Thursday, February 14, 2008

What's roiling India's stock market? --Bonds

Mumbai needs a more robust debt market to prevent violent swings in equities trading

India's markets have long enjoyed a reputation for being well run. But after shares in Mumbai fell 10% in the first 57 seconds on Jan. 22 and regulators halted trading, investors started grousing that India's bourses still have a long way to go before they're on par with the world's leaders. "India has made major strides with market reform, but in's antediluvian," says Percy S. Mistry, chairman of London consultancy Oxford International Group.

The bond market—or lack thereof—is the core of the problem. Although India has long had the regulatory framework for companies to offer debt, the disclosure requirements are so stringent that few bother. Last year, Indian companies issued bonds equivalent to just 1% of the country's gross domestic product, compared with 112% of GDP in the U.S. and 10% in China, according to Britain's University of Reading.



A BusinessWeek article by Manjeet Kriplani (BusinessWeek India's bureau chief).

Complete article @ link

Friday, August 24, 2007

"Death" Bond

A security backed by life insurance which is derived by pooling together a number of transferable life insurance policies. Similar to mortgage-backed securities, the life insurance policies are pooled together and then repackaged into bonds to be sold to investors.
If the person lives longer than expected, the bond's yield will begin declining. However, because the death bonds are created from an underlying pool of assets, the individual risk associated with one policy is spread out, making the instruments more stable.

Courtesy: Investopedia (Original Post @

Thursday, May 24, 2007

What is the difference between fundamental and technical analysis?

These terms refer to two different stock-picking methodologies used for researching and forecasting the future growth trends of stocks.
  • Fundamental analysis is a method of evaluating securities by attempting to measure the intrinsic value of a stock. Fundamental analysts study everything from the overall economy and industry conditions to the financial condition and management of companies.
  • Technical analysis is the evaluation of securities by means of studying statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value but instead use stock charts to identify patterns and trends that may suggest what a stock will do in the future.
Courtesy: (original post @
Introduction to Fundamental Analysis @
Introduction to Technical Analysis @

Disclaimer at end of page

Monday, December 11, 2006

The Countdown Begins

The number of Sensex stocks which gain every month is reducing steadily. The market appears to be heading for a correction, says Ajay Jindal

WHEN brokers start trying funny stunts to rig the market (not that they don’t try all the time) it is time to be cautious. It ap pears that there was a motivat ed attempt to make the Sensex touch 14000 level last week When the market opened last Tuesday, a broker placed an or der in Reliance Industries at price much higher than Mon day’s closing, single-handedly sending the Sensex soaring. As of now, it isn’t clear what ac tion is being taken by the regu latory authorities or the con cerned exchange to curb this kind of suspicious activity.

For the retail investor, this suggests it is time to be cautious The market has been on a one way mad ride since June. The Sensex has now risen 57% in less than six months from the June level of 8900. The market needs to step back a bit and relax for a while.

Even Sensex scrips seem to be getting tired of this hard climb. There are signs that the strength of the Sensex rally is dissipating. The Sensex rise is not broad-based anymore. In the past four months, the number of companies which have risen for each month has reduced steadily.

In November ’06, only 17 out of the 30 Sensex companies closed the month higher than their October closing. In contrast, in August ’06, 29 of the 30 Sensex companies had risen. Between August and November, the number of companies which rose for the month has fallen steadily. A majority of Sensex stocks is still rising, which perhaps explains why the Sensex itself has continued to rise every month.

It is quite apparent that there need not be a great relation between the rise of the Sensex and the number of Sensex stocks which rise (see table ‘Too Fast, Too Furious?’). For example, in September ’06, 25 of the 30 Sensex stocks made gains, while the Sensex rose 755 points in that month. In November, the Sensex gained almost 738 points, while only 17 companies rose.

The movement of Sensex companies in November has been rather peculiar, and also somewhat different from earlier months. In November, a few Sensex stocks witnessed a sharp increase, much larger that what is normally expected from a large cap. This is, perhaps, another factor which explains the almost unchanged pace of the rise of the Sensex, despite the falling number of participating stocks participating.

In November ’06, for example, as many as 10 Sensex stocks gained more than 10%. In contrast, in August and September ’06, only seven Sensex stocks rose more than 10%. In October ’06, only four stocks rose more than 10%. So, if only a few Sensex stocks are rising, then they should make sharp gains for the Sensex to go up strongly.

The maximum rise of any Sensex stock in a month was seen in November, when Gujarat Ambuja Cements gained rose 21%. In the previous three months, the maximum rise of any company listed on the Sensex was normally around 15-16%. In other words, investors are picking up a few Sensex stocks now, and pushing them up to ensure that the Sensex keeps rising.

Sooner or later, this game has to stop. A section of the market believes a correction could take place once the Cairn Energy IPO is through. We will know in a week.

(Courtsey: Economic Times, Bangalore Ed, December 11, 2006 : Article )

Friday, November 03, 2006

A Simple Calculation!

We all know about the growth story of Infosys. How about the stock? Lets find out. Infosys was founded by Narayana Murthy along with some others in 1981. It came with an IPO in 1993 at the price of Rs. 95. Everybody who applied got the shares. Many missed the Diamond oppurtunity by not applying. Suppose that a person applied for 100 Shares. It would cost him Rs. 9500. Let us assume that he is holding the same position till today. What will be the value now? Let us calculate.

Remember that in these 13 years Infosys would have offered many dividends. Let us keep this aside and calculate the value of shares alone. Soon after IPO, Infy gave 1:1 bonus in 1994. So, our 100 shares will be 200 in 1994. Again they gave 1:1 bonus in 1996. That will take the count to 400 shares. And again in 1998 they offered bonus of 1:3 shares. That will take our count to 1600 shares. In 2000, they split the stocks (Rs. 10 FC to Rs. 5 FC). This will take our count to 3200 shares. In 2004, again they announced 1:1 bonus. It will take our count to 6400 shares. Recently, two months back they gave bonus shares in the ratio of 1:1. Now, the count of ours would be 12800.

Today(13/10/2006), I checked the CMP of Infosys. Its Rs. 2070. So, what will be the value of our shares? 12800 x 2070 = Rs. 2,64,96,000. Yes, its Two Crores Sixty Four Lakh and Ninety Six Thousand only.

What other investment would have taken to this level? Real-Estate? Bank Deposit? Gold? I don't think so. A Bank deposit of Rs. 9500 in the same year at the rate of 12% would have hardly fetched us Rs. 38,000 by this time

Tuesday, September 05, 2006

know your broker

A blog address i found. Can be good for your reference. I have not gone through it though

Just Go & Mail...that's what i call GMail

Wednesday, May 10, 2006

Market | At what price will Reliance Petroleum list tomorrow?

The biggest question everywhere around..."At what price will Reliance Petroleum list tomorrow?" will be answered tomorrow!!
The following article details a bit...


Reliance Petroleum created history with its IPO and now it will be listing on the bourses on May 11, 2006 on the BSE and NSE.

The issue was made to part finance the Rs 27,000 crore (Rs 270 billion) export-oriented refinery being set up in a special economic zone, SEZ, at Jamnagar in Gujarat. The export-oriented refinery will have a capacity to process 5,80,000 barrels per day making it the sixth largest refinery in the world. As a part of this project, RPL is also setting up a 900,000 tonne per annum polypropylene plant. The project is likely to go on stream by December 2008.

Moneycontrol spoke to experts on the latest offering from the Reliance stable and its future prospects.

RS Iyer of KR Choksey is expecting Reliance Petroleum to list above Rs 95. He believes that it will stabilize between the Rs 75-80 range.

An investor should wait for atleast six months and gauge its future prospects before taking a decision on whether to hold or sell.

Read the complete article here