Preparation for equity trading

A farmer in remote Bihar borrows heavily from his zamindar to pay the dowry for marrying off his 11-year-old daughter (an extreme form of debt that we know will turn the farmer into a bonded labourer forever).

A newly married yuppie buys a car, TV, fridge on his credit card?(another form of debt that the yuppie hopes to repay with his zooming salaries).

In these instances we see that ?debt? has been incurred to spend beyond one?s current means. We learnt last time that typically whatever we earn either goes into buying food, clothes, or assets like a TV, car, etc. Or we save with the intention to use our savings during our retirement or buy a house, etc. In other words, we spend our earnings today or save it to spend it later. ?Debt? brings in a third element?while we postpone consumption when we save, we spend future savings when we borrow! In simpler terms, ?savings? and ?debt? are like day & night?they can never exist together unless it is twilight. Take the case of Nagesh, who we met up with last time. Nagesh is a very practical person who has learnt from the tough times in his life. Nagesh, just like any other human being, has dreams of buying a car, a big house for his family, but realises that he will only be able to get there in stages as his current earning capacity is too limited. He has been keeping his desires in check while continuing to save regularly and investing a part of it in shares of good companies. Nagesh bought a car last month by selling part of his holding in Zee Telefilms (about 100 shares @ Rs3500 that he had bought over a year back @ Rs100).

Manish has been Nagesh?s colleague for the last four years. Manish believes in living life king size. In his very first year he exceeded the credit limit on his credit card. He has been paying through his nose, shelling out interest at 3% per month on his credit card outstandings. Two years back, he availed of a car loan to buy a Maruti 800, at a monthly installment of Rs8000 when his post-tax salary was just Rs14,000! Last year, envious of Nagesh?s newfound wealth in shares, he decided to dabble in shares too. His broker recommended Blue Information Technologies Ltd. as a hot tip that would double in 3 months? time! Full of fervour, without even checking the background of the firm, Nagesh pledged his wife?s gold and borrowed to buy this stock at Rs150. A week later, he discovered that the stock had fallen 35% from his purchase price. When he called up his broker, he was aghast to find out that the stock had been suspended. His interest meter was ticking on the money he had borrowed while his principal was down the tube. Talk of the power of compounding!

Moral: Never stretch borrowings to invest in the stock market. Shares are long-term investments that cannot be matched with short-term borrowings. Ideally, one should repay all borrowings and then invest the surplus in equities. So, when we are debt free, we are ready to invest in equities! By the way, one is never too old or young to invest as long as one understands the investment one makes.

OK, we have understood that in the long run equities offer the highest returns. We have also learnt that one can invest in equities any time provided one has surpluses after repaying debt and meeting one?s expenditure! But how much do we invest?

How much depends on two criteria. One, the risk profile of the investor and two, the liquidity requirements of the investor! Now that we know Nagesh, his father and friend Manish well, let us understand this better through their actions.

Risk profile! Yes, let?s face it. No equity investments are free of risk. There is no such thing as a free lunch, mind you! There are a whole basket of risks to contend with and we will understand all of them very soon. For now, we need to appreciate that there are risks of losing. Looking at our three personalities, we can straight away rule out Manish. He can?t afford to take any risks as he is buried deep in debt and can?t afford to lose a penny! Nagesh on the other hand is just 35 years old and has a long bright career ahead of him, so he can afford to take greater exposure in equities and in slightly risky shares too (for instance, some stocks from our ?Emerging Star?, ?Ugly Duckling? and ?Vulture?s Pick? categories). Nagesh?s father, on the other hand, has retired and has no source of income other than the savings he has amassed. So he will be able to afford very little risk. Hence, he should be looking at stocks in our ?Evergreen? or ?Apple Green? categories to choose his investments (which is why, if you remember, Nagesh had suggested HLL to his father).

Let us now move on to liquidity. Liquidity requirements signify the need of cash to meet one?s payment obligations (and don?t have anything to do with human beings? fluid intake). Manish needs all the money he can get as he has to meet so many of his loan obligations. Nagesh on the other hand has an idea of his monthly expenses so he has a better fix on his monthly cash requirements. He also needs to maintain a certain amount of cash in liquid savings (savings bank deposit, etc.) just in case there are some unforeseen medical expenses to meet or an unplanned visit to his father?s place. Beyond these requirements, he can look at investing in equities. Nagesh?s father, on the other hand, has to meet his entire expenses from his savings and would have large requirements for immediate cash. Hence, he can allocate a smaller portion of his savings to invest in equities.

Judging the actions of the small world of people we know, we have realised that risk profiles vary with age, current financial position, even one?s own personality. Liquidity requirements too depend on similar factors. These two criteria will be different for different people, but one should not lose sight of one?s risk profile and liquidity requirement while investing in equities.

Way of making equity as your own

what we now need to figure out is how to evaluate which company to buy. I?m afraid this is where all those fancy sounding valuation tools come in? PE, RONW, ROCE, EVA, etc. Hey, hang on, it?s not as bad as it sounds. Stick around and we?ll demystify all the above in a jiffy.

But before you get into the complexities of the various valuations tools you can use and how you calculate them, we must table a fundamental principle:

?Investing in equities is akin to owning a business.?

Let?s now explore the full ramifications of this principle.

When you put your money in a bank deposit, you take a risk (albeit small, depending on which bank). In return, you get paid a small interest.

The bank takes on a higher degree of risk and lends that money at a higher interest rate to some businessman, or to a credit card holder who wants to buy a diamond ring for his wife. The bank pays your interest out of the money he earns from the businessman. Or the doting husband.

Whereas, when you buy shares in a company, you are not lending money to the company. By providing capital for the company, which is represented by an equity share, you are participating in the ownership of the company. Clearly, your risk is much greater in this case. Because, in this case, you are entrusting the company with the job of managing risk for you.

Relatively, the risk in lending to a bank is limited. For one, most of our neighbourhood banks are nationalised. So bank deposits are perceived to be backed by the government. There is little soul searching to be done as to which bank to choose. Even in doing so, the highest priority is accorded to a Nationalised Bank purely on the safety parameter. Obviously, when you invest in equities, even this notional sense of security, of a government standing guard over your money, isn?t available to you.

What kind of business would you like to enter?

Let?s look at this another way now. Let?s assume you want to invest your money into a business. How will you decide what kind of business to enter?

For starters, it should display the potential to earn you a return in excess of what the prevailing rate of bank interest is, right? Now you need to ask yourself what would be the essential factors in determining this return. And apart from the return angle, what qualitative factors should you be looking for?

In the long term, we all look for security. Business, being an entity, is also entitled to aspire for the same. The ideal business would thus have to have horizons where profits can be sustained. Like we mentioned above, there are external factors that determine the direction and growth of the activity. All this would need to be factored into a business plan that would have to sustain itself and grow over a period of years. Of course, on an ongoing basis, we would definitely have to get a feedback on the success of the business. Operations would have to be evaluated from market feedback, while the financial statements would give a view of the profitability of the concern.

The same concepts apply to stocks

Now, here?s the punch line. Everything we discussed above doesn?t apply only to running a business. The same concepts apply, even if you just own shares in the company.

We all know of a document called an annual report. This document is the most basic source for information available on the company?s operations. In the annual reports, the directors dwell, at times in length, explaining the nature of operations and the external environment surrounding the business and how it affected the company during the year.

If you take the additional effort of finding out the positioning of the company?s products in the marketplace, it would give a fair idea of the company?s reputation in the field it operates. All this with the objective of figuring out how stable the company?s operation is.

The company?s progress can be tracked periodically over close intervals of 3 months. This is through quarterly financial statements, the publication of which has been made mandatory by the regulatory authorities.

Next comes the question of management issues. The common question that pops up in this context is: ?How do I externally control the business if I do not have a say in the management??.

Ok, let?s assume that you are now running the business you chose. Can you, a single individual, handle all functions of the company? For a while, maybe. But once growth sets in, it would be humanly impossible to manage all the functions of an economic activity, viz. marketing, finance, procurement, etc. That?s when your business will need to morph from outfit to organisation status. Wherein the various functions are distributed across individuals, and finally the same is translated into a unified activity.

Similarly, as a shareholder, you end up delegating authority to others to run the organisation you have a stake in. Imagine Mr Narayana Murthy (Infosys), Mr Dadiseth (HLL) and Mr Anji Reddy (Dr Reddy?s) reporting to you. That?s exactly how the cookie crumbles.

The company whose equity base you have participated in is answerable. To you, as well as other shareholders of the company. Thus, while you as a joint owner have delegated the operations of the company to the professional managers and the employees, the management in turn is responsible to its shareholders. The management communicates through the balance sheet and the AGM, where shareholders voice their opinion on the performance of the company.

Infact, shareholders can actually participate in constructive criticism of the operation of the company.

Equity is enigma for most of people

If one were to conduct a survey to determine how people saved for their retirement, one would typically get the following responses…

?I put my money in NSC, post office schemes; they double in seven years!? (By the way, HLL in the last seven years is up seven times!!)

?I am too lazy, I leave my money in term deposits with the bank!? (Certain to retire as a pauper!)

?I am clever, I keep deposits with finance companies and co-operative banks. I make upwards of 20%.? (He forgot to mention that a few of them are like CRB! Forget the returns you will not even get your principal!!)

A very rare response would be: ?I invest in equities. I bought Infosys @ Rs500, Zee Telefilms @ Rs220?? (Anybody cares to do the sums for him?!)

Equities, or shares as they are popularly known, have been an enigma for most people. A majority of the middle class in India considers it akin to gambling. A majority of the rest is fascinated by the volatility and the short-term money-making opportunities and misunderstand equities to be a ?get rich quick? scheme. There are very few people who understand that equities offer the highest returns in the long run, adjusted for inflation or even otherwise. Take the case of Nagesh…

Nagesh has had a very conservative upbringing. However, he moved out of his home to pursue his higher studies and his eyes opened! He has been working with a leading MNC as a marketing manager. He has been wisely investing in shares for the last five years, relying on his broker?s advice after doing his own homework. On the other hand, his father worked all his life in a PSU and put all his savings in NSC and Life Insurance. He has retired today and has just realised that all his lifetime savings cannot help him lead a comfortable retired life. Nagesh is now trying to help his father out…

Nagesh: Appa, even now it is not too late. You must invest a portion of your savings in equity. You are getting disheartened because you want to live off the meager interest earnings on your savings. If you put a portion of the money in, say HLL, your money will double in 3 years, quadruple in 5 years!! Appa, equities have the ?power of compounding that is unmatched?.

Appa: Equity is very volatile. After you told me last time, I have been tracking the Sensex on Star News. It goes up two days then there is some political uncertainty and it falls. Sometimes it falls without any reason or otherwise goes up 15% in four days. I cannot handle it. At least here, my principal is safe and I get a fixed return.

Nagesh, if you use the same Sensex as a benchmark, then the index was 1220 in September 1990 and currently trades at 4800 in September 1999, up four times in 9 years! Even if you had put in money at the height of the market frenzy in 1992, you would have still made money. The market benchmark is just an indication; the concept is to invest in specific good companies. Think Company, Appa, and don?t let the short-term market volatility scare you! In September 1990, HLL was trading at Rs115, while it trades at Rs2500 levels now! 22 times in 9 years!!

Appa: Even then, why put my savings in risky equities?

Nagesh: An equally important thing to understand is: ?Why does one save?? One saves because the productive span for any human being is a small portion of one?s entire life. I may live for 80 years but I can only work between the ages of 24 and 60. Hence, it becomes important during our productive lives to earn surpluses and save them for the period when we can?t be productive and earn. Having said that, Appa, you would also recognise that it is important to retain the purchasing power of our savings. In other words, we all know that we used to purchase grains at Rs2 per kg 5 years back, while we pay Rs10 per kg for the same now. The price will keep on increasing as the population living off a fixed area of land increases. Hence, it is also important that whatever we save now at least fetches us an equal quantity when we retire…have I lost you?

Appa: No, I was just thinking. You are right. I deposited Rs10,000 seven years back in NSC and I just got Rs20,000 now. Seven years back, I used to get vegetables for Rs25 and it used to last for a whole week and then we were four of us. Today, I buy vegetables for Rs100 and it barely lasts for a week though there are just the two of us!

Nagesh: Exactly. That?s why people used to buy gold and land to protect their savings from inflation. However, those were the days when communities were small and agriculture was the only activity. As population grew, needs grew and there was a compelling need to improve efficiency. Hence, factories came up to exploit economies of scale. To cut a long story short, investment in productive assets is the best way of preserving savings and creating wealth. Equity is the most productive asset.

Appa: What is the connection?

Nagesh: Equities or shares represent ownership of businesses that own productive assets like plant & machinery and intellectual capital to produce more goods. On the other hand, when you put money in deposits or lend directly, the money ultimately finds its way to purchase productive assets as companies borrow to fund their business! Just like we save to take care of our retirement, productive assets are created to meet greater demand for goods in the future, because of increasing population and its ever increasing needs. Who ever borrows to fund the asset hopes to make more money on his equity than what he pays for on his borrowings. So, savings in deposits or any other fixed income instrument is sub-optimal! Hence, intuitively too, equity has to make lots more money in the long run than any deposits, because there will be no borrowings if the equity owner realises lesser money!!

Appa: All that is fine. But some companies don?t do well?

Nagesh: Obviously they are risky as certain businesses find the going tough. But collectively, they are not only very essential but very profitable. Hence, the returns on equity are always higher to compensate for the additional risk. Risk is a part and parcel of life. There are so many bus, rail and two wheeler accidents, but that doesn?t mean that we prefer to walk everywhere. Even if we decide to walk, we run the risk of being hit by another vehicle! One should only take care to invest in the right businesses, which have assets capable of earning good returns. Hence, these will have to be businesses that have a bright future. Nobody thinks of buying a bullock cart now!…

We all aspire to see the spiraling growth of our money! And investing is the best practice that you can adopt to accomplish the feat. Again, while investing money, it is very important to abide by the old saying that “money needs to work for you, instead of you working for it.” There are quite a few ways to convert your money into high profits via long term investments and investing into the stock market can be much more lucrative than any other short term method!

The stock market does not elude the wits of a common investor anymore! With online share trading anyone can get into the stock market. All you need to have is some basic knowledge of the share market and its trends. The learning curve can be quite steep for novice traders, but those who stick with it will get rewarded handsomely – not just with nice returns but also with a great lifestyle.

It is simple to get the registration done for online share trading through a company engaged in this line or more typically a share broker. Before you start online trading, you should first acquire some experience about the nuances of the same offline! This is the right way to enjoy lucrative gains on your short and long term investments in online share trading.

One of the most imperative long-term basis of finance are issue of equity shares and preference shares, issue of debentures of different types, raising of term loans from financial institutions and generation of reserves. There are many online venture capital firms which may use different combinations of these sources by considering their relative cost and availability and their impact on the value of the firm. Accordingly, a company can have patterns of capital structure such as equity shares only, equity shares and preference shares, equity shares and debentures, equity shares and preference shares reserves, equity shares and preference shares debentures, equity shares and preference shares/debentures reserves.

While online trading, what you must keep in mind is that these ventures are a high risk proposition and one should be very much guarded and remain observant to distinguish market fluctuations. You can achieve tremendously high returns on your investment easily if you are really fortunate.

The actions relating to the purchasing and selling of shares are done online through the internet on a daily basis. You should be able to get enough experience by studying movements of the market and very soon you will be making decisions on your own in online share trading.

Although the media has termed online share trading as “easy money”, any investor in the markets will tell you the opposite. You should cover all the risks and make informed decisions at all times. Yes, the returns can be great but the risk-reward principle is also there in any investment.

When everything is possible online right from shopping to conducting of business, online trading is not a far-fetched reality! One can even access news about the various issues concerning various nations including stock market, government policies, and related regalia at just the click of the mouse. If you are looking for a platform for equities trading or gain detailed information related to it, you can get it all at online share trading portals. No matter whether you are at home or in the office or in the move with a laptop, you can trade in equity shares, provided you have way in to the Internet. The IT has transformed the very concept of living life and eased the complexities involved.  

There are equity shares that are traded in the stock market. Gone were the days when trading was conducted manually with stock brokers being permitted to enter the trading platforms and investors lined up outside to know about the result. Today, almost every stock market is converted into an online trading market facilitating investors to invest from the comfort of their space. In either case, it has been the stock broker that handled all transactions; you can today instruct your broker to make the shares trading transaction done on your behalf.

Any online trading platform for equities has two ways for investors to choose – one is investing in the equity shares of large blue chip companies and the other is investing in  start-up companies or yet smaller companies. In any of the options, if you are goal-oriented of gaining profits, you should equip yourself with market knowledge including the ups and downs, i.e. market fluctuations. The intelligent investor who has been involved in online share trading for years by taking cautious decisions invests in both the options and reaps profits. Investing in blue chip companies would require you to wait as this are long-term investments. This can be a better option as risks involved are very less or negligible. Your stock will grow in the long run but at a slow pace and if you are fortunate enough, i.e. if the company projects fast growth, you grow fast too.

While investing in equity shares of start-up or smaller companies, you cannot avoid risks. The market conditions are highly volatile in nature in this aspect. You may get huge gains or incur heavy losses or stay at the equilibrium. There are many instances of least known companies the equity shares prices of which goes up by one or two cents in a day. In such a scenario, you gain double benefits. Many online trading investors have made big money by investing in such equity shares. No wonder these investors know the tricks. Researches validate that they update themselves with govt. policies that affect the price of the equity shares of a company including access to the latest news of the share market accessible anytime at financial news portals or online share trading platforms and collection of the historical data of the said company.

The advent of the Internet has changed the very course of share market trading. If you hold a trading account, you can buy and sell shares right from the comfort of your space. You need not visit a stock broker to get updations or to gain any stock market information. All such facilities are available online. Locating expert stock brokers, consulting them for expert tips are all possible online today. It requires only minimal investment to start in share market trading in India whether it is NSE trading or BSE trading.

Choices for investment are many in India; it can be government securities, bonds, derivatives, and other financial instruments. If you are a novice investor, you should first learn the basics before taking a plunge in the share market. Seeking professional guidance is easy at online share market trading platforms. Such platforms assist you to learn and identify with the nuances of trading. In no time you can become skilled at speculating – the how, where, and when – of investing. Getting maximum returns will soon seem an easy affair for you, as you will be able to select the right shares. Most trading platforms offer facilities to open free trading account. Usually, you require paying some amount to open a trading account and with the free option you are exempted of the opening fees. And to start investing in the share market, you should have a trading account. And if you have not yet opened an account, you experience a winning situation, as besides the account, you can avail a number of benefits like getting tips from market experts, getting market updations at your mailbox, getting stock recommendations, and lots more. To open a free trading account, submitting your PAN card number is mandatory as per SEBI rules. It is like a bank account where you will have to deposit enough money for buying shares. A stock broker will handle your transactions; the amount gets automatically transferred once you buy a share and in case of profits the amount gets robotically credited. The payment mode is safe; you can view details of your transaction in a chart.

Two stock exchanges majorly represent the Indian share market, viz. National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). The Indian sensex embodies the BSE whereas nifty stands for NSE. The BSE facilitates trading of 30 most active stocks and enlists over 6000 companies; the NSE represents 50 stocks. If you are involved in BSE trading, you should watch the performance of the Indian sensex; the same case applies with NSE trading. No matter where you invest in the share market, what is of substance is your ability to buy shares that prove profitable for you. You will obviously not want to push your hard earned money into the drains and only cautiousness is the buzzword here. So, visit an online share trading platform today; stay updated and get the most out of your investments!

Best Forex Trading Platform In India

The share market of India is dominated by online trading and investors constitute all class of people, the young and the old alike. It is only market knowledge, a computer and the Internet that makes investing possible at a click of the mouse. And with an online trading account facilitating your shares trading, you need not physically visit your broker. You will be guided in your buying decisions by your broker online. Getting registered at brokerage platforms further makes the process easy. It is because you get guidance, tips, and lots more right at your mail box. Best Forex Trading Platform In India

Trading in equity shares online entails with it a number of advantages. The process begins with opening an online trading account, i.e., a demat account. It is an account in digital form and means dematerialization of the trading account. Unlike a physical trading account which needs the submission of a number of documents, a demat account requires your PAN card, which is mandatory. You may or may not require submitting other documents. You will have to deposit enough cash in your demat account which can be linked to your bank account. It is easy to use and its flexibility as well as the security factor associated with it is an added advantage. Once you buy equity shares, money gets transferred automatically and in case of any profits gained from the same, the amount gets automatically credited too. The whole process is digitized and made hassle-free and easy for the investor. Your broker will only guide you and update you about potential equity shares. It rests wholly upon you to give your decision whether to buy the same whether to hold it for some time and the like. There are a group of stock brokers who select potential stocks and then buy and sell them on behalf of the investors. Best Forex Trading Platform In India

It is strongly recommended that you watch share market live regularly if you are seriously investing in the share market in India. The market is highly volatile and market fluctuations may drive your investment prospects towards the drain. If you are equipped with complete knowledge about the share market, you will be able to take intelligent decisions and gain profits at a stretch. To watch share market live, visit any online brokerage platform and if you are already registered as aforementioned, you can view it in the said platform.

The share market of India has two major stock exchanges – the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). The calculations are done on a free float market capitalization method represented by the Sensex and the Nifty. There are also a number of other stock exchanges prominent at the state levels. Best Forex Trading Platform In India

Am I buying the right stock? Will the price of this stock go up? These are the questions that often keep investors in the share market engrossed. If you have bought the shares of companies that have maintained a legacy of a good growth record for several years together, then you have bought the right stock. But if you are not aware about the company’s performance and ignorant about the market conditions and if you have just blindly bought the stocks, there are less chances that you will gain. The share market is a gamble for only impulsive buyers, and for wise investors, it is a platform where one can make quick and easy money.

If you are a part of the online share market and are involved in online trading, you are certainly at an advantageous state. This is because you can gain market information, watch BSE live, view the performance of NSE, and get expert stock tips, all with a click of the mouse. With the emergence of a number of online share trading platforms, the concept of online trading has influenced all sections of the people, youth and the old alike irrespective of gender, incomes, vocations, place, etc. At a single platform, you can view which stocks are potential for you and accordingly take trading decisions no matter whether you are traveling or in India or in some other part of the world. That is the wonder of online trading!

Whenever you buy stocks in the online share market, just consider why you are buying a particular one. Going by rumors about the lucrative aspects of a specific share may not always prove to be true. To verify what people say or what your share broker recommends, satisfy yourself by reflecting upon it and studying the company the share of which you are going to buy. It is safer to trust your own judgment because it is you who are to blame if it does not prove profitable; not others who suggested. While verifying the same, consider your profit limits by percentage points. You can expect good profit limits from companies that have sustained their success record over time. Though risk is there in any investment, yet it is the stability factor that counts. If the company has a good stability testimony, chances of risk can be negated. Watch share market live, especially BSE live if you are buying a BSE share. Because prices go up and down based on market conditions and getting updated on the proceedings of the market can be of great help to you. Even if the company has a good record; if in the current period the sector that it is associated with shows a downtrend, there are equal chances that you will be a victim of the loss factor. Hence, the importance of share market live news cannot be negated.

Reap the benefits of being a registered member of an online trading platform and stay tuned to profitable online share trading!

The share market of India is dominated by online trading and investors constitute all class of people, the young and the old alike. It is only market knowledge, a computer and the Internet that makes investing possible at a click of the mouse. And with an online trading account facilitating your shares trading , you need not physically visit your broker. You will be guided in your buying decisions by your broker online. Getting registered at brokerage platforms further makes the process easy. It is because you get guidance, tips, and lots more right at your mail box.

Trading in equity shares online entails with it a number of advantages. The process begins with opening an online trading account, i.e., a demat account. It is an account in digital form and means dematerialization of the trading account. Unlike a physical trading account which needs the submission of a number of documents, a demat account requires your PAN card, which is mandatory. You may or may not require submitting other documents. You will have to deposit enough cash in your demat account which can be linked to your bank account. It is easy to use and its flexibility as well as the security factor associated with it is an added advantage. Once you buy equity shares, money gets transferred automatically and in case of any profits gained from the same, the amount gets automatically credited too. The whole process is digitized and made hassle-free and easy for the investor. Your broker will only guide you and update you about potential equity shares. It rests wholly upon you to give your decision whether to buy the same whether to hold it for some time and the like. There are a group of stock brokers who select potential stocks and then buy and sell them on behalf of the investors.

It is strongly recommended that you watch share market live regularly if you are seriously investing in the share market in India. The market is highly volatile and market fluctuations may drive your investment prospects towards the drain. If you are equipped with complete knowledge about the share market, you will be able to take intelligent decisions and gain profits at a stretch. To watch share market live, visit any online brokerage platform and if you are already registered as aforementioned, you can view it in the said platform.

The share market of India has two major stock exchanges – the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). The calculations are done on a free float market capitalization method represented by the Sensex and the Nifty. There are also a number of other stock exchanges prominent at the state levels.

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MARKET UPDATE : HOT FROM THE PRESS

* BANKING : bank credit dips for the forthnight ended 15 Jan after rising for 3
consecutive fortnights.. On YoY basis credit grew 13.8% v/s RBI projection of
18% for FY10.. Separately Moody’s changes fundamental credit outlook for
Indian banking system to stable from -ve on bk of favourable trends in
economic indicators

* BHARTI : invites bids to outsource the management of its 120k km of inter-city
optic fibre cable network.. deal estimated to be worth upto $1bn over 5yrs

* WIPRO : enters into multi year outsourcing agreement with British American
Tobacco for its global biz ops

* NTPC : to miss power capacity addition by 70% this fiscal year, to add 990Mw
this fiscal v/s target of 3,300Mw

* POWERGRID : board approves plan to sell 10% of equity.. also plans to invest
Rs2.16bn for a 1000MW project to be commissioned in 28 months

* AHLUWALIA CONTRACTS : wins order worth Rs 5bn

* ONGC : signs accord on oil exploration with Sonangol of Angola

* BHEL : to sign JV with MP Power generation Co to setup 2X800Mw super critical
power plant in Khandwa, Madhya Pradesh

* CADILA : CFO says sales may climb 22% to $1bn next year

* ADANI GRP : Min of Environment & Forest denies co nod for coal mining for
setting up a 1980mw power plant in Maharashtra

Corporate News – Industry trends

– Global cues and fears of tightening monetary measures by the central bank
pulled down the benchmark BSE Sensex 490.6 points (2.92%), marking the
sixth day the market has been in a bear grip. (BS)

– Lower input costs and growth in sales have helped Steel Authority of India
Ltd (SAIL) almost double its net profit for the third quarter ended December
31, 2009; the company’s net profit stood at Rs16.7bn, almost double the
Rs8.4bn in the same quarter last fiscal. (BL)

– Banks and financial institutions are on a resource mobilisation spree overseas
to take advantage of the current low interest rates; Bank of Baroda, Union
Bank of India, IDBI Bank, and Export Import Bank of India plan to tap the
overseas debt market to mop up $1.5-2bn in the next month or so. (BL)

– Hindustan Unilever’s (HUL) advertising expenses simply galloped in the
December quarter, even as both its sales and net profits grew at a modest
pace. To put it in context, the sum of Rs6bn that HUL set aside towards
advertising and promoting its brands was three times what it spent on its
employees (Rs2bn) and nearly equal to the operating profit (Rs6bn) it
generated for this quarter.(BL)

– The Steel Minister is set to take up the issue of making operational the joint
venture International Coal Ventures Ltd (ICVL) with his coal counterpart.
(BL)

– DLF Ltd posted a 30.2% drop in its consolidated net profit for the third
quarter ended December 2009 to Rs4.6bn, but said that demand was robust
across all segments of housing and there are signs of recovery in leasing of
office space. (BL)

– Tata Communications said that it plans to invest about US$50 mn over the next
two years into its newly-formed Global Media & Entertainment Solutions (GMES)
group. (BL)

– India’s leading sea carriers, Shipping Corporation of India, GE Shipping and
Mercator Lines, are looking at buying ships for resale from yards, as their
original buyers succumb to the downturn in shipping cycles and cancel purchase
contracts. (BS)

– Lanco Infratech Ltd has secured contracts worth Rs56.7bn from its subsidiary,
Lanco Mahanadi Power Pvt Ltd, in connection with the setting up of a 2×660-Mw
pulverised coalfired power plant in Maharashtra. (BS)

– Jaypee Group firm Jaiprakash Power Ventures said it will raise up to
US$300mn by issue of bonds for meeting capital expenditure of the company,
its joint ventures and projects being implemented through company’s
subsidiaries. (BS)

– NTPC, India’s largest power utility, plans to sell at least 15% of its additional
capacity through power exchanges to third-party buyers, which would be outside
the purview of a power purchase contract. (ET)

– The government is considering selling its stakes in engineering company Larsen
& Toubro (L&T) and consumer goods maker ITC in tranches to state-run
financial institutions, as it walks a tightrope between raising funds to tide over
fiscal deficit and keep lobby groups in good humour. (ET)

– As many as four telecom proposals were deferred and two rejected by the
Foreign Investment Promotion Board (FIPB) at its last meeting on January 18. The
deferred proposals include those from Etisalat DB Telecom (UAE), Verizon
Communications (US), Arkadin SAS (France), and Telecordia Technologies (US).
Applications filed by Telstra Telecommunications (Australia) and Global Holding
Corporation have been rejected. (DNA)

Economic/Regulatory development

– The Ministry of Communications and Information Technology has pitched for
a modified Software Technology Park Scheme in the forthcoming Union Budget
(2010-11) in order to facilitate the uninterrupted growth IT and IT Enabled
Services (ITeS), particularly as the industry’s growth has dipped to 15% in 2008-
09 from an average growth of over 30% in the last decade. (BL)

– Imports of sensitive items rose 34.5% in April-October 2009 at Rs354bn from
Rs263bn during the corresponding previous period, according to official data
released on Wednesday. (BL)

– Sugar mills have told the Centre that the country would need to import only
another 15-16 lakh tonnes of sugar to meet the current 2009-10 season’s
(October-September) consumption requirements along with ensuring the
reasonable opening stock. (BL)
International trends

– Toyota Motor Corp’s American depositary receipts tumbled the most in a year
after the company halted US output and sales of eight models because of a part
that spurred a 2.3 million vehicle recall. Toyota’s move covers the topselling
Camry and Corolla sedans, along with the Avalon and Matrix cars; RAV4,
Highlander and Sequoia sport-utility vehicles; and Tundra pick-ups. (ET)

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