Experts say on Indian Budget presented by Chidu

CNBC-TV18’s Managing Editor, Senthil Chengalvarayan – I sit to write this about two hours after the Finance Minister wrapped up his budget speech. In all that while I was at our news desk helping think up headlines. The one I liked best and the one that we are running with is “A Ballot-Box Budget”. Now we are not being derogatory at all. In fact we go on to add that while industry has been left to largely bat on it’s own, it will get a boost from all the consumption that this budget will unleash. But more on that later. A Ballot Box budget, because clearly this is an election year budget, and I mean that literally. If the monsoons are okay we could well see an election in 2008. A loan waiver, an effective cut in income tax rates, the pay commission…it all adds up. Read more here

CNBC-TV18’s Executive Editor, Udayan Mukherjee – The stock market’s reaction to the Union budget could have been vastly different, if the Finance Minister had deleted two small lines from his budget speech and added one small line in turn. From his perspective, it wouldn’t have mattered much either. He should dropped the bits about short term capital gains and STT treatment, and perhaps added a modest 5% reduction of the corporate surcharge and sentiment would have been vastly different. Corporates and analysts would have had some reason to cheer, investors wouldn’t have been peeved, the FM wouldn’t have had to sacrifice much by way of revenues either and the Sensex may well have closed above 18000. Anyway, as they say, if wishes were horses, beggarswould ride. Yet, it seems a bit unfortunate as there were many positive things in his budget which investors should actually have focussed on had he not blinkered them with the silly capital gains tax hike. Read further here

India’s Budget Pours Hot And Cold Water On Capital Market (Roundup)

India’s national budget dampened hopes of investors, with key market indices ending the day with losses even as Finance Minister P. Chidambaram hiked tax on short-term capital gains but left corporate taxes and securities transactions tax (STT) unchanged.

Also, the FM’s announcement that the government will consider ways to manage capital inflow into the markets was not well received by the secondary markets.

The 30-share sensitive index (Sensex) of the Bombay Stock Exchange (BSE) opened at 17,779.54 points and notched a high of 17,779.54 before closing at 17,578.72 points.

It lost 245.76 points or 1.38 percent at the day’s close.

The broader 50-share S&P CNX Nifty index on the National Stock Exchange (NSE), which opened at 5,285.00 points, closed at 5,223.50 after touching the day’s high at 5,290.80 points.

At the end of the day of market session, it registered a fall of 61.60 points or 1.17 percent.

The market, which started the day in the negative zone on weak global cues and budget apprehensions, continued the downward slide. At one point the benchmark index lost nearly 500 points.

However, following clarity on the impact of the farm loan waiver on the banking industry, markets managed to partly recover, riding on banking stocks in the final trading session.

Leaving aside automobile and gems and jewelery, most other sectors received no significant benefits, which, according to market analysts, may have adverse effects on the already volatile Sensex in coming few weeks.

Explaining the long-term impact, S.P. Tulsian, head of SPTulsian.Com, said: ‘Overall, it is a negative budget for the capital markets. Chidambaram has gone in for a populist move. The hike in capital gains tax, unchanged corporate tax and STT will heavily affect the sentiments of the market.’

The BSE Midcap index, which closed at 7,680.39 points, went down 31.37 points or 0.41 percent.

The BSE Smallcap index, which closed at 9,628.13 points, went down 40 points or 0.41 percent.

On BSE, the market breadth was negative with low trading volumes. A total of 1,067 shares advanced, 1,630 shares declined and 46 shares remained unchanged.

Asian and European markets also closed in the red Friday.

The top gainers of the day at BSE included State Bank of India at Rs.2,109.70, up 3.48 percent, CMC Ltd at Rs.924.80, up 8.24 percent, GlaxoSmithKline at Rs.1,109.40, up 4.52 percent, Maruti Suzuki at Rs.867.20, up 32.25 percent, and Aventis Pharma at Rs.942.30, up 3.29 percent.

The top losers of the day at Bombay stock Exchange were Seimens Ltd at Rs.816.70, down 52.32 percent, Reliance Capital at Rs.1818.25, down 4.46 percent, Infosys at Rs.1,546.85, down 3.29 percent and Titan Industries at Rs.1,097.60, down 3.42 percent.

How the Sensex is calculated?

For the premier Bombay Stock Exchange that pioneered the stock broking activity in India, 128 years of experience seems to be a proud milestone.  A lot has changed since 1875 when 318 persons became members of what today is called The Stock Exchange, Mumbai by paying a princely amount of Re 1.  For the rest of the topic, click here

Ways to Learn Stock Trading as a New Investor

So you are a new investor just stepping into the world of online investing, where do you go? How do you start a journey towards financial independence, security, and freedom without educating yourself first? Lucky for you there are answers below, and they all can give you a fantastic start. By committing even a ten minutes a day to the following list you will be amazed at how fast it will start to come together.

• Open an account with a top online stock broker and use their tools to get thorough with it. If you open an account with SAM Global Securities, Sharekhan, Indiainfoline, indiabulls, and Motilal Oswal to name just a few you will have access to some amazing free research tools. Some of the brokers listed will let you open an account with as little as Rs.750 and have no maintenance fees for inactivity. Don’t go with some no name broker because you won’t get nearly as much access to free material. Personally I spent coupla months just looking over many market research tools when I first started studying and it provided myself with fantastic knowledge for a fantastic price, free. And, when you are ready to make your first online stock trade down the road, you will already have yourself setup, done deal.

• Read books on stock market education. This is a no brainer, books provide a wealth of information for anyone and everyone, and they are typically inexpensive. A great start is to explore anything written by William O’Neil who is one of my favorite authors because his reads are simple and they provide a great look into making the most of technical and fundamental analysis.

• Join a online stock community. Communities are a great place to meet other traders, ask questions, and just read through detailed conversations that provide a wide variety of investor experiences and insight. I founded www.stockthoughts.wordpress.com which I planned to get some great sites in future.

• Go to Seminars. This can become a more pricey way to gain knowledge, but seminars can provide an excellent means of gaining valuable insight into the market. Most seminars will focus on one specific aspect of the market, and off the top of my head I know there are seminars available on everything from day trading, to simply investing online in general. Some seminars are provided free and just try to sell you on their products and services, even these can be a beneficial experience, just watch out for the sales pitch at the end. Last time I had been to one asset management fund launch in big hotel in Hyderabad, India. Now wonder even before the launching finished, there I found people rushing near the food counter and utter stampede for cocktail bar counter. I was told by manager in charge of our firm’s telling that it’s normal these days.

• Find a stock mentor. A mentor can be a family member, a friend, a past or current teacher, anyone really that has an already established knowledge base and is willing to answer questions, provide help with tough situations, and just keep you motivated to learn more. I did have my stock trading course here in Hyderabad. Those I did learn with though made leaps and bounds with extending their early knowledge bases. You can never underestimate the power of a good mentor.

• Read moneycontrol website and Yahoo India Finance. moneycontrol is the best in my opinion for not only stock quotes and news, but for great well thought out articles on the stock market (which are pulled from a variety of sources). I came to know my mentor made money by looking at money control for his research. When you are getting started, go to the homepage and read through one major headline a day and I guarantee within a month you will have a vast greater understanding of the general stock market.

• Read Economic Times and Business Standard daily. These two papers are the paper covers not only the broad markets but also mutual funds and hundreds of individual stocks. There are many more news papers as well. I personally read the epaper (online version) just about every day and find it extremely useful. If you are just starting out as a new investor reading these papers will expose you to tons of information and offer a unique insight into the stock market.

• Watch CNBCTV18 and NDTV profit during the day. When the stock market is open CNBC is the #1 source for financial news. Even turning on CNBC for 15 minutes a day when you are just starting out will expand your knowledge base significantly. Don’t let the lingo or the style of news bother you, just simply watch and allow the commentators, interviews, and comments to soak into your mind. It will all make sense down the road.

• Watch Udhayan Mukerjee’s advices. For a bit of a change up from the reading and browsing online, He is an ultimate screen reader for me for many years till today. He hosts great shows to give you a daily dose of stock market goodness. He is on multiple times every weekday during the evenings, and can be viewed on CNBCTV18.

• Subscribe many stocktrading blogs in india and abroad and read it daily. This is by far the best way (in my opinion atleast twisted ) to learn stock trading as a new investor.

Ways to de-stress from the Stock Market

We all know that stress is bad. As an investor, it is very important to stay balanced while trading because Monday – Friday you are in the part of the game whether you like it or not. So how do you fight stress? The key is to stay calm and be disciplined with your investing. Stock market induced stress can be caused by you being too involved in your daily routine and the second by second moves versus staying focused on the bigger picture.How do you fight stress from the stock market?

Here are some ways you can get distressed:

• Use stop loss orders. Stop loss orders are like insurance, they are stock orders that will automatically sell your position at a pre-determined price if that price is hit anytime during the trading day. They remove the “do I sell now? Should I hold instead?” drama of investing and replace it with a disciplined strategy. They are also perfect for maintaining a strong profit vs loss ratio.

• Don’t watch your live marquee of scrips all day every day. The real time ups and downs of the market can really cause some temporary stress. If you are like me you have your real-time live quotes from your favorite stocks and the market all day. If you know you aren’t in the right mind frame it sometimes is better to just close the live quotes for a few hours or the day and bring it back on tomorrow.

• Refresh your portfolio balance only once a day. Are your stocks losing ground fast? Instead of refreshing your portfolio every 5 seconds and seeing fresh losses, wait till after the market is closed and then refresh your portfolio balance. Remember, your stop loss orders will minimize your losses for you so you don’t have to.

• Have an investment strategy. Not having an investment strategy is like running around with your head cut off. Don’t be stupid, trade with a plan. Every buy and sell should be part of that plan and as a result will greatly reduce any stress you may have. In fact, a well assembled investment strategy can mean the difference between daily stress and no stress at all.

• Eat healthy foods. Eating healthy can help keep your body well balanced. I personally enjoy an Apple almost every day while watching the stock market. Eating junk food doesn’t help stress because if your body isn’t happy your mind typically won’t be happy.

• Get enough sleep each night. Normally adults should sleep on average 6 – 8 hours a night. If you are having 5 hours or lesser duration of sleep and wondering why you are more sensitive when your stocks open down take a look at your alarm clock. Getting that extra hour or two of sleep will make a lot of difference in how you react and respond to different situations throughout the trading day.

• Don’t surround yourself with stressed individuals. You act like those who you spend the most time with. Take a look at your colleagues, and if they are investors themselves assess how they handle their own stress. If they are emotional investing evangelists screaming at the computer screen and breaking keyboards, you may want to take a step back and reconsider how much time you spend with that person.

• Stay calm in intense situations: stop, think, and then act. Perhaps the most affect way to fight stress is to take those stressful times head on with a calm mindset. Remember always to stop, think, and then act. This applies with everything from making a tough call with a unknown earnings report coming up to finding your portfolio down several percent on the day.

Direct Market Access

Direct Market Access (DMA) refers to electronic facilities that allow buy side firms to more directly access liquidity for financial securities they may wish to buy or sell. Using DMA, the firms still use the infrastructure of sell side firms but take over more of the control over the way a transaction is executed. This would allow clients direct control of their trades without depending on the broker for trade execution. This reduces cost of transaction and the impact cost on larger deals. Impact cost is the movement of stock price on execution of large deals.

There are several motivations to use DMA rather than alternative forms of order placement:

* DMA offers lower transactions cost
* DMA orders are not worked by brokers, so there is less chance of error or execution irregularities
* DMA orders can be extremely fast, and allow traders to take advantage of very short lived market opportunities

DMA was previously provided by independent firms, but the acceptance of such facilities has led to consolidation and acquisition by established sell-side firms.

HDFC and Centurion Bank of Punjab has approved merger

The Boards of both banks, HDFC and Centurion Bank of Punjab have approved a swap ratio of 1 share of HDFC Bank for every 29 shares of CboP, the merger ratio has come in favor of HDFC Bank at current market price.  HDFC Bank will make a preferential issue to HDFC after the merger to maintain 23.28% stake. The merger values CBoP at Rs 50.80 per share and current market price at Rs 56.35. The Boards of HDFC Bank and Centurion Bank of Punjab met to consider, in-principle, a merger between the two banks.  Deepak Parekh, the Chairman of HDFC and Aditya Puri, MD of HDFC Bank who is really the man on the ground; the CBoP meeting happened in the building next to HDFC in the Ambit office. Ambit is the financial advisor to CBoP as they are doing the valuations for that bank.At current market price fair value, HDFC Bank is being valued at Rs 50,000 crore while CBoP is a smaller bank. It is being valued at somewhere between Rs 10,000-12,000 crore, so if one arrives on the swap ratio on this fair value, then one gets a ratio of between 1:26-1:27, but one has to understand that these are two banks that are merging. One has also to take into consideration their total assets. We may be in for a surprise, we don’t know yet, but definitely if one takes the assets into consideration – total assets, CBoP is still just 1/4th the size of HDFC Bank, which means that for every 40 shares of CBoP, one might just getting end up one share of HDFC Bank, but only time will tell.

India: A neglected stepchild for US investors

While I was browsing after the market hours, I caught hold of this article from EMFIS.COM

Why are so few US investors interested in the opportunities of the Indian stock market?  The same question might have been asked in 2001 about interest in Chinese investment opportunities.  At that time only very few Western investors took an interest in this trend-concentrated market.

This is despite the fact that India has shown a growth in GDP of about 7% in recent years, making it one of the fastest growing economies in the world.  Maybe there is too little information in the USA about the Indian market.  Or perhaps US investors still fear the entanglements of the highly-protected semi-socialist economy followed by India after independence from Britain 50 years ago?  We do not know, but if you are reading this report, then you have a particular interest in this 1 billion person market.  Read more here

Today’s most Ten Most Active Securities at NSE

RPOWER, RNRL, IRB, TULSI, REL, RELIANCE, ICICIBANK, RELCAPITAL, JPASSOCIAT, BHARTIARTL  at NSE As on 25-Feb-2008 14:14:12 hours IST

NCFM Test In Gujarati Language

NCFM Derivatives Market (Dealers) Module test is now available in Gujarati language. Candidates have the option to take the test in English or Gujarati language. I do acknowledge Gujarati’s control most of the stock market in India. They are very very entrepreneurial in their bloodlines. I can only say this has reflected in instituting the NCFM Test in Gujarati language. The workbook for the module is available in English only. For details please click here.