Should we buy stocks now?

Being a consultant and investor I am facing a very genuine question these days by almost 90% of the investors I meet and that question is "I missed the rally, should I buy stocks now?" Well the feeling of being left out is very painful sometimes even more than loosing money on stocks. The straight forward answer I give them, without citing too much of reasons, is a big No. The reasons are many and cannot be explained verbally in couple of minutes. So I decided to pen them down in this post.

1. FIIs continue to put money while DIIs continue to pull. FIIs were net buyers to the tune of around 20,000 crore while DIIs were net sellers to the tune of 8500 crore in the month of September alone. FII money are short term money and driven by global factors which could start reversing in case of any bad global economic news and then there will be no buyers to support the selling pressure till it reaches an attractive level where DIIs start putting money backs into the markets.The Indian stock markets have become purely FII driven market since last few months which is not a very sound situation for our markets.

Rajiv Gandhi Equity Savings Scheme (RGESS)

The Union Government, has finally cleared the Rajiv Gandhi Equity Savings Scheme (RGESS) which is supposed to help bring back retail investors into the stock market, and more importantly make stock investment more attractive from gold purchases which results in higher forex outflow. The good part is that this time the RGESS benefit has been extended to mutual funds as well which was not the case before in it's previous form. 

Q2 FY 2012 - 2013 Advance Tax Payment by India Inc.

Advance tax numbers provides good indications of what lies ahead for companies as far as quarterly results are concerned. 

Here is the list of top companies in India with their second quarter 2012 advance tax payment figures (all in crores)

FIIs bullish while DIIs continue to sell

FIIs continue to pump in money into Indian equities and have been aggressive buyers on 14th Sep rally while DII's continue to remain bearish and have been a net seller of the strong rally of around 450 points on sensex. 

Foreign institutional investors (FIIs) were net buyers of Rs 2,833.72 crore in cash market while Domestic institutional investors (DIIs) were net sellers of Rs 688 crore in the cash segment. 

FII have so far poured in huge amount of money into indian equities to the tune of around 65000 crores in 2012.

Debts of some of India's biggest infrastructure Companies

It would be interesting to know how some of the companies grew by leaps and bounds in past few years and announced monster sized projects and expansion, be it in Steel or Power or other infrastructure sectors. The stocks used to go up on expansion plans without bothering about how those massive projects going to be funded. 

Companies lobbied PSU banks top bosses and secured loans for their over ambitious projects without putting substantial guarantees.  The money owed by the top 10 groups to banks is close to Rs 5,40,000 crore – up five-fold in five years. Wonder what the banks’ loan officers were thinking when they allowed this to happen. 

Gift Tax in India: Rules, Rates, Exclusion & Limit

Receiving gift in cash or kind can save you lot of taxes provided the gift is received from the permissible relative and within the annual limits. The main problems is faced by individuals when they look to receive or give gifts and is not being knowledgeable about when the gift would be taxable. 

By Definition "Any gift received in cash or kind exceeding Rs.50,000 is taxed in the hands of recipient under the head income from other sources. However gifts received from specified relatives are exempt from Income Tax, and there is no upper limit on the amount. 

Now the confusion is usually on the relative part. The term relative means following as far as gifts under income tax are concerned. A relative can be any of the following:

Sell RCom 42.5 put of Sep expiry at 0.15

There seems to be nothing going right as far as Reliance Communications is concerned. All sorts of bad news have engulfed the stock whether its very high amount of debt or inability to sell stakes in infratel and flag telecom or loosing 20 million subscribers in a month. But since everything has a price, it seems that enough battering is done in the stock and the stock could find good support at lower levels. 

After two days of loosing the stock bounced back sharply in today's trade (11th sep 2012) from 48 levels to 52 on the back of huge volumes. 

Considering these factors options traders can sell Rs.42.5 PUT at the current market price of Rs.0.15 or higher as the stock is not expected to break below 42.5 level in September expiry. 

Total return from the strategy

Buy Cipla for trading and short term investing

Short term investors and traders can go long on Cipla Ltd. as the stock has hit new 52 week high supported by increased volumes on the back of news of the company winning a patent case against Roche in Delhi high court. The company has also reported very strong July quarter numbers which is creating positive sentiment for it's stock. Valuation wise the stock is expensive but one of the cheaper stocks among large cap pharma names listed on Indian bourses which is triggering the fresh buying interest in the stock.

IIFL NCD Issue: Double in 6 years

India Infoline (IIFL), one of the largest equity broking company in India, is proposing the following NCD issue to be listed on NSE and BSE for a tenure of 6 years. Under cumulative scheme Rs.1000 invested would accumulate to Rs.2054, more than double in 6 years. Investors who are looking for safe but higher than banks FDs return can consider applying for the issue.

FII Investment Inflows in India: Year wise data

Indian Stock Markets have been highly dependent on FII money and the market performance is usually directly proportional to the FII inflows and outflows. 

FIIs have invested over Rs 63,000 crore till august 2012, their highest ever investment in the first eight months and the benchmark BSE Sensex is up around 12%. In spite of highest ever inflows the markets couldn't perform that well, thanks to the Domestic Institutional Investors(DIIs) who have been net sellers during the year facing higher redemption. 

However with abundant liquidity situation worldwide, there is increased probability of India receiving more inflows in coming months. If you have been looking for the FII inflows in India till date, above is the snapshot of year wise inflow of FII money into Indian Capital Market and the corresponding effect on the benchmark index Sensex.

Facebook IPO: A joke that made people cry

Facebook Dislike

When the Facebook IPO was announced few months back I was excited as I saw an opportunity to invest in a company which owns a website where I used to hangout for hours. But when I looked at the IPO details from investment perspective I was absolutely surprised by the kind of price it was demanding. Zukerberg and early FB investors wanted to cash the euphoria and hence priced the shares at $38. But any wise investor would have avoided the IPO simply because of following reasons:

8 reasons why you should invest in Corporate Deposits

With equity markets sluggish in India and interest rates unusually high due to high inflation, companies, being unable to raise fresh equity capital , are trying to raise capital via corporate fixed deposits. These deposits are rated and investors can choose to invest in these deposits based on their risk appetite. Strong companies have almost negligible risk of defaulting while companies with very high debt has some risk of defaults on maturity. Hence the later pays higher interest rates on their deposits to compensate for the risk than the former.

If you aren't aware of all the benefits that corporate deposits provide then here are the eight reasons why you should seriously consider it.

How to watch CNBC TV18 live on Internet

Like me there are many investors and traders in India and abroad who wants to stay tuned to their favourite stock market or business news channel,  on their phones, tablets or laptops via Internet, while travelling. 

In India CNBC TV18 has the largest markets share and many people like me start their morning by not listening to bhajans but CNBC TV18. 

Sometimes I have to travel for hours while the market is open and I felt a dire need to watch CNBC TV18 on the go as I used to miss important trades due to sudden news and updates about companies, sectors or economy. 

Billionaire Investor, George Soros, getting married to Tamiko Bolton at 82

George Soros of Soros fund management is all set to get married for the third time at the age of 82 with his much younger girlfriend Tamiko Bolton. Soros proposed to Bolton, 40, a few weeks ago during a weekend visit to the Hamptons. Soros has five children from his previous marriages. 

Last year, Adriana Ferreyr ,a former girlfriend of Soros, filed a lawsuit in Manhattan state court, alleging he reneged on a promise to buy her an apartment. Soros has filed a pending motion to dismiss the lawsuit filed by the former Brazilian soap opera star.

HUL back in top 10 market cap list after 3 years

The FMCG major, Hindustan Unilever, has outperformed Sensex by huge margin to get back into the elite club of top 10 companies with highest market capitalization in India. 

HUL hit historic high of Rs 496 today, toppled ICICI Bank to become the country's 10th most valued firm in terms of market capitalization. HUL outperformed the Sensex during the past one year gaining 57% as compared to 2.4% rise in the benchmark Sensex. 

However investors should stay cautious as the valuation is quite stretched. The company's shares are valued at more than 33 times based on FY-13 earnings while the benchmark index sensex is valued at around 15 times for the same financial year.

Provident Fund (EPF) ePassbook download – Know your balances

The launch of Member e-Sewa facility by the PF Department (EPFO) has enabled members to get detailed account statements with all credit and debit on request through the EPFO website.

InvestorZclub is glad to inform all the EPF account holders that the EPFO has now brought this dream alive by launching the member services portal at http://members.epfoservices.in - though the portal is still in Beta mode (brought down regularly every day for making updates and expected to be a comprehensive live service soon) you can register on it right now, to take a look at your e-passbook which contains all your PF balances and transaction details.

Sell Titan Industries 250 Call of August Expiry

This month's trading idea germinates from the market favorite Titan Industries. The company reported disappointing result for the first quarter of the current fiscal due to slowdown in jwellery business. The company is trading at expensive valuation of around 30 times based on FY-13 EPS which limits any substantial upside for the stock in the short term. Hence option traders can sell 250 call option of august expiry at the current market premium of 0.95.

Total return from the strategy

NSE to suspend 51 stocks from derivative (F&O) segment

As per revised and more stringent eligibility criteria, National Stock Exchange will suspend following stocks from derivative segments from October 2012 onwards. However the NSE said, "The existing unexpired contracts of these securities for the month of July, August and September 2012 would continue to be available for trading till their respective expiry.

Google ad rates (Adsense CPC) falls significantly in 2012

Bloggers and Google adsense publishers have been experiencing sudden fall in cost per click (CPC) rates since past few months which might have affected their overall earnings. But at the same time the click through rate (CTR) should have increased marginally partly offsetting the fall in CPC rate. 

This is primarily happening due to the overall fall in the advertisement rates given by the advertisers. In the second quarterly report google mentioned that "Advertising rates, or costs per click, have headed south as users gravitate to smartphones and tablets, where Google can generally charge less than on desktop computers.The cost per click for online search ads continued to decline in the second quarter, falling 16% year-on-year but the overall number of clicks on ads, however, increased a robust 42%."

Dewan Housing Finance Ltd. (DHFL) Fixed Deposit Scheme - 2012

DHFL, India's one of the premiere housing finance company, has revised the rates on it's cumulative and non-cumulative fixed deposit schemes for retail investors. 

ICICI Direct Research Report on Bharti Airtel: Recommend Strong Buy

ICICI Securities has become very bullish on India's largest telecom company Bharti Airtel and has recommended a strong buy on the stock with a target price of 420 which is good 37% appreciation from the current market price of 306 as on 13th July 2012. 

The brokerage report says "Using the DCF methodology for valuing Bharti and assuming a revenue CAGR of 7.9% in FY12-20E and a terminal  growth  of  3.0%  thereon,  we have arrived at a target price of  Rs 420. The risk reward seems to be favourable at this point. We rate the stock as STRONG BUY"

LIC holdings in Infosys crosses 6 percent

Life Insurance Corporation of India (LIC India) doesen't seem to be bothered much as far as Infosys under performance is concerned and is playing contra by investing an additional sum of Rs 2,000 crore in the first quarter of the current fiscal. 

LIC seems to be taking advantage of the blue chip stock being available at historically low valuation. At the current market price of Rs.2150 the stock is trading at a PE multiple of 12.5 times based on FY-13 expected EPS of 170 which is very cheap considering the size and the quality of the company. LIC is the largest non-promoter shareholder of the company.

World's Top 10 Young Teen Entrepreneur Millionaires

We all know that entrepreneurs carry different genes that distinguish them from the 99 percent of the population who just wish to work for somebody else throughout their life to lead a constant life. Entrepreneurs take risk and choose to ride a bumpy road to achieve a greater goal for themselves and the society at large. Age is never a bar for this rare breed and following are some of the examples which demonstrates how these young entrepreneurs became successful at such tender age. 

Andrew Hsu : Co-Founder of Airy Labs, a business that creates social learning games for children. Hsu has managed to snare $1.5 million in seed funding for Airy Labs. He was a graduate of the University of Washington by 16.

Morgan Stanley view on Tata Motors for 2012

Morgan Stanley has turned bearish on the India's largest CV maker, Tata Motors, and has lowered its year end target price for the stock to Rs 240 from Rs 291 and maintains its "equal-weight" rating on the stock. The market price of the stock at the close of the markets as on 6th July 2012 was 240.55. 

Sell JSW Steel July 780 Call option at Rs 5

Credit Suisse in a report dated 6th July 2012 stated that JSW Steel understated FY12 net debt by at least Rs 11,900 crore. The company stated debt stood at Rs 16,600 crore for FY 2012. Creidt Suisse arrived at the figure based on following three reasons:

1. Acceptances of Rs 75 bn (up from Rs68 bn in FY11) are effectively debt

2. Securitised receivables of Rs 31 bn (up from Rs26bn); and 

3. Rs12 bn from the fall in INR; un-hedged liabilities are now $3 bn.

Steel industry is mainly valued on EV/EBIDTA basis and such latent debt of almost 70 percent of the stated debt in annual report certainly makes the valuation expensive especially for JSW steel. The stock is expected to remain under pressure and hence a good short term trading opportunity is visible. Instead of shorting the stock directly in futures one can sell 780 call of JSW Steel at the current market premium of Rs 5.

Total return from the strategy

Mutual Fund Schemes that outperformed SENSEX and NIFTY in H1 2012

Reliance Mutual Fund's Reliance Banking Fund (Growth) and Reliance Tax Saver (ELSS) Fund (Growth) have outperformed benchmark indices Sensex and Nifty by huge margins with year-to-date returns of 28.35% and 25.12% respectively. Sensex and Nifty have gained 12.78% and 14.16% respectively since the beginning of 2012. 

Apart from the above two ICICI Pru Discovery Fund (Growth), Reliance Equity Opportunities Fund (Growth) and IDFC Sterling Equity Fund (Growth) has delivered returns in excess of 25% so far this year.In total there are 38 mutual fund schemes which have given better returns than the benchmark indices Sensex and Nifty so far this year.

Money Bags by Chinese Feng Shui - July 2012 Calendar

This year we have very unique month of July which comes once in 823 years. July 2012 has 5 Fridays, 5 Saturdays and 5 Sundays which rarely happens. According to Feng Shui this is called a money bag and sharing this brings money imminently.

Jobs in USA, Greece and Italy - Humor

Please share if you like it

Country wise Stock Market Performance in H1 2012

If you look at the stock market returns generated by the countries all over the world you will be surprised to know that Turkey and Pakistan has been the best performing countries in the world in first six  months of the current calander year. 

Turkey stock markets has delivered 22 percent while pakistan's stock markets has delivered little less at 21.62 percent returns in the first half of 2012 calander year.

India has also done well with 12.78 percent gain while Germany is up 8.78% during the same period. 

Spanish markets, one of the biggest European countries in soveriegn debt trouble, has been one of the worst performers with negative returns of 17.09 percent. 

One of the interesting thing to note is that while US markets were up 7.7 percent, Canadian markets are down 3.41 percent.

Among BRIC countries Brazil has been the worst performer with -5.06 percent returns followed by Russia with -2.3 percent. 

India has  clearly stolen the show in terms of equity returns as far as BRIC nations are concerned.

Greece, the centre of all the crisis in Europe, is not the worst performing market in the world and is down around 10 percent year to date.

List of World Richest Internet Entrepreneur Billionaires

Online business from Amazon to Google or Netflix to Facebook have produced billionaires from garages and dorm rooms. Each of the Internet venture that became successful had one thing in common, passion. 

If you are also an internet entrepreneur and have been looking for net worth of top Internet billionaires of the world then here is the list (all figures in billion):

Real time crude oil prices: Short and long term charts

Crude oil, often termed as black gold, is the most tracked commodity in the world. Indian Economy is almost entirely dependent on crude for its energy need. Crude prices are almost inversely related to equity markets and hence affects both commodity and equity investors. Hence if you are a regular crude oil watcher and it movement affects you then don't forget to bookmark this page to keep a tap on the real time prices and it's short term and long terms trends. In the following chart just hover your mouse on the period and the chart for that period will load instantly.

Veritas Research Report on RCOM, DLF: PDF

Veritas Investment Research, a Canada based equity research firm has pegged the actual worth of India's largest real estate company DLF and Anil Ambani owned second largest telecom company  Reliance Communications (RCOM) at Rs. 100 and Rs. 15 respectively.  

Veritas dubbed India’s largest realtor ‘a crumbling edifice’ in its March 2012 report and on 19th June 2012 the equity research firm, which torn apart Kingfisher Airlines’ financials last year — well before the world woke up to the reality of the doddering airline, has snubbed RCOM numbers and has recommended sell  on the stock with a target price of Rs. 15.

EPF Transfer vs. Withdrawal - Rules and Benefits

Employee Provident Fund or EPF is the only investment instrument in India which enjoys EEE advantage. 

EEE is acronym for exempt from tax during deposit, exempt during interest accumulation and exempt from tax during withdrawal on the corpus after retirement or specified period.

EPF is commonly seen as retirement fund which is accumulated and compounded at a very high interest rate for the tenure of your employment. The benefits of EPF is only visible when it is left for accumulation for 30 - 35 years. 

Rakesh Jhunjhunwala Interview

Rakesh Jhunjhunwala, the billionaire investor and trader who is often compared to the legendary investor Warren Buffett, doesn't want to be recognized as India's Warren Buffett. "It's not a fitting comparison. In terms of wealth, success and maturity, he's far, far ahead," says Jhunjhunwala in an interview at his office in a prime location in Mumbai overlooking the Arabian Sea."I'm not a clone of anybody. I'm Rakesh Jhunjhunwala," he booms. "I have lived the world on my own terms. I do what I enjoy. I enjoy what I do."

Buy Hindustan Unilever for short term trading

Hindustan Unilever made a new life time high today and remained strong throughout the trading session today as on 13th June 2012. The stock touched a lifetime high of 448.50 before closing for the day at 447.50. 

For the past few trading sessions the stock is witnessing strong delivery based buying which suggest that there is more upside left in the stock. Traders can go long at the current levels of 446, 447 keeping a tight stop loss at 439 for a possible target of 460 in next few trading sessions. However if stock moves past 460 continue to hold the stock with insurance of trailing stop loss placed 2% below the then existing price.

Sensex 2013 PE valuation near historical bottom

Historically India's benchmark Index, SENSEX, has bottomed out at a PE valuation of 10 to 12 times. At the current index level of around 16,500 and an estimated EPS of 1250 for the financial year 2013, the index is trading at a PE multiple of around 13 times FY 13 earnings. Above that considering the appreciation of dollar against rupee, the valuation in dollar terms is already around 11 times if we assume an average dollar rate of 48 against INR.

The Confusing Stock Analysts

Warren Buffett once said that serious investors should not believe on all those talking heads coming on CNBC or other business news channels frequently giving out recommendation on stocks you should buy. I spotted a very interesting instance which will make you understand why Mr. Buffett said so.

In the following snapshot, if you look at the encircled area you would notice that there are two recommendations on Hindalco both given on 7th June 2012 at a difference of just 1.5 hours. The target prices given are poles apart. Now the question is whom to believe and whom to leave. The chances of success and failure are equal. So even if you succeed once there is no guarantee that you will succeed next time again. That is why for a layman who just buy/sell stocks based on analysts recommendation it is impossible to make money consistently in the long run.

Buy Saregama India for trading

Kolkata based RPG group company, Saregama India, has zoomed over 10% to Rs 86 on back of over ten-fold surge in trading volumes. Over 9 lakh share, representing around 5% of the total equity of the company were traded on NSE and BSE put together, against an average sub 40,000 shares that were traded daily in past ten trading days on both the exchanges.

The entertainment company has reported a net loss of Rs 7.42 crore, due to Rs 11 crore provision for doubtful debts and advances for the quarter ended March 2012. The company had a net profit of Rs 5.32 crore in the same quarter of previous fiscal. Total operational income too, declined 7% at Rs 41.81 crore on year-on-year basis.

Global Economic Events Calender - June 2012

05/06/2012:

Australia RBA Interest Rate Decision

Germany Purchasing Manager Index Services (PMI) data for May 2012

Bank of Canada Interest Rate Decision

07/06/2012

Japan Gross Domestic Product Annualized (Q1)

United Kingdom BoE Interest Rate Decision

United States Consumer Credit Change

Switzerland Unemployment Rate

08/06/2012

Germany Exports and Imports (April)

Best example to understand Inflation

If it has been difficult for you to understand inflation just by reading the definition from your text book or financial dictionary then the following video is for you. 


The illustration shown in the video below will certainly make you understand inflation from the bottom of your brain.

Goodbye Inflation Confusion.