Monitor Investment Includes companies’ Stock Market Monitor Plus free supplement on Top Mutual funds Cover Story 12-17 Silver 52-53 Market Commentry 42-45 Stock Market Monitor 22-36 The Complete Magazine for Indian Investors www.rrfinance.com www.rrfcl.com October 2009, Rs. 25 Volume X-Issue(10) This issue consist of 80 pages including 24 pages of suppliments on Mutual funds Ready Reckoner
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MonitorInvestment
Includes companies’ Stock Market Monitor Plus free supplement on Top Mutual funds
Cover Story
12-17
Silver
52-53
Market Commentry
42-45
Stock Market Monitor
22-36
The Complete Magazine for Indian Investors
www.rrfinance.com
www.rrfcl.com
October 2009, Rs. 25
Volume X-Issue(10)
Th
is issu
e c
on
sis
t o
f 8
0 p
ag
es in
clu
din
g 2
4 p
ag
es
of
su
pp
lime
nts
on
Mu
tua
l fu
nd
s R
ea
dy R
ecko
ne
r
Editor’s Desk 3
News Bytes 4-5
Review and Analysis 6-7
Prime Economics Indicator 8
Fixed Deposits 9-10
Cover Story 12-17
Health Insurance in India 18-20
Stock Market Monitor 22-36
Stock Ideas 38-39
Market Commentary 40-43
Technical Analysis 44-45
Investor Education 46-49
Sugar 50-51
Investment Advisory 52
Castor Seed & Cardamon 53
Query Time 54-55
Mail Box 56
C O N T E N T
October, 2009 [2]
Editor’s Desk
"To get through the hardest journey we need take only
one step at a time, but we must keep on stepping"
As we get ready to celebrate Deepawali, it would be
prudent to reflect at the year gone by. Last year's
Deepawali was filled with pessimism for an investor.
Markets were falling, there was news of job cuts and in
general experts predicted a gloomy economic forecast
for the future. It seemed as if there was no light at the
end of the tunnel. A year on, the Sensex has more than
doubled and investors who had the
patience and faith have earned
handsome returns. We, through this
magazine, have continued guiding our
readers through all times, good or bad.
We seem to be standing at a
crossroad. What turns the markets will
take next is unknown. This issue's
cover story focuses on this very
question. It is about the route markets may follow in
their journey to the next Deepawali. Currently, there is
optimism and hope. We analyse if this mood is
warranted and give our opinion on what may lie ahead
in the future. Our analysis suggest that an investor be
cautious in the coming few months but use corrections
to build a portfolio of high quality stocks as we remain
bullish for the coming year. Read more about it in our
cover story.
“Making Money requires hard work, investing money
requires knowledge & becoming wealthy requires hard
work, knowledge, patience and self control” - I have
stated time and again and our readers will do well to
remember this timeless investment wisdom as we look
ahead to another year ahead.
In closing I, on behalf of the all the members of RR
group, wish you and your loved ones a happy and
prosperous Deepawali. May all of us have an enriching
despite�low�profitAluminium giant Nalco will invest
over Rs25,000 crore to launch new
projects and undertake major
expansion despite decline in profit
due to the global recession.Despite
adverse market conditions due to the
global meltdown that led to fall in its
net profit to Rs1,272 crore during
2008-09 against Rs1,632 crore in the
previous year, Nalco achieved a
record turnover of Rs5,631 crore last
fiscal compared to Rs5,576 crore
during previous year..
PNB� may� buy� stake� in
Kazakh’s�MetrokombankPunjab National Bank may buy a stake
in small Kazakh lender
Metrokombank.The deal will take
place once several conditions are
met, including a due diligence check
and regulatory approvals.It did not
disclose the size or any other details
of the potential deal.Metrokombank
had assets of $35 million as of 1
August, making it one of the smallest
banks in the oil-rich Central Asian
state.
Glaxo�seen�eyeing�5%�stake�in
Dr�Reddy’sGlaxoSmithKline is in talks to buy a
5% stake in Indian drugmaker Dr
Reddy’s Laboratories in a deal likely
to be valued at $150 million.Dr
Reddy’s will get a lot of mileage in
terms of selling their products in new
markets, while Glaxo will get access
to a basket of generics at a time when
a large numbers of drugs are going off
patent..
IOC�plans�to� invest�Rs�40�bn
in� pipelines� to� cut� transport
costIOC has plans to pump in around Rs
40 billion in pipelines in the next
couple of years to reduce the costs it
include in transporting products by
rail and road.This pipeline plan is in
addition to the projects worth Rs 40
billion already under
implementation.Depending on the
throughput, pipeline transportation
costs 14-70% of the railway freight.
Enhancing the pipeline network will,
therefore, contribute significantly to
IOC`s net profit..
Volkswagen�may�buy�stake�in
Suzuki�Europe’s biggest car marker
Volkswagen could become a
shareholder of its Japanese
competitor Suzuki before the end of
this year, according to the German
auto industry magazine
Automobilwoche.For Suzuki and VW,
it would be a win-win situation.
Suzuki would have access to a major
number of Volkwagen technologies,
while Volkswagen would gain a strong
entry way into the Indian and
southeast Asian markets.
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2.
4.7.
6.
5.
3.
Mutual Fund NewsNews Bytes
October, 2009 [5]
IDFC� MUTUAL� FUNDANNOUNCES� REVISIONSUNDER� ITS� SCHEMEIDFC Mutual Fund has announced thechange in the minimum applicationamount under the systematicinvestment plan facility of its schemeIDFC Small and Mid Cap Equity Fund.The minimum application amount hasbeen revised to Rs. 1000 perinstallment as against the previousamount of Rs. 500 per installment.Furthermore, weekly and fortnightlySIP facilities have also introduced withthe minimum number of installmentsbeing six. The revisions have been ineffect from 17th September, 2009. Theinvestment objective of the scheme isto seek to generate capitalappreciation from a diversifiedportfolio of equity and equity relatedinstruments.
CANARA� ROBECO� MUTUAL
FUND� REVISES� LOAD
STRUCTURE�UNDER�CANARA
ROBECO�F.O.R.C.E�FUND�
Canara Robeco Mutual Fund has
revised the load structure under its
scheme Canara Robeco Financial
opportunities, Retail Consumption
and Entertainment Fund (Canara
Robeco F.O.R.C.E Fund). As per the
revision an exit load of 1 per cent will
be levied on all investments if the
same is redeemed within 1 year from
the date of allotment. However no
exit load will be charged if the
investment is redeemed after 1 year.
The revision has been in effect from
15th September, 2009. The investment
objective of the fund is to provide
long-term capital appreciation by
primarily investing in equity and equity
related securities of companies in the
Finance, Retail & Entertainment
sectors
IDFC� SMALL� AND� MIDCAP
EQUITY� FUND� ANNOUNCES
ITS�CONVERSION�INTO�OPEN
ENDED�SCHEME��
IDFC Mutual Fund has announced the
conversion of its scheme - IDFC Small
and Midcap Equity Fund, into an open
ended equity scheme. The specified
IDFC scheme was to mature in March,
2011 and the scheme would be open
for subscription or continuous offer
period thereafter; however the
conversion of the scheme would pre-
pone the subscription and continuous
offer period. Investors who do not
wish to continue to hold units under
the scheme will have the option to
exit the scheme at the prevailing NAV
and no exit load shall be charged for
these redemptions. The scheme will
convert into open ended scheme with
effect from 11th September, 2009.
IDFC - Small & Midcap Equity Fund,
has the investment objective to
generate capital appreciation from a
diversified portfolio of equity and
equity related instruments.
MIRAE�ASSET�MUTUAL� FUND
LAUNCHES� MIRAE� ASSET
CHINA�ADVANTAGE�FUND
Mirae Asset Mutual Fund has launched
a new open ended fund of funds
scheme, namely, Mirae Asset China
Advantage Fund. The face value of the
new issue will be Rs. 10 per unit and
the new fund offer will close on 09th
October, 2009. The investment
objective of the scheme is to generate
long-term capital appreciation by
investing predominantly in units of
Mirae Asset China Sector Leader
Equity Fund and/or units of other
mutual fund schemes, units of
exchange traded schemes that focus
on investing in equities and equity
related securities of companies
domiciled in or having their area of
primary activity in China and Hong
Kong. The Scheme may also invest a
certain portion of its corpus in debt
and money market securities and/or
units of debt/liquid schemes of
Domestic Mutual Funds, in order to
meet liquidity requirements from time
to time.
EDELWEISS� MUTUAL� FUND
REVISES� FEATURES� UNDER
ITS�SCHEME��
Edelweiss Mutual Fund has decided to
revise the features of Systematic
Investment Plan, Systematic
Withdrawal Plan and Systematic
Transfer Plan under its scheme
Edelweiss Absolute Return Equity
Fund. As per the revision, for daily
frequency the minimum amount of
investment is Rs.100 and the minimum
number of installments is 30. For
weekly, fortnightly, monthly, quarterly
and half yearly frequency the minimum
amount of investment is Rs. 500. The
minimum number of installments is 12
for weekly, fortnightly and monthly
frequency and for quarterly and half
yearly frequency the minimum number
of installments is 4 and 2 respectively.
The revisions have been in effect from
14th September, 2009.
UTI� MUTUAL� FUND
INTRODUCES� DAILY
PERIODICITY� UNDER
SYSTEMATIC� TRANSFER
INVESTMENT�PLAN�
UTI Mutual fund has introduced daily
periodicity under Systematic Transfer
Investment plan. Under this feature
the investors will be eligible to
transfer a fixed amount on daily basis
periodicity. The minimum amount of
transfer will be Rs. 100 per business
day with the minimum number of
transfers bring 20 under this option.
The load structure applicable under
this option would be the same as the
load applicable to respective schemes.
The new plan will be available to the
investors with effect from 22nd
September, 2009.
1.
2.
3.
4.
5.
6.
Security Name Closing price Closing price % Change Market Cap Latest
The Short ArgumentNifty has gone up 93.4% from its 9th
March 2009 lows of 2573.15. This is
one of the best returns the Indian
indices have given in a six month time
frame. How much more upside the
current rally has and if it's advisable
for investors to consider investing
even at these levels. If we break up
this rally into equal parts then the
following is observed:
1. The Nifty went up 80.9%
from 9th March 2009 to 10th June
2009 (3 month period). On 10th June
the Nifty closed at 4655.25 as against
a low of 2573.15 in March.
2. The Nifty has gone up 6.9%
from 10th June 2009 to 18th
September 2009 (3 month period).
On 18th September the Nifty closed
at 4976.05 (new highs for the year) as
against levels of 4655.25 in June.
So, in the last three months, the Nifty
has practically gone no where. The
markets have been largely range
bound with a slight positive bias
(which is indicated by the marginal
rise in the Nifty post June 2009). Thus,
the best part of the current rally was
over in June and after a 7% rise post
June 2009, the Indian markets are
headed for the correction in the next
2-3 months after Deepawali. This
opinion is based on some
fundamental and technical factors
which we would discuss below.
Price Earnings Ratio for the Nifty
The historical and current PE for the
Nifty gives some insight into how
undervalued or overvalued the
markets are currently. Below is the PE
valuation graph for the Nifty from 9th
March 2009 to 18th September 2009.
As shown in the graph below, the
Nifty PE has gone up from 12.2 in
March 2009 to 22.4 currently. These
are expensive valuations considering
the fact that the world is now just
getting hopeful about coming out of
the worst financial crisis and one of
the worst economic crisis. Also, the
following needs to be considered:
In the last nine years, the Nifty PE
has never gone above 28.5. The
Nifty commanded this PE during
times
o f
extreme optimism and during the
peak of liquidity cycles. Thus, the
current PE of 23 again looks
expensive relative to historical data.
The markets are also giving the same
indications and has hardly made any
significant moves in the last three
months. So at times, one needs to be
Nifty has gone up
93.4% from its 9th
March 2009 lows of
2573.15. This is one of
the best returns the
Indian indices have
given in a six month
time frame.
NIFTY P/E CHART
October, 2009 [14]
cautious when everything looks to be
optimistic.
Dollar Index touching lows
At most times, there exists a simple
relation between the Dollar and
Equities. It is as follows: When the
Dollar goes up (an indication of
tightening liquidity), the Equities and
Commodities fall and when the
Dollar goes down (indication of
excess liquidity), the Equities and
Commodities surge higher. Recently,
when some of the major global
markets (including India) touched new
highs for 2009, the Dollar touched
new lows for 2009. Thus, it is very
important to look at the Dollar index
for any trend reversal.
As evident from the chart above, the
Dollar Index has gone down from a
high of 85.9 in March 2009 to a new
low for the year (76.2) on the 17th of
September 2009. What we wish to
emphasize is that the sentiment on
the Dollar is very bearish right now.
The number of traders betting on the
Dollar going down is well over 90%.
Generally, when trends get so bearish,
there is a sharp counter trend which
gets established and even a slight up
move in the index would lead to
traders covering their shorts (which
would lead to further rally). The
Dollar is very oversold in the near
term and might make a temporary
reversal in the next 2-3 months. This
would be negative for equities and
commodities and hence these asset
classes might trend down over the
next 2-3 months.
The INIFTY is currently trading 23%
above its 200 day EMA of 4056. This is
very important in the context of
valuation of the markets. It must be
noted that if the markets are trading
above their 200 day EMA then it is a
bullish indicator. However, whenever
markets have gone way above their
EMA's, there has been a trend
reversal. The chart above shows the
Nifty movement and its 200 Day EMA
for the last one year. Nifty is 23%
above its EMA important and a sign of
an impending reversal based on the
historical Nifty and EMA trend.
N I F T Y
200 Day EMA
When the markets peaked out on 9th
January 2008, the Nifty was trading
25.3% above its 200 day EMA.
Similarly, when the markets corrected
significantly in May 2006, the Nifty
was trading 26.5% above its 200 day
EMA. So whenever the markets trade
more then 23-26% of their 200 day
EMA's a sharp correction follows. The
following is another interesting piece
of data: In March 2009, when markets
made new lows, the Nifty was trading
26% below its 200 day EMA.
Currently, the trend has reversed and
the markets are 23% above its 200
day EMA. So the EMA indicator also
points to overvalued markets in the
near term.
The Long ArgumentWhile we may have our reasons for
remaining bearish in the short term, in
the long term, we remain a big bull on
the Indian growth story. We believe
that a variety of factors will lead India
to a consistent growth path for next
10-20 years and this will herald a long
term long term bull run.
From an emerging market
perspective, there is no big secret to
rapid economic development—
although, as the experience of many
low-income countries attests, getting
the recipe exactly right can be
difficult. In the most simplified form,
the mix would be broadly as follows:
Firstly, a regular pool of domestic
savings is
necessary to fund investment.
Secondly, a system of ownership
rights and market incentives are
needed that
permit the savings to flow into capital
Dollar Index Graph (Source:Bloomberg)
200 DAY EMA
October, 2009 [15]
spending. It also helps considerably to
have the right demographics, with a
young and growing labour force, to
fuel the initial stages of
industrialisation and services
development. Next, virtually no
emerging country has achieved
sustainable high growth without
allowing globalisation and external
trade to play a leading role. The right
environment is also necessary for
steady overall diffusion of growth,
including the rapid diffusion of
technology, political stability and
human capital development. And
finally, it is imperative to do all of this
without having unsustainable
debt,deficits or leverage at the macro
level. We believe India is doing well
according to these criteria, by current
emerging market standards.
Savings & their channeling into
Capital Markets
Perhaps the biggest change of the past
decade has been the significant rise in
domestic saving rates, similar to those
that launched EastAsia’s growth in the
1960s and 1970s. With gross domestic
saving of around 35% of GDP, India is
now well above the emerging market
average, and finds itself able to
support national investment shares
that approach China’s over the last 25
years—shares that led to annual real
growth rates of nearly 10% in the
mainland.
Indians are investing more of their
savings in equities (directly or through
equity products offered
by institutions). Helped
by these inflows,
domestic institutional
investors (DIIs) have
become an important
force. Over FY04-09,
DIIs invested US$50bn
in Indian equities -
nearly 30% more than
foreign institutional
investors (FIIs). We
expect favourable
demographics, rising
incomes and socio-
economic changes to
drive the equity savings
rate higher, as was seen in the USA in
the 1980s and 1990s. The opening up
of the insurance sector to private
players has led to the channeling of
long term savings into equities. In just
seven years, the equity asset base of
life insurance companies has nearly
reached Rs.2,80,000 crore (US$55bn)
-
India has consistently
recorded reasonable rates
of total factor productivity
growth in the past few
decades, at around 0.5%
to 1% per annum. This is
lower than the historical
pace in East Asia or China,
but far better than the
weak performance over
the same period in Latin
America, or the declines in
Africa or the former
Soviet Bloc.
50% more than that of domestic
mutual funds.
Dematerialisation (conversion of
paper shares to electronic records),
tax benefits on equity investments
and advances such as online trading
h a v e
f a c i l i t a t e d
r e t a i l
participation
in equities.
R i s i n g
penetrat ion
of pension
products and
a s s e t
diversification
by pension
funds will also
i m p r o v e
e q u i t y
inflows. The
r e c e n t
removal of
entry load on
equity mutual
funds could create near term
uncertainty as it will lower agents’
commissions, which in turn could
slow the growth of this industry.
However, lower commissions will
mean lower product costs and better
Inflation remains a
unique concern in the
Asian context. And most
importantly, the size of
India’s public debt, and
the magnitude of the
overall fiscal deficit place
the country towards the
far extreme of the
emerging world. None of
these factors has been a
critical impediment to
growth in the past 15
years, and India’s macro
performance has been
strong during the global
turmoil of the past 12
months.
October, 2009 [16]
returns for investors, although the
potential removal of tax benefits on
long-term capital gains on equities
could create problems going forward.
Since 1993, FII inflows have been
steady. New listings and market
outperformance have raised India’s
weight in the MSCI World Index,
aiding incremental flows. FIIs own
16% of Indian equities (worth
US$147bn) and account for 10-15%
of equity volumes, making FII flows a
key driver of short term market
movements. Government
disinvestment and private-sector
listings/fund raising should continue
to attract FII money.
While FIIs dominate the institutional
segment, DIIs already enjoy a
dominant position in 22 of the 50
Nifty index stocks. Our analysis
suggests that FIIs are attracted to
growth, whereas DIIs prefer
established businesses like state
owned firms and multinationals.
Unless the DII investment pattern
changes, stable, predictable businesses
will attract higher flows.
Increase of trade -
Equally impressive has been the sharp
increase in the share of exports and
trade in the economy. From levels of
5% to 7% of GDP through most of
the 1970s and 1980s, exports of
goods and services reached 23% of
GDP last year.
This is still on the low side by
emerging market standards, but
impressive for a country of India’s
size, and higher than in Brazil or
Turkey. And this has still barely tapped
India’s potential for mobilising the
large hinterland of lower-skilled
workers in the rural economy. India
has also consistently recorded
reasonable rates of total factor
productivity growth in the past few
decades, at around 0.5% to 1% per
annum. This is lower than the
historical pace in East Asia or China,
but far better than the weak
performance over the same period in
Latin America, or the declines in
Africa or the former Soviet Bloc. And
with the ongoing structural changes
in the economy, there are good
reasons to believe productivity
growth is rising at the margin. Finally,
Indian demographics are highly
conducive to growth, with falling
dependency ratios and a rising labour
force. Among other things, this points
to the continued availability of a
strong pool of savings in the years to
come.
Increased deregulations
In terms of potential shortcomings,
many investors might point to
bureaucratic restrictions and
regulation; India’s fragmented regional
markets; the poor state of
infrastructure; and the gaps in national
education and literacy. However, it
could be argued that these can serve
as a source of rapid future growth as
bottlenecks are gradually removed, as
happened in China in the 1980s.
Fiscal Deficit – The part to keenly
watch out for – The biggest negative
Perhaps the larger potential risk is the
state of India’s balance sheet. India
does not have the kind of macro
imbalances that affect much of
Central and Eastern Europe, nor is it
a highly stressed boom-bust
commodity economy. However, by
regional standards, its external
current account deficit position
stands out.
Although local firms and households
are still under-leveraged in a long-
term sense, the economy has also just
been through a fairly rapid period of
credit expansion. Inflation remains a
unique concern in the Asian context.
And most importantly, the size of
India’s public debt, and the magnitude
of the overall fiscal deficit place the
country towards the far extreme of
the emerging world. None of these
factors has been a critical impediment
to growth in the past 15 years, and
India’s macro performance has been
strong during the global turmoil of
the past 12 months. However, if there
is one area where India could
stumble, this is probably the most
likely place to look out for.
Our final take
In the short term, we believe the
Indian markets surely are in
overbought zone. It is likely that the
markets will correct over the 2-3
months post Deepawali. It would be
healthy for the markets and would lay
the foundations for the long term
rally which is likely to follow.
It is likely that we are not going to re-
test the March 2009 lows in the near
future. So any correction can be a
good opportunity to consider
exposure to quality stocks. It is always
difficult to predict market movements
and time the markets. But if an
investor buys quality stocks and has
the patience to hold on to his
positions for long term then big gains
can be expected. The best part of the
India growth story is still to come and
the same would apply to the Indian
Stock Markets.
Perhaps the biggest change of the past decade
has been the significant rise in domestic saving
rates, similar to those that launched EastAsia’s
growth in the 1960s and 1970s. With gross
domestic saving of around 35% of GDP,
October, 2009 [17]
October, 2009 [18]
HEALTH INSURANCE IN
India
Treatment of illness at home by
consulting a doctor in your locality
or even in a hospital is not
covered.This means Cold, Cough
,FLU,Viral Fever,Malaria,TB etc are
not covered .If viral fever touches
104 degrees F and Patient has to
be admitted into a hospital (for
more than 24 hours)then this will
be covered and payment will be
made by the insurance company.
October, 2009 [19]
Health insurance is
insurance that pays for
medical expenses. It is
sometimes used more
broadly to include insurance covering
disability or long-term nursing or
custodial care needs. It may be
provided through a government-
sponsored social insurance program,
or from private insurance companies.
It may be purchased on a group basis
(e.g., by a firm to cover its employees)
or purchased by individual
consumers. In each case, the covered
groups or individuals pay premiums
or taxes to help protect themselves
from high or unexpected healthcare
expenses. Similar benefits paying for
medical expenses may also be
provided through social welfare
programs funded by the government.
By estimating the overall risk of
healthcare expenses, a routine finance
structure (such as a monthly
premium or annual tax) can be
developed, ensuring that money is
available to pay for the healthcare
benefits specified in the insurance
agreement. The benefit is
administered by a central
organization such as a government
agency, private business, or not-for-
profit entity.
INTRODUCTION OF HEALTH
INSURANCE INDIA
In mid 80’s most of the hospitals in
India were government owned and
treatment was free of cost. With the
advent of Private Medical Care the
need for Health Insurance was felt
and various Insurance Companies
(New India Assurance, National
Insurance Company, Oriental
Insurance & United Insurance
Company) introduced Mediclaim
Insurance as a product. On August 15,
2007 Prime Minister has announced
Rs 2000 Crores for Health Insurance
for poor citizens. In 2001 with entry
of various private Insurance
companies now the customers have
choice of buying this insurance from
14 Insurance companies. India is the
only country where hospitalization
insurance policy was being sold as
Mediclaim Insurance Policies. Health
Insurance and Mediclaim are two
different names for the same product.
The change has started coming and
now we have started calling it Health
Insurance. ICICI Lombard has even
named it as Health Insurance Policy.
An insurance industry survey in 2008
points out that only 3% of the total
Indian population enjoys coverage
under healthcare policies. This small
number constitutes both public-
funded and private medical insurance.
So, there is an urgent need to
energize the health insurance sector.
This would also help to avert financial
expenses on medical treatment.
In India, public funded healthcare is
available only to a small section of
low income group people and to
government employees only. The
Employee State Insurance Scheme
(ESIS) focuses on the public
healthcare policy for low income
groups. The Central Government
Health Scheme (CGHS) offers
medical treatment to government
employees. However, people can opt
for free medical treatment which is
offered by any of the government-run
hospitals and dispensaries
In the private domain, three types of
Indian health insurance policies are
available. These are grouped as
follows:
• Individual Medical Insurance
• Group Medical Insurance
• Overseas Medical Insurance
Most Indians are privately insured,
which usually means that they opt for
a group medical insurance policy,
which is known as Medicare. These
policies are partially or wholly funded
by the employer. Group medical
insurance offers several benefits over
cover, premium, claims and
reimbursement. Only a limited high
income group has access to individual
medical insurance.
In terms of cover, a private insurance
policy may be divided to cover
specific segments. These include
segments such as basic hospitalization
cover, critical illness and daily medical
treatment reimbursement. Based on
individual requirements, it is possible
to select a cost-effective healthcare
policy that comes with reasonable
cover
Need of Health Insurance
Health Insurance means risk coverage
to provide financial shelter in the
event of Medical treatment incurred
out of sickness or injury.
According to Money Digest Feburary
2003
1 in 3 Person will develop some life
threating cancer
1 in 4 Person will contact heart
disease before they retire
1 in 20 Person Risk the Chance of
having stroke before the age of
seventy
According to the world Bank report
• 85% of the working popoulation
in India do not have RS5,00,000as
instant cash.
• 14% have Rs.5,00,000 instantly
but will face a financial crunch.
• Only 1% can afford to spend Rs
5,00,000 instantly and easily.
• 99% of indians will face financial
crunch in case of any critical
illness.Hence the need of Health
insurance.
What Health Insurance policy covers
in INDIA
Health insurance covers
hospitalization when a patient is in
hospital for more than 24 hours due
to:
• Illness
• Accident
• Surgery requirment
Other Covered
• Room ,Boarding Expenses in
Hospital/Nursing home
• Nursing expenses,intensive care
unit expenses.
• Surgeon,Anessthetist ,Medical
Practitioner,Consultants, Special
fees
• Pre-Hospitalization Expenses
• Post –Hospitalization Expenses
• General Health and Eye
Examination
What Health Insurance policy in
INDIA do not cover
Treatment of illness at home by
consulting a doctor in your locality or
even in a hospital is not covered.This
means Cold, Cough ,FLU,Viral
Fever,Malaria,TB etc are not covered
.If viral fever touches 104 degrees F
and Patient has to be admitted into a
hospital (for more than 24
hours)then this will be covered and
payment will be made by the
insurance company.As far as
individual /families are concerned no
insurance companies is covering
prexisting diseases.
Indian Health Insurance: Tax
Deductions
The Indian government allows for tax
deductions to promote the private
healthcare system. An individual can
get tax benefits up to Rs.15, 000/- as
premium paid to the Indian medical
insurance policy. Complete tax waiver
is also available for those who buy
Indian medical insurance for senior
citizens
Health insurance companies are
offering innovative products to their
customers these days. The latest
product in this line is 'cashless
hospitalisation'. Here individuals do
not have to pay for their hospital bills
in case of hospitalisation; the
insurance company settles the bill
directly. But certain conditions like
the hospital needs to have a tie-up
with the insurance company, the
documents need to be in order etc.
have to be met.
Claim Assessment
In the present Indian context, the
insurers process the claim
themselves. But, after the TPA
regulation coming into vogue and few
of the TPAs getting licences, the
situation is going to change. The
insurers prefer to contract out this
aspect of the service to third parties
specializing in these activities
For minimizing the losses, the
insurers would like to know whether
less expensive, less invasive and
alternative treatment would have an
equally acceptable outcome.
Following initiatives are adopted to
cater to this need
Pre authorization :
• Pre authorization Insurer is
consulted prior to taking medical
treatment.
• Case Management : Medically
qualified staff working for the
insurers manage claims against
the most ususal procedure for a
particular condition.
Eligibility Checks
• Whether premiums have been
paid for the dates of treatment
• Whether the patient is covered
under the policy
• Whether limit is available for the
type of treatment being claimed
• Whether the treatment has been
provided as per the terms of the
policy (should not fall under
exclusion)
• Whether the condition could be
considered as pre-existing when
the policy was undertaken, and
hence not eligible for benefit
payment.
These are the general checks on
eligibility and investigations are
undertaken by the insurers wherever
need is felt.
Health Insurance Companies in India
There are several Health Insurance
Companies in India. These companies
are recognized by Insurance
Regulatory Development Authority
(IRDA). Their names are as follows
• United India Insurance
• ICICI Lombard
• New India Assurance
• Tata AIG
• Royal Sundaram
• Star Allied Health Insurance
• AG Health Insurance Company
• Cholamandalam DBS
• Bajaj Allianz Apollo
• National Insurance Company
October, 2009 [20]
In the present Indian
context, the insurers
process the claim
themselves. But, after
the TPA regulation
coming into vogue and
few of the TPAs getting
licences, the situation is
going to change.
October, 2009 [22]
Le
Ge
nD
in Stock Market Monitor we have covered over 1000 companies appropriately classified intovarious industries (109 in numbers). each industry is given an unique code. the data aims toprovide an insight into the financial health of the companies.
the data of each industry is divided into 3 portions - Full year, Latest Quarter and current data. this database is packed with powerful features like P/e ratio, Market cap., ePS,Sales, net Profit. the fields that we have covered are explained below:
* Year End - the first two digits show the year while the last 2 digits show the calendarmonth. e.g. 0903 shows March 2009 results.
* Equity - the latest subscribed equity capital whether fully paid or not. this figure tallies with the one appearing in balance sheet of the company.
* BV - the Book value per share is calculated by dividing the sum of equity and reserves (excluding revaluation reserve) by the number of equity shares.
* RONW (%) - return on net worth is the figure which appears in the annual report of the company. roWn(%) = { ( net Profit - Preference Dividend ) /(equity paid up + Free reserve excluding revaluation reserve)}* 100
* Net Sales - Sales figure are net of excise duty
* PAT - Profit after tax is the net profit which is calculated without taking into account theincome and expenditure of earlier years. it is before deducting dividend tax
* PATM (%) - this is profit after tax as a percentage of sales.
* Dividend (%) - it is the percentage of the dividend that is declared by the company during the year.
* EPS - earning per share is calculated by reducing the net profit by Preference Dividend and Dividend tax and then dividing it by no of equity shares.
* Market Cap. - Market capitalization is calculated by multiplying the number of equity shares by the current market price.
* PBIDT - this is the Profit before taking into account interest, depreciation and tax.
* PBIDT Margin (%) - this is profit before interest, depreciation and tax (PBiDt) as percent age of sales.
* CMP - current market price is the closing price as on the particular day.
* 52 Week high/low prices - the high and low range is taken for the market price of the last 52 weeks data.
* P/E Ratio - Price earning ratio is the market price divided by the earning pershare (ePS).
* the selected companies are having Market cap greater than rs. 10 crores.
Stock Market
Monitor
Company Name Year Equity RONW Net Net PAT BV Qtr. Net Net PAT PAT TTM CAGR CMP 52W 52W Latest M. Cap. Promter Ended Rs. Cr % Sales Sales% End Sales Sales% Grwth( %) Eps Sales% Rs. high Low PE holding(%)
Company Name Year Equity RONW Net Net PAT BV Qtr. Net Net PAT PAT TTM CAGR CMP 52W 52W Latest M. Cap. Promter Ended Rs. Cr % Sales Sales% End Sales Sales% Grwth( %) Eps Sales% Rs. high Low PE holding(%)
Company Name Year Equity RONW Net Net PAT BV Qtr. Net Net PAT PAT TTM CAGR CMP 52W 52W Latest M. Cap. Promter Ended Rs. Cr % Sales Sales% End Sales Sales% Grwth( %) Eps Sales% Rs. high Low PE holding(%)
Company Name Year Equity RONW Net Net PAT BV Qtr. Net Net PAT PAT TTM CAGR CMP 52W 52W Latest M. Cap. Promter Ended Rs. Cr % Sales Sales% End Sales Sales% Grwth( %) Eps Sales% Rs. high Low PE holding(%)
Company Name Year Equity RONW Net Net PAT BV Qtr. Net Net PAT PAT TTM CAGR CMP 52W 52W Latest M. Cap. Promter Ended Rs. Cr % Sales Sales% End Sales Sales% Grwth( %) Eps Sales% Rs. high Low PE holding(%)
Growth
FULL YEAR LATEST QUARTER CURRENT DATA
STOCK MARKET MONITOR
October, 2009 [27]
D S Kulkarni Dev 0903 25.8 2.36 285.64 -50.18 10.03 166.33 0906 24.87 -76.52 2.14 -72.39 3.73 57.31 59.45 70.5 15.2 34.77 153.38 36.99
Company Name Year Equity RONW Net Net PAT BV Qtr. Net Net PAT PAT TTM CAGR CMP 52W 52W Latest M. Cap. Promter Ended Rs. Cr % Sales Sales% End Sales Sales% Grwth( %) Eps Sales% Rs. high Low PE holding(%)
Company Name Year Equity RONW Net Net PAT BV Qtr. Net Net PAT PAT TTM CAGR CMP 52W 52W Latest M. Cap. Promter Ended Rs. Cr % Sales Sales% End Sales Sales% Grwth( %) Eps Sales% Rs. high Low PE holding(%)
Company Name Year Equity RONW Net Net PAT BV Qtr. Net Net PAT PAT TTM CAGR CMP 52W 52W Latest M. Cap. Promter Ended Rs. Cr % Sales Sales% End Sales Sales% Grwth( %) Eps Sales% Rs. high Low PE holding(%)
Company Name Year Equity RONW Net Net PAT BV Qtr. Net Net PAT PAT TTM CAGR CMP 52W 52W Latest M. Cap. Promter Ended Rs. Cr % Sales Sales% End Sales Sales% Grwth( %) Eps Sales% Rs. high Low PE holding(%)
Company Name Year Equity RONW Net Net PAT BV Qtr. Net Net PAT PAT TTM CAGR CMP 52W 52W Latest M. Cap. Promter Ended Rs. Cr % Sales Sales% End Sales Sales% Grwth( %) Eps Sales% Rs. high Low PE holding(%)
Company Name Year Equity RONW Net Net PAT BV Qtr. Net Net PAT PAT TTM CAGR CMP 52W 52W Latest M. Cap. Promter Ended Rs. Cr % Sales Sales% End Sales Sales% Grwth( %) Eps Sales% Rs. high Low PE holding(%)
Company Name Year Equity RONW Net Net PAT BV Qtr. Net Net PAT PAT TTM CAGR CMP 52W 52W Latest M. Cap. Promter Ended Rs. Cr % Sales Sales% End Sales Sales% Grwth( %) Eps Sales% Rs. high Low PE holding(%)
Company Name Year Equity RONW Net Net PAT BV Qtr. Net Net PAT PAT TTM CAGR CMP 52W 52W Latest M. Cap. Promter Ended Rs. Cr % Sales Sales% End Sales Sales% Grwth( %) Eps Sales% Rs. high Low PE holding(%)
Growth
FULL YEAR LATEST QUARTER CURRENT DATA
STOCK MARKET MONITOR
October, 2009 [35]
S A I L 4130.3999 24.19 43700.80 9.89 6174.8101 67.75 0906 9063.7305 -16.97 1326.09 -27.74 13.72 15.51 173.3 186 55.25 12.66 71579.83 85.82
Company Name Year Equity RONW Net Net PAT BV Qtr. Net Net PAT PAT TTM CAGR CMP 52W 52W Latest M. Cap. Promter Ended Rs. Cr % Sales Sales% End Sales Sales% Grwth( %) Eps Sales% Rs. high Low PE holding(%)
(Rs Crores) on June 09 on Mar 09 on Mar 09 on Dec 08
Sales 180.85 228.22 -20.76 228.22 178.54 27.83
Total Income 182.12 231.61 -21.37 231.61 184.76 25.36
Total Expenditure 135.16 252.55 -46.48 252.55 179.14 40.98
PBIDT 46.96 -20.94 -324.26 -20.94 5.62 -472.60
Interest 9.79 10.48 -6.58 10.48 10.74 -2.42
PBDT 37.17 -59.84 -162.12 -59.84 -5.12 1068.75
Depreciation 16.05 26.35 -39.09 26.35 15.42 70.88
Tax 8.09 -46.02 -117.58 -46.02 -1.67 2655.69
Reported Profit After Tax 13.03 -40.17 -132.44 -40.17 -18.87 112.88
EPS (Unit Curr) 1.95 - - - - -
Dividend (%) - - - - - -
Tourism Finance Corporation of India
Tourism Finance
Corporation of India Ltd.
had been pursuing to expand
its portfolio by extending
facilities to existing hotel
properties for renovation,
upgradation, expansion and
also for setting up new
projects.
October, 2009 [39]
October, 2009 [40]
Equities have risen sharply this
month on the back of heavy
buying by foreign funds. Key
benchmark indices hit a 16
month high following improved
investor sentiments on higher advance
tax payments by companies for the
September 2009 quarter. High beta
came back in a big way and that is
usually a sense that momentum after
flagging off is beginning to pick up again.
Flows have picked up once again and
that’s quite evident with the kind of
stocks which are moving up. Not only
have we seen good run in many of the
strong largecap names but even the
midcaps that are going up are good
quality stocks
A tepid debut of
state-run power firm
NHPC pulled the
market lower on
Tuesday, 1 September
2009 in what was a
choppy trading
session. Weak
European stocks also
dampened investor
sentiment on the very
first day of this month.
Nifty opened at 4662
level and touched the
low of 4576 before
resuming its one side
rally to the highs of
5036. But it could not
sustain itself on the
higher levels and started to fall down
to the current levels. On the other
hand BSE Sensex started the month at
15691 level. During the month it
touched the high of 16944 and low of
15356 level, showing a swing of almost
1500 points in a month’s time.
On sectoral front, all the sectoral
indices add gains to their portfolios.
Metal Index came out as the top
performer, gained over 15 percent in a
month’s time period, outperforming
the bench mark indices. Metals shares
rose on hopes recovering industrial
activity across the globe will boost
demand for metals. Steel Authority of
India (up 4.33%), Ispat Industries (up
5.27%), Hindalco Industries (up
10.91%), JSW Steel (up 7.81%),
National Aluminium Company (up
4.93%), and Bhushan Steel (up 5.91%),
rose. World's eighth biggest steel
maker by output Tata Steel climbed
10.42%. As per reports, its European
unit, Corus will soon restart its plant in
South Wales on the back of rise in
MARKETS AT
16 months HIGH
Market Commentary
On Economic front, the growth in services sector accelerated in August 2009, as a strong
pipeline of new orders helped companies raise prices.
SEBI has issued a code of
conduct for intermediaries,
including distributors, of mutual
funds. Asset Management
Companies (AMCs) have been
told not to deal with non-
compliant intermediaries.
October, 2009 [41]
demand. Auto stocks rose on hopes of
strong sales in the upcoming festive
season. India's top small car maker by
sales Maruti Suzuki (India) rose
11.84%. India's largest tractor maker by
sales Mahindra & Mahindra rose 7.95%.
India's second largest two-wheeler
maker by sales Bajaj Auto rose 14.36%
on reports it has paid advance tax of
Rs 170 crore in the second installment
this year, much higher than Rs 50 crore
in the corresponding period last year.
India's largest truck maker by sales Tata
Motors jumped 8.71%. Tata Motors is
reportedly planning to sell about 10-15
% in subsidiary Tata Motors Finance to
raise funds to reduce debt. The
company has a huge debt largely
related to the purchase of Ford
Motor's marquee brands Jaguar Land
Rover last year, for which it took a loan
of $3.2 billion and other debt to keep
the loss-making unit running. Car sales
in India rose 26% to 120,669 units in
August 2009 over August 2008
boosted by new launches and
availability of cheaper loans. IT stocks
gained on strong US economic data.
US industrial production rose 0.8% in
August 2009, better than expected, and
the data for the prior month was
revised to a 1% gain double the 0.5%
originally reported. US is the biggest
market for Indian IT firms. Cement
stocks rose on bargain hunting after
recent losses. The government has
provided a thrust to the infrastructure
sector in the Union Budget 2009-2010
which may keep cement demand
strong. The government has set a
target of spending $20 billion a year on
road construction.
On Economic front, the growth in
services sector accelerated in August
2009, as a strong pipeline of new
orders helped companies raise prices.
The HSBC Market Business Activity
Index based on a survey of 400 firms
rose to an 11-month peak of 54.9 in
August from 54.7 in July. The index has
been above 50, which separates
expansion from contraction, for four
months. But a slowdown in the
manufacturing sector and falling
exports remains a cause for concern.
The same survey had showed two days
back that the growth in the
manufacturing sector had slowed to a
five-month low in August 2009.
The headline inflation entered the
positive territory after a gap of 13
weeks. Inflation based on the
wholesale price index rose 0.37% in
the year through 23 September 2009
compared to previous week's of 0.12%.
A surge in food price index was
responsible for the rise in the headline
inflation.
SEBI has issued a code of conduct for
intermediaries, including distributors,
of mutual funds. Asset Management
Companies (AMCs) have been told
not to deal with non-compliant
intermediaries. They are to report such
cases to the Association of Mutual
Funds in India (AMFI) and SEBI. The
code of conduct is the outcome to the
SEBI order in June this year
empowering investors through
transparency in payment of
commission and the load structure and
thereby mandating distributors to
disclose all commissions. To curb
commission-driven malpractices, the
code asks intermediaries to avoid
recommending inappropriate products
solely because they get higher
commissions from these. Distributors
should also avoid over-transacting and
churning of investments to earn higher
commissions. During the month,
Mutual Funds have turned net sellers.
Till September 23, 2009 Mutual Funds
have bought 12614 cr and sold 13949
cr in equities.
RBI continued with the sale of bonds
as scheduled in the auction calender.
In the first half of the month, RBI
conducted 2 OMO auctions for
Rs.6000 crore each. In the first week,
RBI purchased securities worth
Rs.2231 crore. In the second week, RBI
offered to purchase relatively liquid
The headline inflation entered
the positive territory after a gap
of 13 weeks. Inflation based on
the wholesale price index rose
0.37% in the year through 23
September 2009 compared to
previous week's of 0.12%. A
surge in food price index was
responsible for the rise in the
headline inflation.
High beta came back in a big
way and that is usually a
sense that momentum after
flagging off is beginning to
pick up again. Flows have
picked up once again and
that’s quite evident with the
kind of stocks which are
moving up.
October, 2009 [42]
securities including 6.07% -2014. In the
second week’s auction, RBI accepted
offers aggregating Rs.4,297.07 crore. In
addition, five state governments also
raised Rs.9,007 crore during this
period and cut off yields ranged
between 8.25% and 8.37%. Treasury bill
auctions witnessed good demand
during the first half of the month
despite higher auction quantum of
Rs.15,000 crore as against Rs.12,500
crore in the previous month. In the 91-
day segment, cut off yield remained flat
at 3.40% in both the auctions of the
month. However market participants
demanded higher yields in 182-day and
364-day segments. 182-day T-bill was
sold at a yield of 3.99% as against 3.93%
in the previous month. Yield on 364 day
T-bill rose even more steeply owing to
a hike in its auction amount to Rs.4,000
crore. During the month 364-day T-bill
was sold at a yield of 4.60% as against
previous month’s yield of 4.34%.
In the secondary
corporate bond market,
Corporate bond yields
rose in the beginning
of the month as a slew
of issuances in the
primary market pulled
up yields in secondary
market as well. With
yields rising to 5 month
high level, market
witness value buying
which helped yields to
ease.
October, 2009 [43]
G-sec yields opened the month on a
firm note as extremely high cut off
yields in the last auction of the previous
month worsened market sentiments.
After charting upwards for two
consecutive days, value buying emerged
and yields retreated from nine and a
half month peak. Announcement of
OMO purchase auction for the third
consecutive week in a row also
underpinned sentiments. However,
announcement of State loan auction
for Rs. 8,350 crore turned sentiments
cautious. Yields also firmed up ahead of
auction of G-sec to the tune of
Rs.12,000 crore with 10-yr yield
nearing the 7.50% mark. However,
better than expected auction results
helped market recover losses. With the
start of the second week, yields
declined considerably as market drew
comfort from lower supply slated for
the rest of September. After falling
sharply on the first day of the second
week, yields inched higher as huge
supply aggregating to Rs.28,350 crore
through issuance of SDL, T-bills and
central G-sec, turned market
sentiments cautious. Moreover market
also remained apprehensive ahead of
results of RBI’s OMO buyback auction
and yields traded in a narrow band.
Despite RBI buying a higher amount of
securities in the second OMO action,
yields remained firm. However towards
the end of the first half of the month,
yields eased from day’s high as G-sec
auction of Rs.11,000 crore witnessed
high demand at lower than expected
yields. RBI also allowed banks to have a
higher percentage of bonds in held to
maturity portfolio. This was an
unexpected positive for the market
and this led to a fall in yields.
RBI’s measures to support the frail
market sentiments by conducting
buyback auctions every week since mid
August clubbed with positive auction
results have led to a fall in yields from
their peaks and has kept further rise in
G-sec yields in check. Moreover, with
bank credit growing at a sluggish pace
of below 15%, bank’s demand for G-sec
has risen significantly. Data released by
RBI in the beginning of the month
indicated that during the month of
August, banks invested over Rs.34,250
crore in G-sec as against Rs.1,199
crore in July. Yields may open the next
month on a positive note riding on the
optimism instilled by strong auction
results. Further, RBI is expected to
release the indicative borrowing
calendar for second half of the year
which may turn market sentiments
cautious.
In corporate bond market, during the
month, State bank of Hyderabad raised
Rs.475 crore through Upper Tier II
bonds maturing in 15 years. These
bonds are rated AAA and carry call
option at the end of 10 year. The
coupon will be stepped up by 50 bps in
case the option is not exercised. These
bonds carry annual coupon of 8.60%.
Power Finance Corporation (PFC)
raised Rs.431 crore through issuance
of bonds maturing in 3 year and 5 year.
3 year bonds carry an annual coupon of
7.75% while company will pay 8.45%
annually for 5 year papers. SAIL raised
Rs.150 crore through issuance of 15-
yrs bonds carrying annual coupon of
8.75%. These bonds are offered under
Separately Transferable Redeemable
Principal Parts option (STRPP) under
which investor can redeem one-third
of the principal amount each at the end
of the 5th, 10th, and 15th years.
In the secondary corporate bond
market, Corporate bond yields rose in
the beginning of the month as a slew of
issuances in the primary market pulled
up yields in secondary market as well.
With yields rising to 5 month high
level, market witness value buying
which helped yields to ease. Easing of
G-sec yields following decline in
auction quantum too pulled down
corporate yields. After intermediate
firming, yields eased on the later in the
month tracking movement in G-sec
yields.
Announcement of OMO purchase auction for the
third consecutive week in a row also underpinned
sentiments. However, announcement of State loan
auction for Rs. 8,350 crore turned sentiments
cautious. Yields also firmed up ahead of auction of
G-sec to the tune of Rs.12,000 crore with 10-yr
yield nearing the 7.50% mark.
October, 2009 [44]
ravel & Tourism growth in 2008
slowed down to just 1%.
Looking beyond the current
crisis, Travel & Tourism is
expected to resume its leading, dynamic
role in global growth, thus posing a
favourable scenario for the Indian Hotels
Company Ltd. Indian Hotels Company,
better known as the Taj group of Hotels,
was set up in the early twentieth century,
has since emerged as one of the leading
players in the domestic hospitality sector
in India and overseas. Recently it has
announced to acquire Sea Rock Hotel in
Mumbai for Rs 680 crore. IHCL will pick
up an 85% stake in ELEL, the company
which holds a long-term sub-lease of the
land on which Sea Rock is built. IHCL will
demolish Sea Rock and develop a
hospitality structure, which would also
house a convention centre, besides
commercial and retail outlets. Technically
Technical
AnalysisIndian Hotel
CMP Target
76 88
Sector Sector Outlook
Hotels bullish
Technically the counter has
been witnessing a continuous
upward momentum after
bottoming out 34-35 level in
the beginning of this year
T
Indian Hotel
the counter has been witnessing a
continuous upward momentum after
bottoming out 34-35 level in the
beginning of this year. This stock has
consolidated quite a bit and is now
standing at its resistance at Rs 80. It has
to trade above the Rs 82-83 band
consistently with higher volumes for the
bulls to really return with a great deal of
conviction but coming 6 months we
expect it to trade in the triple digit mark,
close to Rs 110-115 levels. As per other
technical indicators it is trading well
above the crossover of 9 & 18 days WMA
and 50 days SMA. 14 Days RSI is trading
at 65 level, has come down after touching
the high of 75. This indicates the counter
is bullish in medium to long term and in
the near term the counter has to breach
the resistance to touch its next
resistance of 80-82 level. Overall the
trend remains positive for the counter. So
any dip in price levels from here will be
taken as an opportunity to make fresh
long position.
History has proven that for men of
resilience, challenging times can be times
of opportunity. Hotel Leelaventure Ltd
has a philosophy of carefully analyzing
market challenges and implementing
strict fiscal control and smart planning to
keep the fluctuations in the short term
cycles in perspective. The company
entered North India in 2009 with the
opening of The Leela Gurgaon Hotel and
Residences in January, the first hotel
management contract with. The
Ambience Group; and it opened The
Leela Palace Udaipur in April 2009, the
first hotel in the India's golden triangle.
They are forging ahead, committed to
opening two more Leela Palace Hotels in
Chennai and New Delhi by 2010. During
the year, the Company bought back
FCCBs of face value Euro 12.2 million
and US$ 33 million at a discount of Rs
64.64 crore. During the year, the
Company raised Rs 150 crore thru issue
of non-convertible debentures: Rs 90
crore at 12.5% due December 18, 2013
and Rs 60 crore at 13% due December
30, 2013. Technically Hotel Leela on the
charts has been consolidating since quite
some time and it has formed a triangle
pattern on the charts. The stock has just
managed to get out of this pattern. It is
standing at its strong support of 35 level,
came down after touching the high of 40
in the last few days. The RSI is trading at
64, indicates stock has enough scope for
uptrend before entering into overbought
zone. However it is trading above 50 days
and 200 days SMA and taking support at
9 days WMA. MACD is in positive zone.
The Stock can see
some upside from these levels with
immediate resistance as well as target at
43-45. Therefore it is advisable to use
every downfall to make long positions in
the counter for significant gains
VBC Ferro Alloys, a Multi-Crore and fast
growing Industrial Conglomerate with an
enviable performance committed to
leadership and growth through
excellence in quality, having interests in
Ferro Alloys, Deep Sea Fishing and
Marine Food Exports and Financial
Services as a part of its VISION 2010 to
accomplish the Group's philosophy is
now diversifying into Power, Mining and
Coal Washeries. The board of VBC Ferro
Alloys has reviewed performance of the
company and has given in principle
approval for the proposal of merger of
Orissa Power Consortium (OPCL) with
VBC Ferro Alloys, which is one of the
promoters of OPCL, subject to the
approvals from concerned authorities.
Long term outlook of your company
seems to be encouraging. The company
had already invested significant funds in
445 MW Natural Gas Based Power
Project. Company is actively engaged in
setting up of 65 MW coal based power
plant to enable it to perform better with
higher and improved
quality production resulting in higher
realization and earnings. Technically, the
counter is trading in a continuous
upward trend since the beginning of
2009, after making a strong bottom at 84
levels in December 2008. Currently it is
trading at an all time high level of 505
level, well above 50 and 200 days SMA
indicating the medium to long term
outlook to be positive, In short run also,
the counter is trading well above the
crossover of 9 & 18 days WMA indicating
the positive momentum to continue in
the near term. 14 days RSI is trading at
73, indicating that it is already into the
overbought zone. This may bring some
correction in prices of the counter. The
primary trend for the stock is bullish;
MACD is trading in positive zone, so any
dip in price levels from here will be taken
as an opportunity to make fresh long
position. A strong support is placed at
440-450 level. One should take this
counter as a good investment
opportunity for target of 580 and then
625.
Hotel LeelaVenture Ltd
CMP Target
39 45 to 48
Sector Sector Outlook
Hotels bullish
VBC Ferro Alloys
CMP Target
485 580 to 625
Sector Sector Outlook
Steel Alloys bullish
VBC Ferro Alloys
Hotel Leela
Investor Education
Picking Diamonds From A Stone
Field Strategies to Pick stocks
You can go your whole life
without ever buying a single
stock. But until you do, you
won't really understand the full
potential of investing -- and the
rewards that come with it.
For beginners, mutual funds give you a
great way to get started. With just a
few hundred dollars, you can invest in
a mutual fund that will give you
instant access to thousands of
different stocks. The diversification
that comes with broad based mutual
funds brings with it a measure of
security. You may still lose a lot if the
whole market goes down, but if one
particular company gets hurt, it won't
have a huge impact on your overall
portfolio.
Conversely, though, buying individual
stocks can be a lot more rewarding.
You can earn far greater returns from
individual stocks than you'll ever find
from a diversified mutual fund -- if you
pick the right stocks.
So how should you pick?
Investing, like most other things,
requires that you have a general
philosophy about how to do things in
order to avoid careless errors. So
before you dig deeper into some
specialized investing strategies, you
should first understand the various
methods people use to analyze
stocks. While investing is not nearly as
difficult as these other challenges, you
certainly need a considered plan
before investing your hard earned
savings.
Fundamental Analysis -- Buying a
Business (Value, Growth,
Income, GARP, Quality)
Many people rightly believe that when
you buy a share of stock you are
buying a proportional share in a
business. As a consequence, to figure
out how much the stock is worth, you
should determine how much the
business is worth. Investors generally
do this by assessing the company's
financials in terms of per-share values
in order to calculate how much the
proportional share of the business is
worth. This is known as "fundamental"
analysis by some, and most who use it
view it as the only kind of rational
stock analysis.
Although analyzing a business might
seem like a straightforward activity,
there are many flavors of fundamental
analysis. Investors often create
oppositions and subcategories in
order to better understand their
specific investing philosophy. In the
end, most investors come up with an
approach that is a blend of a number
of different approaches. Many of the
distinctions are more academic
inventions than actual practical
differences. For instance, value and
growth have been codified by
economists who study the stock
market even though market
practitioners do not find these labels
to be quite as useful. In the following
descriptions, we will focus on what
most investors mean when they use
these labels, although you always have
to be careful to double-check what
someone using them really means.
Picking by Value
A cynic, as the saying goes, is
someone who knows the price of
everything and the value of nothing.
An investor's purpose, though, should
be to know both the price and the
value of a company's stock. The goal
of the value investor is to purchase
companies at a large discount to their
intrinsic value -- what the business
would be worth if it were sold
tomorrow. In a sense, all investors are
"value" investors, in that they want to
buy a stock that is worth more than
what they paid. Typically, those who
describe themselves as value
investors are focused on the
liquidation value of a company, or
what it might be worth if all of its
assets were sold tomorrow. However,
value can be a very confusing label as
the idea of intrinsic value is not
specifically limited to the notion of
liquidation value. Novices should
understand that although most value
investors believe in certain things, not
all who use the word "value" mean
the same thing.
The person viewed as providing the
foundation for modern value investing
is Benjamin Graham, whose 1934
book Security Analysis (co-written
with David Dodd) is still widely used
today. Other investors viewed as
serious practitioners of the value
approach include Sir John Templeton
and Michael Price. These value
investors tend to have very strict,
absolute rules governing how they
purchase a company's stock. These
rules are usually based on
relationships between the current
market price of the company and
certain business fundamentals.
Examples include:
* Price-to-earnings ratios (P/E)
below a certain absolute limit.
* Dividend yields above a certain
absolute limit.
* Book value per share at a certain
level relative to the share price.
* Total sales at a certain level relative
to the company's market value.
October, 2009 [46]
Picking by Growth
Growth investing is the idea that you
should buy stock in companies whose
potential for growth in sales and
earnings is excellent. Growth
investors tend to focus more on the
company's value as an ongoing
concern. Many plan to hold these
stocks for long periods of time,
although this is not always the case.
At a certain point, "growth" as a label
is as dysfunctional as "value," given
that very few people want to buy
companies that are not growing. The
concept of growth investing
crystallized in the 1940s and the
1950s with the work of T. Rowe Price,
who founded the mutual fund
company of the same name, and Phil
Fisher, who wrote one of the most
significant investment books ever
written, “Common Stocks and
Uncommon Profits”.
Growth investors look at the
underlying quality of the business and
the rate at which it is growing in
order to analyze whether to buy it.
Excited by new companies, new
industries, and new markets, growth
investors normally buy companies
that they believe are capable of
increasing sales, earnings, and other
important business metrics by a
minimum amount each year. Growth
is often discussed in opposition to
value, but sometimes the lines
between the two approaches become
quite fuzzy in practice.
Picking by Income
Although common stocks are widely
purchased today by people who
expect the shares to increase in
value, there are still many people who
buy stocks primarily because of the
stream of dividends they generate.
Called income investors, these
individuals often entirely forgo
companies whose shares have the
possibility of capital appreciation in
favor of high-yielding, dividend-paying
companies in slow-growth industries.
These investors focus on companies
that pay high dividends, like utilities
and real estate investment trusts
(REITs), although many times they
may invest in companies undergoing
significant business problems whose
share prices have sunk so low that
the dividend yield is consequently
very high.
Picking by GARP
GARP is an acronym for growth at a
reasonable price. The world
according to GARP investors
combines the value and growth
approaches and adds a numerical
slant. Practitioners look for
companies with solid growth
prospects and current share prices
that do not reflect the intrinsic value
of the business, getting a "double play"
as earnings increase and the price-to-
earnings (P/E) ratios at which those
earnings are valued increase as well.
Former Fidelity fund manager Peter
Lynch is GARP's most famous
practitioner.
One of the most common GARP
approaches is to buy stocks when the
P/E ratio is lower than the rate at
which earnings per share can grow in
the future. As the company's earnings
per share grow, the P/E of the
company will fall if the share price
remains constant. Since fast-growing
companies normally can sustain high
P/Es, the GARP investor is buying a
company that will be cheap
tomorrow if the growth occurs as
expected. If the growth does not
come, however, the GARP investor's
perceived bargain can disappear very
quickly.
Because GARP presents so many
opportunities to focus just on
numbers instead of looking at the
business, many GARP approaches, like
the nearly ubiquitous PEG ratio and
Jim O'Shaughnessy's work in What
Works on Wall Street, are really
hybrids of fundamental analysis and
another type of analysis --
quantitative analysis.
Picking by Quality
Most investors today use a hybrid of
value, growth and GARP approaches.
These investors are looking for high-
quality businesses selling for
"reasonable" prices. Although they do
not have any shorthand rules for
what kind of numerical relationships
there should be between the share
price and business fundamentals, they
do share a similar philosophy of
looking at the company's valuation
and at the inherent quality of the
company -- measured both
quantitatively by concepts like return
on equity (ROE) and qualitatively by
the competence of management.
Many of them describe themselves as
value investors, although they
concentrate much more on the value
of the company as an ongoing
concern rather than on liquidation
value.
Warren Buffett of Berkshire
Hathaway is probably the most
famous practitioner of this approach.
He studied under Benjamin Graham
at Columbia Business School, but was
eventually swayed by his partner,
Charlie Munger, to also pay attention
to Phil Fisher's message of growth
and quality.
Arguments against fundamental
analysis
Those who do not use fundamental
analysis have two major arguments
against it. The first is that they believe
that this type of investing is based on
exactly the kind of information that
all major participants in publicly
traded markets already know, so
therefore it can provide no real
advantage. If you cannot get a leg up
by doing all of this fundamental work
understanding the business, why
bother? The second is that much of
the fundamental information is
"fuzzy" or "squishy," meaning that it is
often up to the person looking at it to
interpret its significance. Although
gifted individuals can succeed, this
group reasons, the average person
would be better served by not paying
attention to this kind of information.
Quantitative Analysis - Buying
the Numbers
Pure quantitative analysts look only at
numbers with almost no regard for
the underlying business. The more
October, 2009 [47]
you find yourself talking about
numbers, the more likely you are to
be using a purely quantitative
approach. Although even fundamental
analysis requires some numerical
inputs, the primary concern is always
the underlying business, focusing on
things like management's expertise,
the competitive environment, the
market potential for new products,
and the like. Quantitative analysts
view these things as subjective
judgments, and instead focus on the
incontrovertible objective data that
can be analyzed.
One of the principal minds behind
fundamental analysis, Benjamin
Graham, was also one of the original
proponents of this trend. While
running the Graham-Newman
partnership, Graham exhorted his
analysts to never talk to management
when analyzing a company and focus
completely on the numbers, as
management could always lead one
astray.
In recent years as computers have
been used to do a lot of number-
crunching, many "quants," as they like
to call themselves, have gone
completely native and will buy and sell
companies based on a purely
quantitative basis, without regard for
the actual business or the current
valuation. That's a radical departure
from fundamental analysis. "Quants"
will often mix in ideas like a stock's
relative strength, a measure of how
well the stock has performed relative
to the market as a whole. Many
investors believe that if they just find
the right kinds of numbers, they can
always find winning investments. D.E.
Shaw is one example of a firm that
uses sophisticated mathematical
algorithms to find minute price
discrepancies in the markets.
Size Picking
Some investors purposefully narrow
their range of investments to
companies of a certain size, measured
either by market capitalization or by
revenue. The most common way to
do this is to break up companies by
market capitalization and call them
micro caps, small caps, mid caps, and
large caps, with "cap" being short for
"capitalization." Different size
companies have shown different
returns over time, with the returns
being higher the smaller the company.
Others believe that because a
company's market capitalization is as
much a factor of the market's
excitement about the company as it is
the size, revenues are a much better
way to break up the company
universe.
The majority of publicly traded
companies fall in the micro or small
categories. Some statisticians believe
that the perceived outperformance of
these smaller companies may have
more to do with "survivor" bias than
actual superiority, as many of the
databases used to do this
performance testing routinely
expunged bankrupt companies until
pretty recently. Since smaller
companies have higher rates of
bankruptcy, excluding this factor helps
"juice" up their historical returns as a
result. However, this factor is still
being debated.
Screen-based picking
Many quantitative analysts use
"screens" to select their investments,
meaning that they use a number of
quantitative criteria and examine only
the companies that meet these
criteria. As the use of computers has
become widespread, this approach
has increased in popularity because it
is easy to do. Screens can look at any
number of factors about a company's
business or its stock over many time
periods.
While some investors use screens to
generate ideas and then apply
fundamental analysis to assess those
specific ideas, others view screens as
"mechanical models" and buy and sell
based purely on what comes up on
the screen. These investors claim that
using the screens removes emotions
from the investing process. (Those
who do not use screens would
counter that using a screen
mechanically also removes most of
the intelligence from the process.)
One of the proponents of using
screens as a starting point is Eric
Ryback, and one of the most famous
advocates of screens as a mechanical
system is James O'Shaughnessy.
Momentum picking
Momentum investors look for
companies that are not just doing
well, but that are flying high enough to
get nosebleeds. "Well" is defined as
either relative to what investors were
expecting or relative to all public
companies as a whole. Momentum
companies often routinely beat
analyst estimates for earnings per
share or revenue, or have high
quarterly and annual earnings and
sales growth relative to all other
companies, particularly when the rate
of this growth is increasing every
quarter. This kind of growth is viewed
as a sign that things are really, really
good for the company. High relative
strength is often a category in
momentum screens, as these
investors want to buy stocks that
have outperformed all other stocks
over the past few months.
CANSLIM
CANSLIM is a system pioneered by
William J. O'Neil that is a hybrid of
quantitative analysis and technical
analysis, detailed in his book How to
Make Money in Stocks. The “C” and
“A” of the CANSLIM formula tell
investors to look for companies with
“accelerating Current and Annual
earnings. The “N” stands for New, as
in new products, new markets, or new
management. “S” stands for Small
capitalization and big volume demand.
L tells investors to figure out whether
the company is a Leader or Laggard. I
has them look for Institutional
sponsorship, and “M” concentrates on
the direction of the Market.
CANSLIM includes components of
the next type of analysis --technical
analysis.
Arguments against quantitative
analysis
Because quantitative analysis hinges
October, 2009 [48]
on screens that anyone can use, as
computing horsepower becomes
cheaper and cheaper many of the
pricing inefficiencies quantitative
analysis finds are wiped out soon
after they are discovered. If a
particular screen has generated 40%
returns per year and becomes widely
known, and if lots of money flows into
the companies that the screen
identifies, the returns will start to
suffer.
As "fuzzy" as fundamental analysis
might be, there are often times that
knowing even a little about the
company you are buying can help a
lot. For instance, if you are using a
high-relative-strength screen, you
should always check and see if the
companies you find have risen in price
because of a merger or an
acquisition. If this is the case, then the
price will probably stay right where it
is, even if the "screen" you used to
pick this company has generated high
annual returns in the past.
Technical Analysis - Buying the Chart
What would you do if you truly
believed that all information about
publicly traded companies was
efficiently distributed and that
nobody could get an edge on anyone
else by either understanding the
business or analyzing the numbers?
You might consider simply giving up
on beating the market's returns by
buying an index fund. Some investors
have taken an alternate route,
attempting to create a set of tools
that might tell them what other
investors thought about a stock at
any given time, particularly looking
for the footprints of large
institutional investors that tend to
cause the most extreme price
changes. Investors who focus on this
kind of psychological information call
themselves technical analysts and
believe that charts can sometimes
provide insight into the psychology
surrounding a stock. Although there
are plenty of pure chartists, some
investors use charts just to time
investments after looking at them
from a fundamental or quantitative
perspective.
There is no set of clearly defined
approaches to technical analysis, but
there are a number of different tools.
The most important indicators seem
to be specific chart formations that
show certain price movements at
times when trading volume is at a
certain level. The most common kinds
of charts include point and figure
charts, logarithmic charts, and
Japanese candlesticks, to name a few.
Arguments against technical analysis
Technical analysis assumes that
certain chart formations can indicate
market psychology about either an
individual stock or the market as a
whole at key points. However, most
of the statistical work done by
academics to determine whether the
chart patterns are actually predictive
has been inconclusive at best, as
detailed in Burton Malkiel's A
Random Walk Down Wall Street.
Much of the faith in technical analysis
hinges on anecdotal experience, not
any kind of long-term statistical
evidence, unlike certain quantitative
and fundamental methodologies that
have been shown in many instances
to be pretty predictive. Critics of
technical analysis feel that it is
basically as useful as reading tea
leaves.
Trading
As trading commissions have fallen,
and more and more people have
gained access to instantaneous data
about stock prices, trading has
become more and more popular, and
very likely much too popular. Traders
normally use a hodge-podge of
fundamental, quantitative and
technical techniques with a short-
term orientation. Trading tends to be
a highly charged experience where
one looks to make a few percentage
points from each trade. Although
widespread, trading is far from a
systematized, philosophical body of
knowledge that is easily explained in a
few paragraphs.
Many novice investors, lulled by the
apparently easy casino-like gains
possible in trading, tend to lose a lot
of money before they realize that
when there are thousands of other
traders out there looking for the
same things, it is often those who are
fastest, have the most experience, and
own the best equipment that make
money, and that's normally not the
people just starting out. All traders
emphasize that successful trading
requires careful attention, discipline
and a lot of work, so anyone who
thinks that he can use a break in
between meetings to make a fortune
might want to reconsider.
Arguments against trading
Trading is clearly a time consuming
adventure. Although there are a
number of very famous and
successful traders, many individuals
ignore the fact that these traders are
well equipped to trade and have all
day to do so. Given the time and
effort most successful traders put
into their trading, the potential for
amateurs to reap the same rewards
with less effort and fewer resources
is very low. With so much money
competing in the one-day to one-year
investment time frame, an individual
with a minimal amount of time will
probably be more successful finding
businesses to own for the long term
and not trying to engage in high-
octane, almost gambling-like behavior.
Final Words
At this point you know basics whys of
all the methods. You've gained a
general sense of investing
philosophies without fancy acronyms,
too. We've run down the basics on
fundamental, quantitative, and
technical approaches to pick stocks.
Chances are, like most investors,
you'll find elements of several that
suit your investing style. As your
education continues, you'll develop
your own investing philosophy that
targets your needs and goals with
bull's-eye precision.
October, 2009 [49]
SilverSilver
The net supply of silver from aboveground stocks dropped by a robust 14 percentin 2008 to 151.7 Moz. The decline was mainly due to lower net government salesand a drop in scrap supply.
Silver is a commodity with a long history and
a promising future
Silver's unique properties make
it a very useful 'Industrial
Commodity', despite it being
classed as a precious metal.
Demand for silver is built on three
main pillars; industrial uses,
photography and Jewellery &
silverware Silver is a commodity
with a long history and a promising
future, thanks to its dual role as an
industrial metal and an asset offering
a store of value. Fabrication demand
for silver has increased steadily over
the past several years with the
development of new products and
technologies that exploit its natural
properties, particularly as a biocide
and superior electrical conductor.
More recently, demand for physical
silver has been driven by investors,
reflecting its traditional appeal, along
with gold, as a safe haven investment
in times of economic uncertainty.
According to World Silver Survey
2008, total global silver fabrication
grew 1 percent in 2007 to 843.7 Moz.
Most notably, industrial applications, a
key constituent of the overall demand
complex, posted an impressive 7
percent gain to 455.3 Moz, recording
the sixth consecutive year of growth
in this category.
In fact, in the period since the
technology related slump in 2001,
industrial applications have added an
impressive 120.1 Moz to silver
demand. A key factor behind the
increase last year was the more than
6 percent rise in the electrical and
electronics sector, which broke the
200 Moz mark for the first time.
India, China and the United States
accounted for 70 percent of the
world rise in all industrial uses, while
Germany, Italy and France also posted
gains. Total industrial demand reached
54 percent of total global silver
fabrication demand in 2007.
DemandTotal global silver fabrication slipped a
modest 0.9percent in 2008 to 832.6
Moz. Even though industrial demand
dipped slightly by 1.4 percent to
447.2 Moz, the 2008 performance
was the second only to 2007, with
most of the loss occurring in the 4th
quarter of 2008. Jewelry fabrication
dropped by 3.2 percent to 158.3 Moz
in 2008, the product of weaker off-
take in Italy and Thailand. Growth in
this sector was most pronounced in
India, China and Russia. Silverware
demand fell by 2 percent in 2008 to
57.3 Moz, as losses in western
markets were partially offset by gains
in India, which witnessed a 7 percent
rise, as well as Russia, which also
enjoyed growth in consumption last
year.
World Silver Demand
Supply
Global silver mine production grew
by 2.5 percent in 2008, driven by
strength in the gold and lead/zinc by-
product sectors to 680.9 Moz,
representing the sixth year of
consecutive growth and 77 percent of
total supply last year (see the
Summary Table on page 1). Of note,
Bolivia’s output more than doubled
over 2007’s performance, and Russia
experienced a 24 percent gain in
mine supply last year. Peru was again
the world’s biggest silver mining
country in 2008, followed in the
rankings by Mexico, China, Australia,
and Chile. Last year, silver generated
at primary mines posted a 1 percent
decline to account for 28 percent of
total mine production. Cash costs at
primary silver mines rose to US$4.53
per ounce in 2008, due to inflationary
input cost pressures and diminishing
base metal by-product credits.
The net supply of silver from
aboveground stocks dropped by a
robust 14 percent in 2008 to 151.7
Moz. The decline was mainly due to
lower net government sales and a
drop in scrap supply. Scrap volumes
fell to an 11 year low of 176.6 Moz.
De-hedging reduced the overall
producer hedge
position by 5.6 Moz
last year.
A further decline in
Russian disposals, as
well as the absence of
any sales from China
and India, resulted in a
27 percent fall in
government sales in
2008 to 30.9 Moz.
Silver Production
Global silver mine
production reached a
fresh record high in
2008 totaled 680.9 Moz, driven by
strong production increases in
October, 2009 [50]
Bolivia, Russia, and Peru. Peru was the
world’s biggest silver mining country
in 2008, followed in the rankings by
Mexico, China, Australia, and Chile.
Top 20 silver producing
countries (millions of ounces)
Technical outlookIn the bigger picture, whole medium
term rise from 8.4 is still in progress
and could probably continue towards
next key resistance level at 19.55.
Nevertheless, we're not seeing a clear
impulsive structure from 8.4 yet and
hence, we'd treat such rise as part of
the long term, wide range,
consolidation pattern that started at
21.44 back in Mar 08. In other words,
current rise from 8.4 is expected to
be limited by 19.55/21.44 resistance
zone and bring at least one more
medium term fall. On the downside,
break of 12.435 support is needed to
confirm that rise from 8.4 has
completed. Otherwise, medium
term outlook will remain bullish
even in case of deep pullback.
Silver gathered momentum and
was carried higher on the back of
stronger oil and copper prices,
touching a high of 27960. The
counter is trading at 27137 level
and has fallen down after showing
a continuous upside rally since
last couple of days. After a prolonged
phase of upside, the counter touched
a high of 27960 and came back to the
level of 27185. As per technical
indicators, it is trading well above the
10, 20 and 50 days SMA indicating the
trend to remain bullish. But 14 days
RSI is trading at 76 indicating the
counter is already in over bought
zone. Therefore we may see some
correction in prices in the coming
days. Positive MACD, and stochastic
also indicates the positive trend to
continue in long run. Now the
immediate resistance is placed at
28000-28050 level, Silver may witness
some profit booking after the run up
in last few sessions. We recommend
selling silver from the current level
for the target of 26900 and below
that 26500. Long term investors can
re – enter at lower levels1 Peru 118.3
2 Mexico 104.2
3 China 82.8
4 Australia 61.9
5 Chile 44.9
6 Poland 38.9
7 Russia 36.1
8 United States 36
9 Bolivia 35.8
10 Canada 21.5
11 Kazakhstan 20.2
12 Turkey 10.1
13 Argentina 9.9
14 Sweden 8.4
15 Indonesia 8
16 Morocco 7.8
17 India 7.1
18 Guatemala 3.2
19 Iran 3.2
20 South Africa 2.7
World Silver Supply and Demandt
(in millions of ounces)2001 2002 2003 2004 2005 2006 2007 2008
Supply
Mine Production 606.2 593.9 596.6 613 637.1 641.3 664.2 680.9
Net Government Sales 63 59.2 88.7 61.9 65.9 78.2 42.3 30.9
Query TimeWhat is the right age tostart planning for one’sretirement?
What are your views onthe high fiscal deficit ofthe government. Is itlikely to hurt growth inthe coming days?
Are there any insuranceplans for specificpurposes or needs?
October, 2009 [54]
needs Hence, it is advisable to think
about retirement in the early earning
years when there is no pressure to
support a growing family and you
don’t have high medical expenses.
There is a “cost of delay” in terms of
increase in the initial premiums
required, even if the pension planning
is delayed by a year. For example, a 30
year-old man with
a target
retirement fund
of Rs.15 lakh,
wishing to retire
at the age of 58,
has to start
investing at
Rs.11,876 per annum. However, if he
delays this by one year and starts
investing at the age of 31, he will have
to pay Rs.12,995 per annum for the
same accumulated amount of Rs.15
lakh (increase of 9.43%). This is based
on a net investment return of 6% and
an assumed increase in income of 5%.
I have 100 shares of Biocon
purchased at a price of Rs.180.
What are the prospects of the
stock. Should I book profits or
continue to hold or add some
more. I can hold the stock for 2
years.
Madhusudan, Patna
Biocon has risen from the lows of
Rs.90 to the recent peak at Rs.255.
The stock has been consolidating
with an upward bias since the
beginning of June. Short term targets
for the stock are Rs.260 – Rs.275.
Short-term investors can buy in
declines as long as the stock trades
above Rs.217 – Rs.226. It would
however be better to be cautious
from a medium term perspective
since the stock is at the key
resistance zone between Rs.243 –
Rs,257. If the stock fails to break the
upper boundary of this range in the
coming 10-15 days, a sideways
consolidation between Rs.200 and
Rs.250 can take place for a few more
months. Long term target on a strong
weekly close beyond Rs.257 is Rs
332.
I had bought 50 shares of Axis
Bank at an average price of
Rs.740. How does the stock look
for a period of 1-2 years?
Axis Bank has a strong resistance in
the price band of Rs.925 and Rs.975
and the stock could struggle to move
beyond this zone. The stock made a
high at Rs.974 and has been
consolidating since then. Short term
targets on a break out above Rs.970
are Rs.1011 and Rs.1061. If the stock
manages to sustain above Rs.970, it
can move to its former peak of
Rs.1291 over the medium term.
Investors should however be cautious
till the key intermediate term
resistance at Rs.970 is taken out. It
can spend some more time
consolidating in the range of Rs.700
and Rs.950 before it attempts to
surpass its previous high.
Can you suggest me some
mutual fund schemes for an
investor with a low risk appetite?
Sujoy, Siliguri
Ideally you should look at a
combination of funds. Majority of you
money should be in debt funds. Some
of the good funds in this category are
ICICI Prudential Income
Opportunities fund, Canera Robeco
CIGO, UTI – MIS – Advantage fund,
ICICI Prudential Income Multiplier
fund. A small part of you portfolio
should be allocated to equity funds.
Some good equity funds are DSP
Blackrock Top 100 fund, HDFC – Top
200, Kotak 30 fund, Principal Large
Cap.
What are your views on the high
fiscal deficit of the government.
Is it likely to hurt growth in the
coming days?
Kaushal, Raipur
High fiscal deficit is clearly a cause for
worry. But, you should understand
that the deficit is due to various
stimulus packages that the
government has undertaken to
promote growth in the current
slowdown. At present the deficit is
being financed as there is plenty of
capital available in the international
markets. The
government is using
this window to
finance growth.
With situation
returning to
normal, it will
curtail its
expenditure to return back to a more
acceptable level of deficit. That said,
the deficit is definitely a drag on
growth, but, you would do well to
understand that if the government
had not undertaken these measures
the fall in growth would have been
much more and there would have
been sharp rise in unemployment. So,
in a proper cost-benefit analysis, the
present level of deficit is a necessary
evil.
Are there any insurance plans
for specific purposes or needs?
Aanchal, Bengaluru
Yes, one can buy an insurance plan for
particular needs. For example,
pension plans help one save and get
regular income at the time of
retirement; child plans help one save
and get benefits to meet a child’s
higher education, marriage or
business needs; term assurance plans
help protect a family against loss of
income upon the policyholder’s
unfortunate death;
endowment/whole life plans help one
get both protection and savings
benefits; and unit-linked plans help
one save and get market-related
benefits. Depending upon individual
need and risk appetite, one can
choose an insurance plan.
A 30 year-old man with a target retirement fund
of Rs.15 lakh, wishing to retire at the age of 58,
has to start investing at Rs.11,876
October, 2009 [55]
October, 2009 [56]
Iam a regular reader of your
magazine. I used to read it from
my library when I was a student
about five years back. Since then I
have become a subscriber and
continue to enjoy reading your
magazine. After all these years this is
my first correspondence with you. That
is because of the absolutely excellent
cover story in the September issue.
What an insightful and brilliant article.
I must say I was thoroughly impressed.
I had never given an in depth thought
to insurance as such an important part
of investment portfolio. I heartily thank
you for giving an average investor like
me such a wonderful perspective
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You recommendations were excellent.
In fact, they were unbiased unlike many
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interests in mind without any regard
for their client. After reading the
article, I bought Amulya Jeevan policy
due to your unbiased advice. The
advice about the policy being most
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was something absolutely unique. I
could not find it anywhere.
Please continue giving such article for
the betterment for all investors.
Aanchal, Bengaluru
Commodity Analysis
I am an investor in commodity market.
In the previous month magazine the
article given on natural gas was quite
informative. Very few people know
about the natural gas. In commodities
everybody look out for metals and
crude. I followed your
recommendation about the natural
gas, given on the basis of fundamentals
and technicals of the commodity. I find
it really helpful in making my strategy
for the short as well as medium term.
I am looking forward for more such
investment option to maximize my
benefits in the future.
Gunjan Ahuja, Delhi
Market Commentary
I am a client of RR Investors and have
recently subscribed to your magazine
“Investment Monitor” from the last 2
months. This magazine is really
comprehensive and informative for
retail investors like me. I specifically
follow the market commentary section
to have the snapshot of the previous
month’s market. It provides me the
relevant information about the
broader markets, economic
happenings, mutual fund and FIIs
scenario. By reading this article one
can easily gets the idea about the
underperforming and outperforming
sectors and plan their portfolio
accordingly
Gaurav Vij, Delhi
Insurance Article
I am a regular subsciber of your
magazine, however in the previous
month magazine no article has been
given on insurance .The information
given in theses articles are very useful
in choosing the right insurance
product and moreover they spread
awareness about the importance of
taking insurance in our lives .I really
look forward for the articles in the
forthcoming issues.
Dinesh ,Bikaner
Data Monitor
I am a regular reader of your
Magazine.I must appreciate the data
given in Data Monitor as this database
gives the insight into the company
information.Its keeps us updated
about the company financial status on
monthly basis.It helps in selecting the
best investment stock out of the same
group of companies.I have invested in
some value stocks after reading this
data.
Ritu,Delhi
I am a regular reader of your magazine. I used to read it from mylibrary when I was a student about five years back. Since then I havebecome a subscriber and continue to enjoy reading your magazine.After all these years this is my first correspondence with you. That isbecause of the absolutely excellent cover story in the Septemberissue.What an insightful and brilliant article. I must say I wasthoroughly impressed. I had never given an in depth thought toinsurance as such an important part of investment portfolio. I heartilythank you for giving an average investor like me such a wonderfulperspective about such an important investment