RIL RPL merger . same old story again

Will it materialize??

Reliance Industries Ltd (RIL) is proposing to once again merge its refinery subsidiary RPL(Reliance Petroleum) with itself that would make it one of the world's largest refiners.

Chevron with 5% stake will not be happy because its primary interest was refinery and it also planned to raise it to 29%. It is not interested in other business or RIL.

Old Post :
http://beyond-basics.blogspot.com/2007/12/ril-rpl-merger.html

March 23rd : Tata Nano rolls out in Mumbai

Image Courtsey : Tatamotors.com

Much awaited Tata Nano is going to be launched on 23rd March in Mumbai. Bookings will start in April at various dealers location. Tata is trying to put the best network for bookings so that customers can easily book the 1 lac car.

Though the no of cars delivered will be less initially, Bookings are expected to be in full swing and customers would have to wait to get their cars. This is because mother plant is still not complete and commensed operations.

There is going to be lucky draw for the initial holders of Nano because of shortage. If you get lucky to get hold of one you can a good premium on the same and nice profit can be made.

Credit Crisis explained in short simple story

I found a nice video which explains Credit Crisis in a very easy way.


The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.

Hope you enjoy this video and understand the crisis through a video rather than reading a verbose theory.

Futures or Options

Futures:
ReCap from previous posts.
In the First Episode :
A Futures contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price.
An Option is a contract, which gives the buyer the right, but not the obligation to buy or sell shares of the underlying security at a specific price on or before a specific date.
The primary Difference between options and futures is that options give the holder the right to buy or sell the underlying asset at expiration, while the holder of a futures contract is obligated to fulfill the terms of his/her contract.

Underlying: A stock (Say RPL) or Index (Say Nifty)
Certain Date: Settlement Date of the Month for which Position is taken. Generally we trade in Current Month and Settlement Date is last Thursday of the Month.
Interpretation ...
Say Today I buy RPL future For Rs 230 when current market Price for RPL in cash market is 225.
This means on Settlement date:(31 jan for this month) if RPL is @ Rs 230(future price) its no Profit no Loss for me, and if its 250(settlement price) I gain Rs 20 but I loose Rs 20 if its 210.

So same way, seller of the future contract gains the amount I loose or looses the Amount I gain.

Benefit: Unlimited Profits Posssible, Leverage I get....
Drawback: Unlimted Loss Possible

Now Lets Talk about Options:
An Option is a contract, which gives the buyer the right, but not the obligation to buy or sell shares of the underlying security at a specific price on or before a specific date.

Options can be call option or put option where you get the right to buy or sell specified quantity of the underlying security.

Buyer has to pay a premium to get the rights to buy or sell. Seller of options is also called writer who is obliged to perform according to option terms.

There are many factors which affects the price of an option.
1. Underlying value of the security.
2. Time remaining till the expiry. Options generally decay near the expiry because price of the underlying becomes more predictable and less probabilistic and volatile.
3. All the other information which affects the underlying security like interest rates, divident payouts, liquidity, historical prices, support zones etc.

Underlying : Lets say Nifty Index
You bought a Nifty call option for the strike price of 2800. On expiration the Nifty is at 2850. You will recieve 50*50 which is the lot size for Nifty = Rs 2500. If you have already paid a premium of Rs 20 then you profit remains 30*50 which is Rs 1500. Also you have to factor in the brokerage both for buy and sell. There is mini nifty available with lot size of 20. If the Nifty at expiry is below 2800 you dont get any thing and you loose premium + brokerage.

Other articles on derivatives.
Derivatives Basics

Y Derivatives?

Madoff Scandal for Beginners/Conspiracy Theory

Scandal

Bernard Madoff chairman of Bernard L. Madoff Investment Securities LLC is charged with largest investor fraud committed by a single person.

Asset Management business run by his firm was a big lie. Liabilities run approximately 50 billion dollars. Company used to make fictional stock trades and then even showed them in the monthly statement. This was a clear case of Ponzi Scheme where authorities are looking for cash in and cash out.

In Ponzi Scheme returns to the investors are paid through the investments made by the subsequent investors or from the own pockets rather than from profits.
This requires continuous flow on money for the scheme to continue otherwise it collapses. It is named for Charles Ponzi who started this scheme after emigratinf from Italy to US.

Coming back to Madoff scandal, Banks expects potential loss of billions because of this scandal. The Madoff's firm is now under liquidation. Real Estate Industry is also feeling the heat because of the brokers and developers had hevily invested with the firm.

In an another twist in the tale Madoff scandal is brewing anti semites feeling.

Madoff was a Jewish and many investors were also Jewish. There is a conspiracy theory which claims that Jews are in control of all the money in the world. This is also spread by anti-Semitics.

Since such a big scandal has been executed by Jewish it gives boost to anti-semites.

In Madoff Scandal, Jews Feel an Acute Betrayal


Here are some nice interesting videos..dont know how true they are

The Capitalist Conspiracy


Jew's Control The Money


Source : Web, Wiki.

Srei Infra to participate in Light Rail Project in Kolkata

Srei Infra is going to participate in Light Rail Metro Project in Kolkata in consortium with Amex International.

This is a 6000cr project.

On the business of Loans...Srei sees flat growth in 2009.

View Srei Infra Post @ Srei Infra

Think 3 Latest Victim : Layoff Tracker

It is heard that Think 3 Designs in Bangalore has layed off 50 employees today. The company is based on 100 ft Road indira nagar.

Heard on the Street : lay off tracker

Network Appliance (NetApp) is going to lay off 600 employees worldwide.!!
It has reported a $75 million loss in the third quarter, or 23 cents a share and is going to lay off around 6% workforce. Some lay offs are already confirmed.

FMP(Fixed Maturity Plan) Vs FD(Fixed Deposits)

FMPs are great investment options in times of volatility. FMPs primarily invest in fixed return investments like government bonds and money market instruments which are very short-term fixed return investments.

FMPs are not open ended funds that allows you to exit so invest money you are sure you don't need.

The volatility is reduced because these products invest in instruments upto maturity so that returns are predictable.

FMPs are better than FDs when it comes to tax savings. Interest earned in FDs are taxed at personal interest rates. In FMP there is no personal Taxes there is only dividend declaration Tax to be given by fund house which is at 14.5 % so effective post - tax return is higher in FMP considering similar returns to start with. FMPs also have the benefit of Indexing when kept for more than year to gain long term capital gains.



FMPs might not give higher returns than FDs often but they do tell you the indicative returns at the time of NFO(New fund offer)

It is also different that income fund which doesnot have fixed tenure. Given fixed tenure helps fund manager to invest in instruments having similar maturity period.

Maturity periods can vary from 30,90,141,180 or even an year.

Budget - A Damp Squib

No Tax Cuts. No major policy announcements. No major triggers for the market. After this interim budget the govt will be on the election mode and there is a virtual freeze on the policy matters in this fast deteriorating crisis.

Highlights :-
1. Fiscal Deficit - Expected 2.5% actual ~6% might reach 10% by 2010 of GDP.
2. GDP Growth - Expected 9% actual ~6-7% might reach 4-5% by 2010.
3. India investment rating to go down based on current fiscal deficit parameters.
4. Some good news in terms of higher allocation to NGRM( National Rural
Employment Guarantee Scheme) and JNNURM (Jawaharlal Nehru National Urban Renewal Mission).
5. Industry has given thumbs down to no event budget. This was a last chance to give a support but its an oppurtunity lost.
6. No tax changes in interim budget
7. All the temporary Cess not removed and seems to be permanent taking tax levels to 34%
8. Excise Duty and GST not reduced according to plan to abolish it completely by 2010. Now it might take longer for tax rationalization.
9. Relaxed fiscal responsibility and budget management target to dangerous levels and may need additional measures in next budget to revert to fiscal consolidation.
10. Revenue deficit of 4.4% of GDP v/s estimate of 1%

Recently rally expecting some good news has already been fizzled out.

Valentine's Day - Boost to Economy?

In the raging debate whether to celebrate Valentine's day or not, one thing we can be sure of is that it helps the economy if not the archaic traditions/culture.

Festivals and Marriages are big money spinner in India and give a big boost to consumption. In the same manner Valentine's day promotes lot of industries. Not everyone has a valentine. Not everyone wants a valentine.

But the commercial aspect of this day seems to over saturate the marketplace. This pressures consumers into believing this holiday of love/romance purely revolves around making money.

Lets look at each one of them.

1. Hotels/Pubs/Discos - Youth throng these places on this day and occupancy levels are high.
2. Theaters/Multiplexes - Couples want to cozy up and have fun watching movies.
3. Telecom - Lot of phone calls and SMSes.
4. Garments/Accessories - Filling up the wardrobe to look pretty/handsome.
5. Beauty/Slimming Industry - People preparing for the D-day.
6. Transportation - Instead of relaxing at home people travel a lot on this day.
7. Gifts/Presents - This one should be on the top. Various gifts (flowers, singing stuffed animals, Valentine chocolates and Hallmark/Archies cards)you name it are bought.
8. Advertising - HIgher spend on advertising by the organization of above given businesses.

Spends on all this increases the money flow in the economy and gives its little dose to the economy.

So on these counts Valentine's day surely rocks!!

Mobile Number Area Information

You can get the information about any Mobile Number location through this link

http://www4.yourbillbuddy.com/mobile_number_area_information_in_india.do

Bartronics - Multibaggar stock

Current PE - 6.3
Current Price 76.
52 wk High - 252

Incorporated in 1990, Bartronics is a Hyderabad based company that started with providing solutions in Bar Coding, one of the oldest AIDC technologies, RFID, POS, Smart Cards working as AIDC division, RFID division, Smart Card Division and Retail-IT division in separate.

Booming AIDC/RFID/RETAIL/Smart Card Industry

The AIDC industry is moving rapidly towards the use of RFID in a number of high-value and high-volume market segments. The RFID market is expected to jump from $1.4 billion annually this year to as much as $3.8 billion in 2008, according to a study by Allied Business Intelligence Inc. It is still in a nascent stage but there are several factors, in addition to dropping chip prices, which are driving the growth of RFID as an enabling technology.

RFID is the emerging technology for tracking goods and assets around the world. It is indispensable for a wide range of automated data collection and identification applications across the supply chain. Whether you are a consumer, industrial goods manufacturer, a logistics company, a retailer, home sales / services provider or health care provider, Bartronics provide the complete end to end RFID solutions automating the entire business process.

Bartronics is getting benefits from Govt technological initiatives. Railways is also looking at RFID implementation across trains in the country.

Bartronics has strong presence both in local and international markets. Bartronics has recently bagged order from singapore government for supply of 48,000 tags to Singapore housing development board.

It has also bagged order from DMC ( Delhi Muncipal Corporation) and expects huge revenue of 5000 crore in around 9 years.

Bartronics is expected to provide high CAGR in coming years. Good stock with healthy valuations.


Source : Company website

NTPC News (National Thermal Power Corporation)

The Nuclear Power Corporation of India (NPCIL) and NTPC (NTPC) has signed an agreement to setup nuclear power plants in India.

The present nuclear power generation is only to the tune of 1,800 Mw, against an installed capacity of 4,120 Mw. Shortage of nuclear fuel has plagued the nuclear power sector.

NPCIL has signed an agreement with Russia for supply of 2,000 tonne of uranium for its nuclear power plants. Nuclear power generation is set to touch 6000MW by next year.

NTPC is also planning to bid for imported fuel-based 4,000 MW Ultra Mega Power Projects after acquiring coal properties abroad.

NTPC has floated a joint venture firm International Coal Ventures Ltd (ICVL) with Steel Authority of India Ltd (SAIL), Rashtriya Ispat Nigam Ltd, Coal India and National Mineral Development Corp (NMDC) to secure fuel properties abroad.

NTPC is also going to give contract worth 1000 crores to BHEL for 500MW power plant.

NTPC along with GAIL also plans to lease out part of their new liquefied natural gas import terminal.

NTPC also recorded highest ever monthly generation of 19.2 billion units in the month of January this year.

Stock Market Simulators

New investors who want to dabble in the stock market can take help of these simulators to pratice their stock market strategies and investing acumen.
This helps a lot because you can try to out different things without actually putting money in the market.

Here are few simulators or stock market games.

www.moneybhai.moneycontrol.com/
Moneybhai Investor is a simulated real-time Stock Market Game aimed at giving viewers and investors an easy and interactive platform

www.khelostocks.com/
Khelostocks is a social community for Indian investors which provides tutorials, virtual stock game and investment information and tools.

moneygame.rediff.com
Rediff Moneywiz Share Bazaar Game

US stimulus package passed H1B to get hit!!

US stimulus package is passed and it wont allow replacement of US employees who are laid off by H1B workers. This is applicable to firms using the bailout money.

It is now debated that it can be counterproductive because organizations will not be able to hire the best available resources.

Though this program has been beneficial to both US firms and foreign workers who have come on H1B. This has been misused multiple times. A big Visa racket has been unearthed and investigations are going on. 11 people have been arreseted in relation to this fraud.

Recession rot started seeping india IT

After being the dream job for lot of Indians, IT has began to sour. Other jobs too doesn't seem promising in the current scenarios. With hiring freeze, pay cuts, no variable pay now the axe is on the employees so that organization can sail through the crisis.

Satyam saga has left so many employees scrambling for job security. Sapient is the latest victim. After laying of 160 employees few months back it has laid 500 more employees from Bangalore, Gurgaon and Noida offices. It employees 6000 people.

This was done amid tight security and employees were not allowed to enter the premises.

Also Yahoo ( has asked 45 full time employees to put in their papers, reports Business Standard, quoting a source who says that over 100 employees may be asked to quit.

With US and Europe bracing recession, H1B and HSMP are also not a very attractive options.

Indian IT companies with large number of employees and project bidding at lower rate has kept revenue per employee at $50000 compared to $100000 of the global IT peers.

With salary rising , the edge of cheaper outsourcing is loosing soon.

Employees at these times need to be more innovative in there solution for higher value work. Smart work rather than hard work will be valued. It is imperative to learn new skills to keep oneself updated with latest technologies and job profiles. Basically in these times to remain on the top every increment needs to be supplemented with increase in productivity.

With IT in the forefront of Indian consumption boom, this is all set to slowdown and we can see lot of NPAs in banks.
Stock market should go down after initial euphoria of rail and general budget which is supposed to be friendly in the election year.

Cash will be king and it needs to be deployed at the right time at the right place for best returns.

You might be tempted with the current cheap valuations but I guess we can get the same stocks at quite cheap prices.

People say that it is bear market but stock market is way high from its lows now and many stocks have doubled from their 52 weeks low.

Some layoff trackers :-

http://www.jobeehive.com/company/layoffs

http://www.forbes.com/2008/11/17/layoff-tracker-unemployement-lead-cx_kk_1118tracker.html?partner=contextstory

Alternate Energy

Suzlon Energy and Moser Baer are now top players in Wind and Solar Energy Business. Both have fallen greatly from their heighs and may still fall some more but the downside seems to be limited.

Oil price crashing had a big impact on this sector because when oil comes cheap investment in alternative energies decline. But this sector is going to perform in the long term because there is no alternative to alternative renewable energy.

US Obama has has hinted on promoting renewable energy and huge investments in this area. Economic slowdown will have impact on the order book of these companies and this seems to be a good time to buy these stocks for long term at relatively cheap prices.

Moser baer photovoltaic has bagged order from gujarat govt to setup roof top photovolatic installations and complete system will be installed by April 2009

Moser baer is also going to setup India's largest grid connected solar farm in Rajasthan.

Apart from Entering entertainment business through its home videos It is a big player in media devices. It is also trying to enter in DVD,Monitors and other conputer peripheral hardwares.

Suzlon has controlling stake in REPower which is a big wind energy player. It has got regulatory approval to raise 18 billion rupees for it ADR issue.

Currently in capital investment mode earnings will start trikling in coming years..

SREI Infrastructure Finance Ltd.

SREI Infra is involved in financing infrastructure projects in Power,Road,Aviation,Shipping & Railways which requires huge capital expenditure.
SREI Infra is currently quoting at its new 52 week low with a PE of 3.49

Srei Infrastructure Finance Ltd. is one of India's leading Non Banking Financial Institutions and the only private sector infrastructure financing NBFI.

In addition to infrastructure, Srei also offers a bouquet of allied financial services like capital market services, insurance broking and venture capital. These have not only helped to serve existing customers better, they have also grown into healthy stand-alone services.

Srei has entered into a strategic alliance with BNP Paribas Lease Group, a subsidiary of BNP Paribas of France, for equipment financing business through a joint - venture.

SREI subsidiary Quippo is involved in Telecom tower Infrastructure services.

Liquidity crunch and high interest rates took tool on this stock which is now very cheap. Though overall downside cannot be gauged, fresh exposure can be taken in small lots to accumulate at lower levels.

Source: company website

JM Telecom Sector Fund

JM Telecom Sector Fund

This fund has the right mix of stocks which can perform in this economic environment. Recent recession has bought most of the stocks at attractive level. P/Es are low and they are resonably priced. Only few sectors are showing growth others are in contraction mode. Telecom sector will still continue to grow and add subscribers. though their is cut throat competition , growth in broadband , 3g and other services will drive revenue and growth.

This fund has right mix of stocks with huge weightage on Bharti(Airtel),Reliance Communcation(Rcom), Tanla,Geodesic, Tulip IT (Tulip Telecom) which are now resonable priced and poised for some more growth.

NAV of this fund is below 6 currently and can be bought in few lots for 2-3 years time frame. It has a small Asset size of about 4 crores so it can be nible footed as compared to the bigger funds in terms of churn.