hi can someone tell me exactly wht happens in a stock market crash.....i know the basics and all but still nt clear......say it lost 300 points....wht are the exact implications of this thnxx in advance hope this is the right place too ask :>
In a market crash, the sentiment is usually sell. Now, when sellers are more than the buyers, the valuation of all scrips go down. The sell sentiment can be due to various reasons. The reason for the past few days may be due to a combination of 1. The budget giving less impetus on Industry and focussing more on agriculture. 2. Slowdown in consumer durable goods 3. Most importantly, the weak global cues. India being a high growth story, attracts alot of foreign investments for good returns. But because of recessionary fears in the US, companies are being more careful in selecting investments and are also facing a cash crunch due to sub prime crisis.
All this results in less investment in the market and thus a "sell" sentiment. That is why the FM keeps reminding the people that India may be insulated as we are a consumption based economy.
The implications are not that deep. India still is a high growth company. But what this crash has resulted in is a stronger valuation of scrips which were over inflated earlier.
But with high oil prices, inflationary fears and US recession staring at us, it may be some time before which markets fully recover and post high rises again:-o
hi can someone tell me exactly wht happens in a stock market crash.....i know the basics and all but still nt clear......say it lost 300 points....wht are the exact implications of this thnxx in advance hope this is the right place too ask :>
I believe Indian markets have not YET reached the bottom, and more downside is in pipeline. The primary reason behind the selling pressure is FII net sell. FII's have ~24% stake in Equity markets, the selling is backed by PE multiples, and Indian Equity market was much more over-valued when compared to other emerging markets in south asia. In US big Insurance giants are sitting on huge writedowns, (MBIA, Ambac are among the bigger ones). It is true that Indian markets drive more on sentiments and less on technicals and basics, but this downside has to come, you cant justify a company trading at 200x-150x PE multiple with having virtually no business. Fed might cut rates again this month, but I dont think it will help any liquidity flow from Bond markets to equity markets.
thanx a ton polpot and vivek......u guys made it crystal clear ......:>...true equity masters one more small question..... cld u tell me wht happened to the reliance power stock...i tried searching for the details but all i gt were bits and pieces.....i dint really get wht really happnd in the initial stages
thanx a ton polpot and vivek......u guys made it crystal clear ......:>...true equity masters one more small question..... cld u tell me wht happened to the reliance power stock...i tried searching for the details but all i gt were bits and pieces.....i dint really get wht really happnd in the initial stages
thanks
Reliance Power was by far the biggest IPO, but was over-valued, the Company had a handful of projects and younger Ambani manipulated the price at ~100x PE for FY09 earnings. At this speculation in grey market the IPO was trading at 150 premium before listing and even on penultimate day it was trading at huge premium ~120. At listing the IPO went into discount straight, but since Ambani's neck was at stake, he didnt let the price to go down beyond 350 Rs. However, the activity in reliance power was significant, around 10 million shares were traded in first 20 mins, the volume increased as the day progressed. Later, Ambani decided share dilution, and gave up some stake to retail investors, it was in news at every 5 shares, investors will get 3 free shares, promotors were kept out. The calculation behind the dilution, was to make to price around ~450 levels, and it was trading at that level for a couple of days, but after Feb expiry (and the Budget), the price again detoriated, now it is around ~375 levels I guess.
Given the current volatility:bomb: in the market(which is,no doubt, highest in the history of Stock Markets.) Is it better to be away from investing? I have already been out of the markets since 2 months, given the loss that I suffered:puppydog:. I am still a novice in market investments. I do have some money to invest, so was just curious whether I should invest or not. I am interest in power sector, especially Tata Power or NTPC. Any help with that? Also, what about Tata Motor? Even after "The BIG Nano" it still trading low. It never went to the higher end of it's own price. Any other good script?
However,in the case of participatory notes, PNs, they are issued by SEBI but they are not registered with them. hence they provide anonymity and are easiy transferable by endorsement. thus, they are preferred. so indian stock markets experienced a crash on 17th october 2007 when SEBI announced that it would not issue fresh PNs.
Participatory notes are not issued by SEBI..instead they are issued by FIIs who are registered with SEBI( FII s ought to be registered wiht SEBI to trade in India)> FII issue the participatory notes thru their offices across the globe to the investors (especially the Hedge Funds) who want to gain form the Equity markets of India but do not wish to be registered with th SEBI-thereby preserving their identity...it is because of this anonimity factor that the SEBI had barred all the FIIs from issuing and P-notes further and also to close down all the already issued P Notes within a period of 18 months from October 2007. Hope this helps...
Participatory notes are not issued by SEBI..instead they are issued by FIIs who are registered with SEBI( FII s ought to be registered wiht SEBI to trade in India)> FII issue the participatory notes thru their offices across the globe to the investors (especially the Hedge Funds) who want to gain form the Equity markets of India but do not wish to be registered with th SEBI-thereby preserving their identity...it is because of this anonimity factor that the SEBI had barred all the FIIs from issuing and P-notes further and also to close down all the already issued P Notes within a period of 18 months from October 2007. Hope this helps...
Participatory notes (PNs / P-Notes) are instruments used by investors or hedge funds that are not registered with the (Securities & Exchange Board of India) to invest in Indian securities. Indian based brokerages buy Indian-based securities and then issue PNs to foreign investors. Participatory notes are instruments used for making investments in the stock market However, they are not used within the country. They are used outside India for making investments in shares listed in that country. That is why they are also called offshore derivative instruments. In the Indian context, foreign institutional investors (FIIs) and their sub-accounts mostly use these instruments for facilitating the participation of their overseas clients, who are not interested in participating directly in the Indian stock market. For example, Indian-based brokerages buy India-based securities and then issue participatory notes to foreign investors. Any dividends or capital gains collected from the underlying securities go back to the investors.
Any entity investing in participatory notes is not required to register with SEBI (Securities and Exchange Board of India), whereas all FIIs have to compulsorily get registered. Trading through participatory notes is easy because participatory notes are like contract notes transferable by endorsement and delivery. Secondly, some of the entities route their investment through participatory notes to take advantage of the tax laws of certain preferred countries. Thirdly, participatory notes are popular because they provide a high degree of anonymity, which enables large hedge funds to carry out their operations without disclosing their identity.
Participatory notes (PNs / P-Notes) are instruments used by investors or hedge funds that are not registered with the (Securities & Exchange Board of India) to invest in Indian securities. Indian based brokerages buy Indian-based securities and then issue PNs to foreign investors. Participatory notes are instruments used for making investments in the stock market However, they are not used within the country. They are used outside India for making investments in shares listed in that country. That is why they are also called offshore derivative instruments. In the Indian context, foreign institutional investors (FIIs) and their sub-accounts mostly use these instruments for facilitating the participation of their overseas clients, who are not interested in participating directly in the Indian stock market. For example, Indian-based brokerages buy India-based securities and then issue participatory notes to foreign investors. Any dividends or capital gains collected from the underlying securities go back to the investors.
Any entity investing in participatory notes is not required to register with SEBI (Securities and Exchange Board of India), whereas all FIIs have to compulsorily get registered. Trading through participatory notes is easy because participatory notes are like contract notes transferable by endorsement and delivery. Secondly, some of the entities route their investment through participatory notes to take advantage of the tax laws of certain preferred countries. Thirdly, participatory notes are popular because they provide a high degree of anonymity, which enables large hedge funds to carry out their operations without disclosing their identity.
Cheers
MK
Can u plz explaion me what wrong have i written in my post...the only difference was that i wrote it by my htought and therefore it was short...u pasted from a useful source...the concept of the 2 write up is all the same...
Can u plz explaion me what wrong have i written in my post...the only difference was that i wrote it by my htought and therefore it was short...u pasted from a useful source...the concept of the 2 write up is all the same...
Given the current volatility:bomb: in the market(which is,no doubt, highest in the history of Stock Markets.) Is it better to be away from investing? I have already been out of the markets since 2 months, given the loss that I suffered:puppydog:. I am still a novice in market investments. I do have some money to invest, so was just curious whether I should invest or not. I am interest in power sector, especially Tata Power or NTPC. Any help with that? Also, what about Tata Motor? Even after "The BIG Nano" it still trading low. It never went to the higher end of it's own price. Any other good script?
This is the ideal time to invest in markets-- the exuberance have died down and most of the hyped scripts are almost 50% lower to the prices they had reached in the 1st week of January. Even if u want to make some quick bucks then this is the right time-- but book profits when u have made 10-15% in such markets.... if u r not a derivative trader then buy small amount of shares of those counters which get hammered down sharply and then exit when they move up 10-15% in the next couple of days... I can give u some examples of shares that would have made u some quick bucks in the last week::: Adlabs, Indiabulls real estate, indiabulls finance, ispat, RNRL, unitech.
large counters like tata power and ntpc have come down a lot and these counters will not regain thier highs so soon. The reason being that these counters are traded in the derivative segment also. since many traders have made huge losses during the last 2 months and other traders do not want to commit fresh money unless the market achieves fresh directions. The fact that markets are breaking technical resistance for downward movement every other week is stopping traders from taking fresh long positions.
u can get an idea by seeing the the total amount traded in the exchanges now a days. the total amount is close to 40-45k crores while during the market highs they had reached 1lakh crores... if u have a time frame of more than 6-7 months u can look at stocks which are setting up standalone power plants like monnet ispat( orissa) ..but make sure u study the counters before entering ...also enter at levels in which u can be comfortable even if there is more storm in the markets ( 430 level for monnet ispat)
i am not denying the fact tht i have pasted it frm a useful resource..
u worte tht they are issued by FII's and thts not the case..As given in my post they are issued by the brokers and not the FII's
Cheers
MK
Boss...am 100 % sure that they are issued by FIIs also...refer to your explanataion....it says the word...indian based brokerage houses...it dos not say ..indian brokerage house...the usage of this word is because the FIIs who are registered in india set up their offies in India....(and hence the term india based...) and then they issue the participatory notes by the mechanism as specified in ur post.....I have a complete write up on tis.....will search for that and provde to u....but am pretty sure of wat i have stated....
hey hi well gud topic to start wid... wud like to ask u ppl to giv fair idea abt these ELSS things which coms up by d financial yr end to go for d tax saving investments... they state they hav amazing features wid somwhr written conditions apply as the market goes up n down... n boss i hav no clue abt those conditions n had already did my yr investment in dat...
need som pretty gud xplaination wat they really talk abt n hw d processing get done on these mutual bonds n all
hey hi well gud topic to start wid... wud like to ask u ppl to giv fair idea abt these ELSS things which coms up by d financial yr end to go for d tax saving investments... they state they hav amazing features wid somwhr written conditions apply as the market goes up n down... n boss i hav no clue abt those conditions n had already did my yr investment in dat...
need som pretty gud xplaination wat they really talk abt n hw d processing get done on these mutual bonds n all
Basic features about ELSS
Maximum Tax shield that can be claimed: INR1,00,000 (i.e. in conjunction wid other tax saving instruments like mediclaim fees, NSC etc.)
Lock In period: 3 years (i.e. you cannot withdraw money / encash the units before 3 years)
General options: Dividend / Growth (Both tax free)
To be very simple, they are like any other MFs only that they have a little different features mentioned above...
they are very good tax saving investments as compared to others like NSC since they offer more return (in lieu of greater risk).. in good markets u shall have good returns, in bad u wont.. thats the case wid any MFs...
Maximum Tax shield that can be claimed: INR1,00,000 (i.e. in conjunction wid other tax saving instruments like mediclaim fees, NSC etc.)
Lock In period: 3 years (i.e. you cannot withdraw money / encash the units before 3 years)
General options: Dividend / Growth (Both tax free)
To be very simple, they are like any other MFs only that they have a little different features mentioned above...
they are very good tax saving investments as compared to others like NSC since they offer more return (in lieu of greater risk).. in good markets u shall have good returns, in bad u wont.. thats the case wid any MFs...
hey thanks for ur inputs
well m dat mch clear abt tax saving can b done for a lakh amt n elss hav 3 yrs of blocking period
bt hw they calculate d interest n wat r d gud option to go for m not clear wid dat part ahh as wel wat can b d gud option to invest...
arey yaar ye us crisis ne to dukhi kar diya hai:sad:.. kitne aur fal karegi market ab ?:sad:
when shd we start buying or shd we buy or not:oha?
totally confused :
could someone pls explain what are bonds.
Recently in subprime crises, mortgage bonds were one of the culprits for meltdown of stock exchanges. could someone throw some light on mortgage bonds and how they are traded on the exchanges...
Recently in subprime crises, mortgage bonds were one of the culprits for meltdown of stock exchanges. could someone throw some light on mortgage bonds and how they are traded on the exchanges...
thnx
like any other investment bonds are also some investment option with fixed interest( may be 15 to 20% which is more than fixed deposit , a conservative investment and they also give u tax benefits) or profit to it . Mortage bonds were used by some banks so that they can use that money to lend to the customers and get good returns in terms of interest paid my them. that inturn would be given as profit to the people who have invested in the bonds.
Now since most of them turned out to be defaulters the banks did nto make any profit actually they lost most of the money which they had lent , and also they had to returm the money which they had promised to the bond holders what ever may be the situation as it was alread ypromised . the banks have taken the custody of the propety from the defaulters but banks does not need property they need money. when they tried to suctioned it , the vale had fallen drastically which the banks were not able to afford. so all these mess has created and has resulted in the slowdown of the economy.
like any other investment bonds are also some investment option with fixed interest( may be 15 to 20% which is more than fixed deposit , a conservative investment and they also give u tax benefits) or profit to it . Mortage bonds were used by some banks so that they can use that money to lend to the customers and get good returns in terms of interest paid my them. that inturn would be given as profit to the people who have invested in the bonds.
Now since most of them turned out to be defaulters the banks did nto make any profit actually they lost most of the money which they had lent , and also they had to returm the money which they had promised to the bond holders what ever may be the situation as it was alread ypromised . the banks have taken the custody of the propety from the defaulters but banks does not need property they need money. when they tried to suctioned it , the vale had fallen drastically which the banks were not able to afford. so all these mess has created and has resulted in the slowdown of the economy.
ho ho i guess i have divereted form question.
Anyways please correct me if i am wrong:-P
Ok here you go , actually mortgage bonds are bonds whose underlying value is mortgage based loans so the fixed payment is linked to the payment received through the servicing of underlying debt (loan). Thus more the surety of payment higher is the value of mortgage bonds and inverse is the case happening today So in case of sudden economic downturn holders find themselves suddenly in state of booking losses on their bond portfolio which in turn means bringing in more capital to continue and obviously this time at a higher (expected) rate of interest.
hi puys, sorry if this had been discussed earlier. my ques is pertaining to mortgage crisis. i read that before hedge funds, pension funds and other money market funds poured their money into CDOs, these CDOs were insurred by various monolines like MBIA, AMBAC,etc. then how come when subprime borrowers defaulted on their loans, money was lost by money marketn funds. shud not the loses be incurred by monolines instead as they were the people who gave insurance that in the case of default they wud compensate the party concerned. my knowledge says that money market funds shud have never lost any money because their risk was shouldered by monolines. but the fact is in august Bear Stearn stopped its investors to redeem money from 2 of its hedge funds and even after that we saw a number of hedge funds crashing....??? puys please throw some floodlight on it :) Sanwal
?
, actually mortgage bonds are bonds whose underlying value is mortgage based loans so the fixed payment is linked to the payment received through the servicing of underlying debt (loan). Thus more the surety of payment higher is the value of mortgage bonds and inverse is the case happening today