Equity companies can obtain investment by either borrowing money through bank loans or other debt (like bonds) or they can raise equity capital by issuing stock. The equity capital that they raise usually trades on the exchanges, thereby giving the investors price information and a chance to sell for capital gains. It also helps the Company establish the value of their equity and information to use if they need/want to raise additional equity capital.
Smart Equity - mortgage Payoff, ask mortgage, live mortgage free, mortgage debt
Dhaval Patel SaysCan someone suggest some good companies to invest at this point of time.
As you can see that the market has shedded almost 10000 points since January. But there are few stocks whose valuations were so strong that they did not under perform as much as the sensex did. Some of those companies are Ongc, Educom solutions, Bharti, Hdfc and Hdfc Bank, ITC, Axis Bank even the NTPC and Bhel were ok. amongst the blue chip companies I am talking about. But the whole reliance Pack was amongst the top loosers.
Now to your information you can invest in companies like reliance industries now Why i am talking about this is because some where near december RPL refinery will start up so the direct impact will be seen in the parent company. Reliance capital has been corrected a lot nows its valuations have become quite attractive. Same with L&T.; You can also go for NTPC, Bhel as they will be benefited by the nuclear deal. SBI may be even good. Actually speaking right now banking sector is quite safe but if you are going for psu banks. And the stocks which I mentioned in the first paragraph are also a better option for investment.
i have to invest 1 lakh right now can you please tell which would be the most suitable option at this point of time.
I did a search on international equity mutual funds and they've performed well in the past few years; however, the majority have a very poor "since inception" rate of return. There seems to be a period around 2000 where the international market suffered.
khushi_adi Saysi have to invest 1 lakh right now can you please tell which would be the most suitable option at this point of time.
what kind of time frame you have in mind? First let me know about that
sensex crashesssssssssssssssssssss below 10k
wat next
wait for still lower levels
people predicted 9000 a couple of months back...ab delhi duur nahi 
jaikishen Sayswait for still lower levelspeople predicted 9000 a couple of months back...ab delhi duur nahi
People had also predicted sensex going all the way to 40,000 when it crossed 20,000 this January. In my opinion, there is nothing like 'prediction' as far as the stock markets go.
Wow! now we are in speculation arena.....I dont know if people will call me pessimist...however I believe sensex will touch 6,500 before it could bounce back....it is price correction, I am clueless of time correction, how long it will take our market back to bull phase is a very difficult question, however after watching couple of tech companies earnings and watching blue chips joining the party in last trading session, it becomes little clear that we still havent reached bottom!
Lets wait and watch....on an diffierent note, I saw DMK MPs took off the support from government....it will be the last thing if ruling government goes short of majority, which will further detoriate things, I wonder wht will happen to the bailout package that FM announced in the joint meeting with SEBI !!
Wow! now we are in speculation arena.....I dont know if people will call me pessimist...however I believe sensex will touch 6,500 before it could bounce back....it is price correction, I am clueless of time correction, how long it will take our market back to bull phase is a very difficult question, however after watching couple of tech companies earnings and watching blue chips joining the party in last trading session, it becomes little clear that we still havent reached bottom!
Lets wait and watch....on an diffierent note, I saw DMK MPs took off the support from government....it will be the last thing if ruling government goes short of majority, which will further detoriate things, I wonder wht will happen to the bailout package that FM announced in the joint meeting with SEBI !!
Elections are due anyway early next year, it hardly matters if they're preponed. That's why the Economist doctor was in a hurry to seal the nuclear deal
, forseeing such eventualities in coalition politics.Markets will certainly fall further as FII's are on panic withdrawal mode to meet their payment obligations in the West.
Elections are due anyway early next year, it hardly matters if they're preponed. That's why the Economist doctor was in a hurry to seal the nuclear deal
Markets will certainly fall further as FII's are on panic withdrawal mode to meet their payment obligations in the West.
What so ever be the future of the market. We can't predict at this stage or any other stage. Analysts say that the market has almost touched its bottom. And the FII sellings' impact has almost already been seen in the market. Because of which the rupee was seeing a downtrend.
According to me there is nothing with can make us thing that the market will see a bull run in the near future. But the bearish trend may not be seen. There may be a consolidation phase. The fiscal deficit is a major cause of concern and the export import deficit is also seen on higher side. IIP's no. has imparted its impact. So off course envisaging the Market is not possible. But this is for sure that each time the market will move a bit people will start profit booking because the market has debilitated the public sentiment and its just our proclivity we can't help it. we can't overcome this situation unless some good news comes our way.
Hope for the best. Fundamentally still we are strong, but technically we are seeing a pressure. When ever any bad news comes its the Share market which first discounts the news. Thereafter we see an impact in the economic situation. And so its may be seen that the market may start moving upwards even when the economy is slow.
Also the cause of concern is the reality index, capital goods, but its their tendency that they move in a bullish phase. Now at this point of time banks may prove out to be one sector which will support the market.
cheers
Wow! now we are in speculation arena.....I dont know if people will call me pessimist...however I believe sensex will touch 6,500 before it could bounce back....it is price correction, I am clueless of time correction, how long it will take our market back to bull phase is a very difficult question, however after watching couple of tech companies earnings and watching blue chips joining the party in last trading session, it becomes little clear that we still havent reached bottom!
Lets wait and watch....on an diffierent note, I saw DMK MPs took off the support from government....it will be the last thing if ruling government goes short of majority, which will further detoriate things, I wonder wht will happen to the bailout package that FM announced in the joint meeting with SEBI !!
Your first point itself is wrong. This is not a speculation phase. Had it been speculation there would have been a better scenario on our way.Haven't you seen then period when RNRL was moving breaking all the valuations and PE ratio. Infact all those stocks which were highly bullish in the bullish trend even though their fundamentals were not supporting them. Those were because of speculations.
Well on what basis are you telling 6500. I have never heard about this figure. Can you please elucidate your point. And also substantiate it if you have heard it somewhere or read.
Cheers
Elections are due anyway early next year, it hardly matters if they're preponed. That's why the Economist doctor was in a hurry to seal the nuclear deal
Markets will certainly fall further as FII's are on panic withdrawal mode to meet their payment obligations in the West.
General elections notification will come in March and I guess May end will be the stage set when new government will be in power. However, this will happen only when government survives turmoil caused by DMK MPs, just to give you a heads up, government is in middle of various reforms and of course when FM has announced bailouts - government survival has become critical for capital markets. There will be significant detoriation of investors' confidence if Government finds it difficult to sustain non-confidence motion. {DMK and alliance includes Finance Minister as well}
Your first point itself is wrong. This is not a speculation phase. Had it been speculation there would have been a better scenario on our way.Haven't you seen then period when RNRL was moving breaking all the valuations and PE ratio. Infact all those stocks which were highly bullish in the bullish trend even though their fundamentals were not supporting them. Those were because of speculations.
Well on what basis are you telling 6500. I have never heard about this figure. Can you please elucidate your point. And also substantiate it if you have heard it somewhere or read.
Cheers
My Friend, speculation dosent always shows a trend upwards, India is an emerging economy and capital markets are driven with sentiments. However, there is something called technicals, which is a narrow pipe {you might call it volatility} which operates markets. If you will turn pages in history, in 2004 sensex was trading close to 6,500, we have not reached that level, however many markets have already trading at those levels - you might look at Dow, FTSE, Shanghai.
Speculations is not confined to Capital markets, there are derivative contracts for elections, mansoon, horse trading and wht not !!
If you will notice Chinese Capital markets - Shanghai Composite Index, which is trading at 2,000 levels - has an all time high of close to 6,100. China has a good growth story - or I should say better than India {far better}, even then Nifty seems to outperform Shanghai! FII's have 27% stake in Indian Capital markets, which is still a significant chunk they have.
If you see mature markets, Dow, FTSE, which have huge volumes in CDS, Future contracts compared to India + China, and when they are trading at 2004 lows, how will you defend Indian markets not trading at 2004 lows ? We are in Bear market and bear market have sharp rallies, it is not a consolidation phase, those who think it is consolidation are loosing money - forget what FM, SEBI and RBI says, they are made to say what Congress wants them to say before they contest elections.
@konqueror_vivek Agree with what you have said above.
But then how one can explain prices of stocks such as TCS / WIPRO / L&T; / Hindalco / many others?
for TCS, it has hit life time low of 457, if you went back to 31-12-2004, TCS was trading in 650+ range and it's sales were close to 8,027.58Cr. ... now TCS has sales revenue close to 18,000Cr. but it's stock price is now way below what it was in 2005 (LTP. 532)
isn't this is a case of market driven by sentiments and ignoring fundamentals?
similar case exists for others as well, e.g. hindalco currently trades at PE of 3.42 which makes it very attractive (I know PE alone don't mean anything, PE can be very misguiding, I have used PE here just to point out disparity in the market valuation)
@konqueror_vivek Agree with what you have said above.
But then how one can explain prices of stocks such as TCS / WIPRO / L&T; / Hindalco / many others?
for TCS, it has hit life time low of 457, if you went back to 31-12-2004, TCS was trading in 650+ range and it's sales were close to 8,027.58Cr. ... now TCS has sales revenue close to 18,000Cr. but it's stock price is now way below what it was in 2005 (LTP. 532)
isn't this is a case of market driven by sentiments and ignoring fundamentals?
similar case exists for others as well, e.g. hindalco currently trades at PE of 3.42 which makes it very attractive (I know PE alone don't mean anything, PE can be very misguiding, I have used PE here just to point out disparity in the market valuation)
True, there are many scrips which are trading close to one or two times of their book value, but it is difficult to relate stock price to sales of the Company, for an IT company there are many parameters, not just sales. One of the important thing that one has to look for these IT companies, is the number of contracts they are getting form clients. A company like TCS which has 80% of on going business from US and Europe, and when both the countries are already in ~recession~ {Yes! US is in recession!}, you cant expect these companies to do well in coming days. Trading of a particular stock in capital markets is driven by the ongoing business the company is doing compared to its peers, however, if you'll look at other IT giants they are also not doing well.
The major parameter that is driving IT stocks is the number of contracts these companies will get in near future, these companies have huge contracts {new, maintenance} from banks {JPMorgan Chase, Bank of America}, brokers {example - Goldman Sachs, Morgan stanley, merrill lynch}. Now when these big brokerage houses and banks are running out of capital and selling off their line of businesses to raise capital. It is difficult to expect that these companies will outperform in near future.
@konqueror_vivek Agree with what you have said above.
But then how one can explain prices of stocks such as TCS / WIPRO / L&T; / Hindalco / many others?
for TCS, it has hit life time low of 457, if you went back to 31-12-2004, TCS was trading in 650+ range and it's sales were close to 8,027.58Cr. ... now TCS has sales revenue close to 18,000Cr. but it's stock price is now way below what it was in 2005 (LTP. 532)
isn't this is a case of market driven by sentiments and ignoring fundamentals?
similar case exists for others as well, e.g. hindalco currently trades at PE of 3.42 which makes it very attractive (I know PE alone don't mean anything, PE can be very misguiding, I have used PE here just to point out disparity in the market valuation)
I cannot comment on the overseas markets, but Indian Equity is purely sentiment driven, fundas really don't work here. A political statement, riots, floods, drought, anything is enough here to increase speculative trading. Then a clutch of big brokers at dalal street may spread rumours, & manipulate stock price, as is the recent case of ICICI bank being hammered by rumours of a run on the bank.
Commodity stocks may take a beating by a lowering of demand, as in case of cement, stocks are not being lifted by real estate builders due to go-slow by banks not releasing loan installments to these chaps, acting on an RBI advisory to banks (The effect of subprime crises: Housing loans in the USA. ) And real estate is a prime consumer of cement.
As regards IT, there may be a silver lining in future, as investment banks convert to retail banks, & may require a re-modeling of their softwares in a new business alignment.
Agreed, But when we talk about talk, we talk about business .... & value of business is not calculated not only on present / short term scenario but also on long term scenario (in fact, as per economics, value of business should be assumed in such a way that business will continue forever 😉 )
In case of TCS / IT companies, though number of new contracts will going down, but there still plenty oppurtinity exists (look at india, tremendous potential exits, TCS even bagged Rs.1000 Cr order from Passport Dept.),
Even when talks about western clients, most of contracts are for long tern (usually 5-7yrs), so contracts which were signed earlier (back in 2005) will continue to pay till 2012 (though some contracts has gone haywire, such as lehman brother)
Still from price point, these stocks are attractively priced if one look for 3-5 yrs horizoin
one more stock i mentioned is Hindalco, on 04-02-2002, hindalco was trading @ 62.30 (sales less than 5k Cr.), today it is trading @ 55(sale ~ 18K Cr), EPS is Rs. 18.90, PE 3.4
if one buys this stock today, within next 3 yrs value of stock is justified (assuming current EPS remains constant), even if it does not, 5 yrs span can justify the price.
I cannot comment on the overseas markets, but Indian Equity is purely sentiment driven, fundas really don't work here. A political statement, riots, floods, drought, anything is enough here to increase speculative trading. Then a clutch of big brokers at dalal street may spread rumours, & manipulate stock price, as is the recent case of ICICI bank being hammered by rumours of a run on the bank.
Every capital market has sentiments, however, since you have pointed ICICI Bank's case, the detoriation in price was not just because of rumours, speculation in a scrip can effect a stock 10% or lets say 20% in short term, given only rumours no stock can plunge to 1/3rd of its value in 6 months. There has to be some concrete reasons behind, ICICI bank has large exposure to CDX {iTraax europe} indices, the bank has exposure to interbank lending in the US and Europe. These reasons are good enough to create a plot for the stock detoriation. I dont know and probably many bankers also at ICICI bank will not be knowing the amount of exposure the bank has in these credit markets - the information is proprietary.
Agreed, But when we talk about talk, we talk about business .... & value of business is not calculated not only on present / short term scenario but also on long term scenario (in fact, as per economics, value of business should be assumed in such a way that business will continue forever 😉 )
In case of TCS / IT companies, though number of new contracts will going down, but there still plenty oppurtinity exists (look at india, tremendous potential exits, TCS even bagged Rs.1000 Cr order from Passport Dept.),
Even when talks about western clients, most of contracts are for long tern (usually 5-7yrs), so contracts which were signed earlier (back in 2005) will continue to pay till 2012 (though some contracts has gone haywire, such as lehman brother)
Still from price point, these stocks are attractively priced if one look for 3-5 yrs horizoin
one more stock i mentioned is Hindalco, on 04-02-2002, hindalco was trading @ 62.30 (sales less than 5k Cr.), today it is trading @ 55(sale ~ 18K Cr), EPS is Rs. 18.90, PE 3.4
if one buys this stock today, within next 3 yrs value of stock is justified (assuming current EPS remains constant), even if it does not, 5 yrs span can justify the price.
The written agreement / contract has various negative covenants which have various clauses that make sure that bank will not be loosing money or capital in adverse conditions. For example - Lets say if bank's mortgage or card buisness is not generating enough capital which has some variable percentage maintenance fees - paid to IT company, if the capital itself is not substaintial - how one could expect the contract to go forward. The IT giants are loosing business from Insurance companies, banks, brokerage houses for the same reason.
Disclaimer - I am not into capital markets - nor an investor, however, I am working in credit markets {risk management}.
Every capital market has sentiments, however, since you have pointed ICICI Bank's case, the detoriation in price was not just because of rumours, speculation in a scrip can effect a stock 10% or lets say 20% in short term, given only rumours no stock can plunge to 1/3rd of its value in 6 months. There has to be some concrete reasons behind, ICICI bank has large exposure to CDX {iTraax europe} indices, the bank has exposure to interbank lending in the US and Europe. These reasons are good enough to create a plot for the stock detoriation. I dont know and probably many bankers also at ICICI bank will not be knowing the amount of exposure the bank has in these credit markets - the information is proprietary.
Info's not privy it's in the papers:
ICICI Bank?s credit fundamentals remain sound: S&P-; Views/Recommendations-Stocks-Markets-The Economic Times
Info's not privy it's in the papers:
ICICI Bank?s credit fundamentals remain sound: S&P-; Views/Recommendations-Stocks-Markets-The Economic Times
Please read what I wrote above, is different from what you read on the above link - the information on ET, is sourced from ICICI Bank's Filings for 2Q {Sep 08}. The rating agencies usually file their view on the fundamentals and the numbers the Company quotes.
Bank's portfolio and position is non-public data, you wont find anywhere what is the position of ICICI Bank's trading arm as on October 13 - in credit / equity / debt markets. Banks have exposure limit and utilization norms for various markets and currencies - which is ONLY known to trading desk - given compliance norms, it should not be shared even within the bank!
Agreed with all the view points given by every one. Stock markets are driven by sentiments. Its just one of the factors which run the markets. And effect of sentiment is more prominent in bear phase. The share market is a big web which have spaces for the global news, for the sentiments and offcourse for the fundamentals too. But the problem with the fundalmentals is we common man does not know much about it. then its analysts whom we have to rely upon. Who misguide us very often because of their personal interest too.
How ever as I said before its the share market which first discounts the news whether it is good or bad, there after the effect is seen in economy.
Those who think that RBI, SEBI and other bodies are made to say what the government wants may be true but let me tell them these are autonomous bodies, they are there even at the time of anarchy.
Each index has some offect of global financial situation, but is it always same. offcourse not. By making this statement we are generalising things. So those who think that its because the FTSE, Dow, Shanghai Index are trading at the level of year 2004 then Indian markets should also trade at those level or will trade at those levels. I want to ask him one question. Is every situation same in the indexes you mentioned and indian index.
FII investment in china is more than in India, so as the FII were under heavy debts they had to start selling to meet their obligations. Thus the effect was more prominent on shanghai index. And need less to comment on FTSe and dow and NAsdaq everyone knows about them. In a bull run Indian markets outperformed every other market. Indian markets had a YOY return of around 40%, while the china had 30%. And other markets were in single digits while Japan could not even reach postive figure.
I want to say that each country has different potential. And different exposure towards foreign bodies. So its not that one trading at some level so do the others should.
Markets have lost 50% of its strength so it was obvious that every share should loose. But is it that every share is fundamentally weak. No. There is something called valuation which should be taken into consideration first then comes fundamentals and sentiments. Some companies had good fundamentals but its valuation was not that good PE ratio were too high so these companies lost most of its strength in this bearish phase. But I agree that some even become undervalued in this bear run being driven by sentiments. So is it that ICICI has bad fundamentals. ICICI had investment of around 85 million $ in Lehman Brother so after the crash of Lehman ICICI suffered. Its not that is has weak fundalmentals. if some one go and check its fundamentals its actually has become under valued.
Public sentiment is such bad that people sell when every body is selling and contributing to a bigger loss. And buys when every body has purchased and prices have surged high. I am talking specifically about the retail investors. But people forget that to be a earner we should depend more on fundamentals than sentiments. Right now the fundamentals are quite good for many companies but they are under valued. we just have to look for those companies. In a bull run such companies are the major contributor, so people can make high profits. just we need to have a bigger time frame.
RPL story has been incredible it is on papers till now, but It made a high of 294 in a bull run but when it came close to the opening of its refinery it is trading at a price less than 100. What has changed in the course of time. Is it fundamentals(NO), Is it valuations(NO) then what has made it so weak. First public sentiment second large selling by the FII. Foreign investors buy in companies having growth potential. So as the FII started selling the stock started loosing.
SEBI's decision of restarting short selling for the FII proved out to be even bad for the market. Thats why it has again banned short selling. And even the retail investors are following this approach. They sell each time the market shows up move for 2-3 consecutive trading session. so that they can recover later on. This makes chances of moving up even bad.
Forget what the people are telling forget what the analyst are telling. We need to be different(Remember Shiva Khera). Don't simply follow the Bhed chall. Buy in companies having growth potential and correct valuation stocks if not under valued. We will definitely make profits. Just the time frame should not be less than 2-3 years. Start buying when others are still selling. DII's are taking advantage of public sentiments each time we have a greater fall they start buying thus getting a better price. So we should also gradually start buying.:clap: