Equity Markets

Jobs & Careers
2469
chekuri Says
On Nov 4 when FOMC announced that interest rates may remain benign for some more time, interest rate futures price moved up!!!. i always thought the futures prices reflect the expectations of the market in the near term. But this movement left me confused. obviously i lack a good understanding . can anyone enlighten me....


Does the answer lie in the equation F= Se-rt?(e raised to -rt). Looks like....Guru 650 rocks!
2470
chekuri Says
On Nov 4 when FOMC announced that interest rates may remain benign for some more time, interest rate futures price moved up!!!. i always thought the futures prices reflect the expectations of the market in the near term. But this movement left me confused. obviously i lack a good understanding . can anyone enlighten me....


Futures contracts are used primarily for hedging cash portfolio, which is bought/sold {offset} by speculators in any market. Movement of futures depend on behaviour of underlying asset on which the contract is written, which is influenced by various other macro and micro factors.

Like in your example of interest rate futures, which supposedly went up after FOMC announced rates to remain static for sometime, which could be because of two reasons -
1. Traders might have a belief that markets have enough liquidity - given the fact various central banks have pumped billions of dollars in market, this money has to go somewhere, which will drive inflation going forward and will weaken currencies and so forth. So interest rates should rise going forward and static rates at this time sense same thing.
2. Majority of big banks have ample liquidity, however, lending rates and deposits rate have large basis - keeping rates static might bring the equilibrium going forward rather than disturbing rates by increasing/decreasing key rates.

India, China and Australia have recovered at horrendous pace compared to other asian peers in last two years of recession according to IMF. This builds a string story of inflationary region for India, so probably FOMC is being conservative keeping rates static for the time being.
2471

can ne1 explain d term "Cross Trading"???

2472

the markets have gone crazy....first a bear run for a week and now a big bull run for a week ...hell...whats happening is beyond my comprehension...i had expected the correction to stay for some time but

2473

Hey Guys,

My first post on this thread.

Its interesting how people try to guess the impact of events like the RBI policy, budget etc on the markets. While im in no way suggesting that these events do not impact the markets, they certainly do, but history shows (as suggested by legends like Graham and buffet) that in the long run what really counts is the underlying business and a fair margin of safety.

Graham gave the analogy of Mr. Market to explain the futility of predicting market movements.

The analysts that gave sell recos when the sensex was at 8k are giving buy recos at 17k!! Everyone seems to have a magic wand to predict where the markets will be at a given point of time. There seems to be a total lack of accountablity in these research reports that seem to be made to increase brokerage earned rather than maximise investor returns.

Hope to carry on this discussion.

Best regards,

Charles Carvalho
PGP1
Goa Institute of Management

2475

Friends i dono if anyone is remembering the age old fact of share markets that they are an indicator of the economic performance of various companies and the country as a whole(wont call it exhaustive though). The prices at which shares are quoted on long term average is determined by the earnings expectation or the performance of the company alone. Other temporary factors like govt, RBI policies, acquisitions, law suites etc are only factors that affect the price of a share on a temporary scale. If you are a trader then go with these and the global cues. But if you are an investor which is a safer bet , then you better go with EPS and P/E and have patience. Invest wisely on a horizon of 2-3 years atleast. It will bring you good ROI. After all investor needs to consider facts like a short term capital gains tax of 30% VS 15% for a long term investment. So keep in mmind such factors rather than simply jumping into the bandwagon!

2476

Hello Friends.......

The market in which shares are issued and traded, either through exchanges or over-the-counter markets. Also known as the stock market, it is one of the most vital areas of a market economy because it gives companies access to capital and investors a slice of ownership in a company with the potential to realize gains based on its future performance.

Thanks

2478

Guys,

Please use PM for personal chit chat.

Regards,
Pallavi

2479

There have been so many recent news events that have been bad but yet markets around the world just ignored them and kept-moving higher.

2480
Hey Guys,

My first post on this thread.

Its interesting how people try to guess the impact of events like the RBI policy, budget etc on the markets. While im in no way suggesting that these events do not impact the markets, they certainly do, but history shows (as suggested by legends like Graham and buffet) that in the long run what really counts is the underlying business and a fair margin of safety.

Graham gave the analogy of Mr. Market to explain the futility of predicting market movements.

The analysts that gave sell recos when the sensex was at 8k are giving buy recos at 17k!! Everyone seems to have a magic wand to predict where the markets will be at a given point of time. There seems to be a total lack of accountablity in these research reports that seem to be made to increase brokerage earned rather than maximise investor returns.

Hope to carry on this discussion.

Best regards,

Charles Carvalho
PGP1
Goa Institute of Management


Hi Charles
Agreed to whatever you have said. Accurate prediction would be possible had every market participant been a 'smart' 'informed' 'investor'. But neither all participants are smart & conversant with what they are doing, nor everyone is an investor & there are pockets of information that everybody cannot be privy to. Fundamentally, nothing changes in a day, but still we have so many intraday transactions.
Ofcourse, there are vested interests & you just cannot go by the analysts reco's.
2483

Hi Ashish,

Dual listing of stocks in international markets is done for a variety of reasons. For example a Non US firm might sell an equity issue in the United States because it can tap a much larger source of capital than its home country. Also a US firm might tap a foreign market by listing there because it wants to create an equity market presence to accompany its operations in that country. Large multinational companies also occasionally issue new stocks simultaneously in multiple countries.

In addition to new issues, outstanding stocks of large multinational companies are increasingly being listed on multiple international exchanges. For example Coca Colas stock is traded on six stock exchanges in the United States, four stock exchanges in Switzerland, and the Frankfurt stock exchange in Germany. Some 500 foreign stocks are listed in the United States.

US investors can also invest in foreign companies through American Depository Receipts (ADRs) which certificates representing ownership of foreign stock held in trust. About 1700 ADRs are now available in the United States, with most of them traded on the over the counter (OTC) market. However, more and more ADRs are being listed on the New York Stock Exchange, including Englands British Airways, Japans Honda Motors and Italys Fiat group.

Several Indian companies like Infosys, Dr. Reddy's, HDFC, ICICI, Satyam, Tata Motors, Wipro etc. have listed themselves on the US stock exchanges in addition to their domestic stock exchange (i.e. BSE, NSE). The major advantage of such a move is the additional capital that the Indian companies could hope to get from the cash rich American investors.

The potential problems with foreign listings include a significant cost of trading shares on a foreign exchange, the cost of complying with accounting standards, and the risk of lawsuits. Such issues may play a significant role in the firms decision to list abroad, especially for smaller companies. Similarly, there is mixed evidence on long-term valuation gains following the decision to list abroad.

2485

Hey Ashish,

Thanks for pointing that out. I was under the impression that they were one and the same.
Well I just realized that I dunno much about dual listing myself.

Following is the wikipedia definition of a dual listed company "A dual-listed company or DLC is a corporate structure in which two corporations function as a single operating business through a legal equalization agreement, but retain separate legal identities and stock exchange listings. Virtually all DLCs are cross-border, and have tax advantages for the corporations and their stockholders."
Well I know this will not be of much help. It would be great if someone with a deeper understanding of this tries to explain this concept.

Also, the recent Bharti MTN deal was called off due to complications arising out of dual listing. The South African government was keen on maintaining the national identity of the telecom operator, MTN.

2486

Please click on this link to download the complete list of ET 500 companies.

This might help in deciding which companies to look for while considering investment.

2487

Can someone explain what is the exact implications of operating a demat account through Power-of-Attorney.

I recently find out that ICICI direct also operates through PoA route.
Is there a way to remove the PoA and if so what will be the difference in operating the account?

2488

Puys,

Trading will start at 9 AM from Jan 4th 2009. Is this a positive move!!

Technical analyst are criticizing this move.

2489
Puys,

Trading will start at 9 AM from Jan 4th 2009. Is this a positive move!!

Technical analyst are criticizing this move.


My personal view on this - It was not the right time for regulators to increase trading time, given recessionary dust is still underway. Increasing time will rather increase speculation and volatility in markets. In my view, this step should be implemented not before June next year, or probably when regulators have a good sense that increasing tradiing time will help corporations raise value for money and will be in the best interest of their shareholders.

Regulators should concentrate on other more important issues related to bank lending, and liquidity flow rather than increasing trading time for no valid reason. Various central banks have pumped billions of dollars in the system, which has driven horrendous rise in Asian capital markets. Does rising markets signifies we are on a road to recovery, and capital markets actually need more trading time to settle trade ? Government and regulators should re-think on this front.
2491
The stock exchange bosses will be very happy as they will get more trade..and some of the nse futures business which was being taken away by hang seng will get back to nse..


How is Hang Sang's future index related to NSE ? I believe you meant SGX (Singapore), which enjoys time difference from India.
2493

mere prashnon ka bhi koi jawab do :|

Can someone explain what is the exact implications of operating a demat account through Power-of-Attorney.

I recently find out that ICICI direct also operates through PoA route.
Is there a way to remove the PoA and if so what will be the difference in operating the account?
2494

>>

2495
My personal view on this - It was not the right time for regulators to increase trading time, given recessionary dust is still underway. Increasing time will rather increase speculation and volatility in markets. In my view, this step should be implemented not before June next year, or probably when regulators have a good sense that increasing tradiing time will help corporations raise value for money and will be in the best interest of their shareholders.

Regulators should concentrate on other more important issues related to bank lending, and liquidity flow rather than increasing trading time for no valid reason. Various central banks have pumped billions of dollars in the system, which has driven horrendous rise in Asian capital markets. Does rising markets signifies we are on a road to recovery, and capital markets actually need more trading time to settle trade ? Government and regulators should re-think on this front.

Hey thanks for this.

Just wanted to understand how increasing the time will lead to greater speculation? I think its other way around. If you have more time speculators can't tweak the market the way they want.

Correct me if I am wrong.