Sensex may touch 17500 by Diwali: JM Financial

2007-09-14 12:54:16 Source : Moneycontrol.com

Atul Mehra, ED & Head-Capital Markets of JM Financial said that they are bullish on power, power transmission and distribution, capital goods, construction, alternate fuel and iron.

Mehra added that they see the Sensex at 17,500 by Diwali.

According to him, the concerns on crude and interest rates remain. The Fed cut by 25 bps could see cheer in the equity markets, stated Mehra. There are enough non-US funds moving around in markets to absorb shocks.

Excerpts from CNBC-TV18�s exclusive interview Atul Mehra:

Q: We are within striking distance of an all-time high, could we go much higher from here, if so how much?

A: Well we have not seen highs being created; we are going to see newer highs being created. My personal guess is you will see the index somewhere in the region of 17,500 closer to Diwali time. The fundamental reason that gives me motivation to believe that is going to be achieved is liquidity. The same old argument that we have been using for three years still continue to hold true.

Q: Fundamentally, there is a wee bit of a crack coming on the windscreen. You have this IIP number, which is not looking too good. Globally you could see a slowdown because credit is tight. So, would you say that this liquidity argument could get punctured?

A: If you want to add a slight bit of crack, add two more cracks to that. One is the oil price trading at USD 80 a barrel and interest rate, which still continues to trade in the vicinity of 10.5% to 11.5%, which is still high. These are what I call cracks, which are there. The question out over there is all these have been factored into our system, markets are taking note of it and right now corporate India may have given us enough confidence and made us believe that despite all these cracks and uncertainties their numbers will be very much on track and their growth will not be hampered in quarters and years to come ahead.

Q: You are looking at 17,000 by Diwali and perhaps a continued high, where should investors be putting their money sector-wise?

A: Let me give you five or six sectors that I am personally very excited about. Slot numbers one, two and three have been taken up by power sectors. We are very bullish on power, power transmission, and power distribution. So, all the three sectors in one bucket is the most exciting sector. We are bullish on the construction sector; we are bullish on capital goods as a sector. The two other sectors that are our favourites would be the opportunistic sectors and one of them would be the alternate fuel sector. This is a very interesting sector and I am pretty much excited about this sector.

The second sector, which is again very interesting, would be the resources sector, which is what I call as the metal resources sector, basically back into the iron ore or manganese ore, those kinds of companies. This is a very interesting sector and I would urge investors to look into that.

Q: Since you touched on liquidity, there are two important aspects. One is, what would the Fed do on September 18 and its impact? Is there any more seriousness to the subprime effect?

A: I would say that it is a very well kept secret that the Fed is meeting on September 18. Almost the entire world has given advice on what the Fed should be doing and the unanimous opinion is that the Fed should decrease the rates by another 25 basis points. I think that is pretty much given. If that happens, people would say all is fine and you would see some more euphoria continue in the market.

As long as we do not come across a subprime losses number, which is staggeringly above the number that people have factored into their assumptions, I think we will continue to do very well. Unless somebody tells us that the number is awfully different or the number is totally gigantically different, you would see the marketing taking a cue from that.

Q: If it is gigantically different, if there is a recession, if the flow of money from the US definitely stops or flows out, do you think the downside is very bad or do you think the downside is protected, because there is this middle eastern money that seems to be still coming?

A: Let us assume a hypothetical situation where all that we just discussed is true. I would say that there are enough shock absorbers that have been factored into it and one shock absorber is Middle Eastern money, and the second shock absorber is the domestic mutual fund money. Look at the amount of money that these mutual funds have gathered as a corpus, and what they invested in; in the last month or so, it is a pretty exciting number. What gives me terrific confidence is that the retail or wealthy individuals are putting every dime of their money into the market and that is a very encouraging sign.

Infrastructure Funds

India's economic performance, particularly over the past three years, has been robust on several counts. Economic growth has accelerated and is now averaging over 8% per annum.

In order to sustain this rate of economic growth, India's Planning Commission has estimated that investment would have to be made in infrastructure, such as road, rail, air and water transport, electric power, telecommunications, water supply and irrigation. During the Eleventh Plan period (2007-2012), it was estimated that an investment of almost US$ 320 billion would have to be made over the Eleventh Plan period.

Due to government initiatives, investments in India's infrastructure development are growing. Political parties, across ideologies, have realized the importance of infrastructure in sustaining economic growth. The Government recognizes the need to improve infrastructure and has stepped up investments in this direction.

Several indicators in the economy today point to the huge investments being made by both the Government and the private sector in infrastructure development. Some of them are:-

• India's construction equipment sector is growing at over 30% annually
• The order books of the 10 largest construction companies in India have risen by over 50%year-on- year
• Annual cement consumption has breached the150-million tonne mark for the first time.

Source: - India Brand Equity Foundation

According to India Brand Equity Foundation, investment requirements in some key sectors are:

• US$ 50.8 billion for modernization of highways
• US$ 9.25 billion for civil aviation
• US$ 11.5 billion for ports
• US$ 69.39 billion for railways

As we can see, there is a huge potential for profitable investments to be made in these sectors. Dedicated infrastructure funds such as Tata & ICICI Infrastructure Fund with its focus on investments in the Indian infrastructure sector, shows potential for long-term growth.
Investors who wish to be beneficiaries of this hugely developing sector can participate in it and create potential long term value for their investment.

Analysis, the key to investing money

2007-08-06 13:01:38 Source : Moneycontrol.com

By Kartik Jhaveri

Several factors need to be kept in mind when you are aiming to generate wealth – not just for yourself, but for your subsequent generations as well. Identifying multiple sources of income, understanding your financial expenditure, and having a healthy mind and a strong drive.

Given all that, when the time comes to actually investing, you are inundated with an explosion of information. You need to know how to cherry-pick from this flow and also sharpen your intelligence so as to take better financial decisions.

Identify trends
Consider this: Someone’s expense is your income and your expense is someone’s income. Now the lesser your expenses the more are your profits. The same applies to companies.

If interest rates go down, your expenses reduce. You can now take more loans and pay more interest. The companies that lend you money have a field day lending more and profiting more, since many others think like you and take loans to buy cars, houses and durables.

Doesn’t it now make sense to buy their shares at this point?

The trick is to see where you spend or would like to spend your money. See what people around you are buying, see where they money is flowing. You don’t need to see the balance sheet of each company, just be attuned to what’s happening around you. Tie news with its impact.

For example, if the rupee has appreciated, companies that are into import will be able to buy more for the same amount of rupees. They can also buy the same amount of goods for a lower price – profits are bound to be made.

Or consider a takeover – only a profitable company will have the money to buy another company, in most cases. Total assets increase; expenses go down as synergies are created.

Deploy resources
To take better decisions, you first need to know how much money is available to you. Creating budgets and financial controls can both increase this amount and inform you how much you have to create your castle with.

You also need to make sure your money is being ploughed into fruitful assets. Paying huge premiums for unneeded life insurance or being over insured are examples of ineffective use of resources. So is investing in PPF at a stage when you are looking to build wealth.

Make sure that what you pay for is worth your money. Of course, financial control does not mean cutting necessary expenditure – it is about effective deployment of your resources.

Think positive
Though you may not realise this, your mindset and emotions play a strong role in determining the wealth you will make. You especially need to eliminate fear and arrogance, since these cloud rational thinking, affecting your ability to take intelligent decisions.

Do not think, “I am born in a middle class household, I cant possibly get that Audi.” By doing that, you are pretty much condemning yourself to eternal poverty. Instead, think, “I want to get that Audi. How do I go about it?”

On the other hand, thinking in terms of “I know” or “I don’t need to know more” or “I am right, you/ that is wrong” is a sure-fire way of shutting doors on all knowledge.

Find out, investigate, talk and then take a more informed decision. Be curious always – to find out more, to learn new things. Getting rid of your arrogance will put you on the right track to making advantageous decisions.

Credit Policy: RBI hikes CRR by 50 bps to 7%

2007-07-31 12:01:26 Source : Moneycontrol.com

The Reserve Bank Governor Dr Yaga Venugopal Reddy announced a 50 bps hike in the CRR rates, raising it to 7% from 6.5% in his Credit Policy announcement today.

However, the RBI has kept the repo, reverse repo and bank rates unchanged. There hasn't been much change in the monetary policy stance.

There was a general expectation that starting with this policy, lending rates would start heading southward. While deposit rates may come off after this policy, the pace at which interest rates or lending rates were expected to come off, may not be as swift as was originally expected.

Impact on Rates

Deposit rates likely to come down
Lending rates to remain the same

Highlights

Bank rate, Repo, Reverse Repo rates unchanged
CRR hiked by 50 bps to 7%
Rs 3,000 cr daily reverse repo cap withdrawn
FY08 economic growth target unchanged at 8.5%
Medium-term inflation target: 4-4.5%
FY08 inflation target: 5%















The RBI has been a little more hawkish than what the markets expected it to be. The move will effectively take out approximately Rs 15000 crore from the banking system and bring no returns for the banks for that kind of money. In terms of the stance of the RBI, it remains practically unchanged, which means it’s a pretty hawkish stance, pretty cautious, pretty vigilant on inflation.

It has acknowledged that headline inflation has come down, but it’s clearly worried about the kind of impact increased liquidity may have on forthcoming inflation.

The key takeaways from the policy are:
RBI hikes CRR by 50 bps to 7% from 6.5% from Aug 4
RBI keeps all other key rates unchanged
RBI removes Rs 3000 cr reverse cap from Aug 6
GDP forecast for FY08 retained at 8.5%
Has discontinued second auction of the day
Hedge Funds pose significant risks to markets
Financial stability added to monetary stance
Emphasis on price stability, anchored inflation expectation
Uncertainty over supply situation has increased
Inflation pressures seen from liquidity, high credit
Global inflationary pressures stronger than before
Inflation threat from re-emergence of producers' price power
This was the kind of stance that was enunciated on 31st January, continued in the April 24th policy and the wording more or less remains unchanged in today’s policy, with an addition that says that it will also watch out for financial stability in the country.

So, clearly, if it was a hawkish kind of a stance in January, the stance remains unchanged today, and the walk of RBI matches its talk, in as much as it is controlling the amount of cash available with the banks to lend.
It seems that domestic outlook will dominate the RBI policy in the period ahead. While, the domestic outlook continues to be favourable, fiscal deficit is evolving as per the Budget. The risk to inflation expectation is up due to the high oil prices. Global inflationary pressures are stronger than before. The monetary stance spelt out in April has been retained. According to the policy, prospects for FY08 GDP growth appear positive.
On growth, the RBI says that there is really no moderation – there seems to be increased capacity constraints in several industries like cement and even petroleum refining and it also points to the fact that there is perhaps return of pricing power and higher asset prices, all of which could lead to a rise in inflationary expectation

What's driving the markets down?

2007-08-01 11:22:15 Source : Moneycontrol.com


The markets are trading weak on account of weak cues from US markets, rising crude prices, shift in investor interest from equities to bonds, fears of a rise in interest rates and US sub-prime woes.
At 12.34 am, the Sensex is down 545.22 points at 15007.45, while the Nifty is down 162.05 points at 4366.35. About 1,101 shares have advanced, 1,804 shares declined, and 78 shares remained unchanged.

The Wall Street resumed its downward skid yesterday, falling sharply as renewed concerns about soured home loans blew away what had looked like a solid recovery rally. Wall Street has been concerned about lenders after some loans made to borrowers with poor credit have gone bad, and that anxiety contributed to the market's big plunge last week. Tuesday's trading showed how vulnerable the market remains, and how any advance can quickly evaporate.

Investors remain worried about credit getting tighter because of the faltering housing market. On Tuesday, a housing index released by Standard & Poor's showed that US home prices fell for a fifth consecutive month in May by the steepest amount in about 16 years.

The Dow Jones fell 146.32 points, or 1.1%, to 13,211.99, while investors seeking safety moved into bonds. It fell after being up as much as 140 points during the session. The Standard & Poor's 500 index declined 18.64 points, or 1.26%, to 1,455.27, and the Nasdaq Composite index fell 37.01 points, or 1.43%, to 2,546.27.

On the Nymex, crude also breached the USD 78 per barrel on expectations that inventory reports will show a decline in stockpiles last week. Reports of fresh bout of violence in Nigeria also pushed prices higher.
Taking a cue from US markets, Asian markets slipped into the red today. Japan's Nikkei tumbled 1.12%, or 193.31 points, at 17,055.58; Singapore's Straits Times plunged 1.3%, or 45.99 points, at 3,501.67; Taiwan Weighted slipped 0.38%, or 34.84 points, at 9,252.41; and South Korea's Seoul Composite declined 1.77%, or 34.13 points, at 1,899.14.

What to do when the Markets crash

hi friends,

this week we have seen the market behaving very volatile... yesterday the markets crashed 600 points ,,....

dont panic at all guys .. take this as a good buying opportunity,

stocks and funds that are very attractive at these levels are given below:

Engineering & Power Sector:

BHEL
L & T
Siemens
Areva TD
Sundaram Capex Fund
ICICI Infrastrucutre Fund

Banking and Financial Services Sector:

Reliance Capital
ICICI Bank
Punjab National Bank
Development Credit Bank
Kotak Mahindra Bank
UTI Banking Fund

Other stocks

Financial Technologies
M & M
Reliance Comm
IOL Broadband
Indo Borax

best way to beat the volatile index is to invest in mutual funds

either do a SIP or invest lumpsum in these mutual funds with a 2 yr horizon. i am sure u ll make good money.
to know more contact me at dhavalmehta84@gmail.com

happy investing!!!!!

rgds,
Dhaval

Recommended Mutual Funds for this quarter

EQUITY FUNDS

• Large Cap Equity Funds
  DSP ML Top 100
  ICICI Pru Power
  HDFC Equity
  Kotak 30

• Opportunistic Equity Funds
  Fidelity Equity
  Kotak Opportunities
  ICICI Pru Dynamic
  DSP ML Equity

• Mid Cap Equity Funds
  Reliance Growth

  SBI Magnum Global 94
  Kotak Midcap
  ICICI Pru Emerging Star
  

• ELSS Funds

Kotak Taxsaver

HDFC Long term Advantage Fund
SBI Tax Gain 93

Thematic Funds

DSP MLTech Fund

10 myths about Systematic Investment Plans

Although SIP is a popular investment method for most, there are still several myths surrounding SIPs. PV Subramanyam tries to break 10 myths about SIPs and bring more clarity to this concept of investing.

Source: 2006-10-16 17:34 Money Control

What is a Systematic Investment Plan (SIP)?

SIP is a method of investing a fixed sum, regularly, in a mutual fund. It is very similar to regular saving schemes like a recurring deposit.

An SIP allows you to buy units on a given date each month, so that you can implement an investment / saving plan for yourself. Once you have decided on the amount you want to invest every month and the mutual fund scheme in which you want to invest, you can either give post-dated cheques or ECS instruction, and the investment will be made regularly.

SIPs generally start at minimum amounts of Rs 1,000 per month and the upper limit for using an ECS is Rs 25000 per instruction. Therefore, if you wish to invest Rs 100,000 per month, you may need to do it on 4 different dates. ( Also read - Demystifying NAV myths )
As is customary, I started with describing the concept of an SIP. Let us break some myths on SIP now.

Investment in equity mutual funds or unit linked insurance should always be done in SIP mode: I remember in 1999 when Templeton Mutual fund would talk about SIP – the market looked at it skeptically. And it took a lot of convincing for customers to accept it. Now, life has come a full circle. Everybody wants to (always) invest using an SIP.

If you have the maturity and calmness to realize that equities are for the long term and are willing to give your funds about 10 years, and you have a lump sum, you can afford to give the SIP route a pass.
However, if your horizon is less than five years, you must do an SIP.
I do rupee cost averaging in a single equity – that is a kind of SIP is it not? This is a question I face every day. No, a rupee cost averaging in a single scrip cannot be equated to an SIP. When the market brings down the price of a single scrip, it is giving you information. You need to react to that.

Let us take 2 examples – Lupin Laboratories – has moved from a high of Rs 700 to Rs 100 and back to Rs 700. The question to ask here is not whether an SIP would have worked. The question to ask is whether you would have had the stomach to continue the SIP through this period. Silverline Technologies moved from Rs 30 to Rs 1300 to Rs 7! In this case, if you had started an SIP at a price of Rs 1300, today you would be licking your wounds. SIP works in a portfolio, not in a single scrip.

You cannot invest a lump sum in the same account in which you are doing an SIP: Many people assume that if they are doing an SIP in a particular fund, and suddenly they have a surplus, they cannot put that lump sum in that account.
Fact is, in case you are doing an SIP of Rs 10,000 per month in an equity fund, and suddenly you have a surplus of Rs 100,000 and clearly you have a 10-year view on the same, then you can just push it into your SIP account. SIP is just a payment mode, not a scheme!

If I miss investing for a particular month, will they prosecute me? Now, this is the fear of EMI that people have. In an SIP you are buying an investment every month (or quarter), there is no question of prosecuting you for missing one investment. As a matter of discipline, you should not miss any month; however, missing one month's investment is not a crime!

When you have a surplus (accumulation stage of your life) you should do an SIP and during retirement you should do a SWP: No. You should ideally keep your withdrawals only from an income fund or a bank fixed deposit.
You should sell an equity fund on some other basis, say deciding to sell 20% of your portfolio in a year so that the return is 4 times the 30 year historic return. SWP, by definition cannot work in an equity fund! ( Also read - 7 good reasons to invest in SIPs)

SIP works for everybody, but does not work for me: Another myth. SIP works in a well-diversified equity fund in the long run. When people put forth arguments that it does not work for them, they have either not chosen a good fund or are looking at a 12 month horizon.

SIP is only for small investors: Nothing can be farther from the truth. I have a client who has invested Rs 32.66 lakhs using SIP, starting from January 1998 till date. Obviously, he has invested much more in later years as his income went up and the funds together are worth Rs 97 lakhs, substantially higher than his provident fund.

Market is at very high level to start an SIP: I have heard this when the index was 3000 also. I have no clue where the market is headed, but I know SIP works!

All fund houses are now charging a full load on the SIP, so now SIP will not work Why not time the market? Introducing an entry load was expected to happen and it has happened. What actually hurts the retail investor is the asset management charges – 2.5% in most cases is a bigger threat to compounding! (Also read - How to optimize your tax using mutual funds?)

If I do an SIP in a tax plan, can I withdraw all the money on completion of 3 years? Another regular question almost! Every installment has to be with the fund house for 3 years. The lock-in comes from the Income tax rules, which say that a tax saving scheme should have a 3-year lock-in. You cannot escape that by doing an SIP!

The author, PV Subramanyam, is a financial domain trainer.

Mumbai has fastest growing affluent population in world

Mini Joseph Tejaswi[ 5 Apr, 2007 0128hrs ISTTIMES NEWS NETWORK ]

BANGALORE: So what if the markets are spiralling out of control? And so what if interest rates have hit the ceiling? Never mind the fact that a study published by Mercer Consulting on Monday threw up Mumbai as one of the worst cities in the world to live in? It ranked 209 out of 215 surveyed cities. The number of people that are growing richer are not showing any sign of slowing down.

A recent study conducted by American Express (AmEx) reveals that Mumbai has at least 25,000 dollar millionaires. What it means is this: each of these people also called high networth individuals (HNI) have at least Rs 4.5 crore in liquid funds that are investible. The number of affluent individuals in Maharashtra has been estimated at 2,00,000.

These include the super-rich; defined by the report as anybody having in excess of Rs 50 lakh to invest. Between the HNIs and super rich in Maharashtra alone, they have a whopping $60 billion in liquid investible funds. That is 4-5 times the foreign direct investment (FDI) that flows into the country.

There are 83,000 HNIs and 7,11,000 super-rich people in India. By 2009, India will have at least 10 lakh super rich people. Mumbai and Delhi account for bulk of them. And if all this isn't enough, consider this. Assets under management (AUM) in western India have grown 51% as on January 1, 2007 as compared to last year.

HNIs in Mumbai are estimated to invest Rs 46,000 crore in mutual funds alone. "Mumbai is home to the largest number of affluent individuals and has the fastest growing affluent population in the world," said the study.

Dhaval Mehta says: this is a huge opportunity for all private bankers and wealth managers or portfolio advisors. everyday people are getting richer and thier income increasing. so they will need people who can help them manage and increase thier wealth.

My First Blog

Few years back, in around 2000 I was busy preparing for my SSC. At that time all I could here my parents talking at home was about shares. At that time, I didn't understand anything about the stock markets and shares. As time passed by, I graduated from a reputed college in Mumbai and secured a fancy degree: BMS – Bachelor of Management Studies.

International Finance and Marketing were my main subjects in which I opted to specialize. We did many projects on capital markets, some training sessions on mutual funds, insurance and so on. In the meanwhile the Sensex was moving up at a phenomenal pace. In 2003 when I started my degree course, the Sensex was trading at around 3000 level. By the time I was graduated it was at 6500 levels in 2005. By this time I was fascinated by the way people made money by investing in the stock markets. Even I wanted to make money at a fast pace just as every one else around me did.

Companies came on campus giving us good profiles and a handsome package, I opted for something else. By this time I was very clear in my mind that I wanted to know and learn more about the shares and stocks. I got into one of the biggest brokerage houses in India at that time, which has maintained it’s dominant position till date. Though my profile initially sounded very boring but there was a lot of learning to be made. On one side I started working and on the other side I started investing slowly. Soon, I started making good amount of money. I thought, by now I knew everything about the markets. But I was wrong. Soon, I started making some wrong investment decisions by picking up stocks about which I had no information; the result was that I lost a good amount of money on them. This was the time when some one told me that you should also invest in Mutual funds. We were at 8000 levels and I started learning about mutual funds, structure, formation, philosophy etc. I realized it was a much efficient way of investing for people who do not have the knowledge and time to study the share market.

Taking forward a step in 2006, I decided to start on my own when the markets were at all time high 12000 levels. Everyone was jittery about the markets, they were confused as to invest rite now or wait for a correction and then invest. Initially it was a bit difficult to convince people that you should not time the market but then later it started becoming easier, even I gained confidence. Assay Investments was my dream from college days. I remember we did a project on market research, where we had given our company this name – ASSAY. Assay means To Seek, To Try. I didn't know about others but I always wanted to start up on my own. I do understand that it was not the time to start something at that point in time. But now that I have almost 2 yrs in the industry I am confident of at least advising people on how to go about investing in Mutual Funds.

Do watch out for more to come on the Mutual Fund Industry …. Lots of statistics and insights yet to come!