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Showing posts from August 17, 2008

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Go for gold

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Golden Story Between 1990 and date, gold has risen by 6.15 per cent per annum while equity has grown by 20.6 per cent per annum. The standard deviation of monthly movement in gold prices is 3.8 per cent while that of equity is 9.3 per cent, suggesting less volatility in gold.

Sheen of returns V. Pattabhi Ram
T. N. Madhan'Gold', as an investment option, has been in the news in recent times. Suddenly every analyst is suggesting that gold should form part of every portfolio. And they are right. Date with Gold Humans have an eternal date with gold. In 1849, when gold was discovered in California, thousands of men rushed in for a share of the booty. Some managed to mine the gold, many returned home sadder and poorer but wiser while others died in the punishing ordeal.During financial crisis, countries have turned to gold for help. In 1931, when agricultural production slumped, India sold 1,400 tonnes of gold. Sixty years later, in 1991, the Indian government shipped out 4…

oil suffers biggest oneday fall since 2004

Oil suffers biggest one-day fall since 2004



Prices drop more than $7 to $114 on dollar rise, demand worries


Richard Valdmanis NEW YORK




  CRUDE oil prices fell more than $7 on Friday in the biggest oneday
percentage slide since 2004 as dealers turned their focus to rising
supply levels and weakening global demand.
  A rebound in the US dollar encouraged the sell-off, applying
downward pressure across the commodities markets by weakening the
purchasing power of buyers using other currencies, analysts said.
  "People who were buying on Thursday are taking profits on Friday,"
said Peter Beutel, analyst at consultancy Cameron Hanover. "There is
also renewed technical selling and talk again of demand destruction.
The dollar is strong again too."
  US light crude fell $6.07, or 5%, to $115.11 a barrel at 12:25 am
IST, — the biggest one-day fall in percentage terms since December
2004. London Brent crude fell $5.85 to $114.31 a barrel.
  The slide completely reversed crude's surge…

Govt, PSU employees preferring investment in stocks: Assocham

Mutual funds and stocks have emerged as attractive investment tools for a majority of government employees, who until recently preferred traditional and risk-free options such as fixed deposits, a survey said Of the 510 employees surveyed by industry body Assocham, 58 per cent said they preferred shares and mutual fund schemes for investing their savings as these provided higher returns over a 2-3 year time frame.     The main reason for government employees to foray into stocks is the easy availability of advisory services by experts, the chamber said.     Massive investments in stocks and infrastructure have also lured government employees, who are tilting toward the capital market instead of traditional channels of investments like post offices, banks and fixed deposit schemes promoted by the government, it added.     "Despite the stock market being volatile, government employees are willing to take the risk. They are now focusing on investing in stock markets rath…

RIL inches ahead on hopes for settlement of gas dispute

Reliance Industries rose 0.5% to Rs 2225 after the Bombay High Court on Thursday, 21 August 2008, suggested that the warring Ambani brothers go back to their mother Kokilaben and have the dispute settled. The stock hit a high of Rs 2229 and low of Rs 2191. On BSE, 42,219 shares were traded in the counter. The scrip had an average daily volume of 12.79 lakh shares in the past one quarter. The stock had a 52-week high of Rs 3252.10 on 15 January 2008. It had hit a 52-week low of Rs 1717 on 22 August 2007. The large-cap scrip had underperformed the market over the past one month till 21 August 2008, rising 2.74% compared to the Sensex's 2.84% gain. It had outperformed the market in the past one quarter, sliding 17.08% compared to Sensex's 17.39% fall. The company has an equity capital of Rs 1453.71 crore. Face value per share is Rs 10. The current price of Rs 2225 discounts its Q1 June 2008 annualised EPS of Rs 113.10, by a PE multiple of 19.67. The division bench…

Oil sees biggest 2-month gain on rising global woes

Oil prices rose more than 5% on Thursday, the biggest gain in more than two months, amid rising global tensions and a weak US dollar.

US light crude for September delivery gained $6, or 5.2%, to $121.56 a barrel by 21:30 pm IST, the biggest percentage gain since June 6. London Brent crude too climbed by $6.11 to $120.47 a barrel.

"There's a myriad of geopolitical factors rumbling in the background — Russia, Iran," said Tony Machacek, broker at Bache Commodities, adding "Also, the dollar is weaker."

The US and Poland signed  on Wednesday to station parts of a US missile defence shield on Polish soil, drawing a sharp response from Russia, the world's second-largest oil exporter. The pact comes as relations between Russia and the West have been strained by Moscow's military intervention in Georgia. The conflict there has disrupted the transit of Azeri oil through Georgia.

The spat adds to political factors that have supported oil prices in rec…

Rayban Sun Optics India spurts

Rayban Sun Optics India surged 4.53% at Rs 120 at 12:20 IST on BSE after a majority of bids came at Rs 185 per share in its ongoing delisting offer. On BSE, the counter saw high volumes of 2.28 lakh shares so far during the day. The scrip had an average daily volume of 59,796 shares in the past one quarter. The stock hit a high of Rs 122.85 and a low of Rs 114 so far during the day. The stock had a 52-week high of Rs 142.40 on 17 December 2007 and a 52-week low of Rs 53 on 19 March 2008. The small-cap scrip underperformed the market over the past one month till 20 August 2008, rising 3.14% compared to the Sensex's 7.65% gain. It outperformed the market in the past one quarter, falling 60.90% compared to Sensex's 14.81% fall. The company has an equity capital of Rs 24.48 crore. Face value per share is Rs 10. The current price of Rs 120 discounts its Q2 June 2008 annualised EPS of Rs 7.34, by a PE multiple of 16.34. As per the latest data available maximum bids …

Low-yield stocks could get you higher returns

MUMBAI: In a volatile market such as one we are in right now, are investors better off betting on high-dividend yield stocks? After all, buying such stocks is traditionally considered a good defensive strategy in turbulent market conditions.

But there is a school of thought that propounds the view that investors tend to overlook capital appreciation, for which equities as an asset class are known for. In other words, the primary objective of equity investments is capital gains, rather than fixed returns. If one was to keep this aspect in mind, low-yield stocks, by virtue of belonging to moderate-to-high growth sectors, could actually have a higher likelihood of giving better returns.

"Remarkably, low-yield stocks reported a higher average eearnings growth Y-o-Y (65% in FY07 and 37.5% in FY08) vis-à-vis high-yield stocks (30.5% in FY07 and 14.9% in FY08)," says Keynote Research senior vice-president Nitin Khandkar.

Dividend yield is the annual dividend paid by a stock, divided b…

Visa Steel shines on initiating mega project

Visa Steel rose 2.51% to Rs 53 at 14:53 IST on BSE after the company said it signed a preliminary agreement with the Chhattisgarh state government to invest Rs 4750 crore in the state for an integrated steel plant. The company made the announcement after market hours on Tuesday, 19 August 2008. On BSE, 1.30 lakh shares were traded in the counter. The scrip had an average daily volume of 1.42 lakh shares in the past one quarter. The stock hit a high of Rs 55.90 and a low of Rs 52.10 so far during the day. The stock had a 52-week high of Rs 65.65 on 2 January 2008 and a 52-week low of Rs 30.05 on 24 August 2007. The scrip had outperformed the market over the past one month till 19 August 2008, rising 13.63% compared to the Sensex's 6.66% gain. It had also outperformed the market in the past one quarter, falling 9.62% compared to Sensex's 16.58% fall. The small-cap pig iron maker has an equity capital of Rs 110.24 crore. Face value per share is Rs 10. The current …

Fertiliser stocks soar on subsidy clearance

Fertiliser stocks spurted on report that the ministry of fertilisers has cleared Rs 22000 crore in cash as fertiliser subsidy, reducing concerns of cash flow problems for the companies. Tata Chemicals (up 1.45% at Rs 321.60), Chambal Fertilizers & Chemicals (up 3.90% at Rs 82.55), Nagarjuna Fertilizers & Chemicals (up 3.92% at Rs 42.45), GSFC (up 4.51% at Rs 167), Zuari Industries (up 5.06% at Rs 325.20), National Fertlizer (up 4.93% at Rs 59.65), and Rashtriya Chemicals & Fertilizers (up 5.07% at Rs 68.35), soared. According to reports, Ram Vilas Paswan, minister of chemicals & fertilizers and steel has said that the Finance Ministry has cleared Rs 22,000 crore in cash as subsidy for fertiliser companies. He said that the second tranche of Rs 32,000 crore subsidy would also be paid in cash. The government will pay the first two tranches of fertiliser subsidy within three months. The first two tranches of fertiliser subsidy would amount to Rs 54,000 crore.…

RCom gets high investor rating points on launch of DTH services

Reliance Communications gained 3.43% to Rs 413.50 at 11:35 IST on BSE after its subsidiary Reliance Big TV launched direct to home services on Tuesday, 19 August 2008. On BSE, the counter clocked volumes of 10.07 lakh shares. The scrip had an average daily volume of 24.90 lakh shares in the past one quarter. The stock hit a high of Rs 418.80 and a low of Rs 403.60 so far during the day. The stock had a 52-week high of Rs 844 on 10 January 2008 and a 52-week low of Rs 381.05 on 3 July 2007. India's second listed largest telecom services provider by sales had underperformed the market over the past one month till 18 August 2008, sliding 5.24% compared to the Sensex's return of 7.41%. It also underperformed the market in the past one quarter, declining 31.48% compared to Sensex's decline of 16%. The company has an equity capital of Rs 1,032.01 crore. Face value per share is Rs 5. The current price of Rs 413.50 discounts its Q1 June 2008 annualised EPS of Rs 6.…

L&T close to picking equity in Australian, Indonesian coal mines

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N. RamakrishnanChennai, Aug. 19 Larsen & Toubro Ltd is close to buying equity stake in coal mines in Australia and Indonesia. "We are in the process of completing the due diligence," said Mr K. Venkataramanan, Member of the Board and President – Engineering & Construction.He, however, declined to provide details of the location of the coal mines or the stake that L&T will pick up in the mines. "We will make the announcement in two to three months," he told Business Line. The company has set up a group to scout for coal mines abroad.Picking up a stake in coal mines is part of L&T's strategy to increase its focus on the power sector. Apart from tying up with Mitsubishi Heavy Industries for manufacturing super-critical boilers, turbines and generators, L&T also plans to set up power plants on its own, including bidding for ultra-mega power projects, or pick up equity stake in projects being set up by others.In the next couple of year…

Vishal Information Technologies on a roll

Recently listed Vishal Information Technologies surged 16.53% to Rs 304.15 at 13:53 IST on BSE extending a strong rally on sustained buying interest Meanwhile, the BSE was down 240.91 points, or 1.64%, at 14403.64 on weak global cues. US stocks sank on Monday, 18 August 2008, as the prospect of more losses from the mortgage crisis hurt the shares of banks and the two biggest home finance providers, pushing all three major indexes down about 1.5%. On BSE, 76.02 lakh shares were traded in the counter. The stock hit a high of Rs 311 and a low of Rs 258 so far during the day. The stock is northbound since its debut on 11 August 2008. The stock advanced 34.58% to Rs 261.30 on 18 August 2008 from Rs 194.15 on 11 August 2008. On its day of debut, Vishal had settled at Rs 194.15 on BSE, a premium of 29.43% over the initial pubilc offer (IPO) price of Rs 150. The small-cap IT-enabled services provider has an equity capital of Rs 10.68 crore. Face value per share is Rs 10. The cu…

Back on track: IPO mkt recovers

NEW DELHI: The recent decision of the Securities and Exchange Board of India (SEBI) to cut the timeline for rights issues and change the pricing rules will enable India to improve its ratings in the global IPO market, industry players feel. SEBI recently reduced the duration for a rights issue from 109 days to 43 days.
India was in the fifth position in the global IPO market, raising around $4.3-billion from 32 deals so far this year. The only other Asian country in the top five is China, which came second, raising $15.6 billion from 94 IPOs, according the media.

The ranking indicates that India's IPO market has managed to recover after some companies such as Wockhardt Hospitals and Emaar MGF pulled out their public offerings due to inadequate response. Global IPO volumes have dipped by 51.3% so far this year, reaching around $87-billion from 403 issues.

The United States tops the global IPO list, with Saudi Arabia and Brazil at the third and fourth spot, respectivel…

Is not interim dividend a more investor-friendly option?

Coimbatore, Aug. 17 With an increasing tendency among companies to publish audited financial results that pushes back the annual general meetings (AGMs) still further, the payment of annual dividend, if any, is being done at the second/third quarter of the next financial year when the previous financial year's performance is already history and investor attention is focused on how the current financial year would turn out to be!A question as to whether the companies could not resort to distribution of interim dividends on a quarterly basis to provide periodic cash flow to the investors has arisen because companies are publishing un-audited financial results every quarter and they know about the distributable surplus in a particular quarter.Of course, companies in some of the sectors such as sugar that have huge seasonal variations in their performance may not be able to adopt this system since their financial performance varies quarter to quarter by a wide margin and t…

How to analyse a company

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After identifying the right industry to park your money, you should lay your hands on the right company. Some parameters that will help you analyse a company.


V. Pattabhi Ram
T. N. MadanAfter you have decided that it is the right time to investin and identified the right industry to park your money, you should lay your hands on the right company. As Peter Lynch says, "Identifying the right industry but the wrong company, is like marrying into the right family but the wrong girl."Here are eight financial and three non-financial parameters that you should look into when you invest in a company.Return on Capital employed: This refers to the amount earned by the company on the total funds employed in business. The capital means both equity capital and loan capital. Equity capital would, of course, include reserves as well. Return would mean profit after tax plus interest on long-term funds, adjusted for tax. This measures the productivity of money and is the closest measure of fin…

Order win boosts Bartronics India

Bartronics India gained 2.70% to Rs 180.70 at 12:18 IST on BSE after the company secured a contract worth over Rs 400 crore from the Employees State Insurance Corporation for providing smart cards. On BSE, 7.62 lakh shares were traded in the counter. The scrip had an average daily volume of 1.01 lakh shares in the past one quarter. The stock hit a high of Rs 187.50 and a low of Rs 175 so far during the day. The stock had a 52-week high of Rs 294.50 on 7 January 2008 and a 52-week low of Rs 125 on 4 April 2008. The small-cap company outperformed the market over the past one-month till 14 August 2008, advancing 15.42% compared to the Sensex's return of 10.45%. It underperformed the market in the past one quarter, declining 20.84% compared to Sensex's decline of 13.28%. The company has an equity capital of Rs 27.58 crore. Face value per share is Rs 10. The current price of Rs 180.70 discounts its Q1 June 2008 annualised EPS of Rs 22.15, by a PE multiple of 8.15.In …

Kalindee Rail Nirman Engineers: Buy

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Investments with a two-year perspective can be considered in the stock of Kalindee Rail Nirman Engineers, which is engaged in the business of signalling, telecommunications, gauge conversion and track-laying for the Indian Railways. A direct beneficiary of the higher government spending on rail infrastructure, Kalindee stands to benefit significantly from initiatives such as setting up of dedicated freight corridors, increased outlay for gauge conversion and the rollout of Metro rail projects in major cities. At current market price of Rs 209, the stock trades at a reasonable valuation of about 12 times its likely FY09 per-share earnings. This is attractive considering that the company's revenues are relatively shielded from slowing economic growth as the investments in rail infrastructure — a must to bolster the economy — may be the last to see any downturn. Given the stock's small-cap status, investors must consider accumulating the stock in lots.The proposed sett…

Gold may slip below Rs 10,500/10 grams by end-September

MUMBAI: In line with the steep fall in its price in global markets, gold price in India is expected to fall below the Rs 11,000 mark per 10 grams by September, a top industry official said.

"Gold prices have witnessed a steep fall in line with the global markets and are likely drop further and may touch the Rs 10,400 to Rs 10,600 per 10 grams-mark by September-end," Bombay Bullion Association (BBA) President, Suresh Hundia. told reporters here today.

Domestic gold prices in July saw an inverted U shaped trend, rising in the beginning of the month trading initially at Rs 12,900 per 10 grams and then rallying up to a peak of Rs 13,567 per 10 grams by mid month. Gold then began its downward journey and at the end of the month finished at Rs 12,557 per 10 grams, much below the level it had initially begun.

The gold price dropped from Rs 12,705 on July 26 to the present Rs 11,300 per 10 grams in the local bullion market.

In the international market, the yellow meta…