It is learnt that Hindalco Industries, the flagship company of the Aditya Birla group, are on the right path even during the time of economic meltdown, all their projects are on track and they are not postponing any of their plans.

It is learnt that Power Grid Corporation of India (PGCIL) is all geared up to get a part of the supplementary USD 3-billion loan the World Bank (WB) will provide to India by July 2009.

Unitech, the realty major, in order to better manage telecom business has decided to merge all of its eight telecom subsidiaries. Each of these subsidiaries has licenses for three to four circles and together they cover all 22 telecom circles in the country.

Reliance Petroleum (RPL) announced on December 25, the commissioning of its refinery in a Special Economic Zone (SEZ) at Jamnagar, Gujarat in India, commencing its crude processing. The secondary processing units are now under synchronization and commissioning. The entire refinery complex is expected to attain full capacity shortly. _ In order to ensure uninterrupted supply of fuel for its safeguarded nuclear power plants, India will acquire up to 50% ownership in uranium mines in Russia, Kazakhstan and a few other countries. Certain new uranium mines are explored in these countries and India is ready to invest in order to acquire ownership in these mines.

Country’s largest public sector trading agency MMTC is entering into partnership with 4th currency futures exchange to pick up to 15% equity in the exchange at an investment of Rs 225 million.

The government has decided to review the PSU`s projects on fortnightly basis as SAIL`s capacity expansion plan to reach 26 million tons steel production by 2010 seems to be a dream due to its slow progress. The Department of Industrial Policy and Promotion (DIPP) in the commerce ministry suggested that the foreign direct investment (FDI) ceiling for the tobacco industry should be reduced from 100 to 74%.

Jaypee Hotels announced that it has received approval from its board of directors for the merger of the company with parent firm Jaiprakash Associates. 

Nava Bharat Ventures plans to buyback a minimum of 735,295 shares of face value Rs 2 each, for an aggregate amount not exceeding Rs 500 million. The buyback will be made at Rs 170 a share, which represents a premium of 42.44% and 42.02% to the closing price on BSE and NSE, respectively, on Dec. 11, 2008.

Mauritius-based Swiss Finance Corporation has increased its stake in Amtek Auto to over 8% following acquisition of shares from the open market. 

Life Insurance Corporation of India (LIC) has increased its stake in HDFC Bank to over 5% following acquisition of shares from the open market. LIC purchased 158,519 shares from the open market hiking its stake in the company to 5.01%.

US-based Zydus Pharmaceuticals, a subsidiary of Cadila Healthcare, has received final approval from the US Food and Drug Administration (USFDA) to market Acetazolamide capsules, in the strength of 500 mg.

Vardhman Textiles on Wednesday, December 24 said its board approved buyback of foreign currency convertible bonds (FCCBs) that were issued in 2006, subject to the approval of the Reserve Bank of India (RBI) and other terms and conditions governing the buy-back of FCCBs.

GVK Oil & Gas, a wholly owned subsidiary of GVK Power & Infrastructure, has signed a production sharing contract with the ministry of petroleum and natural gas, government of India on Dec. 22, 2008. 

Deciding to invest in a sector may not be challenging but choosing the sector definitely is.

One of the ways to pick a sector is to look at its medium-term prospects. Though sector funds are riskier than diversified funds, invest in a sector which has a good potential in the near term. Hence, the investment tenure too should be a minimum of 2-3 years like diversified funds.

While choosing a sector, avoid investing into a sector which has seen a sharp rise in a short span of time. Though retail investors always tend to chase sectors which are in the news or companies which have seen a sharp upside, such a strategy will only increase the waiting period for investors.

For instance, the flood of IPOs from the construction sector had taken the share prices of many construction and realty sector stocks to dizzying heights, a year ago. Now the sector heads the list of non-performance ones and those who didn’t book profits earlier, have seen huge erosion in value. As a result, investors who made their investment at higher levels will have to wait for a good 3-5 years to see good returns. In fact, one of the big risks associated with a sector is that the performance tends to get cyclical and the investor should have the ability to hold on to his investment.

Besides keeping away from hot sectors, investors would also be better off if they choose sectors which are more dependent on domestic consumers. For instance, sectors like FMCG, retail, services, infrastructure and media are a reflection of the economy though policy changes relating to the sector could have some short-term implications. Infrastructure, for instance, is a typical example which offers good growth potential in the long term.

Rajiv Mundra has a keen eye for the markets and he has the following post on his Google Group.

Details here Buy & go to sleep for 4-5 years!

While the financial crisis has felled several international banking giants, closer home, it is the banking sector funds that have outperformed all other categories of funds over the last three months.

Seven of the 10 top performing mutual fund schemes during the July-September quarter were banking schemes, including banking ETFs, says data provided by Value Research. 

The banking sector funds have given an average return of 4.72 per cent for the period, while Gold ETFs have given a 4.26 per cent average return. Equity diversified schemes have recorded negative returns of 5.62 per cent, according to the research firm.

The benchmark index, Sensex, was down by 4.47 per cent, and the S&P CNX Nifty down 2.95 per cent during the July-September quarter.

The banking stocks performed well as they had under-performed badly in the months before the quarter, said Mr Satish Ramanathan, Head of Equities, Sundaram BNP Paribas Mutual Fund.

While the BSE-Bankex was up by 9.51 per cent for the three months ending September 30, it had fallen by more than 23 per cent during the first quarter of the financial year.

While Gold ETFs couldn’t give returns as high as banking funds in the three-month period, they have logged the highest returns of all categories during September, as well as for the six months ended September 30.

Investing in the equity market directly is exciting and rewarding over a long period.

But the volatility and the information overload make it a very difficult task.

It is important to understand that everyone has different financial goals and risk appetite. So the first step would be to be aware of your own financial goals and your risk profile before you take a d ip into the Stock Markets!

CERC has issued draft guidelines for tariffs for the period 2009-14. The proposed guidelines has retained the 14% ROE for tariff fixation. However, it has proposed to link incentives based on plant availability as against the earlier practice of incentive based on PLF. There has been change in depreciation charges which is aimed at avoiding front-loading of tariffs.

Fuel efficiency norms tightened. If implemented, may reduce fuel cost savings for generators like NTPC

The new guidelines propose linking incentives to plant availability as against the earlier practice of plant load factor (PLF). Several power generators including NTPC and NLC have earlier favoured incentive based on plant availability. According to them, generator can only ensure availability of the station whereas generation schedule depends on demand by the customers. Plant availability is within the control of the plant management while the generation depends on available demand from the SEBs

Read the full post

Depth and breadth of private banking space has now increased. You see significantly large private banks. And the private sector is getting market share. I feel the valuation of PSU banks continue to trade at a discount.

People are talking of reforms in financial sector in general and banks in particular. Will that increase activity in PSU bank stocks?

We have to pay for the subsidies. There is no other way than through the capital receipts. The gap can’t be filled with revenue receipts. Capital receipts can come only via disinvestment.

But, disinvestment doesn’t necessarily mean selling off. It could be like the selling of 3G licence. It could be through public sector IPOs.

Business is booming as usual. Biggest consumption and raising per capita income means they are at slight premium to the indices. From business point of view, they will feel pangs of liquidity. We are little unsure if they can quote at the non-cyclical valuations they are quoting at this point, which shouldn’t be the case

Program trading is casually defined as the use of computers in stock markets to engage in arbitrage and portfolio insurance strategies.

The term has also been defined as “a wide range of portfolio trading strategies involving the purchase or sale of 15 or more stocks having a total market value of $1 million or more” without any direct reference to the use of computers. The word “program” can be interpreted in its earlier, more general meaning of a defined and pre-arranged sequence of steps, rather than specifically a computer program.

In recent times, there has been a subset of program trading called algorithmic trading. This is when a computer program takes a large order, breaks it up into small pieces (typically 100-300 shares per piece), and gradually submits these pieces to the market.

The goal is to complete the order without other market participants realizing that a large trade is in progress, because they would change their behaviour (and thus the price) to the detriment of the program trader if they recognized a large trade.

See this Wikipedia page for more details

There’s no better formula for losing money than to buy high and sell low. And data for 2008 shows people have been doing exactly this

Indian stock markets were lower by around 29% in the current year, and have since recovered around 14% from the low. Market participants cite various reasons for this performance: inflation, deteriorating macro numbers, selling by foreign institutional investors (FIIs), declining global risk appetite, and so on.

Often, I run into investors who recount their own investing experiences. Here are a few samples of varying perspectives on the stock market. First, a young graduate who has got his degree and has been working since 2003, says, “Stock markets? A place to make quick money. Hardly any downside, invest at every correction. Markets will always go up.”

Next, a gent in his late 30s who has been working for 10 years, says: “You can make money, but watch for sharp corrections, and a scam every five years.”

Third, a home maker who started investing in 2008. This lady says, “Stock markets? Stay away! The kitchen is safer! I lost money in intraday trading. Experts on the business TV channels say the markets will not rise.”

Fourth is a retired bank manager. He says, “Stock markets are highly risky! I lost money in the past, when IT stocks crashed. There’s no guaranteed income. Bank deposits are safer.”

Fifth, a gentleman in his late 40s, with a career of 20 years, says, “Stock markets are all about timing. If you time it right, you make money. If not, the volatility will kill you.”

Next, a day trader in stocks says, “I’m a daily wage earner. I leverage in futures markets. I make or break Rs 10,000 to Rs 20,000 a day.” And lastly, we have a stock market investor who says, “Buy stocks when crude oil falls, and vice versa.”

These views seem diverse, but there’s a common underlying thread: they all take an unfortunately short-term view. No one refers to stocks as a long-term wealth creation tool. The Sensex hit its 2008 intraday low of 12,595 on July 15, 2008—four days after crude oil touched its all-time high of $147/barrel. On the same day, the yield on 10-year government bonds touched a recent high of 9.55%.

Once crude oil prices started falling, due to worries about global demand and the unwinding of speculative positions, Indian markets recovered sharply. The trend to sell stocks and buy oil seems to have reversed. Oil is now 20% below its peak.

Nothing has changed significantly in the fundamentals other than sentiment and the drop in oil prices. But the stock market rallied 14% from the bottom. There could be other reasons besides oil, but crude certainly facilitated the rally. What if the trend were to reverse, so that oil prices started climbing again towards $150/barrel? Would the market fall again? If it were that easy, everyone would make money in the stock markets!

Only if the price of oil falls substantially and remains low for a long time will it translate into benefits for the economy, earnings and markets. Although crude prices are crucial to the Indian economy, it’s surprising that at every dollar drop or rise in oil, speculators take the markets up or down.

Retail investors often get carried away by short-term movements. Sometimes newer correlations between different factors emerge in stock markets, such as now, buy equity and sell oil. Such correlation trades often influence market movements in the short run, which then deviate from fundamentals.

The long-term winners are the fundamentals.

Often, stock markets are regarded as an arena for shortterm speculation, especially in a rising market. Stock markets and equity mutual funds are vehicles for long-term wealth creation. Investments in these should be made in a disciplined way, irrespective of market levels.

A retail investor should remain invested in stock markets over a few market cycles—at least five years—to create wealth. A short-term market timer is likely to lose money in the long run, unless he has the gift of predicting the future.

Goldman Sachs issued a report in 2003 predicting that India’s economy will be the world’s third largest by 2035. The report cited expected annual growth rates of 5.3% to 6.1%.Though it has been a bumpy ride as of late, India has the potential to fulfill these optimistic promises. Unfortunately, I’m about as confident in “potential” macroeconomic projections as I am in my own ability to read the future. After all, questions about economic reform, infrastructure, and education must be addressed first.

But if these projections are even close, the Indian stock market will show you the money.

China vs. India: showdown of the 21st century
The real question is: How much of these two looming giants should you have? Both are growing at accelerated rates, so it’s not a simple decision. You really need both — a good piece of China will pay off over the next few decades.

That said, I look to India to exploit an edge: its commitment to the democratic process. Yes, this may sound cliche. India’s government has long been criticized for extended periods of unremarkable reform. Yet I prefer it.

Advantage: India
Long term, India’s commitment to democracy and free markets are a massive benefit. The economies of Brazil, Taiwan, South Korea, and yes, even the United States can testify to that.

At its simplest, India is attempting to build a foundation of sustainable yet powerful growth. And it is doing it through a functional democratic process, which is accountable to its citizens.

Taking stock
When it comes down to companies, India has some specific areas of critical advantage. The IT outsourcing world has been hit before. But I think Satyam is still an intriguing investment opportunity that has been tremendously volatile as of late. The company is closing in on becoming the developing world’s first global consulting firm — similar to IBM’s (NYSE: IBM) role in the tech consulting industry. In the financial world, our Global Gains team of analysts picked up on two Indian banks (ICICI was one) that have posted strong financial performance of late. The other, HDFC (NYSE: HDB), continues to be an intriguing investment in a country that is building wealth quickly.

Attacking its own content-hungry consumers, Rediff.com has created a strong online presence that is beginning to resemble Microsoft’s (Nasdaq: MSFT) MSN site in its early years. Rediff is certainly not on the same scale of popularity or profitability yet; it may be getting there soon. If you are paying attention to SINA (Nasdaq: SINA) in China, you might want to look into Rediff.com as well.

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