Market Update

February 2015

Highlights of Union Budget 2015-16

Highlights of Union Budget 2015-16, India, Jaitley

Following are the Highlights of the Union Budget 2015-16.
You may read the key features of the budget here.
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Taxation:
Abolition of Wealth Tax.
Additional 2% surcharge for the super rich with income of over Rs. 1 crore.
Rate of corporate tax to be reduced to 25% over next four years.
Total exemption of up to Rs. 4,44,200 can be achieved.
100% exemption for contribution to Swachch Bharat, apart from CSR.
Service tax increased to 14 per cent.

Agriculture:
Rs. 25,000 crore for Rural Infrastructure Development Bank.
Rs. 5,300 crore to support Micro Irrigation Programme.
Farmers credit – target of 8.5 lakh crore.

Infrastructure:
Rs. 70,000 crores to Infrastructure sector.
Tax-free bonds for projects in rail road and irrigation
PPP model for infrastructure development to be revitalised & govt. to bear majority of the risk.
Rs. 150 crore allocated for Research & Development
NITI to be established and involvement of entrepreneurs,researchers to foster scientific innovations.
Govt. proposes to set up 5 ultra mega power projects, each of 4000MW.

Education:
AIIMS in Jammu and Kashmir, Punjab, Tamil Nadu, Himachal Pradesh, Bihar and Assam.
IIT in Karnataka; Indian School of Mines in Dhanbad to be upgraded to IIT.
PG institute of Horticulture in Armtisar. (more…)

Highlights of the Railway Budget for 2015-16

Highlights of Railway Budget 2015-16 , Suresh Prabhu

Highlights of Railway Budget for 2015-16

Following are highlights of the Railway Budget for 2015-16

FARES, FREIGHT
* Emphasis on gauge conversion over next 5 yrs
* Must run fast trains like Rajdhani, Shatabdi
* To up track length by 20% to 138,000 km next 5 years
* Must substantially regain freight mkt share
* No hike in passenger fares

HYGIENE BOOST
* To have professional agencies for railways cleaning
* Ensuring higher standards of cleanliness a priority
* Swachh Rail to be a driving force
* To create new dept for clean stations, trains

MISCELLANEOUS
* 1,219 sections on high density network
* Railway is a unique integrator of India (more…)

February 2012

Facebook IPO!!! Valuation @ approx $100Billion

facebook, facebook ipo, google comparison, us stock market,financeFacebook IPO valuation is tagged @ $100Billion making it one of the largest IPO launch in history. Personally, I think that this is a BIG Hype. At $100 billion total value Facebook will be trading at a Price to Earnings multiple, or P/E, of 77 and Price to Sales multiple of around 25. A significant chunk of revenues come from casual video games developer Zynga, which brings in 12 per cent of all revenue.

Google’s IPO worked for long-term investors because the search engine literally became one of the best companies on earth. Google’s price has gone up 7-fold since the IPO but the company has grown into it’s expensive initial price. Can Facebook replicate the success story? Now this is a big question mark..

Follow the story here :

Now that everyone on earth has offered their 2-cents on the upcoming Facebook IPO, one question remains: Should you buy shares when the social networking king becomes a publicly traded company sometime in April or May?

(more…)

September 2010

Reliance – 2nd among world’s largest value creators

There is a report in Business Standard which mentions many Indian Companies amongst the world’s largest value creators in this decade. The report is here :

Mukesh Ambani-led Reliance Industries has been ranked second in the list of world’s 10 biggest ‘sustainable value creators’, companies that have been successful in creating the most shareholder value over the last decade, prepared by Boston Consulting Group.

Reliance Industries again comes second in the ‘Large Cap firms’ for 2005-2009 of 112 global companies with a market valuation of more than 35 billion dollars.

In the chemicals industry, Reliance Industries has been named the second biggest value creator of 53 global firms during the period behind South Korea’s OCI.

However, the stock has virtually not given any returns over the past 2 years….. Many investors are losing patience now and
letting go of the stock in favor of Banks, Pharma and FMCG Companies…. which have outperformed…
If you compare the returns of Reliance with the BSE Index, the result is quite glaring….Sensex is up almost 40 % in last one
year……Whereas Reliance has not given any return at all ……
So , What is next …….. Well a relief rally should be on cards till 1200 at least if the stock holds above 960 levels. …. And this will definitely bring smiles to the investors… and the markets as well.

August 2010

Selling Options : Sometimes it can be made to good use.

Selling Options , Calls, Puts, Tutorials, Options Strategies, Butterfly, Straddle, Strangle,  What Investors should know.

Options, by definition, are a wasting asset. The time decay, declining volatility etc. eat away into the premiums of the options.

Many option buyers learn this fact the hard way by watching their option contracts expire worthless many times. The majority of options expire worthless (estimates are somewhere > 80%). Given that the majority of option buy positions are worthless at the time of expiration, some investors decide that they will sell options and collect the premium. Prima Facie, this sounds like an easy way to make money.

However, there is no free lunch in the investment field as well. There are stories of how some of the brightest people in the world have blown up their accounts while selling ‘Naked’ options. Selling options, when there are no underlying holdings to support in case of adverse move is known as ‘Naked’ Selling.

Nevertheless, Options selling, when used intelligently, can be used to complement/protect your portfolio holdings to a certain extent and also make income in return.

Investors earn a premium for every put and call option which they sell. This premium is paid by Option Buyers.

Selling Short

When you sell shares of a company which you do not own, then it is called short selling. Selling a stock short is taking a view that the shares will keep going down. One way of doing this is by selling Futures. And another way of doing this is by selling Call Options.

In a short sale you have to buy back the shares at some point. And thus, short selling exposes you to unlimited risk, if the price of the stock starts to increase.

There are numerous strategies in Options. I will present just one example of how the selling of call options can be used by investors :

 

Covered Call Strategy

A covered call strategy is strategy for bullish investors to make some money and benefit from a stock that will move little over the short term.

This is often employed when an investor has a short-term neutral view on a stock or when the Stock has made a decent up move in a relative short period of time, and is expected to be range bound in the near term.

Let us take the example of Larsen and Toubro (LNT) recent price action again.

Assume, Investors bought the stock @ 1400 or Traders bought it at the breakout above 1660 in early June. Next, the stock made a decent up move in a month’s time frame and touched almost 1900. Investors could have written an options contract selling one call option of LNT Jul 2010 strike price 1900 at Rs 40. (However, Remember that one call option gives an investor the right to buy 125 shares).

You would earn income because the buyer of the call option has to pay you a premium for the option. If the stock’s price drops stays below the strike price (In this case , LNT did close well below Rs 1900 by Jul end) , the call buyer will never exercise the contract and the entire premium is yours to keep (Remember one lot of LNT is 125 and that makes the premium monies Rs 125 * 40 = Rs 5000).

If the stock’s price increases above the strike price, the call buyer may choose to exercise the contract. You would then either have to buy shares on the open market or deliver your shares to the buyer.

This is one of the common ways in which large institutional players generate income on the basis of their large holdings which they can always use to hedge in case of any adverse move against their options position.

Again, the intention of this article is to arouse interest and make aware of Options Selling. It does not advocate that you start selling options. Please understand, when selling options, remember that although your profit potential is limited to the amount of the premium that you receive, your losses can be rather large.

Also, My personal view is that selling PUT Options carries higher risk than Selling CALL options. This is because , in general, stocks generally use the stairs when going up (Sellers of Call Options can manage risk here ….) , But Jump out of the window when coming down. (Sellers of Put options can run out of exit options or get trapped …)

LNT has indeed made a good move from 1660 to 1900 and which I have been tracking since Early June …

You might be interested to know about Buying Options here…

July 2010

RBI hikes short-term rates; CRR unchanged

rbiThe central bank raised interest on Tuesday in the face of inflation has been above 10 percent for the past five months. The Reserve Bank of India said it would continue to normalize policy in line with the growth and inflation rate in the economy.


The RBI lifted the repo rate, at which it lends to banks, by 25 basis points to 5.75 percent, which was in line with expectations, but raised the reverse repo rate, at which it absorbs excess cash from the system, by a steeper than expected 50 basis points to 4.50 percent.

The central bank left the cash reserve ratio (CRR) unchanged at 6 percent.

Inflation in India emerged last year in the wake of a poor monsoon that drove up food prices but has spread broadly throughout the economy, spawning protests against a government whose voter base is predominantly poor and rural.  New Delhi’s decision to increase fuel prices is expected to add nearly a percentage point to wholesale price index (WPI) inflation starting in July and led the opposition to call a one-day nationwide strike early this month.

The government is hoping on normal summer monsoon rains to results in better crop yields and ease pressure on food prices, and has said inflation should decline to 6 percent by December, which in my opinion is a task in itself…..

ICICIdirect’s trading site crashes; customers trapped and helpless

The online trading system as well as the phone-order service of ICICIdirect broke down today leaving numerous customers feeling completely helpless. However, the company is keeping mum so far

icici-direct-trading

ICICIdirect.com, ICICI Securities Ltd’s retail trading and investment services portal crashed today due to technical glitches. This has put all of its customers in deep trouble. Till writing the story, the trading or customer login page on icicidirect.com was showing an error message saying:”Dear Customer, Our website ICICIdirect.com is not available today due to technical issues. We truly regret the inconvenience caused to you.”

ICICIdirect.com was down since morning with a message that the services will be resumed at 8.55am, the time when trading commences on bourses. However, throughout the day, customers were not able to log in or do any online trading. Even its CallNtrade facility used for placing orders through a phone was not working.

More here at moneylife ………

It is surprising that there was no backup planned for such an event and no trading could be conducted by ICICIdirect customers. Wonder whatever happened to people who speculate in Derivatives and wanted to square positions.  Markets gapped up and stayed positive throughout ……

Welcome to the secure world of technology , security and finance…….

Indian Markets are outperforming ….

Indian Markets are outperforming , Sensex, Nifty, Stocks, Global Indices, Sensex compared to DOW

The Indian Stock Markets are outperforming other markets over the past month and a half.  As seen in the charts above, the out performance of the Indian Markets started in May 2010.  How long this goes on is anybody’s guess.

However, this out performance is sweet for Indian investors; especially because (1 ) There is a heavy impact of the European crisis on Stocks worldwide and (2) – the US markets are demonstrating serious weakness in near term especially with Dow below 10,000 and S&P Index below 1050.

In India, well — The tax collections are up.  Corporate performance in Q1 is expected to be better, at least by 15%.  Monsoon is active again and covered almost all the areas ten days in advance. Earnings season will begin soon.

The above factors are seemingly having a favorable impact on markets.

It will be interesting to see the performance of the markets vis-à-vis the US Markets in the coming weeks and months.