RPL and RIL merger

Yet again, for the second time merger of RPL and RIL is on the cards. In the last board meeting amalgamation of the two companies was announced. However, the ratio in which the shares will be converted is yet to be seen.

In 2002, merger of the two companies RPL and RIL had happened. This was good for the shareholders of both the companies with RIL shareholders benefiting the most. This time as well the same is expected. Earlier RPL has started its first refinery under the name of RPL and when it became operational it got merged with RIL. Then its second refinery was being built under the name of RPL. Now its time when this refinery is about to be operational. So the merger again.

The merger couldnt have been timed any better. This merger will bring two companies together, one of which has good potential to bring in high cash flow and the other having huge reserves for the investment.

Post merger the swap ratio could be anywhere between 1 share of RIL for very 15 or 24 shares of RPL. This would prove profitable to RIL shareholders rather than RPL.

So should we buy these shares next week. Buying RIL early next week would be profitable but its better to avoid RPL.

Related Posts:

Multibaggers

Oil price cuts

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New industrial policy for karnataka

With elections in mind the Karnataka government announced a new industrial policy intending to replicate the success achieved in Gujarat.

Some of the features of the new industry policy for 2009-2014 are:-

• Rs 30,000 crore to create additional one million jobs in the industrial sector in the next five years.
• To enhance the contribution of manufacturing sector to the state Gross Domestic Product to 20 per cent by end of policy period and priority for human resources development.
  
• 1000 to 2000 acres of land would be acquired and developed in each district for establishment of industries including foreign investments.
  
• A policy would be framed to ensure better price for farmers towards the land acquired for the purpose.
  
• New airports would come up in Shimoga, Hassan, Gulbarga, Bellary, Bidar and Bijapur districts along with 11 Air strips for other districts.
  
• Investments and concessions to cover new industrial investments including expansion, modernisation and diversification in 166 taluks out of 176 taluks in the state.
  
• interest free loan against VAT payment by large and mega scale industries
• small and medium industries will be eligible for production or employment-linked investment subsidy of Rs 5 lakh to Rs 35 lakh, stamp duty exemption ranging between 75 to 100 per cent in respect of all categories of industries for purchase of approved industrial layout and also for registering their term loan documents.
• five per cent interest subsidy on term loan availed by micro enterprises and incentives and concessions to export oriented industries.
  
• A separate Special Economic Zone (SEZ) policy. The new policy, aiming to facilitate smooth establishment of such zones, will permit acquisition of lands only on the consent of the land owners. It comprised incentives for developers which among others included exemption from state taxes for all purchases exemption of electricity duty, exemption of labour welfare cess and capital subsidy for CETP.
• The Government will also develop four eight-lane roads under the Suvarna Karnataka Development Corridor Programme.
• 4,000 acres of land to Ministry of Defence for setting up of all defence related activities in Challakere taluk of Chitradurga District.

Looking at all the steps taken the state has surely addressed many concerns and one feels like the government is ready to do something for the people unlike the center which only boasted about how it ruled for the last five years in the last budget.

Related Posts:

Oil rate cuts

solution to economic slump

GDP

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GDP growth falls to 5.3%

The overall gdp growth has now fallen down to 5.3%. This is purely an impact of the global slowdown that has effected the country's gdp as well. All the industries related to service are affected very badly by this.

The RBI should now take immediate action. Reduction in the intrest rates is likely. Both the repo and the revere repo rate should be reduced by atleast 50 basis for more cash flow in the market.

The agriculture and manufacturing sector is not impacted as much as the service industry and is contributing close to one third of the GDP. However, the service sector of the country is in a bad shape and is in need of some steps to revive it.

Related Posts:

New Industrial policy

oil rate cuts

You can expect many more such measures in the coming few weeks.

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solution to avoid economic slump

In the last week Obama has introduced new measures and even indicated that he is completely against outsourcing. He even warned companies against outsourcing saying that they will have to face more taxes. Obama's policies look to be more like a communist government. Anyway, all this is happening in US and why should it affect us. This is the thinking most of the people have. 60% of the software outsourcing work is done by India. So any measures like that is surely going to affect us. So if all these actions are being taken by US should India keep quiet. No, but is anybody listening. In India, all the politicians seem to be in the election mode. All they have done till date is to fill up their pockets with money.

So is there a solution to get out of all this. Of course, every problem has a solution. Today you have seen rupee hit a new low even breaching the 50 rupee per dollar mark. The first thing that everyone in the county should do is to encourage buying of Indian products. Please avoid buying any foreign product. Indian market is the second largest market in the entire world. Yet, if you see any general stores in the market you will find 70% of the products are foreign goods.

The government should have immediately increase the import duty on all foreign products. This would immediately bring down the sales of foreign products and Indian companies would come out of the situation that they are facing today. The fiscal deficit that India is facing today will also be avoided with this step. This would be a fitting reply to Obama's stand against outsourcing.

Anyway, you cant expect the government to take any action. So lets all take a pledge to avoid foreign products from today.

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buyers of satyam ?

satyam is going to be sold in a short time. So who is going to buy it. There are many names doing rounds but the biggest strong contender for it is L&T.

The construction gaint already has 12 percent stake in this company and is willing to invest more into it. At this time of global downturn its only companies that have huge reserve capital which can think about buying the company.L&T has expressed it many times that they would be interested in buying if the company is sold to them quickly as the customers are withdrawing projects and the employees getting eroded. Satyam is expected to complement the L&T infotech and hence its showing so much interest. However, for how long it is interested in the same needs to be seen.

The other contender is Spice. Modi has expressed that he has interest in buying this firm and even asking for online bidding. This is seen as a diversification of investments by spice which wants to move from being involved only in telecom sector. He is also said that he would take all the liabilites of the company along it. This shows how keen he is on taking the control of the company.

Tech mahindra also has shown interest in this. Deepak pariekh one of the board members of satyam is also heading the mahindra and mahindra. So he could influence the decisions of the company. It may or may not enter into the buyout plan.

Related Posts:

Satyam stocks

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stock market strategy

Today is the holiday for the stock market on account of shivaratri. Probably this is a good time for us to define our stock market strategy for the year. The economic slowdown that is going on has affected all the countries. Slowly in the last few months this has strated affecting the indian industries as well, as was predicted by the stock market. Signs of layoffs in MNC's have started emerging in India as well. Not only exports but now it has started affecting all industries. So at this time should we invest in stock markets. The markets doesnt look good for the next 8-9 months. Investing at this time is a big risk. There are more chances to lose money than getting profit.

Anyway presently the sectors Pharma and FMCG products seems to be good sectors to invest in. However you may not see upward trend in these sectors but it may not be much affected during a recession. i.e. value of these stocks may not see a downward trend like the other sectors, mainly because consumption of these products wont decrease. FMCG includes dialy used products like toothpaste, milk, soaps etc. Also the pharma sector forms the important necessities which nobody can avoid. These sectors look good to me only in the sense that the value of this may not be eroded like the companies in the other sectors.

inflation less than 4%

Inflation recorded has come down lesser than 4%. This is after a very long time that the inflation has come down so low. In fact the inflation rates had reached double figures at even stayed at that for a long time over the last one year. This is the precise reason that the inflation figures even if this is considered very low is not going to affect much.

There was a time when the inflation figures used to affect the stock market greatly and everyone used to wait for the inflation to be announced. This is not the case now.

Now, even if the inflation goes negative its going to have little impact. Only if it sustains negative levels over a few weeks will it have some impact on the stock market and economy.

However these figures are surely going to get some attention of RBI. Even though the government many not take any more significant actions, you can expect RBI to come up with some measures soon.

Basics of the stock market

There are three modes of buying or selling of stocks.

Margin: These are intraday trading of shares. You can either buy the shares first and then sell the same amount of shares or vice versa. This means that at any point of time if the stock market is not flat (no movement) you can earn money if you make the correct decision.

In case you only buy the stock during the normal working hours and dont sell the stock or vice versa then the stock broker would trade the same in the last half hour of trading on your behalf, since you have taken the stock saying you would dispose the stock at the end of the same day.

You can also change the mode of buying the stock from margin to delivery after you buy the shares before the end of the day. This is called conversion to delivery.

The facility of selling the stock first and then buying the same is called short selling. i.e. selling when you are short of those shares.

Delivery: This is the normal mode of trading. Delivery means the share will be bought and converted to demat form. You can sell the share after you get the share in its demat form. Although for the aquiring the share in the demat form takes about 2 days. During this time if you want to sell it then you have use ATST option. On the same day or after you get the share in the demat form you can use delivery to sell it.

ATST / BTST (Aquire/Buy today sell tomorrow): As mentioned earlier actually getting the shares takes 2 days. If you want to sell the share before you get the share in the demat form then you can use this option.

The broker charges for intraday (Margin) would be very less while compared to delivery.

Related Posts:

Market Quotes

Learning about stocks

Key terms

key terms used in the stock market

EPS is Earnings per Share, it is the earnings of a company divided by the total number of shares. This is calculated every three months and hence for that period EPS remains the same.

PE ratio is the ratio of the market to earnings per share or simply put
PE of a company = Market price / Earnings per share (EPS)

So why are these terms important. These determine the performance of the company and hence are very important parameters you should look at while buying a share.

In case the PE ratio is very high say 100 then it means that the market is ready to buy the share at 100 times more than its current price. (meaning it has huge expectations by the market).

So should anyone buy stocks with very high PE ratio. This purely depends on the individual company. Does the company have enough in it to sustain such huge expectation.

Similarly, are the companies that have very low PE ratio are a good buy? Here again you should check the reason why the market sentiment is very bad about the company. Anywhere between 5-20 PE ration is a decent ratio

Related Posts:

Basics of the stock market

Learning to buy/sell stocks

satyam

Satyam has been cleared and now an offer for sale would be made soon. There are already a few parties like L&T, spice and the hinduja group eyeing for it. When the actual sale of the company is done we may witness a few more companies and some surprise entries going for the bid.

So what is there for the investors. Is this the right time to invest in this stock. Probably yes. Over the last few days we have seen the price of this stock falling, but this wont be for long. However investing on this stock is a risk. Many companies would be intrested in buying this company purely because its valuations have decreased greatly in a couple of months. Finally at what price does the other company buys satyam is what we have to look at. Since the stock has been trading at an average price of 40 over the last few months the bidding for this company would start at this level.

However, I doubt if the company would be sold off anytime soon. This means, it would be better to look at other stocks rather than park your funds with this share. Instead if the offer for the same of the company is made anytime soon you may end up getting very good returns. So would go for it or not ...?

gold prices breach 15k

The marriage season in India is gone, yet the gold breaches the 15000 mark. These are the record high prices. The prices seem to be only speculative without much transactions taking place in the country. With the stock market crashing along with the global recession gold provides a safe haven for all the investors all over the world. Its good for the people who are ready to sell the yellow metal, possibly the best time.

2009 Multibaggers

My picks for the potential Multibaggers for this year 2009 are:-

• Reliance Natural Resources Limited (43.55)- The price is very less since the operations of this company is yet to begin. However since this is a stock from reliance there are lot of expectation from this.
• Reliance Petroleum Limited (78.2)- The petroleum unit of Mukesh is doing well. However the price crude oil has decreased so I would prefer RNRL over this.
• Tata Steel (168.5)- Comes from the group of tata's and the best in steel industry.
  
• KS Oils (46.15)- This has great potential. Also mentioned by money control as one of the potential multibaggers.
• Arvind Mills (13.98)- The one stock that I beleive in the textile industry. The price of this stock has gone very low and my pick in this industry.
• Moser Baer (53.8)- Recently has diversified into the solar cell manufacturing. The indian subsidiary is doing very well.
• Unitech (28.05)- One among the Real estate industry which has been battered a lot in the last few months.
• DLF (155.05)- The pick of the real estate sector.
• Power Grid (86.15)- My pick in the energy industry.
• Suzlon (41.35)- another in energy because the value of this stock decreased greatly for no proper reason.

With many people requesting the value of the stocks to be posted along with the stocks, I have updated the same above as on 20th-feb. I will be revisiting this post after an year.

stock market strategy

The criteria for selecting these stocks to accumulate (aimed at long term investers) in the coming months are:-

The value of the stocks has come down to a large extent in the last one year.
The intrinsic value of the company hasn't come down much but is affected by the economy.
The company has sound capital and wont shut down under any circumstances.

With this criteria the stocks that are my favorite are:-

• Tata Steel :- Comes from the group of tatas, and the entire steel industry is affected by the slowdown of the economy. The price has come down from 1000 last year to 170 now. Probably the best time to accumulate.
• LNT :- The value of this stock has come down drastically from over 3000 to just above 600 now. The fundamentals of the stock are very good.
• Arvind Mills :- One from the textile industy which has been affected greatly by the current situation.
• RNRL :- Probably this shouldnt have been included in this list, since it hasnt started its operations yet but this stock comes from reliance so is bound to give you good returns soon.

Always remember the golden rule. Be greedy when everyone is selfish and be selfish when everyone is greedy. Thats the reason why you see stocks from real estate, steel and textile industries listed when almost everyone is running away from it now.

Stock market investment strategies - Stocks to make money instantly

In the stock market there are many ways to make money instantly. The most important ones are intraday trading and trading on futures and options. As expected  they are both easy way to make money and equally easy way to lose money as well. However, if you want to cut out the risks you can try some of the shares mentioned below.

• MMTC - the volume is very low
• Spice communication - too much manipulation happening now
• Satyam - Running on speculation

These shares are very volatile and can give good returns in short time but bear the risk of bringing you huge losses as well.

stocks to accumulate in coming months

In the previous post I had talked about this time being the best time to invest in shares. Elections are due in a couple of months and this would surely have an impact on the stock market. Since there will no government action during the election time and slowdown looming large on the world market this would probably be the worst time for the stocks.

All private sector companies will have to strive hard to stay in the competetion. Recent times look like its best to invest in public sector companies even though the private sector companies will probably be at their all time lows.

My pick for the coming months would be SBI, RIL, RNRL, LNT.

future of the stock market....

Stock market this week may be going down. The US budget didnt have much effect on its market. The same way the budget announced by Pranab mukargee didnt have any effect on the indian stock exchange.

Without any other events expected in the next few days, you may see the stock market go down for the next few days. We need to wait for some event for the market to go up, and this seems to be unlikely. Elections are coming up soon and todays budget was the last for the present government, so any changes now is very unlikely. You may expect the bank intrest rates, etc to come down a little before the elections could start but that may not effect the stock markets.

The election times will be a good opportunity for the investors to invest since this is the time when the stocks will be battered the most. Although this might be a risk, in case there is no coalition government coming up but I feel its worth the risk. Absolute majority for any party is almost impossible. So lets wait and see the action (elections) and how it affects the stock market. Enjoy...

stimulus budget?

When everybody expected a third version of a stimulus budget due to the worldwide slowdown our FM came up with a budget mainly aimed at elections (or did it acheive even that). The budget was purely a report card for the last five years... oops sorry first 3 years of its rule, it successfully ignore the last 2 years of its rule when the slowdown occured. Pranab, who is presenting the budget after almost 25 years was expected to come up with something for everyone, but it just proved to be another election campain.
Almost immediately the stock market reacted. Due to elections coming up very soon everybody expected some sort of tax releif atleast. But it looks like for the UPA aam aadmi means the agricultrists. They dont care about the people living in the cities who produce the maximum revenue for the government. I am not against the farmers but something should have been announced to curtail the slowdown of the economy.

Interim budget

This is the third budget in the last few months with the world hit by a slowdown. This is the last stimulus budget before the elections. So what to expect from it. The previous two budgets are an indication of it. This one since it is the last one before elections maybe the best in terms of tax exemptions etc. Anyway the expections are very high and it doubtful if it will live upto it.

Anyway, the share market is down as I had mentioned yesterday in my blog. Even after the budget is announced it is doubtful if it will come up. Anyway good luck.

Top tax saving funds

This is that time of the year when you will look at investments. I prefer ELSS mutual fund tax saving investments while compared to others like insurance. It gives better returns ofcourse this has not been the case who invested in the last few years.

All the tax saving funds needs to be continues for more than 3 years. Expecting that the recession hit stock market will recover before that time, I feel its a good time to invest in ELSS tax saving funds.

So while investing in these funds better go for the funds that have been performing well for a long time. While considering this criteiria of proven records the ones the funds that come to my mind are :-

1. SBI magnum fund
2. Birla sun life tax saver 96
3. sundaram tax saver

We need to consider proven records while investing in any mutual fund because you are going to hand over your money to be managed by a fund manager who needs to have a good record. If he is new to this field then its a big risk you will be taking. Not worth it...

Another advise I would like to give is that while investing in mutual funds dont bother to look at NAV's because that hardly matters. After you invest all that matter is by what percentage the funds go up or down. Since the percentage is what matters your money in either funds doesnt hardly make any difference

How market will behave today

Tomorrow the market is expected to fall. For the last one week it has been good and the market was on a upswing. But it has never been the case that market been good for more than a week in recent times. So if possible make some profit booking on monday early morning, before it goes down. Anyway this is just my prediction, have to see whether it actually does work or not ;)

Income tax refunds

Income tax now has a website which boasts of frequent updates. Infact this is a very good site. Last year I tried to file my tax returns using this site but it didnt allow me to create an account as well. Actually it has a way to file tax returns online but doesnt work. Anyway, now it says that tax refunds that are undelivered can be accessed though their website link given below.
http://www.incometaxindia.gov.in/CCIT/refundsearch
Dont know if it works though. If you find it working let me know.

sites to track stock market

So what are the best sites to track the indian stock market on the net.

To track my stocks I prefer to use rediff's stock watch. The page loads really fast even though the stock updates are a little slower than other sites. The only reason that I like this site is that it loads very fast. You can create your own portfolio and create a market watch etc and for beginners can play share bazaar game before entering the stock market.

For stock market news moneycontrol is the best. The news updates are good. Even small news are updated very quickly and accurately on this site. The stock market recommendations are also good. This site loads very slowly which is a pain.

Best shares to invest

During the times of recession which is the best stock to invest.

According to me the best industry would be banking or finance. These industries are at their all time lows. So it would be the best time to invest in these now. There are other sectors like the real estate or textile industries which have been batter to their all time lows, but expecting them to give good returns in the near future would be almost impossible. Infact, many of the companies in these two sectors are about to shut down. So better to stay away from these.

Looking at the stability of the companies I like SBI. There are couple of others like ICICI which I would like to avoid even though there are of the same sector. Nationalized banks are always a safe bet. In the finance sector reliance capital seems a safe bet mainly because it has reliance name associated with it ;).

Surely this is not a time to go for penny stocks. So dont go for small stocks even though it may give good returns. If you have an appetite for high risk go for it. My bet on small stocks goes to Arvind Mills and Ispat industries.

stock updates this week

This week the indian stock market has been steady. The same is not the same with the US stock exchange. The interim stimulus budget announced by Obama had very little impact on their stock market. It fell continuosly and even breached the 8k mark. All this had no effect on the indian stock market. Probably and hopefully this is the end of the dependecy of Indian market on the US. As of now Indian stocks seems to be impacted purely by the happenings in the country. On friday, the railway budget was announced. This had a good impact on the stock market as it went up. Only the railway related shares went down, but overall it was taken very well.

Funds to invest in now

These are the times when recession is going on. So what are the best funds to invest in. This is the question in everybody's mind now. For the last one year the best funds are Gilt funds and debt funds.

So should we invest in Gilt funds now? When the bank intrest rates are going down this is the best funds to invest in.
Debt funds are like fixed deposits. So there are also a good bet.

According to me money is very valuable now. Most of the things are available at a cheap price now. So this is the best time to invest. So should we invest in Gilt or Debt funds. My opinion is NO. Now is the time to invest Stock market directly or normal funds cause all the funds are available at a very low price. I am saying this expecting the recession to continue for 8-9 months. So till then Debt funds and Gilt funds are a good bet.

Finance strategies during recession times

At the times of recession you need to focus and plan a lot on your finance and the strategies to be used.


During these times money is highly valued. So any kind of investment should be properly thought out.

One of the important things to do immediately is to diversify. i.e have multiple sources of income.

Don't depend on one particular income source. This is one of the best survival strategy.