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Wednesday, December 29, 2010


By Gods grace,
 zee learn achived medium term tgt of 20%
Kiri dyes achived medium term tgt of 20%

within a week.

Wednesday, December 22, 2010

December 22nd performance

By Gods Grace
Harrisons Malayalam Ltd Short Term TGT achieved in single day 4.7% returns
Jayshree tea Short Term TGT achieved in single day 4% returns
Long term call Voltam given B@700 levels now trading @800levels within a month time-- 14% returns till now

Tuesday, December 21, 2010

December 20th performance

By Gods Grace
Herohonda TGT achieved in 1 days--13.9% profit
HEG TGT achieved in 1 day-- 8.7% profit
camlin hit SL  --4.4% loss
Tech mahindra missed TGT by 1 rs..days high 709..tgt given 710..upside till now 9%

GOLD B@20500 on 16th S@ 20538--3800Rs. profit per lot--4.75% profit per lot

Friday, December 17, 2010

Insurance FAQs

1)What is the difference between nomination and assignment?

Nomination is an authorization to receive the claim arising out of policy in the event of the death of the life assured, it does not give the nominee an absolute right over the money received to the exclusion of other legal heirs. Further, the Nomination can be changed or cancelled at any time during the lifetime of the policyholder at his will and pleasure or by a subsequent assignment. On the other hand, assignment of an insurance policy is a transfer or assignment of all rights and liabilities to the insurance policy in favour of the assignee.

To be continued...


This article came in news paper Times Property dated 17-12-2010

 You can avail a home improvement loan to complete all those pending repairs, says Kavita Sriram

    Some homes may require urgent repairs. Homeowners need not wait indefinitely till they can augment enough money towards revamping their house. Banks lend money not only to buy a property but also for any home improvement project you may undertake.
    The process of renovating or making additions to your house is home improvement. It includes painting, flooring, upgrading cabinets and wardrobe, expanding capacity of electrical and plumbing systems, and roofing. Some people may want to add a room or convert an unused corner to a living space. Home improvement loans are meant to finance these activities that could cost anywhere from a couple of lakhs to around Rs 10 lakhs.
    Technological additions like installing security systems, fire prevention gadgets, water recycling units and rain water harvesting systems are expensive. Homeowners can also use the home improvement loan amount to buy home electronics like microwave oven, washing machine, hobs, kitchen chimney and air conditioners. This loan enables homeowners to concentrate on home improvement, free from the fret
ters of financial limitations.
    Homeowners with a stable income over the last couple of years and a minimum age of 21 years are eligible for this loan. Most lenders limit the repayment period to 10 years. If you have a home loan already, applying for the new loan with the existing lender may be a good idea. This could make the loan process less cumbersome with minimal paperwork.
    Most lenders expect margin money (down payment) to the tune of 20 percent of the cost of home improvement project.
    The financial estimate can be made by an architect or may be based on the cost of gadgets you would like to purchase. Estimated cost of home improvement project includes
cost of repairing, renovation or extension. Before applying for a loan, try to raise funds to meet the down payment.
    Some banks finance the entire project cost for their existing customers with impressive repayment track record. Consider availing home improvement loan if you have pending internal and external repairs and other structural improvements to your home.


This article came in news paper Times Property dated 17-12-2010

It is always advisable to buy a property with a home loan as you get tax benefits and the advantage of the bank carrying out a due diligence process, writes V Nagarajan

    Most homebuyers need a home loan to buy a residential property. There are some who prefer to buy using their own funds. But there are risks associated in such cases. Many people have invested in vacant plots without seeking a site loan and there are instances where such investments have gone sour. The process of seeking a home loan not only assists a homebuyer in tiding over the financial need, but also helps him to a great extent in the due diligence process.
NRIs get benefit of due
For instance, take the case of NRIs who are away from home and who may have to go through the process of legal scrutiny while investing in a property. They have to depend on their relatives or friends. The best way out is to seek a home loan as the legal cell in the bank will scrutinise the documents and certify that the property is free from encumbrances before lending. It is always wiser for such people to invest in projects approved by banks as that ensure that all due diligence process has been completed. Incidentally, the Foreign Exchange Management Act (FEMA) rules prohibit NRIs from investing in agricultural land, farm land and plantation property.
Tax planning done
From a tax planning point of view as well, it would be better to buy a house with a home loan. It is also equally beneficial for those who have an investible surplus to invest in residential property through a home loan. The in
terest on the loan up to Rs 1.5 lakhs is tax deductible for a self-occupied house. This means a tax saving of nearly Rs 45,000 per individual. A housing loan of Rs 18.75 lakhs attracts around Rs 1.5 lakhs as interest at present. The interest payment can also be adjusted against salary income, business or profession income, or any other income. A loan can be taken from a bank, financial institution, relative or friend.
    There is no limit on the deductibility of interest in the case of let-out and commer
cial properties. It is advisable to go in for a home loan especially when the property is to be let-out. So, you can take as much loan as one you can get from the lending institution. Here again, the interest payment is allowed as a deduction in full while computing 'income from house property'.
    Further, capital repayments are eligible for deduction under Section 80C within the overall aggregate limit of Rs 1 lakh. Payments on account of stamp duty, registration fee and other expenses which have been incurred for the
purpose of transfer of the house are available for deduction also.
Co-borrowers get benefits
Even while making a joint investment in property, every member gets a special deduction in respect of interest on the loan and also repayment of capital. From the point of wealth tax planning as well, one property is exempt from the purview of wealth tax irrespective of the value of the property for
every individual.
Avoid wealth tax
Above all, if an investor is holding more than one residential property, he can avoid payment of wealth tax if the residential properties are given on rent for more than 300 days in a calendar year. Maximum marginal tax rate of 30 percent can be brought down to 21 percent in case the property owned is leased out.
    So, go for a home loan while investing in property.

Six tips to make the most of your PPF

This article is taken from ET wealth
The stock market, despite the probability of giddy returns, can give you the heebie-jeebies due to the wild swings in share prices. Fixed deposits can be a turnoff because the interest earned is taxable. For investors seeking the best of both worlds, there is the Public Provident Fund (PPF). Wrapped in safety and free of tax, the PPF is almost a godsend for risk-averse investors.

“PPF is an excellent tool for long-term investment. It is risk-free as it is backed by the government,” says Harsh Roongta, CEO of It is especially suitable for self-employed professionals and small businessmen who are not covered by the Employees' Provident Fund . “Those who don't have access to an organised setup can realise long-term goals through the PPF,” says Surya Bhatia, a Delhi-based financial planner .

Don’t think of your PPF account as a stodgy investment option where you put away something once in a year. With a little planning, it can be an important part of your financial portfolio. Here are a few tips that will help you make the most of this option: 

PPF vs FDs
Maximise limit:

The 8% compounding interest you earn on the balance can work wonders for you, especially because a PPF account is a long-term investment. There is an annual limit of Rs 70,000 that one can invest in the PPF. You may feel it is a waste to be investing Rs 70,000 in this option when your Rs 1 lakh tax saving limit under Section 80C has already got exhausted. But don't let the tax savings alone guide your decision. Invest as much in PPF as you can afford to. If you contribute Rs 70,000 a year to your PPF for 15 years, your investment would grow to a gargantuan Rs 22.92 lakh on maturity.

And remember, this is tax-free money. In the 30% tax bracket, this is equivalent to receiving almost 11.5% interest on a bank fixed deposit. “The PPF offers the highest post-tax returns among all fixed income options since no tax is levied on the investment, income and withdrawals,” says Bhatia.  
Distribute income:

There are benefits in store if you open a PPF account in the name of your spouse or child. Tax laws say that if any money gifted to a spouse is invested, the income from that investment is clubbed with the income of the giver. But since PPF income is tax free, it will not push up his tax liability. This way, you can invest more than Rs 70,000 a year in this tax-free haven and benefit from its various advantages.

This strategy does not work in case of minor children though. You can open a PPF account in the name of a minor child but the combined contribution to your and your child's account cannot exceed Rs 70,000 a year.

Invest for children:

However, if the child is over 18 years, up to Rs 70,000 a year can be invested in his name separately. The taxman insists on clubbing the income of minor children with that of the parent. But once they turn 18, they can have a separate income. “A PPF is an ideal way of building a fund for your child's educational needs instead of falling for all the ‘high-commission-paying’ child plans of insurers,” says Sandeep Shanbhag, director of Wonderland Consultants, a tax and financial planning firm. “In a child plan, you are not sure of the final returns.
Invest before cut-off:

It’s important to keep an eye on the calendar when you make your contribution to the PPF. The interest on your investment is compounded annually but the calculation is monthly. The interest is calculated on the lowest balance between the 5th and last day of every month. So, if you invest before the 5th, the contribution will earn interest for that month too. Otherwise, it's like an interest-free loan to the government for a month.

Withdraw for emergencies:

The PPF can also be your emergency fund. Although it is not a good idea to dip into long-term savings for consumption, if you are faced with a terrible cash crunch, you can withdraw from your PPF account. It will be far cheaper than going in for a personal loan at 17-18%. Withdrawals are allowed after the sixth year. But you can withdraw only once in a year and only up to a specified limit.

Also, be sure to put back the amount you have withdrawn at the earliest. As we said earlier, this is not a good strategy if you do it frequently. Some investors use this tack to claim tax deduction. They withdraw from the PPF and then reinvest the money after sometime. This is a flawed investment strategy. They only look at their gross savings but their net savings do not grow.

Other helpful tips:

A PPF account matures in 15 years. Though you are allowed to open only one PPF account, you can extend it after it matures. Accounts can be extended in blocks of five years indefinitely. Even if you don't have a large sum to invest in the PPF, don't forget to invest the minimum Rs 500 in a financial year. There's a small but troublesome penalty of Rs 50 levied if you fail to do so. Don't invest more than the Rs 70,000 a year. The excess amount, even if credited to your account by mistake, will not earn any interest.


This article came in news paper Times Property dated 17-12-2010

Today, home loans are available for many needs of homebuyers. With the keen competition among lenders, more innovative schemes can be expected, says V Nagarajan

    The home buying exercise has never been as flexible as it is now thanks to a plethora of home loan options, quick processing, instant approvals and faster disbursements. That is not all. The fierce competition among various housing finance companies and banks has brought in its wake transparency, bargain deals and festival offers to enable borrowers strike bargain deals. There is no dearth of festivals in India and each festival brings discount offers in one form or the other to lure home loan borrowers.

    Loans are available not only for salaried but self-employed, agriculturists and businessmen. The new entrants to the home loan industry are keen to remain flexible, especially among self-employed and businessmen, when the latter is also not reluctant to pay a higher lending rate. Home loans are available to buy under-construction or ready built units, furnish existing homes, and build additional floors on an existing home. There are loans available to buy developed plots and then construct a house. Plot loans are also available to bid for
units offered by State housing boards.
    With an increase in family size, the requirement for a larger sized house is felt and there are institutions that assist homeowners in looking for a new home while simultaneously working on the resale of the existing one. Today, there are institutions which assist sellers in getting a better deal for their properties through a property services division.
    If both a husband and wife are employed, the joint income enables them to seek a higher loan and both are eli
gible for the tax sops while investing in property. Tax experts advise that even if one has savings, it is advisable to seek a home loan while investing in property due to the sops associated with the home buying exercise through home loans.
    Loans up to Rs 20 lakhs are treated as priority sector. There is an interest concession of half percent for those seeking loans below Rs 10 lakhs and houses whose value does not exceed Rs 20 lakhs.
    Home loans are also available to buy additional homes to rent out and earn rental income. The government offers tax sops for those who are keen on investing in housing primarily to boost the rental housing stock. Residential property leased for a minimum of 300 days in a calendar year is exempt from
wealth tax. So, a home loan comes in handy to acquire an additional house.
    Home loans are available even for senior citizens who can show recurring income even after retirement. There are institutions that consider offering home loans even after the retirement age and so there is no age restriction on going in for a home loan.
    NRIs are invariably faced with a dilemma as to what would happen when they avail a home loan during their sojourn abroad and thereafter are compelled to return home during the home loan repayment period. Housing finance institutions are flexible in that they reschedule the loan repayment period depending on their qualification, family size, savings, re-employment potential and other incomes in India.
Varied options
It makes better sense to seek a home loan while investing in property. Home loan borrowers can avail of top-up loans offered by several institutions to tide over contingencies. Similarly, mortgage loans go a long way in raising that much-needed capital for any exigencies. Those who have let-out their residential or commercial properties to corporates or public limited companies can get the rentals for the unexpired period of the lease upfront and plough back the money to more profitable avenues.
    Those who are aspiring for higher education abroad can use property as a security while seeking an education loan. This is irrespective of the fact whether there is an existing home loan liability attached to the property.
    Gone are the days when a self-employed or budding entrepreneur had to accumulate savings to commence his operation in his own premises. Today, he could own commercial premises by seeking specific loans and commence his business instantly. Loans are also available for upgrading existing office premises or extension of the premises.
    Even during later years,
the asset acquired through a home loan comes in handy to meet any contingencies. This is because reverse mortgage allows senior citizens to remain in the house and also retain their ownership. The money they get from reverse mortgage can be used for anything like meeting day-to-day expenses, home improvements or for healthcare. In a reverse mortgage, the borrower can choose to receive the money in one lump sum or by way of monthly, quarterly, or annual payments.

Thursday, December 16, 2010

December 16th performance

By Gods Grace,
Tatasteel acheived medium term TGT of 660 in less than 2 weeks.--4.5%
Gravita  Reched tgt of 245 in a single day--3.6% returns
Gold B@20500--holding

Wednesday, December 15, 2010

The classic derivative trader’s strategy

Set up hedged positions that could gain if the market loses ground. For example, sell the Nifty futures and buy cheap calls at the same time. That way, if the market falls, you gain on the futures and if the market rises, your losses are limited by the appreciation
in the calls.

December 15th performance

Sensex down 150 points, Nifty down 50 points

But by Gods Grace our calls rocking.
Crest animation TGT acheived on the same day--6.3% returns
Hpcl from 393 to 424 in less than one week--7.8% returns
 LIC housing finance Stop loss triggerred-3.4% loss :-(
Bhushan steel acheived TGT of 445 in 3 days-- 5.9% profit( Still teem left in this script..but margin of saftey is the issue)

Voltamp told to buy @ 700 on 26th november is trading@ 777--11% returns so far

Warren Buffett On Value Investing-CNBC

Rakesh Jhunjhunwala -- How to Pick right Stock

Checkout Warren Buffet of Indian stocks markets, Rakesh Jhunjhunwala talking on how to pick right stocks for long term investment.

Tuesday, December 14, 2010

December 14th performance

By Gods Grace

Escort up 5%
Tata Coffe up 5% again
Bhushan Steel up 3.5%
Geodesic up 2.5%
Jindal Poly up 7%
Gujarat Gas again up 2%
Indswift Lab again up 2.5%
IRB Infra again up 3%
Strides Acrolab again up 1.5%
Areva up 2%
Gold B@20600 on 8th december Sold@20700- prfot 10000 (12.5%) per lot--

Monday, December 13, 2010

December 13th performance

Dear Clients,
hope u enjoyed the call of

hexaware--up 10%
strides-- up 2.5%
ind swift lab-- up 6%
tata coffe-- up 2.5%
IRBinfra--UP 7%
aban--Up 1.5%
gujarat gas--up 2%

By great Grace of GOD.

Friday, December 10, 2010


To buy 1 Lot=5000qty of Zinc you need Rs.35000
Zinc S@104 B@103--5000 Rs Profit Per Lot--14.5% returns

Copper S@413 B@411 --2000Rs(10%) Profit per lot


Its not about making money.Its about protecting your capital.We have to wait for good opportunity before entering trade.

No trade today.

Only TATASTEEL SL triggerred.

Thursday, December 9, 2010


Share Rigging can be described as attempts to pump up a company's stock price by floating favourable news about the company's earnings.

A report on the Indian stock markets prepared by the Intelligence Bureau suspects that a market operator, Vimal Rathod was accumulating shares on behalf maverick investor C Shivasankaran based on insider information. The IB has passed on the information to the CBI and the market regulator, the Sebi for further action.

SEBI is targeting some firms intimating that these companies have been involved in the price rigging activities.
Following are the companies which involved in show and created blood bath..

1) Shree Ashtavinayaka Cine Vision--Stock Price rocketed from 15 to 51 within 5 months back to 15 levels in 3-4days !!

2)  Karutari Global -- Stock Price rocketed from 18 to 38  within 5 months back to 158levels in 3-4 days !!

3) Ruchi Soya -- Stock Price rocketed from 90 to 140 within 8 months back to 82 levels in  2-3 days !!

4) Hanung Toys -- Stock Price rocketed from 125 to 410 within 11 months back to 190 levels in 4-5days !! 

5) Welspun Corporation -Stock Price was rangebound between 225-275  almost for 1 year  is now trading at 153 levels which is 52 week low !! 

6)Ackruti City Ltd -Stock Price was rangebound between 480-550  almost for 1 year  is now trading at 258 levels which is 52 week low !! 
7)Murli Industries --Stock Price was rangebound between 75-115  almost for 6 months is now trading at 55 levels!! 

8) Uflex Ltd -- Stock Price rocketed from 95 to 325 within 9 months back to 160 levels in 3-4days !!

How they did it?

As per Economic times the modus operandi in each instance was the same. The companies would have a set of investment arms, which would sell shares to various entities controlled by the Dangi group.

This cartel would then push up the stock price by buying some more shares from the market, and at the end of the operation, sell the shares back to the company’s investment arms. The profits would be shared by the Dangi group and the companies. The Dangi group entities traded through a large number of stock brokers, primary among them being Ashika Stock Broking, Sanchay, Systematix Shares & Stocks and Anand Rathi Financial Services.

What is the Penalty?

According to Economic Times late on Thursday, the regulator barred the promoter groups of Murli Industries, Ackruti City, Welspun Corporation and Brushman India from dealing in their shares till further notice, for colluding with share trader Sanjay Dangi and his associates, and the Ashika Group in rigging the stock price of their respective companies. Sanjay Dangi and his group of investment arms, and the Ashika group of firms too have been banned.

How spokes person of few companies responded?
Clarifying his stance on the issue, Naveen Jain, Company Secretary of K S Oils informed, "We understand from the mandatory disclosures made by Mr. Sivasankaran a few months back to us that companies belonging to him had purchased a certain block of our company shares in a secondary market transaction  from Citi Venture Capital, a private equity investor in our company.

Ackruti City Managing Director Vimal Shah said he would challenge the Sebi order. 

Whats the lesson to be learnt?

The saying ‘small is beautiful’ is always not true. Small and mid cap companies are prone to manipulation of stock prices by Operators.
Few Operators who specialise in rigging public issues,have set up off-shore entities, which fulfil the requirements for a ‘foreign institutional investor’ status. The operators then buy into the IPOs through these ‘FIIs’. 
In some cases merchant bankers agree to mobilise the funds as required by the promoter, but price the issue much higher. The difference is usually shared by the merchant banker and the operator. 

Whats going on now?

Few companies got clean chit and their share prices went up like rocket on Dec 11-2010
1) KS oil up 22%
2) Ruchi soya up 10%
3) Hanung up 5%
On 13th December
 KS oil agin up 10%
Ruchi soya 5%

On 14th December

KS oil agin up 1.5%
Ruchi soya 2%
Hanung up 9%

On 15th December

KS oil agin up 16%
Ruchi soya 2.5%
Hanung up 1.6%

On 16th December
Ruchi soya 2.9%
Hanung up 0.6%

---to be continued


Wednesday, December 8, 2010





GOLD S@20670 B@20590--10% PROFIT (8000Rs)PER LOT

GOLD B@20400S@20550--15000PROFIT( 18.75%)PER LOT

COPPER B@403 S@412--9000 PROFIT(45%) PER LOT
COPPER S@413 B@411--2000 PROFIT(10%) PER LOT

Tuesday, December 7, 2010











By Great Grace of GOD :-)

Sunday, December 5, 2010

Five investment ideas to beat inflation

Shooting well past the 5 per cent mark, inflation could pose the biggest risk yet to your plans of buying a home or living well on retirement. And with traditional investment options struggling to beat inflation, it's time to look at alternatives for your long-term portfolio, says Aarati Krishnan.

For most of us, inflation only conjures up images of sky-rocketing onion or milk prices that can throw the household budget into disarray. But have you thought about the serious damage that inflation can inflict upon your long-term wealth? Even a small but sustained increase in inflation rates can completely wreck your carefully constructed plans for buying a home, funding your daughter's engineering degree or even living it up after retirement (See table). Prepare for 8 per cent
The risk of inflation upsetting your financial plans is not theoretical; it is very real, for two reasons. One, inflation in India is usually discussed in terms of the Wholesale Price Index or WPI, which captures product prices at the factory level. But it is the Consumer Price Index (CPI Industrial Workers) that better reflects products and services used by middle-class consumers. Annual inflation in the CPI (8 per cent) has consistently stayed well above WPI (6 per cent) in the last five years. Two, inflation has climbed steadily in recent years, with a rising middle-class stoking demand for everything from apartment blocks to vegetables. Therefore, while financial advisors in India have traditionally used a 5 per cent inflation rate to construct long-term investment plans, inflation today is already at twice that level. So what inflation rate should investors budget for over the next decade or so?
A study of inflation trends over the past 30 years shows that 8 per cent would be a realistic number. Studying 30-year data for CPI (using ten-year rolling returns) reveals that consumer prices rose at over 8 per cent annually almost sixty per cent of the time since 1980. Inflation stayed at 5 per cent or less only five per cent of the time. If inflation itself is to reduce the value of money by 8 per cent every year, how should you rejig your portfolio to keep ahead of it? Here are five ideas that may help investors win the battle against inflation:
Stop shunning stocks
Whether inflation hurts or actually helps stock prices has been the subject of a wide academic debate. However, a study of real-life trends in the Indian stock market shows that stocks are the only asset class that have done a decent job of delivering ‘inflation-plus' returns to their investors, with any degree of consistency, over the last 30 years.
A rolling-return analysis of the BSE Sensex vis-à-vis the consumer price index shows that for investors who held on for ten years at a time, the BSE Sensex beat the consumer price index on nearly 80 per cent of the occasions.
Yes, there were certain ten-year periods (for instance, between 1992-93 and 2002-03) where stocks actually declined and left investors high and dry. But the big gains notched up in the good years would still have left investors in a comfortable position had they waited a couple of years to cash out.
In contrast, gold, the retail favourite did not match inflation nearly 50 per cent of the time! Investors who bought gold for the extended period between 1987 and 1995 would have found the value of gold holdings not keeping pace with inflation rates over the next ten years. In recent years, however, gold has done a splendid job of beating inflation, thanks to the spurt in returns on the yellow metal. Fixed deposits, where most people park the bulk of their savings, have not delivered positive ‘real' returns on most occasions.

All this suggests that stocks are a must-have in the portfolio for anyone saving money towards any 10-year plus financial goal. For a person with a debt-only portfolio earning a return of 8 per cent now, allocating 20 per cent to stocks may lift returns to a respectable 10 per cent, assuming stocks deliver 16 per cent over the next ten years. Beating inflation by a bigger margin will require a bigger stock component.
Debt-plus funds
Those not comfortable dabbling directly in stocks can take the mutual fund route. Monthly income plans that add a dash (15-20 per cent) of equity to a debt portfolio are one option. However, only a handful of them have trounced inflation over the past five years — the category as a whole has managed a 8.4 per cent return. Reliance Monthly Income Plan, CanRobeco Monthly Income and HDFC Monthly Income Plan are a few funds that registered a 11-12 per cent annual return.
Though they come with higher risk, balanced funds (which use a 65:35 combination of equity and debt) seem a much better option for conservative investors seeking to beat inflation.
One, all of the 15 balanced funds that have a ten-year record have comfortably beaten a 9 per cent inflation rate, their returns ranges between 13 and 27 per cent and averaged 17 per cent for ten years.
Two, returns from balanced funds, as they are treated as ‘equity-oriented funds', suffer lower tax compared to monthly income plans. Thus they may yield higher effective returns for investors in the higher tax slabs. Yes, balanced funds will see their values plummet in any stock market meltdown. But regulated equity exposures and a 10-year plus holding period should mitigate this risk to a good extent.
Real estate & rents
Though there is no ‘property index' to support this, inflationary periods in India have usually been accompanied by rising prices of real estate. Real estate investments help you keep ahead of inflation in two ways. One, as a home tops the ‘must-buy' list for most Indian salary-earners, property prices usually move in step with income levels (a key inflation driver) over the long term.
Two, rents on residential property, especially in the cities, also tend to march with inflation. Therefore, owning a second home and renting it out, ensures that a portion of your monthly income is automatically benchmarked to inflation over the next decade or so.
Most Indians already have a sizeable portion of their wealth locked up in property, thanks to the value of their own homes. A self-occupied home allows the owner to protect himself against inflation in his monthly rent outgo. However, those who have little or no investments in property should actively consider real estate investing to counteract the impact of inflation.
Buying plots of land, an affordable home in the suburbs or real estate funds to participate in property price appreciation are options. However, investors keep tabs of their overall portfolio structure while doing this — having over 50 per cent of your total wealth invested in property would be tantamount to putting all your eggs in one basket!
Make use of leverage
Ever thought about why the EMI (equated monthly instalment) on the flat you bought five years ago seems so manageable today? That's because of inflation too. One of the key side-effects of inflation is that, by steadily nibbling away at the value of a rupee, it puts the borrower at a distinct advantage over the saver in the long run.
The EMI of Rs 30,000 a month on the home loan you took five years ago may have amounted to 50 per cent of your monthly salary in 2005. But if your salary itself has kept pace with inflation (growing at 8 per cent a year), then you would today be shelling out only one-third of your monthly salary as loan repayment. The appreciation in the market price of your home would also have increased your comfort levels in paying off your debt.
Yes, higher inflation may push up the interest rates if you have a floating rate home loan. However, the tax incentives on home loan repayments, on top of the relatively low interest rates on home loans, still make leverage a particularly good option to fund your property purchases.
Now, we are not suggesting that maxing out your credit card while shopping or borrowing to bet on IPOs is an inflation-beating idea! However, judicious use of loans to fund long-term goals such as acquiring a degree or purchasing property does help you win the battle against inflation.
Stock up to win the inflation battle When it comes to beating inflation, all stocks are not equal. The following points may help investors choose stocks that can inflation-proof their portfolio.
Stick to blue-chips: Though mid-cap stocks tend to deliver bigger returns than large caps in a bull market, mid-sized companies in India have historically proved more vulnerable to rising raw material prices than large ones. That makes them less well-placed to deliver profit growth in high inflation scenarios. For instance, the Sensex companies in India have traditionally enjoyed over twice the profit margins of their mid-sized peers, given their market leadership, procurement strengths and pricing power. Thus, investors looking to add a stock component to their mainly-bond portfolios may add Sensex/Nifty ETFs or funds to get the equity exposure.
Lean towards commodity processors: A scenario of high global inflation usually puts commodity processors (like Tata Steel or a Hindalco) at an advantage over converters of commodities (like a Welspun Gujarat or an Apollo Tyres).
The former benefit from high commodity prices while the latter usually lose.
Look for pricing power: A high inflation scenario usually forces companies to look for avenues to pass on higher input costs to their customers without hurting demand. Companies that have high pricing power usually hold a monopoly or dominant market shares in their category, operate in niche markets or offer premium products that are in high demand.
In recent times, companies that market products directly to consumers (consumer durable and auto makers) have enjoyed good pricing power even in an inflationary scenario, owing to strong consumer demand.
Industrial product makers who sell to other businesses have been forced to absorb higher costs. A company's operating profit margins are the best test of pricing power.

Note: This article came in Hindu Business Line on 5th december 2010.I personally thank the author and sharing his views to visitors of my blog.Since this article can be mailed to friends publishing this in my blog is allowed as per copyright act.


Monday, November 15, 2010

Investment Advisory Services

Quality Tips


Sunday, November 14, 2010

Investor Education Series

October 18 2010

My Dear Investors,

I wish to share the knowledge (obtained from my experience) with my valuable customers. So I am starting this series. Your queries, Feedback, arguments,critics are most wel-come.

1) Most retail investors FEAR about the Current price of the share

Remember share price doesnt matter but valuation of the stock matters.

For eg:
a) Look at this company

Share price Rs. 56,391.45 per share. Today it is up 3.91% up by 2120.35 Rs. It managed to make new 52 week high in volatile market.
On 21st september its price was 24957Rs. Within one month it has gained 125%..means more than money double.

b) also have a look at
On 9th september its price was 1.27Rs. Nearly one month it is down 37%.
Share price 80paise per share. Today it fell 4.7%

So dont think that share price is @ Rs.2000 hence it is costlier to buy. or If the share price is @2Rs means it is cheaper to buy.

What matters is underlying business and future prospectives of the company/business.

100Rs. stock up by 1 Rs is same as 1000Rs stock up by 10 Rs. So what matters is how much % u can gain.

Eg: for 10000 u can get 100 shares costing 100Rs. each or 10 shares of 1000Rs each.
at the end of the day 100Rs quotes 101 and 1000 Rs. shres quotes 1010 amout u gained is 100Rs. flat 1% in each case.

So Dont worry about the share price but look for share vluations.

Happy Investing.
God Bless all of Us.


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