results expected in next quarters but companies have not performed yet. Companies have not shown the profits in their balance sheets yet. And the biggest of SENSEX rise has been on the account of UPA government's win and stability of next government. It has nothing to do with company balance sheets.
So do not get overwhelmed by this rally and start buying stocks in big quantities. Markets might get corrected up to 20% soon. This correction could happen in next 3 to 6 months timeframe. Stock markets might correct even in tunes of 25%. If at all you want to buy stocks, buy with long term investment horizon.
Sell?
My answer: Again a big NO!
Why?
Unless you need the money for heart surgery in family/marriage of son/daughter or to pay fees of your child, do not sell stocks you have right now!
You should not sell stocks in such a rally unless you really need money badly. Why should you sell stocks and take money out from market when you have a chance to make profits and earn money. Do not forget, equity investments are for long term investment.
Stocks To Buy After Lok Sabha Elections 2009 Results
With a breathtaking rally resulting in two consecutive upper circuit filters in stock markets on Monday morning, investors are eyeing sectors that could be beneficiaries of policies likely to be unveiled by the UPA government. Most market participants are expecting shares of infrastructure companies and banks to lead the bull charge, given the key role of these sectors in the revival of India’s economic growth, which is considered the top priority of new UPA government to be formed soon. Here are few large cap stocks to buy that could be benefited by these new policies.
Hero Honda:
Boost to rural income will further raise demand for entry-level bikes. This is expected to benefit Hero Honda significantly
Checkout: Hero Honda - Best stock to invest in two wheeler auto sector
Maruti Suzuki:
Rising rural prosperity and improvement in rural road network will boost car ownership
State Bank of India:
The default banker to the govt with the widest branch network, SBI will gain from any govt policy
Read: State Bank of India (SBI) - Elephant in Banking sector
Best stocks to buy now are banking stocks
Bharti Airtel:
Likely to gain from government initiatives to widen telecom network in the country
Checkout: Bharti Airtel - Buy Stocks Research Reports From Sharekhan & IIFL
Tata Communication:
UPA promises to cover the entire country with broadband services in the next 3 years. Tata Comm’s Wimax will play a major role
Rural Electrification Corp & PFC:
The govt programme will boost these companies in providing electricity to every household
ACC & Grasim:
Being India’s largest cement makers, these companies will be direct beneficiaries of the govt policy to expand rural infrastructure
Crompton Greaves:
Investment in rural electrification to increase demand for transmission & distribution products
SAIL & Tata Steel:
Being two of India’s largest steel producers, these companies will gain from continued growth in rural demand for steel and allied goods
Hindustan Unilever & Tata Tea:
Rising rural prosperity to push up demand for personal care products and FMCG
Checkout: Best FMCG Companies - Stocks to Invest in 2009
Cipla & GlaxoSmithkline Pharma:
To gain from the govt programme to expand healthcare facilities in the country
Rashtriya Fertilisers & Chemicals:
UPA promises to achieve food security by enacting a Right To Food Act. This will need a significant increase in foodgrain production, raising demand for fertilisers and pesticides
L&T:
Being India’s leading engineering and infrastructure company, L&T will gain from any govt plan to expand infrastructure
Mahindra & Mahindra:
M&M will be a prime beneficiary of growth in rural economy, being the largest maker of tractors & utility vehicles
Jain Irrigation:
Will gain from the government plan to bring more farm areas under micro irrigation
Educomp:
Will gain from government plan to further step up investment in school and higher education
Areva T&D:
The company is likely to play a big role in the development of nuclear power in India
NTPC & BHEL:
The companies will be prime beneficiaries of a government plan to aggressively expand power generation in the country
Hero Honda:
Boost to rural income will further raise demand for entry-level bikes. This is expected to benefit Hero Honda significantly
Checkout: Hero Honda - Best stock to invest in two wheeler auto sector
Maruti Suzuki:
Rising rural prosperity and improvement in rural road network will boost car ownership
State Bank of India:
The default banker to the govt with the widest branch network, SBI will gain from any govt policy
Read: State Bank of India (SBI) - Elephant in Banking sector
Best stocks to buy now are banking stocks
Bharti Airtel:
Likely to gain from government initiatives to widen telecom network in the country
Checkout: Bharti Airtel - Buy Stocks Research Reports From Sharekhan & IIFL
Tata Communication:
UPA promises to cover the entire country with broadband services in the next 3 years. Tata Comm’s Wimax will play a major role
Rural Electrification Corp & PFC:
The govt programme will boost these companies in providing electricity to every household
ACC & Grasim:
Being India’s largest cement makers, these companies will be direct beneficiaries of the govt policy to expand rural infrastructure
Crompton Greaves:
Investment in rural electrification to increase demand for transmission & distribution products
SAIL & Tata Steel:
Being two of India’s largest steel producers, these companies will gain from continued growth in rural demand for steel and allied goods
Hindustan Unilever & Tata Tea:
Rising rural prosperity to push up demand for personal care products and FMCG
Checkout: Best FMCG Companies - Stocks to Invest in 2009
Cipla & GlaxoSmithkline Pharma:
To gain from the govt programme to expand healthcare facilities in the country
Rashtriya Fertilisers & Chemicals:
UPA promises to achieve food security by enacting a Right To Food Act. This will need a significant increase in foodgrain production, raising demand for fertilisers and pesticides
L&T:
Being India’s leading engineering and infrastructure company, L&T will gain from any govt plan to expand infrastructure
Mahindra & Mahindra:
M&M will be a prime beneficiary of growth in rural economy, being the largest maker of tractors & utility vehicles
Jain Irrigation:
Will gain from the government plan to bring more farm areas under micro irrigation
Educomp:
Will gain from government plan to further step up investment in school and higher education
Areva T&D:
The company is likely to play a big role in the development of nuclear power in India
NTPC & BHEL:
The companies will be prime beneficiaries of a government plan to aggressively expand power generation in the country
Post Election - Stock Markets To Zoom On Monday - Rakesh Jhunjhunwala
Stock markets would zoom on Monday morning i.e. on 18th May after declaration of election results and UPA winning the same in order to put a stable government for next 5 years.
In an exclusive discussion on CNBC-TV18, leading investor and trader Rakesh Jhunjhunwala of Rare Enterprises said that the election results signalled the coming to end of divisive politics.
The victory is very important for what will happen ahead given the economic circumstances prevailing in the world, he said, adding that he sees the country going back to 8-10% growth on the back of a stable government.
I expect a lot of capital inflow into to India, the ace investor said, adding that the government was likely to be aggressive with reforms. The market would prefer to see a pro-reforms finance minister.
Source: Moneycontrol
Checkout: Rakesh Jhunjhunwala - Latest Portfolio Changes And His Strategy
In an exclusive discussion on CNBC-TV18, leading investor and trader Rakesh Jhunjhunwala of Rare Enterprises said that the election results signalled the coming to end of divisive politics.
The victory is very important for what will happen ahead given the economic circumstances prevailing in the world, he said, adding that he sees the country going back to 8-10% growth on the back of a stable government.
I expect a lot of capital inflow into to India, the ace investor said, adding that the government was likely to be aggressive with reforms. The market would prefer to see a pro-reforms finance minister.
Source: Moneycontrol
Checkout: Rakesh Jhunjhunwala - Latest Portfolio Changes And His Strategy
How To Get Best Returns On Investment - With Debt And Equity
At a time when most investors were bracing up for a sharp correction and new lows in the equity markets, the indices across the globe registered a smart recovery in the last 4-5 weeks.
While a clear picture of signs of recovery is yet to emanate from most markets, this recovery has nevertheless given hopes that the future is not so bleak for the markets, at least 12 months down the line.
Despite the relief rally, if you can call it so, it hasn't been convincing enough for investors to rush and put their entire money in equity. After all, many are yet to forget the pains of 2008 and particularly the crash of October 2008.
One of the safe options to manage the current financial dilemma is by allocating your portfolio between equity and debt.
While financial planners have always been suggesting such an allocation for long, it hasn't really percolated down to all class of investors simply because momentum drives the investment decisions for many rather than needs or risk appetite .
The time has probably come for a good balance between the two options.
One of the simpler options is to choose a balanced fund which can allocate as much as 35 percent in debt and the balance in equity or allocate funds individually between debt and equity.
If an individual chooses to strike a balance between debt and equity, he can even go up to 50 percent of the corpus in favour of debt, depending on the market environment.
Unfortunately, there are few who strike a balance and in reality, you find investors chasing one of the options. As a result, while one group ends up with a high-risk allocation , the other group ends up with a low-risk one.
The latter, of course, have their moments of success as was the case in the recent times, but in the long run, miss out on the opportunity of earning higher returns.
For die-hard debt lovers, there may not be much hope in the next 1-2 years as the days of higher rates are clearly behind us.
Those who rely on fixed deposits will probably have to look beyond banks and can park money in company deposits.
In the case of companies, liquidity is still an issue as banks are still taking a cautious approach. As a result, even companies with high credit rating have been forced to face liquidity crunch.
For debt investors some of the other options could be post office monthly income plans, income funds and public provident fund, though income generation on a monthly basis is possible only through post office products.
In this category, monthly income plans of mutual funds can be another option but they carry an element of risk.
If one were to rely on a good mix, a combination of these products along with equity can be the choice besides balanced funds.
In fact, a gradual increase in asset allocation in favour of balanced funds is not a bad idea if you are a mutual fund investor and in the age group of over 50. The advantage with a balanced fund is that during an equity downtrend, it acts as an excellent cushion as debt tends to be a performer during such a scenario.
That is also one of the reasons why balanced funds have managed to cut down their losses in the last 12 months when compared with large-cap focused funds.
While a clear picture of signs of recovery is yet to emanate from most markets, this recovery has nevertheless given hopes that the future is not so bleak for the markets, at least 12 months down the line.
Despite the relief rally, if you can call it so, it hasn't been convincing enough for investors to rush and put their entire money in equity. After all, many are yet to forget the pains of 2008 and particularly the crash of October 2008.
One of the safe options to manage the current financial dilemma is by allocating your portfolio between equity and debt.
While financial planners have always been suggesting such an allocation for long, it hasn't really percolated down to all class of investors simply because momentum drives the investment decisions for many rather than needs or risk appetite .
The time has probably come for a good balance between the two options.
One of the simpler options is to choose a balanced fund which can allocate as much as 35 percent in debt and the balance in equity or allocate funds individually between debt and equity.
If an individual chooses to strike a balance between debt and equity, he can even go up to 50 percent of the corpus in favour of debt, depending on the market environment.
Unfortunately, there are few who strike a balance and in reality, you find investors chasing one of the options. As a result, while one group ends up with a high-risk allocation , the other group ends up with a low-risk one.
The latter, of course, have their moments of success as was the case in the recent times, but in the long run, miss out on the opportunity of earning higher returns.
For die-hard debt lovers, there may not be much hope in the next 1-2 years as the days of higher rates are clearly behind us.
Those who rely on fixed deposits will probably have to look beyond banks and can park money in company deposits.
In the case of companies, liquidity is still an issue as banks are still taking a cautious approach. As a result, even companies with high credit rating have been forced to face liquidity crunch.
For debt investors some of the other options could be post office monthly income plans, income funds and public provident fund, though income generation on a monthly basis is possible only through post office products.
In this category, monthly income plans of mutual funds can be another option but they carry an element of risk.
If one were to rely on a good mix, a combination of these products along with equity can be the choice besides balanced funds.
In fact, a gradual increase in asset allocation in favour of balanced funds is not a bad idea if you are a mutual fund investor and in the age group of over 50. The advantage with a balanced fund is that during an equity downtrend, it acts as an excellent cushion as debt tends to be a performer during such a scenario.
That is also one of the reasons why balanced funds have managed to cut down their losses in the last 12 months when compared with large-cap focused funds.
NPS - New Pension Scheme From PFRDA India - What Is It & Analysis
WITH the launch of New Pension Scheme (NPS) comes the government’s attempt to offer a first of its kind social security plan. The long awaited plan was finally launched on May 1, 2009 after being in the pipeline for five years. Wealth tries to answer the 10 most commonly asked questions about this scheme.
Q1. What is NPS?
NPS is a pension plan where you can invest during your working years and withdraw when you retire. Until May 1 2009, the plan was available for central government employees only. But it is now thrown open to the citizens of the country.
The current NPS launched is of tier-I type. The typical feature of tier I type plan is that it does not allow you to make any withdrawals before 60 years. However, there can be exceptions in situations like a medical emergency or buying your first house.
If you don't like the idea of this long lock in, you would need to wait for the tier II type of fund, which is yet to be launched. D Swarup, Chairman of Pension Fund Regulatory Development Authority (PFRDA), said in an interview with CNBC TV18, "The tier II plan will be out before the end of this year."
Q2. How does it work?
NPS works like a mutual fund (MF). If you want to invest in the NPS, you can choose from three funds or a mix of funds:
Fund E: This invests up to 50 per cent in the equity market Fund C: This fund invests 100 per cent in corporate bonds Fund G: This fund invests 200 per cent in government securities
If you are confused about how much to invest in which fund, you can leave it to the auto selection option. Through this option, 15 per cent of your money will be invested in equity, 45 per cent in corporate bond and 40 per cent in government bonds.
However, after 36 years of age, your equity and corporate bonds exposure will reduce, but it will be compensated with higher investment in government bonds. The maximum cap in government bonds will be 80 per cent. Equity and corporate bonds will have 10 per cent each investment proportion.
Q3. Whom should I approach to invest?
These fund are managed by six asset management companies (AMC): State Bank of India, UTI, ICICI Prudential, Kotak Mahindra, IDFC and Reliance, appointed by the PFRDA. Swarup says, "You have the liberty to choose, change your fund manager every year unlike mutual fund or unit linked insurance plans where you are tied to the same fund manger throughout the term of the product."
All AMCs have to follow the guidelines laid out by PFRDA since it’s the ruling authority.
Q4. How much can I invest?
If you are investing in the scheme, you will have to make a compulsory contribution of minimum Rs 6,000 annually or Rs 500 every month. Swarup, says, "You also have the flexibility to make weekly contribution, but it would involve transition cost, hence it is better to stick to minimum transactions."
The minimum age to enter the scheme is 18 years and the maximum is 55 years.
Q5. What about charges?
The best thing about this scheme is the fund management charge, which is a bare minimum of 0.0009 per cent! That is nowhere close to the charges by mutual funds or unit linked insurance companies which range from 1.5 per cent to 2.5 per cent per annum.
The application form will cost you Rs 40 and for every transaction you make, you will have to shell out Rs 20. Switching to another fund will cost you another Rs 20. However, you cannot make more than one switch every year. Apart from this, you will have to pay Rs 350 as annual maintenance charge to National Securities Depository Ltd. (NSDL), which is the central record keeping agency for all the individual pension accounts. Just like the way you pay an annual charge in maintaining your demat account, you will have to bear a cost for NPS too.
Q6. Do I get tax benefits?
Unlike retirement plan options, NPS doesn’t offer tax benefits under section 80 C and that’s the biggest drawback of the scheme. Currently, NPS falls under Exempt-Exempt-Tax (EET) system. This means that the maturity benefits that you will receive at the retirement stage will be taxable. However, Swarup assures that NPS will be brought at par with other schemes sooner than later.
Q7. How will I be paid on retirement?
Payments will be made once you reach 60 years of age. A part of your invested money will be paid out to you as lumpsum, and the balance will be mandatorily kept back as annuity. This annuity, which is the remaining amount left in your account, will be paid out to you as pension every month or year depending on what you choose. In case of your untimely death, your nomination will receive this pension.
Q8. Should I invest?
Like any other scheme, NPS has its own advantages and disadvantages. When compared to other retirement plan options such as employee provident fund (EPF), NPS is a better choice. And the reason Kartik Jhaveri, Certified Financial Planner, gives is that presently, EPF gives 8 per cent interest rate. But if you invest in NPS, you can gain better returns because of the equity portfolio of the scheme.
But compared to equity mutual funds, Jhaveri says that NPS has a major drawback: it restricts equity to 50 per cent. Even if the fund management charges are lower, Jhaveri still recommends a mutual fund. "If one is voluntarily investing in NPS, then he/she might as well invest in the stocks or mutual funds (MF). It will give you better returns and you have control over your investments too."
The main reason: NPS loses its charm when it comes to flexibility and taxation, he explains. Firstly, in NPS your money is locked till your retirement age unlike MFs that do not have lock-in period except equity linked mutual funds. Moreover, annuity that you will receive at the age of 60 is taxable and so is the maturity benefits. Hence Jhaveri cautions investors to wait for a while before hurrying to invest in it.
Q9. Where can I buy the scheme?
In order to invest in NPS, you will have to open an account with any one of the 23 point of presence (PoP). The PFRDA has appointed mutual funds, financial distribution firms, insurers, banks as PoP.
Q10. What is the procedure?
1. Visit the nearest PoP to open the account
2. You will need residence proof, permanent account number, photograph and other essential documents. 3. Once you have opened the account, you will get a permanent retirement account number (PRAN) with internet banking access details. 4. You can then begin with your transactions and start investing money 5. You will receive physical account statement every year that will carry you transaction details, amount invested, etc.
The process is similar to opening a bank or a demat account.
Disclaimer: While we have made efforts to ensure the accuracy of our content (consisting of articles and information), neither this website nor the author shall be held responsible for any losses/ incidents suffered by people accessing, using or is supplied with the content.
Source:MoneyControl
Q1. What is NPS?
NPS is a pension plan where you can invest during your working years and withdraw when you retire. Until May 1 2009, the plan was available for central government employees only. But it is now thrown open to the citizens of the country.
The current NPS launched is of tier-I type. The typical feature of tier I type plan is that it does not allow you to make any withdrawals before 60 years. However, there can be exceptions in situations like a medical emergency or buying your first house.
If you don't like the idea of this long lock in, you would need to wait for the tier II type of fund, which is yet to be launched. D Swarup, Chairman of Pension Fund Regulatory Development Authority (PFRDA), said in an interview with CNBC TV18, "The tier II plan will be out before the end of this year."
Q2. How does it work?
NPS works like a mutual fund (MF). If you want to invest in the NPS, you can choose from three funds or a mix of funds:
Fund E: This invests up to 50 per cent in the equity market Fund C: This fund invests 100 per cent in corporate bonds Fund G: This fund invests 200 per cent in government securities
If you are confused about how much to invest in which fund, you can leave it to the auto selection option. Through this option, 15 per cent of your money will be invested in equity, 45 per cent in corporate bond and 40 per cent in government bonds.
However, after 36 years of age, your equity and corporate bonds exposure will reduce, but it will be compensated with higher investment in government bonds. The maximum cap in government bonds will be 80 per cent. Equity and corporate bonds will have 10 per cent each investment proportion.
Q3. Whom should I approach to invest?
These fund are managed by six asset management companies (AMC): State Bank of India, UTI, ICICI Prudential, Kotak Mahindra, IDFC and Reliance, appointed by the PFRDA. Swarup says, "You have the liberty to choose, change your fund manager every year unlike mutual fund or unit linked insurance plans where you are tied to the same fund manger throughout the term of the product."
All AMCs have to follow the guidelines laid out by PFRDA since it’s the ruling authority.
Q4. How much can I invest?
If you are investing in the scheme, you will have to make a compulsory contribution of minimum Rs 6,000 annually or Rs 500 every month. Swarup, says, "You also have the flexibility to make weekly contribution, but it would involve transition cost, hence it is better to stick to minimum transactions."
The minimum age to enter the scheme is 18 years and the maximum is 55 years.
Q5. What about charges?
The best thing about this scheme is the fund management charge, which is a bare minimum of 0.0009 per cent! That is nowhere close to the charges by mutual funds or unit linked insurance companies which range from 1.5 per cent to 2.5 per cent per annum.
The application form will cost you Rs 40 and for every transaction you make, you will have to shell out Rs 20. Switching to another fund will cost you another Rs 20. However, you cannot make more than one switch every year. Apart from this, you will have to pay Rs 350 as annual maintenance charge to National Securities Depository Ltd. (NSDL), which is the central record keeping agency for all the individual pension accounts. Just like the way you pay an annual charge in maintaining your demat account, you will have to bear a cost for NPS too.
Q6. Do I get tax benefits?
Unlike retirement plan options, NPS doesn’t offer tax benefits under section 80 C and that’s the biggest drawback of the scheme. Currently, NPS falls under Exempt-Exempt-Tax (EET) system. This means that the maturity benefits that you will receive at the retirement stage will be taxable. However, Swarup assures that NPS will be brought at par with other schemes sooner than later.
Q7. How will I be paid on retirement?
Payments will be made once you reach 60 years of age. A part of your invested money will be paid out to you as lumpsum, and the balance will be mandatorily kept back as annuity. This annuity, which is the remaining amount left in your account, will be paid out to you as pension every month or year depending on what you choose. In case of your untimely death, your nomination will receive this pension.
Q8. Should I invest?
Like any other scheme, NPS has its own advantages and disadvantages. When compared to other retirement plan options such as employee provident fund (EPF), NPS is a better choice. And the reason Kartik Jhaveri, Certified Financial Planner, gives is that presently, EPF gives 8 per cent interest rate. But if you invest in NPS, you can gain better returns because of the equity portfolio of the scheme.
But compared to equity mutual funds, Jhaveri says that NPS has a major drawback: it restricts equity to 50 per cent. Even if the fund management charges are lower, Jhaveri still recommends a mutual fund. "If one is voluntarily investing in NPS, then he/she might as well invest in the stocks or mutual funds (MF). It will give you better returns and you have control over your investments too."
The main reason: NPS loses its charm when it comes to flexibility and taxation, he explains. Firstly, in NPS your money is locked till your retirement age unlike MFs that do not have lock-in period except equity linked mutual funds. Moreover, annuity that you will receive at the age of 60 is taxable and so is the maturity benefits. Hence Jhaveri cautions investors to wait for a while before hurrying to invest in it.
Q9. Where can I buy the scheme?
In order to invest in NPS, you will have to open an account with any one of the 23 point of presence (PoP). The PFRDA has appointed mutual funds, financial distribution firms, insurers, banks as PoP.
Q10. What is the procedure?
1. Visit the nearest PoP to open the account
2. You will need residence proof, permanent account number, photograph and other essential documents. 3. Once you have opened the account, you will get a permanent retirement account number (PRAN) with internet banking access details. 4. You can then begin with your transactions and start investing money 5. You will receive physical account statement every year that will carry you transaction details, amount invested, etc.
The process is similar to opening a bank or a demat account.
Disclaimer: While we have made efforts to ensure the accuracy of our content (consisting of articles and information), neither this website nor the author shall be held responsible for any losses/ incidents suffered by people accessing, using or is supplied with the content.
Source:MoneyControl
ELSS Mutual Funds are best investment option over 3-5 years
Nobody loves to pay taxes. Unfortunately there is no way you can avoid it. Once, you cross a certain income level, you have very few ways to save taxes. That explains people’s obsession with the overcrowded section 80 C of the Income Tax Act. It covers scores of avenues—employee’s provident fund, public provident fund, tax saving schemes from mutual funds, national savings scheme, five-year fixed deposits and so on—which allows one to invest up to Rs 1 lakh and claim tax deduction.
Among these, tax saving schemes for mutual funds (also known as equity linked savings schemes or ELSSs) was the in-thing among “yuppie’’ investors till a few years ago. However, the scenario is a little different this year. The depressed stock markets, coupled with economic uncertainties—both on the domestic and overseas front—have forced many bravehearts to reconsider their decision to park money in ELSSs.
Checkout: Best Mutual Funds In India - Outlook Money-Morningstar Mutual Fund Rankings
“Even before the beginning of the financial year, my customers have been calling up to say that they don’t want to renew their systematic investment plans (SIPs) in ELSSs this year,’’ says a financial advisor here. “The stock market has given huge negative returns in the last year and all equity schemes, including tax saving ones, were down 35-50%. People don’t have the stomach to lose capital in the current environment, be it even for a short period,’’ he adds.
Also Read: Systematic Investment Plans (SIP) From Mutual Funds
Thanks to the revival of the stock market lately, some investors are rethinking, while a small section has already resumed its SIPs, say some investment consultants. And they aver that it is the right thing to do. “If you have a 3-5 year timeframe in mind, you should go for ELSSs. The market may be down in the short term, but you still have the potential to earn better returns in a long period,’’ says Sajag Sanghvi, a certified financial planner (CFP). “If you have decided to invest in equity as per your asset allocation plan, then you should go ahead and put the money in tax saving schemes,’’ he adds.
Checkout: ELSS Fund - Choosing Good Income Tax Saving Fund
According to financial experts, there are many advantages of ELSS tax saving option. To begin with, the SIP option would help you start tax planning from the beginning of the financial year. It also imparts a certain financial discipline to your life. “For most people, tax planning is a last-minute rush in March, just before the end of the financial year. They also put money arbitrarily without giving much thought, mostly influenced by the market conditions at that time,’’ says a mutual fund manager. “If they start the process in the beginning of the year, they don’t have to scramble for funds in the last minute. They will also benefit from downward movement in the market,’’ he adds.
One can also hope to pocket superior returns vis-a-vis others in the section 80 C basket. Other options like EPF, PPF, five-year FD, among others, offers fixed rate of return (currently around 8%,), whereas ELSSs (at least in theory) can give you nearly 15%. “One year, stocks may be down 50%, but over a period of 3-5 years you can hope to get an average return of 15%,’’ says Sanghvi. This is because historical data indicates that stocks have the potential to outperform all other asset class in the long run. ELSSs can also beat other equity MF schemes, as they have a mandatory 3-year lock-in period. “This gives us freedom to invest in stocks with huge potential and wait for unlocking of value, whereas in an open-ended fund this is not possible,’’ says a fund manager. “Though ELSSs didn’t outperform the last rally, on previous occasions the category has managed to outperform other equity schemes,’’ he adds.
Source: TOI
Among these, tax saving schemes for mutual funds (also known as equity linked savings schemes or ELSSs) was the in-thing among “yuppie’’ investors till a few years ago. However, the scenario is a little different this year. The depressed stock markets, coupled with economic uncertainties—both on the domestic and overseas front—have forced many bravehearts to reconsider their decision to park money in ELSSs.
Checkout: Best Mutual Funds In India - Outlook Money-Morningstar Mutual Fund Rankings
“Even before the beginning of the financial year, my customers have been calling up to say that they don’t want to renew their systematic investment plans (SIPs) in ELSSs this year,’’ says a financial advisor here. “The stock market has given huge negative returns in the last year and all equity schemes, including tax saving ones, were down 35-50%. People don’t have the stomach to lose capital in the current environment, be it even for a short period,’’ he adds.
Also Read: Systematic Investment Plans (SIP) From Mutual Funds
Thanks to the revival of the stock market lately, some investors are rethinking, while a small section has already resumed its SIPs, say some investment consultants. And they aver that it is the right thing to do. “If you have a 3-5 year timeframe in mind, you should go for ELSSs. The market may be down in the short term, but you still have the potential to earn better returns in a long period,’’ says Sajag Sanghvi, a certified financial planner (CFP). “If you have decided to invest in equity as per your asset allocation plan, then you should go ahead and put the money in tax saving schemes,’’ he adds.
Checkout: ELSS Fund - Choosing Good Income Tax Saving Fund
According to financial experts, there are many advantages of ELSS tax saving option. To begin with, the SIP option would help you start tax planning from the beginning of the financial year. It also imparts a certain financial discipline to your life. “For most people, tax planning is a last-minute rush in March, just before the end of the financial year. They also put money arbitrarily without giving much thought, mostly influenced by the market conditions at that time,’’ says a mutual fund manager. “If they start the process in the beginning of the year, they don’t have to scramble for funds in the last minute. They will also benefit from downward movement in the market,’’ he adds.
One can also hope to pocket superior returns vis-a-vis others in the section 80 C basket. Other options like EPF, PPF, five-year FD, among others, offers fixed rate of return (currently around 8%,), whereas ELSSs (at least in theory) can give you nearly 15%. “One year, stocks may be down 50%, but over a period of 3-5 years you can hope to get an average return of 15%,’’ says Sanghvi. This is because historical data indicates that stocks have the potential to outperform all other asset class in the long run. ELSSs can also beat other equity MF schemes, as they have a mandatory 3-year lock-in period. “This gives us freedom to invest in stocks with huge potential and wait for unlocking of value, whereas in an open-ended fund this is not possible,’’ says a fund manager. “Though ELSSs didn’t outperform the last rally, on previous occasions the category has managed to outperform other equity schemes,’’ he adds.
Source: TOI
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Few guidelines before your apply:
1. If you are planning to cover news/article that is already well known on the Internet, add thoughtful analysis to your article or explore it from various possible angles not covered earlier.
2. It’s always nice to have charts and images or even videos in articles.
3. There’s no minimum word limit, but it is advisable to have at least three or more paragraphs of text.
5. If you quote some text from another source, always give full credit with an hyperlink. Never attempt to rehash someone else’s content or idea.
6. You can explore the archives in Indian Stocks News to learn about topics that are frequently covered here.
All regular writers will be paid via online bank transfer or if asked, by cheque.
Guest Writer
If you have great ideas but don’t have the time to make regular contributions, you can join Indian Stocks News as a guest writer and submit articles at your own convenience for publication on the main blog.
As a guest writer, you won’t be paid for your contributions but it can help get more exposure for your blog or your brand on the Internet. All guest articles can include a brief bio of the author and a link to his or her web site for some extra publicity but before you start writing a guest post, please do send me a brief outline of the same.
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Warren Buffet - Investment Management Strategy From Legend In Current Downturn
Interview of legendary investor Warren Buffett. Article published on Valueresearchonline from Dhirendra Kumar, editor of site. This intrview outlines Buffett's thought process and his stron beliefs on long term investment strategy.
A couple of days ago, I watched a short interview with the legendary investor Warren Buffett on an investment news channel. The interview was conducted shortly after the annual general meeting (AGM) of Buffett’s company Berkshire Hathaway. Buffet said many interesting things—as he always does—but the really educational part of the interview was the contrast between the world that Buffett inhabits and the world that his interviewer seemed to come from.
It was like listening to members of two different species talk. If a fly (which lives for perhaps a few hours) and a tortoise (who can survive for a hundred years or more) had a conversation, it would probably sound like Buffett and that interviewer.
At one point, the interviewer asked Buffett to comment on how his companies would cope with the downturn. Buffett replied that things were certainly down at the moment but he expected them to be OK in three to five years. I could see that the mere mention of a time scale like three to five years had derailed the interviewer’s thought process. Coming as she did from a world where three to five hours or at most three to five days is the standard unit of time, the idea of an investor talking in years seemed to have thrown a spanner in her works.
Checkout: Warren Buffet - Top Secrets of His Success In Value Investing
Next, she pulled out the day’s newspaper and drew the old man’s attention to a news item that US unemployment was up to 700,000. She wanted to know what he thought of the news. Buffett said that he was sure that five years from now, the employment situation would be much better than it was today. Again, this epic timescale put an end to that line of questioning.
However, this Methuselah of investing had reserved his best shot for the last. When the interviewer asked him about whether the economy was getting any better, Buffett upped the ante sharply. He said that the Dow Jones index had started the twentieth century at 66 points and ended it at 11,000 points. During these hundred years, there had been two world wars, a great depression, an oil shock and countless recessions. But in the end they had all worked out so he wasn’t really worried about the future.
Also Read:
Warren Buffett's Priceless Words
Charlie Munger..the Right Hand Of Warren Buffet..
There is simply no meeting point between an investor who is comfortable with such long time periods and the modern investing ‘process’. As you can see from the stock markets, there is no one around who actually takes the long view. Curiously, the normal investment-industry types frequently express scepticism about what Buffett stands for. Some time ago, I read a newspaper article which quoted some investment managers on Buffett. Many of them suggested that Buffett's approach to investing was unrealistic—real investors need to be more 'flexible'. They seemed to suggest that Buffett is a hermit living in a cave whose teachings are too impractical for the real world. Except that Buffett lives in the same real world and his real world investors have made returns of some 5,000 times.
Far from being impractical, Buffett’s success suggests—or even proves—that the only practical way of making money is to do a handful of straightforward things and keep doing them for decades.
A couple of days ago, I watched a short interview with the legendary investor Warren Buffett on an investment news channel. The interview was conducted shortly after the annual general meeting (AGM) of Buffett’s company Berkshire Hathaway. Buffet said many interesting things—as he always does—but the really educational part of the interview was the contrast between the world that Buffett inhabits and the world that his interviewer seemed to come from.
It was like listening to members of two different species talk. If a fly (which lives for perhaps a few hours) and a tortoise (who can survive for a hundred years or more) had a conversation, it would probably sound like Buffett and that interviewer.At one point, the interviewer asked Buffett to comment on how his companies would cope with the downturn. Buffett replied that things were certainly down at the moment but he expected them to be OK in three to five years. I could see that the mere mention of a time scale like three to five years had derailed the interviewer’s thought process. Coming as she did from a world where three to five hours or at most three to five days is the standard unit of time, the idea of an investor talking in years seemed to have thrown a spanner in her works.
Checkout: Warren Buffet - Top Secrets of His Success In Value Investing
Next, she pulled out the day’s newspaper and drew the old man’s attention to a news item that US unemployment was up to 700,000. She wanted to know what he thought of the news. Buffett said that he was sure that five years from now, the employment situation would be much better than it was today. Again, this epic timescale put an end to that line of questioning.
However, this Methuselah of investing had reserved his best shot for the last. When the interviewer asked him about whether the economy was getting any better, Buffett upped the ante sharply. He said that the Dow Jones index had started the twentieth century at 66 points and ended it at 11,000 points. During these hundred years, there had been two world wars, a great depression, an oil shock and countless recessions. But in the end they had all worked out so he wasn’t really worried about the future.
Also Read:
Warren Buffett's Priceless Words
Charlie Munger..the Right Hand Of Warren Buffet..
There is simply no meeting point between an investor who is comfortable with such long time periods and the modern investing ‘process’. As you can see from the stock markets, there is no one around who actually takes the long view. Curiously, the normal investment-industry types frequently express scepticism about what Buffett stands for. Some time ago, I read a newspaper article which quoted some investment managers on Buffett. Many of them suggested that Buffett's approach to investing was unrealistic—real investors need to be more 'flexible'. They seemed to suggest that Buffett is a hermit living in a cave whose teachings are too impractical for the real world. Except that Buffett lives in the same real world and his real world investors have made returns of some 5,000 times.
Far from being impractical, Buffett’s success suggests—or even proves—that the only practical way of making money is to do a handful of straightforward things and keep doing them for decades.
An Opportunity To Buy Best Small Cap Stocks!
Speculation on election results has made the Indian stock markets jittery, a consequent market crash is seen as a good opportunity for retail investors to buy some fundamentally sound small cap stocks with a little higher risk appetite.
According to market watchers, retail investors who have missed the bus in the bear market rally since last 45 days, small cap stocks can cushion their equity portfolio, already battered by the global meltdown. They can expect a return 35-50 per cent in 3-8 months span assuming that the worst is over.
Zuari Industries, Sterlite Technologies, Amara Raja Batteries, Bharat Bijlee, Hyderabad Industries, Sangvi Movers, Yes Bank, IndusInd Bank, Welspun Gujarat, Sesa Goa, Hind Zinc, Varun Shipyard, Renuka Sugar, Kalpataru Energy are some fundamentally sound small caps recommended by experts who believe that these stocks are available at an attractive price.
In the recent bear market rally, most of the large cap stocks have already moved up considerably. After the fall of market on the back of election, we expect a gradually recovery unless there is no unexpected global cue. Hence, investment in small caps with good potential coupled with positive sectoral outlook does make sense to book short term profit.
Echoing similar views, Alex Mathew, head – equity research, Geojit BNP Paribas, said: “The worst is over! We are inching ahead towards recovery wherein certain sectors like banking, metal and shipping industry will rise first. B group small cap stocks can well be the focus in that recovery.”
Small and Mid cap stocks are said to be "high risk - high return" bets and those who have appetite to go for risk rewards, they should bet with 80:20 ratio for small mid cap versus blue chips or large caps, feels Dillip Davada, an independent Mumbai based stock analyst.
Market men are of opinion that BSE Sensex which hovers around 12,000 points could come down between 9,000 and 10,000 level over horse trading uncertainly to be prevailed upon after election results to form the new government. Similarly, 50–share Nifty finds a support at 3,300 level. Equity indices may breach these levels, if there is a strong emergence of Left supported Third Front, which is unlikely according to them.
However, a section of market men do not rule out chances of re-election in the worst scenario wherein both the UPA and NDA does not reach 200 mark each.
Source & Ref: EconomicTimes
According to market watchers, retail investors who have missed the bus in the bear market rally since last 45 days, small cap stocks can cushion their equity portfolio, already battered by the global meltdown. They can expect a return 35-50 per cent in 3-8 months span assuming that the worst is over.
Zuari Industries, Sterlite Technologies, Amara Raja Batteries, Bharat Bijlee, Hyderabad Industries, Sangvi Movers, Yes Bank, IndusInd Bank, Welspun Gujarat, Sesa Goa, Hind Zinc, Varun Shipyard, Renuka Sugar, Kalpataru Energy are some fundamentally sound small caps recommended by experts who believe that these stocks are available at an attractive price.
In the recent bear market rally, most of the large cap stocks have already moved up considerably. After the fall of market on the back of election, we expect a gradually recovery unless there is no unexpected global cue. Hence, investment in small caps with good potential coupled with positive sectoral outlook does make sense to book short term profit.
Echoing similar views, Alex Mathew, head – equity research, Geojit BNP Paribas, said: “The worst is over! We are inching ahead towards recovery wherein certain sectors like banking, metal and shipping industry will rise first. B group small cap stocks can well be the focus in that recovery.”
Small and Mid cap stocks are said to be "high risk - high return" bets and those who have appetite to go for risk rewards, they should bet with 80:20 ratio for small mid cap versus blue chips or large caps, feels Dillip Davada, an independent Mumbai based stock analyst.
Market men are of opinion that BSE Sensex which hovers around 12,000 points could come down between 9,000 and 10,000 level over horse trading uncertainly to be prevailed upon after election results to form the new government. Similarly, 50–share Nifty finds a support at 3,300 level. Equity indices may breach these levels, if there is a strong emergence of Left supported Third Front, which is unlikely according to them.
However, a section of market men do not rule out chances of re-election in the worst scenario wherein both the UPA and NDA does not reach 200 mark each.
Source & Ref: EconomicTimes
Futures Options Trading Strategy Ahead Of Election Results
The eagerly eyed US stress test results came in line with the Street’s expectations and did not have any negative surprises. This has proved to be a positive for the stock markets across the globe. On the whole, the global equity markets may see further upside in the near term.
However, for the Indian markets, uncertainty over the parliamentary elections is a major cause of concern from a very short term point of view, except if the Third Front comes in power. The Indian stock market is passing through tremendous pressure in the form of election results, which will be announced on May 16.
Karvy Stock Broking advises players to use derivatives tools to avoid loosing from high volatility. “Long-term investors with holdings in cash markets can use put options to partially hedge their portfolios for a limited period and remove the hedge once clarity emerges about the new government and its policies. Also, investors can buy call options which would enable them to participate in the rally, but limit the downside to a great extent,” the brokerage advises.
“Overall, the Nifty is likely to be highly volatile within the broad range of 3500-3800-4000 levels during the week. Long positions can be assumed in the stock from energy, metals, construction, capital goods and BFSI sectors from lower levels. Short positions can be assumed in telecom, software and cement sectors,” said a report of Karvy Stock broking.
Derivatives strategy:
Reliance:
Buy one lot of Reliance May futures at Rs 1898-1902 and buy one lot of May Rs 1890 put price 78-82; Break even point: Rs 1980; timeframe: 8-10 days.
The positive developments like the commencement of production of oil & gas from the KG basin and signing the gas supply agreements have boosted the positive developments for the stock. The waning economic recession has triggered an increase in demand for petroleum products across the globe and led to sharp rise in crude oil prices which is a positive development for the company in the near term.
In the F&O segment, the stock open interest increased marginally to 67.14 lakh shares in the near month. Call options open interest has increased to 15 lakh shares, whereas put options open interest has increased to 9.15 lakh shares. Overall, the stock is likely to trade on a moderately bullish note in the next few trading sessions, but the downsides should be protected considering the volatility in the markets. Hence, we recommend a protective put strategy in this scenario.
Tata Steel
Buy one lot of Tata Steel May futures at Rs 280-284 & buy one lot of May Rs 280 at put price18-22; Break even point: Rs 300; timeframe: 6-8 days.
The stock witnessed heavy buying interest on expectations of a rebound in demand for metals amid signs of easing economic recession. Anticipating higher demand for base metals on the back of rising metal prices has led to a sharp rally in domestic metal stocks.
In the F&O segment, the near-month open interest has decreased marginally to 1.27 crore shares. Call options’ open interest has increased to 50 lakh shares, whereas the open interest of put options has increased to 32.82 lakh shares. Overall, the stock is likely to trade on a bullish note for the next few trading sessions. Hence, we recommend a protective-put strategy in this scenario.
Source: EconomicTimes
However, for the Indian markets, uncertainty over the parliamentary elections is a major cause of concern from a very short term point of view, except if the Third Front comes in power. The Indian stock market is passing through tremendous pressure in the form of election results, which will be announced on May 16.
Karvy Stock Broking advises players to use derivatives tools to avoid loosing from high volatility. “Long-term investors with holdings in cash markets can use put options to partially hedge their portfolios for a limited period and remove the hedge once clarity emerges about the new government and its policies. Also, investors can buy call options which would enable them to participate in the rally, but limit the downside to a great extent,” the brokerage advises.
“Overall, the Nifty is likely to be highly volatile within the broad range of 3500-3800-4000 levels during the week. Long positions can be assumed in the stock from energy, metals, construction, capital goods and BFSI sectors from lower levels. Short positions can be assumed in telecom, software and cement sectors,” said a report of Karvy Stock broking.
Derivatives strategy:
Reliance:
Buy one lot of Reliance May futures at Rs 1898-1902 and buy one lot of May Rs 1890 put price 78-82; Break even point: Rs 1980; timeframe: 8-10 days.
The positive developments like the commencement of production of oil & gas from the KG basin and signing the gas supply agreements have boosted the positive developments for the stock. The waning economic recession has triggered an increase in demand for petroleum products across the globe and led to sharp rise in crude oil prices which is a positive development for the company in the near term.
In the F&O segment, the stock open interest increased marginally to 67.14 lakh shares in the near month. Call options open interest has increased to 15 lakh shares, whereas put options open interest has increased to 9.15 lakh shares. Overall, the stock is likely to trade on a moderately bullish note in the next few trading sessions, but the downsides should be protected considering the volatility in the markets. Hence, we recommend a protective put strategy in this scenario.
Tata Steel
Buy one lot of Tata Steel May futures at Rs 280-284 & buy one lot of May Rs 280 at put price18-22; Break even point: Rs 300; timeframe: 6-8 days.
The stock witnessed heavy buying interest on expectations of a rebound in demand for metals amid signs of easing economic recession. Anticipating higher demand for base metals on the back of rising metal prices has led to a sharp rally in domestic metal stocks.
In the F&O segment, the near-month open interest has decreased marginally to 1.27 crore shares. Call options’ open interest has increased to 50 lakh shares, whereas the open interest of put options has increased to 32.82 lakh shares. Overall, the stock is likely to trade on a bullish note for the next few trading sessions. Hence, we recommend a protective-put strategy in this scenario.
Source: EconomicTimes
Short Term Stock Tips - Torrent Power - Mid Cap Stock
Mid Cap power generation company stock Torrent Power can give you good returns in short term time frame. Checkout the details.
Market Cap 4,677.24
EPS (TTM) 7.13
P/E 13.88
P/C 9.65
Book Value 61.17
Price/Book 1.62
Div(%) 12.00
Div Yield(%) 1.21
Market Lot 1.00
Face Value 10.00
Industry P/E 22.77
Checkout 3 months stock chart
After surging from 70 levels to 100 in recent stock market rally in past 2 months, it is making a strong support at around 100 levels. Next rally can take the stock upto 130 levels. But keep an eye on overall stock market trends. Torrent Power's next move is highly dependent on overall market trend and sentiments as well.
Buy stock in small quantity depending on your capacity to invest for short term returns as quick gains but be careful to book moderate profits, say 15 - 20%.
Market Cap 4,677.24EPS (TTM) 7.13
P/E 13.88
P/C 9.65
Book Value 61.17
Price/Book 1.62
Div(%) 12.00
Div Yield(%) 1.21
Market Lot 1.00
Face Value 10.00
Industry P/E 22.77
Checkout 3 months stock chart
After surging from 70 levels to 100 in recent stock market rally in past 2 months, it is making a strong support at around 100 levels. Next rally can take the stock upto 130 levels. But keep an eye on overall stock market trends. Torrent Power's next move is highly dependent on overall market trend and sentiments as well.
Buy stock in small quantity depending on your capacity to invest for short term returns as quick gains but be careful to book moderate profits, say 15 - 20%.
Rakesh Jhunjhunwala - Latest Portfolio Changes And His Strategy
Over the past five quarters between January 2008 and March 2009, 48-year-old Rakesh Jhunjhunwala’s portfolio of publicly traded stocks, of firms in which he owns at least a 1% stake, has underperformed the benchmark index. His portfolio has dropped at least 60% in value, according to data from exchanges, while the Bombay Stock Exchange’s (BSE’s) benchmark equity index Sensex dropped around 52% over the same period.
The Sensex has climbed back about 45% since, while Jhunjhunwala’s concentrated portfolio, which has largely been kept undisturbed, gained only about 15% over the same period.
Jhunjhunwala, the founder of proprietary trading firm Rare Enterprises—named using the first two letters of his and his wife Rekha’s names—twice declined to speak for this story. Most of his portfolio picks are held under this firm, by himself and in the name of his wife.
The most visible, albeit minor, changes made by Jhunjhunwala to his portfolio indicate a trend towards defensive sectors. He purchased an additional 0.65 million shares in software firm Geometric Ltd, where he now owns a 7.27% stake, and 0.3 million shares of Agro Tech Foods Ltd, in which he held a 7.8% stake at the end of December. He also purchased 0.17 million shares of Karur Vysya Bank Ltd and 0.13 million shares of drug maker Lupin Ltd.
On the other hand, he has cut his exposure to Hindustan Oil Exploration Co. Ltd, selling 1.4 million shares during the quarter ended March. Jhunjhunwala also sold about one million shares of Hyderabad-based Nagarjuna Construction Co. Ltd. He reduced the ownership in Pantaloon Retail (India) Ltd by 0.43 million shares and in Titan Industries Ltd by 0.12 million shares. Apart from large investments in a concentrated portfolio and smaller investments in a larger portfolio of listed firms, Jhunjhunwala owns sizeable chunks of equity in several closely held entities through his private equity and venture capital- style investments.
According to data published at the end of December, he owned at least a 1% stake in 31 firms, valued at about Rs1,466 crore.
click The Image To Enlarge
And at the end of March, he owned at least 1% in 27 companies traded on BSE that declared their latest shareholding details. Some of his portfolio stocks, including the pharmaceutical services provider Bilcare Ltd, pharma firm Zenotech Laboratories Ltd, publisher Infomedia 18 Ltd and water treatment firm Ion Exchange India Ltd, are yet to update shareholding details.
Jhunjhunwala’s holdings in at least a dozen non-listed entities include the 16% stake in Diwan Rahul Nanda’s Tops Security Ltd, New Delhi-based A2Z Maintenance and Engineering Services Pvt. Ltd, Dharti Dredging and Infrastructure Ltd, Inventurus Knowledge Solutions Pvt. Ltd, Maneesh Pharmaceuticals Ltd, Nandan Biometrix Ltd and Concord Biotech Ltd, among others.
To be sure, Jhunjhunwala’s portfolio consists mainly of mid-cap stocks while the Sensex is composed of large caps.
And, despite the beating his portfolio has taken during the downturn, people who have worked with this whisky and cigar aficionado vouch for the soundness of his overall strategy.
“He has tonnes of patience and the temperament that makes him a rare stock market investor,” says Alok Agarwal, a Mumbai-based funds adviser who owns at least 2% in Aptech Ltd, a venture he started to provide computer education. At the end of March, the Jhujhunwalas held a 31.7% controlling stake in Aptech, valued at around Rs123 crore.
It is this so-called temperament that, starting with Rs5,000 in 1985 when the Sensex was trading at 150—on Friday it closed at 11,876.43—has allowed him to achieve almost cult status with investors in a country where only 3% of the 1.2 billion population invests in equity markets.
His investment strategy, followed closely by many individual investors, involves maintaining a steady portfolio of stocks with a long-term view while committing smaller amounts to the high-beta activity of equity trading such as day trading that tends to be highly volatile.
Source:livemint
The Sensex has climbed back about 45% since, while Jhunjhunwala’s concentrated portfolio, which has largely been kept undisturbed, gained only about 15% over the same period.
Jhunjhunwala, the founder of proprietary trading firm Rare Enterprises—named using the first two letters of his and his wife Rekha’s names—twice declined to speak for this story. Most of his portfolio picks are held under this firm, by himself and in the name of his wife.
The most visible, albeit minor, changes made by Jhunjhunwala to his portfolio indicate a trend towards defensive sectors. He purchased an additional 0.65 million shares in software firm Geometric Ltd, where he now owns a 7.27% stake, and 0.3 million shares of Agro Tech Foods Ltd, in which he held a 7.8% stake at the end of December. He also purchased 0.17 million shares of Karur Vysya Bank Ltd and 0.13 million shares of drug maker Lupin Ltd.
On the other hand, he has cut his exposure to Hindustan Oil Exploration Co. Ltd, selling 1.4 million shares during the quarter ended March. Jhunjhunwala also sold about one million shares of Hyderabad-based Nagarjuna Construction Co. Ltd. He reduced the ownership in Pantaloon Retail (India) Ltd by 0.43 million shares and in Titan Industries Ltd by 0.12 million shares. Apart from large investments in a concentrated portfolio and smaller investments in a larger portfolio of listed firms, Jhunjhunwala owns sizeable chunks of equity in several closely held entities through his private equity and venture capital- style investments.
According to data published at the end of December, he owned at least a 1% stake in 31 firms, valued at about Rs1,466 crore.
click The Image To EnlargeAnd at the end of March, he owned at least 1% in 27 companies traded on BSE that declared their latest shareholding details. Some of his portfolio stocks, including the pharmaceutical services provider Bilcare Ltd, pharma firm Zenotech Laboratories Ltd, publisher Infomedia 18 Ltd and water treatment firm Ion Exchange India Ltd, are yet to update shareholding details.
Jhunjhunwala’s holdings in at least a dozen non-listed entities include the 16% stake in Diwan Rahul Nanda’s Tops Security Ltd, New Delhi-based A2Z Maintenance and Engineering Services Pvt. Ltd, Dharti Dredging and Infrastructure Ltd, Inventurus Knowledge Solutions Pvt. Ltd, Maneesh Pharmaceuticals Ltd, Nandan Biometrix Ltd and Concord Biotech Ltd, among others.
To be sure, Jhunjhunwala’s portfolio consists mainly of mid-cap stocks while the Sensex is composed of large caps.
And, despite the beating his portfolio has taken during the downturn, people who have worked with this whisky and cigar aficionado vouch for the soundness of his overall strategy.
“He has tonnes of patience and the temperament that makes him a rare stock market investor,” says Alok Agarwal, a Mumbai-based funds adviser who owns at least 2% in Aptech Ltd, a venture he started to provide computer education. At the end of March, the Jhujhunwalas held a 31.7% controlling stake in Aptech, valued at around Rs123 crore.
It is this so-called temperament that, starting with Rs5,000 in 1985 when the Sensex was trading at 150—on Friday it closed at 11,876.43—has allowed him to achieve almost cult status with investors in a country where only 3% of the 1.2 billion population invests in equity markets.
His investment strategy, followed closely by many individual investors, involves maintaining a steady portfolio of stocks with a long-term view while committing smaller amounts to the high-beta activity of equity trading such as day trading that tends to be highly volatile.
Source:livemint
Best Large Cap, Mid Cap & Small Cap Stocks To Buy From Sugar Sector For Investing
Analyst recommendations from various stock brokerage houses based on detailed stock analysis. These stock reports provide a high level view on individual stock based upon overall sector guidance.
LARGE CAP STOCKS
Shree Renuka Sugars
CMP: Rs 114
On account of high sugar prices and the company’s decision to import raw sugar we remain bullish on the company. Revenues from the sugar segment rose 84.4% to Rs 293.9 crore. SRSL, which possesses sugar refineries with a total capacity of 4,000 TPD in Karnataka and the port of Haldia, respectively, is well positioned to benefit from the alteration of import policy of sugar.It is also benefitted from price discrepency in the global and domestic market.
Balrampur Chini Mills
CMP: Rs 78
Net sales for the six months ended March 2009 increased to Rs 786.6 crore against Rs 742.3 crore last year. Net profit rose 79.1% to Rs 117.5 crore. The lower recovery rates have resulted in lower production of about 14.2 MT for the year 2009 in the country.
With consumption pegged at 23 MT a favourable demand supply scenario for the sugar industry has emerged, wherein a surge in sugar prices is imminent, which will increase the revenues of the company.
MID CAP STOCK
EID Parry
CMP: Rs 191
EID Parry belong to the Murrugappa group and is one of the largest producers of sugars in India. It manufactures and markets Bio-Pesticides and Neutraceuticals apart from sugar.
The company had exceptional income of Rs 7,46 crore on sale of stake in joint venture company Parryware Roca Pvt Ltd and Rs 51.2 crore from sale in Parry Monsanto Seeds Pvt Ltd in the last year. We expect the revenue to increase at a CAGR of 22% to Rs 970 crore in FY10.
SMALL CAP STOCKS
Dhampur Sugar Mills
CMP: Rs 44
DSM sells a wide range of products — refined sugar and plantation white sugar, power, ethanol, other chemicals. With a stock of 1.35 lakh tons at the end of Q1-FY'09 we expect DSM to crush up to a maximum of 2.8 million tons this fiscal by operating for 115 days.
DSM sells refined sugar under the brand - Dhampure. It has a power capacity of 145mw with an exportable surplus of 80 mw.
Ugar Sugar Works
CMP: Rs 21
It is the flagship company of the Shirgaokar Group of Companies. It is a pioneer of sugar production in the state of Karnataka with a crushing capacity of 10,000 TCD, 75 KLPD distillery and 45MW of co-generation.
It derives more than 60% of its revenues from sugar, 30% from distillery and related products and 10% revenues from power. We expect co-generation from the Jewargi unit to significantly improve profitability from FY10 onwards.
Source: EconomicTimes
LARGE CAP STOCKS
Shree Renuka Sugars
CMP: Rs 114
On account of high sugar prices and the company’s decision to import raw sugar we remain bullish on the company. Revenues from the sugar segment rose 84.4% to Rs 293.9 crore. SRSL, which possesses sugar refineries with a total capacity of 4,000 TPD in Karnataka and the port of Haldia, respectively, is well positioned to benefit from the alteration of import policy of sugar.It is also benefitted from price discrepency in the global and domestic market.
Balrampur Chini Mills
CMP: Rs 78
Net sales for the six months ended March 2009 increased to Rs 786.6 crore against Rs 742.3 crore last year. Net profit rose 79.1% to Rs 117.5 crore. The lower recovery rates have resulted in lower production of about 14.2 MT for the year 2009 in the country.
With consumption pegged at 23 MT a favourable demand supply scenario for the sugar industry has emerged, wherein a surge in sugar prices is imminent, which will increase the revenues of the company.
MID CAP STOCK
EID Parry
CMP: Rs 191
EID Parry belong to the Murrugappa group and is one of the largest producers of sugars in India. It manufactures and markets Bio-Pesticides and Neutraceuticals apart from sugar.
The company had exceptional income of Rs 7,46 crore on sale of stake in joint venture company Parryware Roca Pvt Ltd and Rs 51.2 crore from sale in Parry Monsanto Seeds Pvt Ltd in the last year. We expect the revenue to increase at a CAGR of 22% to Rs 970 crore in FY10.
SMALL CAP STOCKS
Dhampur Sugar Mills
CMP: Rs 44
DSM sells a wide range of products — refined sugar and plantation white sugar, power, ethanol, other chemicals. With a stock of 1.35 lakh tons at the end of Q1-FY'09 we expect DSM to crush up to a maximum of 2.8 million tons this fiscal by operating for 115 days.
DSM sells refined sugar under the brand - Dhampure. It has a power capacity of 145mw with an exportable surplus of 80 mw.
Ugar Sugar Works
CMP: Rs 21
It is the flagship company of the Shirgaokar Group of Companies. It is a pioneer of sugar production in the state of Karnataka with a crushing capacity of 10,000 TCD, 75 KLPD distillery and 45MW of co-generation.
It derives more than 60% of its revenues from sugar, 30% from distillery and related products and 10% revenues from power. We expect co-generation from the Jewargi unit to significantly improve profitability from FY10 onwards.
Source: EconomicTimes
Credit Cards & Loan Without Interest - How?
CREDIT cards are like double-edged swords; if you are not careful you can get hurt. Now that you have been warned, take a look at your credit card features closely and you will find ways to use it to your advantage.
Before we begin, let us get an answer to one basic question: What is a credit card? It is a loan which you can take when you swipe the card and you repay the money when the bill comes. The good part about this kind of facility is that you can actually enjoy an interest free loan. How? By paying up during the 'free credit period'.
What is free credit period?
The credit card companies offer you an interest free credit period of anywhere between 20 and 52 days, after you swipe your card. The terms vary across different credit cards.
How do you know what is your free credit period?
Your credit card company, generally, follows a monthly billing cycle. You will get bills or credit card statements on a particular day of every month. The bill will mention the due date within which you need to make the due payment. Usually, you have around 10 to 20 days from the last day of the billing cycle to pay the charges.
The interest free period will work out to 40 to 50 days including the billing cycle plus the number of days leading up to the due date.
What is the advantage?
There are two advantages. The first, obviously, is that you get a little more time to pay off your bills. The second, is that you can use this as a free loan instead of dipping into your bank account.
How do you use it to your advantage?
The trick is to time your purchases in a way that you can get maximum free credit period. Of course, it's worth the effort only if you are making big ticket purchases, the interest cost on which would have otherwise been high.
Example:
Let's assume the billing cycle starts from the 1st of every month ending at 30th of every month. That is, my bill for transaction from 1st May to 30th May will come on 1st June. Let us also assume that my bill due date is the 20th of every month, so in this case, it is 20th of June. So, if you make a purchase on the 1st of May, you will get to enjoy 49 days of interest free period. That is, 29 days before the billing cycle ends plus the 20 days you get before your due date for the bill amount.
On the other hand if you make a purchase on the 25th of the month your interest free period will be only 25 days (5 before the billing cycle ends and the 20 days before your due date).
How does this benefit you financially?
Let us look at this example:
Situation 1: On 1st May, you buy a plasma TV costing Rs 1 lakh in full cash, that is, by issuing a cheque out of your bank account.
Situation 2:On 1st May, you buy the TV using your credit card and avail a free credit period of 50 days. That means, the Rs 1 lakh is still in your bank account for 50 days. At an interest rate of 4 per cent on a 50 day deposit, the interest works out to Rs 300.
Situation 3: Instead of 1st May, you buy buy the TV using your credit card on 25th May and avail a free credit period of 25 days. That means, the Rs 1 lakh is still in your bank account for 50 days. At an interest rate of 4 per cent on a 50 day fixed deposit, the interest works out to Rs 150.
Are there any terms and conditions?
Fine print has a way of getting in the way of happiness. To avoid this, scan the terms and conditions of the credit card company carefully. It, usually, mentions that the free credit period will cease to exist if you carry forward balance from the previous month. That is, you need to make your card payments in full each time to be eligible for this feature.
In all, judicious use of the credit card will provide you the maximum free credit period on your card. So, the next time you go shopping, time your purchases in such a way that you get the maximum credit free period.
Before we begin, let us get an answer to one basic question: What is a credit card? It is a loan which you can take when you swipe the card and you repay the money when the bill comes. The good part about this kind of facility is that you can actually enjoy an interest free loan. How? By paying up during the 'free credit period'.What is free credit period?
The credit card companies offer you an interest free credit period of anywhere between 20 and 52 days, after you swipe your card. The terms vary across different credit cards.
How do you know what is your free credit period?
Your credit card company, generally, follows a monthly billing cycle. You will get bills or credit card statements on a particular day of every month. The bill will mention the due date within which you need to make the due payment. Usually, you have around 10 to 20 days from the last day of the billing cycle to pay the charges.
The interest free period will work out to 40 to 50 days including the billing cycle plus the number of days leading up to the due date.
What is the advantage?
There are two advantages. The first, obviously, is that you get a little more time to pay off your bills. The second, is that you can use this as a free loan instead of dipping into your bank account.
How do you use it to your advantage?
The trick is to time your purchases in a way that you can get maximum free credit period. Of course, it's worth the effort only if you are making big ticket purchases, the interest cost on which would have otherwise been high.
Example:
Let's assume the billing cycle starts from the 1st of every month ending at 30th of every month. That is, my bill for transaction from 1st May to 30th May will come on 1st June. Let us also assume that my bill due date is the 20th of every month, so in this case, it is 20th of June. So, if you make a purchase on the 1st of May, you will get to enjoy 49 days of interest free period. That is, 29 days before the billing cycle ends plus the 20 days you get before your due date for the bill amount.
On the other hand if you make a purchase on the 25th of the month your interest free period will be only 25 days (5 before the billing cycle ends and the 20 days before your due date).
How does this benefit you financially?
Let us look at this example:
Situation 1: On 1st May, you buy a plasma TV costing Rs 1 lakh in full cash, that is, by issuing a cheque out of your bank account.
Situation 2:On 1st May, you buy the TV using your credit card and avail a free credit period of 50 days. That means, the Rs 1 lakh is still in your bank account for 50 days. At an interest rate of 4 per cent on a 50 day deposit, the interest works out to Rs 300.
Situation 3: Instead of 1st May, you buy buy the TV using your credit card on 25th May and avail a free credit period of 25 days. That means, the Rs 1 lakh is still in your bank account for 50 days. At an interest rate of 4 per cent on a 50 day fixed deposit, the interest works out to Rs 150.
Are there any terms and conditions?
Fine print has a way of getting in the way of happiness. To avoid this, scan the terms and conditions of the credit card company carefully. It, usually, mentions that the free credit period will cease to exist if you carry forward balance from the previous month. That is, you need to make your card payments in full each time to be eligible for this feature.
In all, judicious use of the credit card will provide you the maximum free credit period on your card. So, the next time you go shopping, time your purchases in such a way that you get the maximum credit free period.
Engineers India Ltd - Mid Cap Stock To Buy For Long Term Investing
ENGINEERS INDIA (EIL) provides engineering and related technical services to petroleum refineries and other industrial projects.Apart from engineering consultancy, EIL also undertakes lump-sum turnkey projects (LSTK). Order book of this Mid cap stock is quite impressive and revenue would start contributing from LSTK division soon to make this stock valuable.
Engineers India Ltd
cmp:588
It mainly focuses on refineries and other petrochemical industries, which contribute almost 90% to its revenues. Despite its expertise in turnkey projects, its LSTK division has not grown at a rapid pace and most of the growth comes from the consultancy division.
Market Cap: 3,304.51
EPS (TTM): 43.28
P/E: 13.60
P/C: 13.04
Book Value: 205.15
Price/Book: 2.87
Div(%): 110.00
Div Yield(%): 1.87
Market Lot: 1.00
Face Value: 10.00
Industry P/E: 13.24
However, LSTK contributes nearly 50% to EIL's current order book. The division is expected to start contributing to EIL's growth once revenue from this segment starts reflecting in the company's financials. EIL''s engineering consultancy business is yet to catch the attention of most investors, as most of its peers are in the unlisted domain. This is because of limited investment in fixed assets, reducing the need for companies to go public.The public sector company is looking at the exports market, especially in the Middle East, more aggressively now, which also provides better margins.
EIL is a major beneficiary of the existing shortage in refining capacity as investment in petroleum refining is likely to remain high for the next few years, domestically as well as globally. This is likely to translate into huge business opportunity for the company.A great buy at dips for long term investors.Make it a part of your core portfolio.
Engineers India Ltd
cmp:588
It mainly focuses on refineries and other petrochemical industries, which contribute almost 90% to its revenues. Despite its expertise in turnkey projects, its LSTK division has not grown at a rapid pace and most of the growth comes from the consultancy division.
Market Cap: 3,304.51
EPS (TTM): 43.28
P/E: 13.60
P/C: 13.04
Book Value: 205.15
Price/Book: 2.87
Div(%): 110.00
Div Yield(%): 1.87
Market Lot: 1.00
Face Value: 10.00
Industry P/E: 13.24
However, LSTK contributes nearly 50% to EIL's current order book. The division is expected to start contributing to EIL's growth once revenue from this segment starts reflecting in the company's financials. EIL''s engineering consultancy business is yet to catch the attention of most investors, as most of its peers are in the unlisted domain. This is because of limited investment in fixed assets, reducing the need for companies to go public.The public sector company is looking at the exports market, especially in the Middle East, more aggressively now, which also provides better margins.
EIL is a major beneficiary of the existing shortage in refining capacity as investment in petroleum refining is likely to remain high for the next few years, domestically as well as globally. This is likely to translate into huge business opportunity for the company.A great buy at dips for long term investors.Make it a part of your core portfolio.
Systematic Investment Plans (SIP) From Mutual Funds
When stock markets rise, most of the retail investors regret not investing in stocks when they were down. Exactly what people felt when they saw the sensex rise 50% in less than two months to cross the 12,000 mark. Instead, when markets plunge, they get scared and sell stocks or stop investing.
Again, that’s something many investors did few months ago. “It is a standard joke in the market that individual investors are always late comers. They enter the market when it is at historical high and they exit when it really hits a low,’’ says a portfolio manager with a broking firm. “If anyone wants to make money they should do the opposite. They should buy stocks when the market is low and sell when it is high,’’ he adds.
That’s easier said than done. For example, nobody predicted that the sensex would traverse from 8,000 to 12,000 in less than two months. “Who can say what is the bottom? For example, when the market was at around 8,000, there were some who predicted that it would hit 6,000,’’ says Suresh Sadagopan, chief financial planner, Ladder 7 Financial Advisories, a wealth management firm. “That is why investors shouldn’t get caught up by the highs and lows in the market and continue with their regular investments if they want to make money,’’ he adds.
According to him, the best way to do it is to opt for a systematic investment plans (SIP) of a mutual fund (MF) scheme. SIP Plan allows you to invest as little as Rs 100 a month in an MF scheme of your choice. You can invest even with a small amount every month in a scheme for a minimum of 12 months. If you wish to stop investing at any point of time, you have the option of asking the fund house to discontinue the SIP.
The best thing that an SIP promises, experts say, is to bring financial discipline into your life. “Most people start investing at some point in life. But a majority fail to continue with it or review it periodically. Finally, money gets stuck somewhere, mostly in some unproductive assets,’’ says a wealth manager. SIP also ensures that you don’t waste time to build a decent amount before kick-starting the investment plan. “Most people have the false notion that they need large amounts to start investing in stocks. This is not true, you can start right away by investing a small amount regularly,’’ the wealth manager adds. Another alluring prospect of an SIP is the benefit of what financial wizards call ‘dollar cost averaging’. Simply put, when you purchase stocks on a regular basis at different levels of the market, you benefit from the averaging of the purchase cost. This can enhance your return possibilities. For example, if you are buying a stock at Rs 10, Rs 12 and Rs 8, your purchase cost will be Rs 10. When you are doing it for a longer period, chances are that your purchase cost will be really lower than a one-time purchase.
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“If you look at any successful investor, he or she would recommend regular investments at periodic intervals. Most would vouch that it is the only way to make money since nobody can predict the course of the market correctly all the time,’’ says the wealth manager. That is exactly why most advisors recommend SIP to their clients. “I tell my clients to forget about the highs and lows in the market. If you have the time to wait for 3-5 years, the best way to invest is to start an SIP,’’ says Sadagopan.
“The market may be down today, but it will bounce back over a period of time. If you are long term investor, you should stick to your regular investment plan to make your investment grow better.’’ Source & Reference: EconomicTimes
Read:
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Mutual Funds - A Good Way To Buy Stocks
Read more on Mutual Funds
Again, that’s something many investors did few months ago. “It is a standard joke in the market that individual investors are always late comers. They enter the market when it is at historical high and they exit when it really hits a low,’’ says a portfolio manager with a broking firm. “If anyone wants to make money they should do the opposite. They should buy stocks when the market is low and sell when it is high,’’ he adds.
That’s easier said than done. For example, nobody predicted that the sensex would traverse from 8,000 to 12,000 in less than two months. “Who can say what is the bottom? For example, when the market was at around 8,000, there were some who predicted that it would hit 6,000,’’ says Suresh Sadagopan, chief financial planner, Ladder 7 Financial Advisories, a wealth management firm. “That is why investors shouldn’t get caught up by the highs and lows in the market and continue with their regular investments if they want to make money,’’ he adds.
According to him, the best way to do it is to opt for a systematic investment plans (SIP) of a mutual fund (MF) scheme. SIP Plan allows you to invest as little as Rs 100 a month in an MF scheme of your choice. You can invest even with a small amount every month in a scheme for a minimum of 12 months. If you wish to stop investing at any point of time, you have the option of asking the fund house to discontinue the SIP.
The best thing that an SIP promises, experts say, is to bring financial discipline into your life. “Most people start investing at some point in life. But a majority fail to continue with it or review it periodically. Finally, money gets stuck somewhere, mostly in some unproductive assets,’’ says a wealth manager. SIP also ensures that you don’t waste time to build a decent amount before kick-starting the investment plan. “Most people have the false notion that they need large amounts to start investing in stocks. This is not true, you can start right away by investing a small amount regularly,’’ the wealth manager adds. Another alluring prospect of an SIP is the benefit of what financial wizards call ‘dollar cost averaging’. Simply put, when you purchase stocks on a regular basis at different levels of the market, you benefit from the averaging of the purchase cost. This can enhance your return possibilities. For example, if you are buying a stock at Rs 10, Rs 12 and Rs 8, your purchase cost will be Rs 10. When you are doing it for a longer period, chances are that your purchase cost will be really lower than a one-time purchase.
+-+Benefits+copy.gif)
“If you look at any successful investor, he or she would recommend regular investments at periodic intervals. Most would vouch that it is the only way to make money since nobody can predict the course of the market correctly all the time,’’ says the wealth manager. That is exactly why most advisors recommend SIP to their clients. “I tell my clients to forget about the highs and lows in the market. If you have the time to wait for 3-5 years, the best way to invest is to start an SIP,’’ says Sadagopan.
“The market may be down today, but it will bounce back over a period of time. If you are long term investor, you should stick to your regular investment plan to make your investment grow better.’’ Source & Reference: EconomicTimes
Read:
Best Mutual Funds In India - Outlook Money-Morningstar Mutual Fund Rankings
Mutual Funds - A Good Way To Buy Stocks
Read more on Mutual Funds
Colgate-Palmolive (India) - Defensive FMCG Sector Stock To Buy
Buying stocks with defensive strategy is one of the strategy smart investors follow in current stock market scenario where market's future direction is unclear. Colgate Palmolive is one such stock people love to buy as part of defensive stock buying.
Business performance.
In the first three quarters of financial year 2009 (FY09), Colgate-Palmolive’s product categories in oral dental care maintained their leadership position. In toothpastes, for example, a major revenue contributing segment, the company maintained a market share of 49.6 per cent. The segment’s volumes grew consistently at over 10 per cent year-on-year (y-o-y) in the three quarters, with December 2008-ended quarter being particularly robust at 14 per cent.
In the same three quarters, the toothbrush category saw an exceptional growth of over 30 per cent, with Colgate-Palm-olive’s market share in the segment moving up by 2.8 per cent to 38 per cent. Other categories such as personal and household care continued to add to volume growth.
The company has maintained its position and profits in an increasingly competitive market by focusing on the three major drivers of dental care products—rise in per capita consumption, support of dental professionals and increase in sales through enhanced distribution—as a part of its longtime strategy of building its presence.
Financial performance.
The company’s financials have grown slowly but steadily over the last 10 years. Sales grew at a compounded annual growth rate of 4.5 per cent but profits grew at 17 per cent. This was due to continuous expansion in margins as a result of cost control and focus on efficiency across the organisation.
In the first three quarters of FY09 too, profits rose more than sales. For example, Q3 y-o-y growth in sales was 13.25 per cent and in profits 28.60 per cent. This, again, was due to the operating margin going up by 54 basis points in Q3FY09 compared to the corresponding quarter last year. In fact, Colgate-Palmolive’s operating margin is among the highest in the FMCG sector.
The cost of raw materials as a percentage of net sales has remained constant over the last four quarters. The declining cost of commodities is yet to be reflected fully in the cost figures, which could help in margin expansion. As a result of this and the tax benefits the company enjoys for its production facility at Baddi, Himachal Pradesh, its margin could remain high in the coming quarters.
The company is almost debt-free, with small borrowings of Rs 4.69 crore and a cash balance of Rs 144.26 crore.
Read: Best FMCG Companies - Stocks to Invest in 2009
Stock Valuations.
Colgate-Palmolive’s scrip was trading 23 times its trailing 12 months’ earnings in April 2008. Even after gaining 22 per cent in the past year, its shares are trading at the same PE level (the current figure is 23.35). This is because it has also maintained a high growth in earnings per share (EPS).
The stock may look expensive, but isn’t. Taking last five years’ profit growth, the scrip’s PEG (price-to-earning by growth) ratio, which discounts a company’s growth, is 1.09. If the PEG ratio is below (or just about) one, the stock is fairly priced. Further, the stock’s dividend yield is 4.89 per cent and it has a long dividend history. So, we expect the scrip to ensure a regular income as well as capital appreciation.
Source: Outlook Money
Business performance.
In the first three quarters of financial year 2009 (FY09), Colgate-Palmolive’s product categories in oral dental care maintained their leadership position. In toothpastes, for example, a major revenue contributing segment, the company maintained a market share of 49.6 per cent. The segment’s volumes grew consistently at over 10 per cent year-on-year (y-o-y) in the three quarters, with December 2008-ended quarter being particularly robust at 14 per cent.
In the same three quarters, the toothbrush category saw an exceptional growth of over 30 per cent, with Colgate-Palm-olive’s market share in the segment moving up by 2.8 per cent to 38 per cent. Other categories such as personal and household care continued to add to volume growth.
The company has maintained its position and profits in an increasingly competitive market by focusing on the three major drivers of dental care products—rise in per capita consumption, support of dental professionals and increase in sales through enhanced distribution—as a part of its longtime strategy of building its presence.
Financial performance.
The company’s financials have grown slowly but steadily over the last 10 years. Sales grew at a compounded annual growth rate of 4.5 per cent but profits grew at 17 per cent. This was due to continuous expansion in margins as a result of cost control and focus on efficiency across the organisation.
In the first three quarters of FY09 too, profits rose more than sales. For example, Q3 y-o-y growth in sales was 13.25 per cent and in profits 28.60 per cent. This, again, was due to the operating margin going up by 54 basis points in Q3FY09 compared to the corresponding quarter last year. In fact, Colgate-Palmolive’s operating margin is among the highest in the FMCG sector.
The cost of raw materials as a percentage of net sales has remained constant over the last four quarters. The declining cost of commodities is yet to be reflected fully in the cost figures, which could help in margin expansion. As a result of this and the tax benefits the company enjoys for its production facility at Baddi, Himachal Pradesh, its margin could remain high in the coming quarters.
The company is almost debt-free, with small borrowings of Rs 4.69 crore and a cash balance of Rs 144.26 crore.Read: Best FMCG Companies - Stocks to Invest in 2009
Stock Valuations.
Colgate-Palmolive’s scrip was trading 23 times its trailing 12 months’ earnings in April 2008. Even after gaining 22 per cent in the past year, its shares are trading at the same PE level (the current figure is 23.35). This is because it has also maintained a high growth in earnings per share (EPS).
The stock may look expensive, but isn’t. Taking last five years’ profit growth, the scrip’s PEG (price-to-earning by growth) ratio, which discounts a company’s growth, is 1.09. If the PEG ratio is below (or just about) one, the stock is fairly priced. Further, the stock’s dividend yield is 4.89 per cent and it has a long dividend history. So, we expect the scrip to ensure a regular income as well as capital appreciation.
Source: Outlook Money
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