indian stock market

http://in.finance.yahoo.com/news/How-reduce-tax-selling-shares-bankbazaar-2846348923.html Investors looking for high returns and willing to take high risk, use equity/stock markets as an investment avenue. As an investor, do you know what the tax implications of gains/losses from this investment are? Are you aware of the impact corporate actions (rights issue, bonus, split, dividend) have on you from a tax perspective? If not, it is essential you understand the same so that you're able to minimise tax incidence and increase return on investment. Securities traded on the stock exchange are treated as a capital asset. Hence transacting in securities will lead to a capital gain or a capital loss. Anil purchased 200 shares of Axis bank at Rs. 740 on 10th May 2009, and sold it off at Rs. 820 on 15th March 2010. There was a gain of Rs. 80 per share, which is termed as 'capital gain'. Capital Gain/loss can be either short-term or long-term depending on the tenure for which the...

Ashish Gupta, ET Bureau         A stock split is the partitioning of outstanding shares of a company into a larger number of shares, without affecting stockholders' equity or the total market value of the stock.     For example, if a company declares a 2-for-1 stock split of its stock, which has a current market value of Rs 100 per share, and 1,00,000 shares are outstanding Before the split:     Outstanding shares: 1,00,000 Market value: Rs 100 Market capitalisation: Rs 1 crore     After the split:     Outstanding shares: 2,00,000 Market value: Rs 50 Market capitalisation: Rs 1 crore Essentially, in the 2-for-1 stock split, the company's outstanding shares are simply doubled and the stock price is divided in half. The market capitalisation, or market value of the stock, remains the same. This is because stock splits have no impact on the value of a company's stock.     A stock split is merely an accounting transaction in which no equity is exchanged. Companies can split ...

If dividends and capital gains are the two components of return to an investor, how much do Indian investors value dividends? Not much, it seems. Rajalakshmi Sivam Indian investors tend to put their money on stocks more for their ability to deliver capital gains than for their yearly dividend payouts. This is also justified by the fact the Indian market as a whole doesn't deliver much of a return by way of dividend. The current dividend yield for the constituents of the Nifty index (dividends/market price) is less than 1 per cent. Nevertheless, investing for dividends does make sense for investors due to a few reasons. If last year's evidence is anything to go by, dividend payouts tend to be less volatile than company profits, which decide valuations. While the market as a whole may not sport a high dividend yield, investors can still bet on the few stocks that do. Here's an analysis of the trends in dividend payouts of Indian companies and dividend yield stocks, based on...

Making money from Indian stock market was never so simple. Even though markets are in the upswing we can find more and more people losing in stocks. A close study shows non understanding of financial markets as the major reason for this. Fundamental study helps you to identify potential winners which can be multi-baggers. Technical analysis helps to time the markets. But there is one more important factor that affects the profits of your investments that is Tax. In this article we have briefly explained different types of Taxes that influences your Returns. There are thousands of companies in India all of them require capital for functioning and they issue securities to get funds. Securities Transaction Tax (STT) Securities Transaction Tax (STT) is a tax on the evalue of shares bought and sold on a stock exchange. The Tax has to be paid irrespective of your profit or loss; it is a turnover based tax. STT has been introduced in the in the year 2004-05. It is levied on the purchase or ...

One of the most common problems that many investors face is whether to sell or to resort to cost averaging when the price of a stock, or the NAV of a mutual fund, drops just after a purchase is made. A typical question I face goes something like this: "I bought a stock at 80, and when it dropped to 40 I bought some more to bring my average cost price down to 60. Now the stock has dropped below 30. Should I sell to reduce further losses, or buy some more to bring the average cost down further, or just hold on till I get back my average cost price of 60?" There are no easy answers to such a question. The answers will depend on the type of stock, the investor's risk tolerance and holding period. So, instead of providing answers, let me try to list out some do's and don'ts that can better prepare investors to face a similar situation. Do's about Cost Averaging 1. Before you pick any stock or fund, do a due-diligence. Find out as much as you can about the track r...

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, divide...

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. Madan After 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 ...

this volatile market, nobody wants to have a bumpy ride and lose money in the risky instrument like equity. Caution needs to be taken and instead of going for the `tips', doing your own `homework' certainly helps. Common investors, if they invest their time in selecting the businesses, which are fundamentally strong, then they should not fret over the market movements. Here are some pointers to look at before investing in any business. 1. Income - Look at the quarterly and yearly progress in the earnings of the company - Look at its competitors' earnings and do a comparative analysis - See whether the income is coming from its core businesses and its growing - Give attention to debt part, see whether it is shrinking or growing 2. Change - Keep an eye on any change in management, geographical focus or any new launch of product which could make/destroy the value - See what is the capital structure of the company, any change, issue of new shares, buyback ...

investors hould aim at picking up stocks with a low price earning ratio (PE ratio). The term PE ratio is commonly used in investment decisions. Investors rely on this ratio to base their investment decisions in equities. Simply stated, a P/E ratio is the ratio between the market price of the share and the earning per share. The ratio tells us how many times the market price of a share is vis-a-vis its earning. According to one view, lower the PE ratio, the better it is for the investors, as there are chances of appreciation, and vice versa. Moreover, the risk element also increases. According to others, it is the other way around. However, there are exceptions to these rules. A PE ratio is a valuation ratio of a company's current share price as compared to its per share earnings. It is calculated as market value per share divided by earnings per share (EPS). For example, if a stock price is Rs 100 and it has an EPS of Rs 5, the PE ratio is Rs 100 divided by Rs 5, that is, R...

How to build an ideal portfolio? An ideal portfolio should have exposure to different asset classes like Gold, Property, Insurance, Providend Fund, Bank deposits besides equities. It should be well-diversified so that you are saved from the ups and downs in one asset class but not over-diversified as it kills the returns of a portfolio over time. This can be implemented by having: • Not more then 15-20 well-researched stocks. This can be achieved by allocating a minimum of 5% and maximum of 10% to a particular stock. • Not less then 5 sectors and not more then 8 sectors. This can be achieved by allocating a minimum of 10% and maximum of 20% to a particular sector. • A judicious combination of large caps and mid caps depending on the risk profile (A recommendation is 60:40 ) • Small cap/Speculative stocks exposure between 0-5%. An investment in such stocks is like drinking, if it cannot be avoided altogether then it should be done occasionally and in limited quantity. • Allocation to va...

ABSTRACT The article starts with simple jargon related to stock market. It is exclusively meant for starters who do not know fundamentals of stock market investment. What are the reasons for low participation in equity market in India are highlighted. The power of Systemic Investment Plan, the role of Mutual Funds and the potential in the High Net worth Individuals are attempted effectively. Risk diversification and tips for effective investment are dwelt at length so as to encourage new investors in this area. At the end, the article concluded that any one can become a billionaire like Mr. Warren Buffet if there is passion, patience, preservation to reach the top slot. Key words: Technical jargon, Indian Stock market Scenario, Demat Format, Systematic Investment Plan, Mutual Funds, High Net worth Individuals, Risk diversification, Tips for investment and Conclusion. ----- "Every fall has a rise and every rise has a fall". The globe has turned out to be a materialitic and no ...

T he following 8 financial ratios offer terrific insights into the financial health of a company -- and the prospects for a rise in its share price. 1. Ploughback and reserves After deduction of all expenses, including taxes, the net profits of a company are split into two parts -- dividends and ploughback. Dividend is that portion of a company's profits which is distributed to its shareholders, whereas ploughback is the portion that the company retains and gets added to its reserves. The figures for ploughback and reserves of any company can be obtained by a cursory glance at its balance sheet and profit and loss account. Ploughback is important because it not only increases the reserves of a company but also provides the company with funds required for its growth and expansion. All growth companies maintain a high level of ploughback. So if you are looking for a growth company to invest in, you should examine its ploughback figures. Companies that have no intention of expanding a...

Tools for Finding Breakout Stocks Fundamental analysis is the process of looking at a company's basic or fundamental financial level. This type of analysis examines important terms of a companies to determine its financial health and gives you an idea of the value its stock. Many investors use fundamental analysis alone or in combination with other technical tools to evaluate stocks for investment purposes. The idea behind this is to determine the current worth and, more importantly, how the market values the stock in coming future. The following points are based on important tools of fundamental analysis and what they tell you. Even if you don't plan to do in-depth fundamental analysis yourself, it will help you to follow stocks more closely which will give you good returns in future/long term investments. Earnings It's all about earnings. When you come to the bottom line, that's what investors want to know. How much money are the companies making and how much is it go...