Indian stock market and companies daily report (June 08, 2012, Friday)

The Indian markets are expected to open in the red tracing negative opening in most of the Asian bourses and the SGX Nifty. Asian stocks were trading lower after comments by Federal Reserve Chairman Ben S. Bernanke overshadowed China’s first interest-rate cut since 2008.
The People’s Bank of China has lowered its benchmark lending and deposit rates by 25 basis points. The announcement, two days before China is due to report inflation, investment and output figures, may signal that the economy is weaker than the government expected. Bernanke said the central bank will need to assess conditions before deciding if more measures are needed to stoke an economy threatened by Europe’s debt crisis and U.S. budget cuts.
Meanwhile Indian shares extended recent gains on Thursday after the rupee breached the 55 mark to hit a two-week high against the dollar reflecting a return of appetite for risk. Talks of the government giving a big push to infrastructure development bolstered sentiments. Although there were reports of the Union Cabinet deferring a decision on the Pension Bill due to lack of consensus, the benchmark indices ended the trading day with significant gains.

Markets Today
The trend deciding level for the day is 16,617/5,039 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 16,713 – 16,777/5,070 – 5,091 levels. However, if NIFTY trades below 16,617/5,039 levels for the first half-an-hour of trade then it may correct up to 16,552 – 16,456/5,018 – 4,987 levels.

China cut borrowing costs
China reduced interest rates for the first time since 2008 and loosened controls on banks’ lending and deposit rates, in its bid to combat a deepening slowdown as Europe’s ongoing debt crisis threatens global growth. The one-year lending rate and one-year deposit rate were reduced by 25bps to 6.31%, and 3.25%, respectively. Banks are now given more leeway to offer upto 10% higher than benchmark deposit rate to depositors and to charge upto 20% lower than the key benchmark lending rate (previously 10%).

RIL plans a capex of Rs.100,000cr over next 4 years
Reliance Industries (RIL) conducted its Annual General Meeting (AGM) for FY2012. With cash and equivalents of ~Rs.80,000cr as of March 31, 2012 on RIL’s balance sheet, Chairman Mr. Mukesh Ambani announced that the company plans to invest Rs.100,000cr across business segments over the coming four years. It targets to invest ~US$3.5bn on shale gas. On its core petrochemical business, RIL aims to increase its capacity to 25mn tonnes from the current 15mn tonnes and also invest in operational efficiency projects. RIL aims to become a market leader in retail business and targets to achieve top-line of Rs.40,000-50,000cr over the next threefour years (current top-line Rs.7,600cr). Further RIL informed that although KG D6 production has declined over the past one year to 34mmscmd, it aims to raise total gas production to 60mmscmd by 2015. On profitability front, Mr. Ambani said that RIL aimed to double its operating profits in the coming five years. RIL has bought back 2.79cr shares at a cost of Rs.1,929cr under its share-buyback program. Alongside decline in KG D6 gas output, deployment of huge cash pile was amongst the key concerns on the stock. Clarity over deployment of cash is positive in our view. We maintain our Buy rating on the stock with a target price of Rs.879.

L&T bags orders worth Rs.2,410cr
L&T’s construction arm has won Rs.2,410cr new orders across various businesses during April-June 2012. The Buildings and Factories IC has secured new orders worth Rs.1,921cr. The orders are from leading developers for the construction of major residential towers across various cities in the northern part of the country. L&T Infrastructure IC has won orders to the tune of Rs.345cr for the design and construction of viaducts and three elevated stations from Delhi Metro Rail Corporation which also includes additional orders from various ongoing projects. Water effluent and treatment business has bagged new orders worth Rs.244cr from Bangalore Water Supply and Sewerage Board for upgrading the existing water distribution systems including additional orders from various ongoing projects.
At the CMP of Rs.1,277, the stock is trading at 16.7x FY2014E earnings and 2.4x FY2014E P/BV on a standalone basis. We have used the SOTP methodology to value the company to capture all its business initiatives and investments/stakes in different businesses. Ascribing separate values to its parent business on a P/E basis and investments in subsidiaries on P/E, P/BV and mcap basis, our target price works out to Rs.1,553, which provides 21.6% upside from current levels. We recommend Buy on the stock.

Economic and Political News
- People’s Bank of China cuts interest rates as economy continues to slide
- Monsoon 36% below average in first week: IMD
- PM's push for infra sector to boost investor confidence: CII
- Cabinet defers decision on pension reforms bill

Corporate News
- Tata Steel to set up Rs.30,000cr plant in Karnataka
- Suzlon to invest Rs.15,000cr to set up a 2,500 MW wind farm in Karnataka
- Dr Reddy's launches generic Parkinson's disease tablets in US
- BHEL commissions 250MW unit at UP thermal power project
- Jubiliant Life Sciences to invest ~Rs.1,000cr across businesses in Karnataka

Online share trading in India, open demat account in Angel Broking for stock market trading

What are Derivatives and their need in the Indian Share Market

Derivative instrument is a contract between two parties that emphasizes conditions ( including dates that result in values of the underlying variables and notional amounts) under which payments can be made between both the parties.

Derivatives are used by investors for the following reasons:

1)            It provides leverage with a small movement in the underlying value that causes a large difference in the value of the derivative.

2)            One can often speculate and make a profit, if the value of the underlying asset goes in the way they expect.

3)            It mitigates the risk in the underlying, by making an entry in the derivative contract whose value moves in the opposite direction, stays in or out of a specific range and may reach a certain level.

4)            It can obtain exposure to the underlying where it may not be possible to trade in the underlying derivatives.

5)            It has the ability to create options, where the value of the derivative is linked to a specific condition or event.

When Derivatives allow risk related to the prices of the underlying asset to be transferred from one party to another, it is known as Hedging. Both the parties have a reduction in a future risk, however there is still a risk of the non-availability of the resource that may back-track because of the events unspecified by the contract such as natural damage, may cause problems on the contract.

Although a third party, which is also known as a clearing house, it insures a futures contract, not all derivatives can or will be insured against a counter-party risk.

Derivatives are also used to acquire risk, rather than hedging the risk. Thus, some investors or institutions can enter in a derivative contract to speculate on the value of the underlying asset.

These speculations look to purchase an asset in the future at a really low price which according to the derivative contract maybe a high price to sell the asset in the future when the market price is low.

An OTC or over-the-counter derivative is a contract that is privately traded and negotiated between two parties without going through an exchange.

Exchange-traded derivative contracts are those derivatives that can be traded via specialized derivative exchange or other exchanges. There is a market where derivatives exchange acts as an intermediary to all transactions and takes an initial margin from both the sides of the trade to act as a guarantee.

Online share trading in India, open demat account in Angel Broking for stock market trading

What are the advantages and disadvantages of Online Trading?

Due to the problems that arose during paper shares, there was a need of a system that would make share transfer, buying/selling of shares, etc. an easier affair.

Therefore in 1996, the Indian parliament passed the Derivatives act, which allowed online transaction of shares, thus making it much easier for the broker and investor.

In the new online Trading system, an investor must open a demat account with one of the Stock Brokers to start trading online.

A demat account is a must for an investor to trade online.

Mentioned below are some of the advantages of trading online:

1)            Easier and convenient way to own shares

2)            Immediate transfer

3)            Zero stamp duty on transfer of shares

4)            Safer than paper shares, e.g., fake signatures, delay, thefts, etc.

5)            Lesser paperwork for transfer of securities

6)            Less transaction cost

7)            No “odd” problems. Even a single share can be sold.

8)            DP registers a change in address with all companies. No need for the investor to contact the companies immediately.

9)            DP transmission of securities, thus eliminating the need of notifying the companies.

10)          Automatic credit in demat accounts

11)          Both equity and debt instruments can be held by a demat account

The depository system aids in reducing the expenditure of new issues due to lesser printing and distribution costs. It increases the efficiency of the registrars and transfer agents and the secretarial department of a company. It provides better facilities for communication and timely service to shareholders and investors.

The disadvantages of online trading are mentioned below:

1)            Investors, who are trading for the first time, go with the flow and get immersed in technology and actually temporarily forget that they are actually using their real money. 

2)            There is no relationship that of a mentor between a professional broker and an online trading account holder, thus leaving the investor on his own to make choices of the right shares.

3)            Users who are not familiar with the ins and outs of the basics of brokerage software can make mistakes which can prove to be a costly affair.

4)            This is like any other financial strategy, where your commitment to online trading takes research and dedication to make sure by yourself that everything is up to par. You have to take time out to do your own research where you will have to overcome a great learning curve to make some money from online trading a possibility.

Online share trading in India, open demat account for stock market

Indian stock market and companies daily report (March 30, 2012, Friday)

The Indian markets are expected to open in the red tracing negative opening in most of the Asian indices. Asian stocks fell for a second day as growth in U.S. durable-goods orders trailed estimates.
The US markets drifted lower over the course of the day on account of profit booking as some traders cashed in on the recent strength in the markets amid calls by a number of analysts for a correction. Traders also reacted negatively to the latest batch of U.S. economic data, including a report from the Labor Department showing that weekly jobless claims came in above economist estimates. However the indices recovered significantly in the later sessions and eventually ended up near the opening.
Indian shares extended losses for a second consecutive session on Thursday, as concerns about growth prospects in the world's two largest economies prompted investors to square off long positions on the expiry of March series derivative contracts.

Markets Today
The trend deciding level for the day is 17,136/5,200 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,232 – 17,342/5,231 – 5,267 levels. However, if NIFTY trades below 17,136/5,200 levels for the first half-an-hour of trade then it may correct up to 17,026 – 16,930/5,164 – 5,133 levels.

TCS to provide banking solution - BaNCS to AmBank, Malaysia
TCS' financial services platform, TCS BaNCS, will replace Malaysian AmBank's core banking engine. This integrated banking suite, spanning conventional and Islamic banking, will support both retail banking and lending functionalities. TCS BaNCS will help expand AmBank's business into new areas. It will also enable development and the scalability required to meet both current and future market and regulatory needs. Due to this deployment, TCS may soon have a regional support centre for TCS BaNCS in Kuala Lumpur. We maintain Accumulate rating on the stock with a target price of Rs.1,262.

NTPC Tamil Nadu Energy Co. commissions Unit I of Vallur Power Project
NTPC Tamil Nadu Energy Co. Ltd. a JV of NTPC Ltd. and TNEB has commissioned Unit I (500 MW) of Vallur Thermal Power Project on March 28, 2012. With this, the total capacity of NTPC group has become 36,514 MW. In all NTPC group has commissioned 2,320MW of capacity in FY2012 till date, which is below the initial target of 4,320MW. At the CMP, the stock is trading at 1.6x FY2013E P/BV. We maintain a Buy on the stock with a Target Price of Rs.199.

Economic and Political News
- February infra output up 6.8% yoy
- Indian GDP to grow at 7.5% in FY2013: Fitch
- Government will clarify stance on P-Notes taxation: Finance Minister

Corporate News
- Tata Motors hikes commercial vehicle prices by up to Rs.60,000
- Tata Motors to invest Rs.600cr on defense vehicles
- NTPC to halt expansion of gas-based projects
- Bharat Forge earmarks Rs.100cr to develop artillery gun

Open demat account in Angel Broking for Online share trading in India

Share Prices in India

A share price is the value of a single or a number of shares or saleable stocks of a particular company. Once an investor has purchased the shares, he becomes a Share holder of that company that has issued the share.

The research analysts believe that the share price deviation results on the basis of seasonal and temporal patterns. It has been noted that the returns is significantly more then what it is in other months and on Mondays the share price is down more than on any other day.

These effects have been observed by the research people on the basis of these fluctuations.

The technical analysis to extract information based on future share price movements from historical data. As a result of such an unpredictable or behavior the huge amount of data available researchers for analysis causes the fluctuations.

The causes an element of unpredictability in the share prices, depending on what the market has achieved so far. When viwed over a long duration the stock prices are directly or indirectly related or the dividends to the earnings, and cause a fluctuation in the market value.

The desire of the investors has led into trading of shares. The stock exchange is the place, where buying/selling of the stocks take place.

A stock broker usually represents the stock trader, who buys the shares on his/her behalf. A company lists its shares on the BSE or NSE stock exchange by maintaining the listing requirements of the particular stock exchange.

In India, BSE and NSE hold the rights for all its investors.

Small companies that cannot qualify or cannot meet the listing requirements of the major exchanges can be traded over the counter using the off-exchange mechanism in which trading can take place directly between both the parties.

When an investor wants to buy shares, he purchases them via the stock broker. The brokers normally charge a fixed amount of commission over the prices. Another way to buy shares is by purchasing them directly from the company at the originally listed prices.

A direct public offering is an initial public offering in which the shares are directly purchased from the company without the aid of brokers.

The share prices are normally not affected when the stock broker buys the shares on the behest of the investor.

Selling stock is similar to buying it. Generally the investor will buy when the share prices are low and sell them when the share prices are high. Even while purchasing the broker has a certain fee depending on the type of brokerage services that he is offering to the investor.

The share prices play an important role in the profit or loss statement of the investor.  So, after any transactions, the seller is then entitled to all the money, but he must make sure to keep a regular track of his earnings.