Stock Market News & Industry trend

Corporate News – Industry trends

* A day after SAIL reduced flat steel prices, private steel makers JSW
Steel, Essar Steel and Ispat Industries — have followed. Ispat has
cut prices by Rs 1,000 a tonne, while Essar Steel has reduced by Rs
700-1,000 a tonne (BS)

* Consumer durables major Videocon Industries said its board had
approved of raising Rs 12.4bn by issuing shares on rights and
preferential basis (BS)

* Tata Consultancy Services, has been chosen strategic IT partner by
the City Council of Cardiff in Britain for 15 years; the contract value is
close to £150 mn; the other contenders were IBM and BT Global
Services (BL)

* Mahindra Satyam announced its plans to collaborate with defence
and security company Saab to develop its operations in India for the
global defence and homeland security market; While the company did
not give any official figure, the “ongoing-MoU” deal is reportedly worth
US$400 mn over a five-year period (BS)

* The company RIL and the RNRL joined hands to oppose the plea of
a shareholder in both the companies to be made party in their ongoing
dispute in the Supreme Court over the gas price to be supplied from
the K-G basin (BS)

* Construction firm Unity Infra projects said its joint venture with
IVRCL Infrastructure & Projects has bagged an order worth Rs 11.4bn
from Municipal Corporation of Mumbai. The JV received the contract for
the construction of tunnel, which is to be completed within 60 months
(BS)

* Balrampur Chini has called off the deal it was looking to enter into
with Bajaj Hindusthan after initial talks. In a communication to the
stock exchanges, Balrampur Chini said “some discussions were held
with Bajaj Hindusthan on future business strategies”. It said the
promoters had not entered into any agreement with any party for sale
of their stake (BS)

* Larsen & Toubro Ltd has bagged a Rs 68.9 bn contract from
Maharashtra State Power Generation Co Ltd for three 660 Mw supercritical
Boiler Turbine Generator (BTG) units (BS)

* Fueled by high performance in first half of this fiscal, country's largest
two-wheeler maker Hero Honda revised upwards its sales target for
FY'10 and said it will exceed the 40 lakh units mark announced earlier
(ET)

* The government ordered a safety audit of all oil and gas installations
across the country after the massive fire at Indian Oil Corp fuel depot
at Jaipur (Mint)

Economic/Regulatory development

* The Reserve Bank of India has purchased 200 tonnes of gold valued
at Rs 314bn from the International Monetary Fund under the latters’s
limited gold sales programme (BL)

* Even as the country’s export decline decelerated in September to
13.8% in dollar terms, the decline in import growth has been
increasing with the numbers for the month dropping a hefty 31.3%
(BS)

* THE RESERVE Bank of India has untangled a knot which could have
jeopardised the ownership of the insurance business of home loan
major HDFC and the country’s largest private lender ICICI Bank; the
RBI has told the government that control of a company, not just its
ownership, should be taken into account while determining foreign
investment, particularly in the financial services sector (BS)

International trends

* Warren Buffett’s Berkshire Hathaway Inc will pay US$26 bn to
buy out railroad Burlington Northern Santa Fe Corp in what the
billionaire investor called a bet on the US economy; The deal, Buffett’s
biggest-ever acquisition, is priced at a premium of 31.5% over BNSF’s
closing stock price on Monday and values the railroad at US$34 bn
(BS)

* Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc
will receive 31.3 bn pounds in a second bailout from the UK taxpayer
as the two banks agreed to cap bonuses (BS)

Biggest-ever gain for Sensex

Creating history, the benchmark index Sensex on the BSE on Monday posted its biggest ever gain of over 2,100 points in just one-minute trade as investors enthused by a decisive verdict in the just concluded general elections, went into frenzied buying.

Monday's rally is the most significant as the 30-share index journeyed from 12,000 to 14,000 level in just a minutes time with a jump of 1,305 points in 30 seconds in opening trade and another 806 points gain in another 30 seconds after markets resumed trading, triggering the final circuit filter for the day.

"Investors rejoiced the coming of a stable government in power. Bulls got encouraged as investors were screaming to buy in apprehension that stability will come in the economic policies," brokerage firm Unicorn Financial CEO G Nagpal said.

Another analyst with a leading brokerage house said domestic and foreign investors who were waiting on the sidelines due to the uncertainty in the markets rushed in to cash in on the big victory of the Congress-led UPA government in the general elections.

Following are the biggest ever single-day gains made by the Sensex so far.

Date	Points
May 18, 2009	2,110.79 points
January 25, 2008	1,139.92 points
March 25, 2008	928 points
November 14, 2007	893.58 points
October 23, 2007	878.85 points
January 23, 2008	864.13 points
July 23, 2008	838.08 points
October 31, 2008	743.55 points
May 4, 2009	731 points

Earlier, the BSE Sensex had recorded the biggest single day gain of 1,139.92 points or 6.6 per cent on January 25, 2008, to 18,361.66.

Some of the biggest single day gains of Sensex so far are a 928 points jump on March 25, 2008, 893.58 points surge on November 14 2007, a 878.85 points surge on October 23, 2007.

Other major single day gain for the bellwether index were 864.13 points on January 23, 2008, 838.08 points on July 23, 2008 and 743.55 points on October 31, 2008.

Marketmen cheered Monday's gain and termed it as a "magic Monday" for the Indian stock market as the benchmark index Sensex registered its biggest ever single day gain of 2,111 points and also hit the upper circuit limit twice in a single trading session.

The decisive win by the ruling government in the general elections gave such a boost to the market that the 30-share bellwether index surged over 17.34 per cent or 2,110.79 points in a single trading session.

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1.8 Billion IPO as Stocks Collapse Starts By Emaar MGF

Emaar MGF Land Ltd., controlled by the Middle East’s biggest real estate developer by market value, started its initial public offering in India today amid the biggest plunge in equities in almost four years.

“The market may go up, or come down, but there are fundamentals of a company and the long-term investors will look at that,'’ Shravan Gupta, executive vice chairman and managing director at Emaar MGF, said in an interview at an event in Mumbai. “We hope we will be seen in a long-term perspective.'’

Emaar MGF is seeking 70.8 billion rupees ($1.8 billion), in what would be the second largest IPO by an Indian real estate company. The developer will offer 102.6 million shares at 610 rupees to 690 rupees apiece, the New Delhi-based company said in a statement today.

India’s Sensitive Index had the steepest move among global benchmarks today on concern the U.S. will enter a recession and as investors placed funds in Reliance Power Ltd.’s record IPO. DLF Ltd. had its biggest fall since completing a record share sale by an Indian real estate company in June.

“Emaar would get enough demand to close the issue, but if one expects something like Reliance Power, they would be disappointed,'’ said Arun Kejriwal, director at research firm KRIS. “There’s enough money in the system to see the issue through, although the markets are off their peak.'’

Attracted Bids

The developer is seeking to sell shares amid an 8.7 percent drop in the National Stock Exchange’s 50-stock Nifty index and a 7.4 percent drop in the Sensex index.

Unitech Ltd., the second biggest developer by market value, fell 60.3 rupees, or 13 percent, to 414.55 rupees, while Housing Development & Infrastructure Ltd. plunged 28 percent to 894.3 rupees.

Emaar MGF this month raised 1 billion rupees selling shares to state-run financial institution IFCI Ltd., New Delhi Television Ltd., and newspaper publisher Bennett Coleman & Co., Chief Financial Officer Sanjay Baweja told reporters.

Real estate firms raised a record $4 billion in share sales last year to benefit from growing demand for houses, offices and shops in an economy poised to grow at least 9 percent for a third year. That included $2.3 billion by DLF and fund raisings by Housing Development & Infrastructure and Puravankara Projects Ltd.

DLF got bids for 3.5 times the shares on sale, catapulting its promoter Kushal Pal Singh’s fortune to $35 billion, the wealthiest developer in the world, according to Fortune.

`Shortfall of Houses’

Reliance Power attracted $190 billion of bids for its IPO last week as a record economic expansion lured overseas investors to Indian shares.

Emaar MGF had 12,544 acres of land reserves as of August, of which it has development plans for 11,580 acres, the company said in its share sale documents.

The developer, a joint venture of Dubai-based Emaar Properties PJSC, and MGF Development Ltd. of India, is developing homes, offices, hotels and special economic zones and building the capital’s Commonwealth Games village.

“There’s a huge shortfall of houses,'’ said Gupta. “Our target is about 10,000 to 15,000 houses a year which we should be able to sell comfortably.'’

The government estimates India could face a shortfall of 26.5 million houses by 2012.

Set up in 2005, the company has projects in New Delhi, Mohali, Gurgaon, Dehradun, Hyderabad, and Pune. Emaar plans to set up 30,000 hotel rooms over eight years in different categories and is forming joint ventures with Hyatt Corp., Accor SA and Whitbread Plc, among others, Gupta said.

Emaar MGF hired Citigroup Inc., Goldman Sachs Group Inc., HSBC Holdings Plc, JPMorgan Chase & Co., Merrill Lynch & Co., Enam Financial Consultants Ltd. and Kotak Mahindra Capital Co. to help sell the shares. The offer will run Feb. 1 to Feb. 6.

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Golden Ring for your equity Portfolio

With the equity markets tanking, some investors have been shifting focus to commodities such as oil and gold to gain from the rally in these commodities and restrict overall losses. But, with oil already showing signs of weakness and gold cooling off from its highs, will investment in these commodities still hold good?

To help out investors who wish to have the best of both worlds, a new product called AutoInvest that has a portfolio comprising of both gold and equity has been launched. Investments in gold would be made through exchange traded funds (ETFs), which are units of mutual funds that can be traded on stock exchanges. Here gold is held in demat or electronic format, thus cutting down on storage costs and the risk of gold purity etc. There are atleast five gold ETFs listed on the National Stock exchange, but AutoInvest will park money only in Gold ETF.

The portfolio would hold equity either in the form of stocks or a combination of mutual funds. One can invest in AutoInvest via only the systematic plan route, wherein a fixed amount (minimum Rs. 2500) is invested at regular intervals, usually on a monthly basis.

AutoInvest would have seven plans with different combinations of equity and gold investments. Investors, who wish to have a pure gold portfolio, can take the Aggressive Gold Plan, while the ones looking at only equity can take the Conservative Equity option. For those who wish to have mutual funds apart from stocks, the Conservative Equity and Mutual Funds plan can be taken.

The levels of each – equity, mutual funds and gold. – For various options would be in the proportion specified in the table. A person cannot change the proportion, but the research team suggesting the allocation, may change it depending on market conditions. But if you wake up one day to realize that your risk profile is different, you can switch from one option to the other.

Looking at the current market situation, where one would want to limit the downside risk, the Aggressive Gold Moderate Plan looks apt. Under this, 30% of the portfolio would be invested in equity, 50% in diversified mutual funds and 20% in Gold ETFs.

Assume that you had invested Rs. 10,000 in the Aggressive Gold Moderate Plan on January 1, 2008. You have invested Rs. 3000 in equity, Rs. 5000 in diversified mutual funds and Rs. 2000 in gold. Since then the BSE Sensex has fallen by 31.77%, while gold has gained 21.31%. So the Rs. 8000 invested in equity via stocks and mutual funds would have shrunk to Rs. 5458.4 (assuming investments were made in the shares that constitute the BSE Top 30) while gold would have grown to Rs. 2426.2 As a result your overall portfolio would have shrunk to Rs. 7884.6.

However had you invested in 100% equity portfolio, and then your entire Rs. 10,000 would have gone down by 31.77% to Rs. 6823. So the return on gold helped reduce the fall in your portfolio. This shows the benefit of having invested in gold.
When people redeem their investments in Auto Invest- Gold, investors will be offered a 2% discount to those selling Gold ETF units and purchasing physical gold. However, note that banks sell gold coins and bars at a premium that ranges between 5-16%. When the market price of gold was Rs. 1, 28,500 for 100 grams, the 100 gram gold bar sold was priced at Rs. 1, 48,174. So a 2% discount may still fetch you a higher price for the gold bar, which could have come cheaper at a jeweler. Many jewelers too sell gold in the same packing and with the ASSA Y certificate that banks offer.

Why did the stock market crash and what should you do now?

If you are an investor in the stock market, the happenings of the last few days must have caused a lot of concern. Remember the black Tuesday of January 22 when the market plummeted by more than 11 per cent during the first few minutes of trade. Nervous sellers pushed the panic trigger, sending the markets into a free fall, until it hit the circuit breaker, which automatically caused all trading to come to a halt, both, at the BSE and NSE. The 30 stock Sensex lost almost 2273 points during the day, before some value buying made it recoup some losses. Finally, it closed the day at 16,729.94 points, still down by 875.41 points. The outlook for the share market seems to have changed overnight. Let’s take a look at the prime factors responsible for such a drastic fall in the markets.



Fears of a recession in the US

One of the biggest reasons for the heavy duty fall in the markets is a fear of recession in the US economy. The global investment climate has changed with the impact of the sub-prime crisis in the US mortgage market taking its toll. Big investment banks and conglomerates are declaring huge losses and investors’ confidence is completely shaken. There is a saying that when the US sneezes, the whole world catches flu. No wonder that most of the economies are having inter-linkages with what is happening there. The after effects are felt in our markets also as the negative impact on IT companies, BPOs, KPOs, export oriented units and other sectors are feared in the long run.



Huge selling by FIIs and hedge funds

Hedge Funds and Foreign Financial Institutions (FIIs) have also started selling in our markets. This is because they want to reallocate their investments and book profits to cut their losses due to the economic meltdown. The volatility of financial markets seen today is the result of continuing and heavy selling pressure by investors of all classes due to uncertain times and events.



IPOs drained out liquidity from the system

Domestic factors also contributed to the record fall in no small measure. The primary market was inundated with a large number of IPOs. Liquidity was sucked from the market as people invested in these offerings with expectations of windfall gains on listing. Reliance Power IPO was oversubscribed by as many as 72 times with investors putting in bids for over 1,654.8 crore shares as against 22.8 crore shares offered. As per an estimate, more than Rs 60,000 crore was locked in the offer by way of application money, thereby causing liquidity problems in the secondary market.



Don’t panic and stay invested for the long term

If you are a long term investor, who has invested in fundamentally strong companies, you should not be worried too much about volatility and sudden downturns. Remain invested and use the opportunity to buy at lower levels. There is absolutely no need to press the panic button and start selling amidst high volatility.


Somebody once asked the investment guru Warren Buffet about when the right time to sell one’s stocks is and the answer was ‘Never; if you have quality investment’. Also, if you do not have a high risk taking capacity, do not try to make a fast buck by investing in the so called momentum stocks. They may lose their value in no time and you will be holding next to nothing. So be a smart investor and stay invested for the long term.

Why is portfolio diversification essential for investors?

Diversification of portfolio is a method use to minimize risk factor in investments. It takes grouping of various types of investments in a single portfolio, which creates a balance of return throughout the fiscal year. Usually it is practiced by very large financial institutions like Hedge Funds, but small investors also take part in portfolio diversification by investing in for example Mutual Funds.
Normally there three types of portfolio diversification. They are:
1. Investment in different types of commodities like shares, mutual funds, government bonds and foreign exchange.
2. Investment within a single commodity but with different strategies, like taking a long position in US dollar and sterling pair at the same time going short with Japanese Yen and US dollar pair.
3. Spreading your investments in different geographic locations. It can help you create a balance in your investments, for example if NYSE Dow Jones is showing a bearish trend there is a possibility that BSE SENSEX is going bullish. It can also apply to investment in entirely different industries.
However, it should be clear at this point that by diversifying your portfolio, you ultimately reduce the potential of high returns on individual investments. But what is more essential for investor is the smooth running of their portfolio, which makes sure sustainability, steady growth and reduced risk.
There are some strategies which portfolio managers apply on their investments to create diversification and maximum returns in both falling and rising market condition, they are:
1. Allocation of assets according to various market trends. A rising trend is also an opportunity for going short in opposite commodity.
2. You can use leverage to maximize chances of target return.
3. Research and analysis are vital for making a decision; both fundamental and technical realizations should be incorporated in your strategy.
4. Limit your strategies to a targeted return or risk level. Over concentration and expectation can cause a big loss of opportunity in other investments. You need to look at portfolio analysis on regular basis.

BSE Market & Its Role in Indian Economy

The BSE Market in India came into existence with efforts from 22 professional stock brokers in the year 1875. Popularly known as Bombay Stock Exchange, this share market has evolved into the most efficient & productive stock market in Asia. Now, both the operational capacity & infrastructure of this market are at par with the global standard. The BSE market is working towards providing traders with multiple investment options together with channelizing funds from investors for expansion purpose of different institutions & organizations. But being highly unstable in nature, those investing in BSE market are at risk of losing money. It is extremely tough for the common man like us to predict the market movements. Hence it would be better to seek for the expert opinion before making investment in this highly fluctuating market place. The professional stock broker firms can really help traders to get the expert opinion.
The Stock Broker Association & Native Share with few hundred members took the initiative in forming the Bombay Stock Exchange. The BSE market got the permanent accreditation from the government of India in the year 1965. BSE & NSE, two of India’s national stock exchanges have played crucial in representing the Indian security market condition. In fact, BSE market is the first such stock exchange market in which around 5000 companies had registered for share trading at the time of starting itself.
Basically BSE issues registered company shares & stocks to general investors & raise funds from them. These funds are then used by the public companies or private companies registered with BSE market. As a result, all the traders who made investments in the company share the company’s loss as well as profit. Thus BSE market has become a financial platform facilitating investors to buy or sell company bonds & shares. SEBI otherwise known as Securities and Exchange Board of India is the statutory body of BSE which is formed to control & regulate the role of brokers, sub-brokers, investment advisors, portfolio managers & stock exchanges to name a few. BSE’s market movement indicator or index called BSE sensex is compiled on the basis of the share performance of the market’s 30 most sensible financial companies.
The BSE market transacts through two different financial markets called primary & secondary markets. In primary market the stocks are issued to the investors directly by the company & the company appointed stock brokers handle the transactions. In secondary market, stock brokers hold shares of companies listed on BSE market & issue them to investors for trading with the consent of the company. Thus BSE market deals with the financial complicacies of stock, shares, bonds etc & still helps in strengthening the Indian economy.

Is the bubble forming again in the Indian stock market?

What is a bubble?

It is nothing but massive and unwarranted increase in prices of the investment with respect to the fundamentals of that investment. The most popular bubbles of the recent decade are the stock market bubble in the early 90s post-Harshad Mehta scam and the technology or internet bubble in 2001.

3 factors driving the stock market…..

Stock markets are driven by three factors i.e., Fundamentals, Liquidity, Sentiments. Liquidity and sentiments are interrelated. Currently, Indian stock markets seem to be driven largely by liquidity/sentiments. Fundamentals have been more or less fine, but they have not been that good to warrant such remarkable turnaround. The last time the Sensex took a year and 10 months to rise from the 8,000-plus level in early 2005 to the 16,000-plus level in late 2007. This time around it has passed through the same distance in just flat six months. What are the reasons behind such a strong comeback?

FII Investments…….a major contributor to the dramatic stock market comeback……..

The FII investment of Rs 80,500 crore in 2009 is the highest ever inflow into the country in rupee terms in a single year and comes a year after they pulled out over Rs 50,000 crore. Although, FII inflows were high in 2009, but no of new FII’s were very limited this year compared to the previous years. This was mainly due to high profile collapse of Lehman brothers and others, which deterred the new entities from entering the Indian market. Other than that, FII’s have made merry in 2009. Major reasons for resurgence of interest by foreign investors were low interest rate regime in US/UK and also ease of restrictions on P-notes. However, till 2007, FII’s were mostly using P-notes used by foreign funds in India to trade in local shares, but off late, more and more FII’s prefer to park their funds through sub-account route. This is mainly due o the uncertainty among FII’s

Till Mar 09, stock markets were going southwards, as FII’s were selling all the way. It’s only after Mar 09 that stock markets picked up, and the reason for that was fairly simple. FII’s started buying April onwards. From this, we can clearly make out that surge in the Indian stock markets is heavily influenced by FII investments. Indian stock markets more often than not dance to the tunes of FII’s. FII’s inject much needed liquidity in stock markets, which automatically uplifts people’s sentiments.

Other factors:

Although, FII inflows are the major reason for stock market upswing, experts feel that there are other positives too. Finance minister’s statement on GDP growth, strong show on the corporate advance tax payout, record-low interest rates, tax cuts and higher government spending unveiled by policy makers since September 2008 to shield the economy from the global slump are few factors that would lead India on growth trajectory. But as I mentioned before, fundamentals, although good do not justify such a rapid rise.

How to save yourself from the bubble burst….

The worst part of the bubble scenario is timing it. However, the bubble scenarios in past decades have taught us few important lessons. You can save yourself by diversifying and rebalancing your portfolio, In addition to that, just plainly follow three golden rules of investing, i.e. invest early, invest regularly and invest for a long time.

More information about Stock Market India, Indian Stock Markets, Stock Markets we can get:

http://www.sharetipsexpert.com/

NSE India Report for the next trading day after 20 August 2010

Security Name	Close	10 day %	60 day %	Idx Rel%	Ticker Symbol
SAREGAMA INDIA LIMITED	157.35	100.45	115.11	99	SAREGAMA
WOCKHARDT LIMITED	247.15	57.42	91.96	56	WOCKPHARMA
BHARTIYA INETRNATIONAL LT	101.00	46.59	42.96	45	BIL
RADAAN MEDIAWORKS (I) LTD	4.00	42.86	26.98	41	RADAAN
AARVEE DEN. & EXP. LTD	91.45	37.83	55.40	36	AARVEEDEN
KRISHNAENGGWORKS	3.45	35.29	30.19	34	KRISHNAENG
JUBILANT FOODWORKS LTD	538.90	30.90	70.89	29	JUBLFOOD
SURYA PHARMACEUTICAL LTD.	229.05	25.34	28.43	24	SURYAPHARM
ATUL LTD	135.45	23.36	59.63	22	ATUL
JET AIRWAYS (INDIA) LTD.	818.25	22.68	63.27	21	JETAIRWAYS
T T LIMITED	39.10	21.24	124.71	20	TTL
BANNARI AM SPIN MILL LTD.	146.75	20.24	33.41	19	BASML
SRI ADHIKARI BROS.	39.95	19.79	41.92	18	SABTN
KINGFISHER AIRLINES LTD	61.60	19.26	33.33	18	KFA
SUTLEJ TEXT & INDUS LTD	227.70	19.25	98.00	18	SUTLEJTEX
IND SWIFT LABORATORIES LT	93.95	18.85	45.89	17	INDSWFTLAB
JAGSONPAL PHARMACEUTICALS	26.30	16.63	25.84	15	JAGSNPHARM
SURAJ DIAMONDS LTD	66.85	14.67	37.69	13	SURAJDIAMN
LAKSHMI VILAS BANK LTD	125.40	14.00	62.65	12	LAKSHVILAS
IND-SWIFT LIMITED	39.45	13.85	39.40	12	INDSWFTLTD
AUROBINDO PHARMA LTD	1079.40	13.28	22.20	12	AUROPHARMA
ARCHIES LTD	132.60	12.33	30.19	11	ARCHIES
BHUSHAN STEEL & STRIPS LT	1842.55	12.25	17.68	11	BHUSANSTL
KARUR VYSYA BANK LTD	681.50	11.82	36.14	10	KARURVYSYA
RPG LIFE SCIENCES LTD	110.35	11.69	63.97	10	RPGLIFE
SMS PHARMACEUTICALS LTD.	202.95	10.90	19.98	9	SMSPHARMA