Equity Markets

[i_m_listening]

Originally Posted by shalabhkumar

So I feel the market was indifferent with the government. So even it falls who cares. Not that we are in between any major eco reforms

Thanks
SK

in my opinion it does matter if the govt falls or if there is any political instability in the economy

elections > increased govt spending > increased fiscal deficit > increase in money supply > further surge in inflation > RBI hikes interest rates/crr > capital spending gets hurt > growth derails > mkts enter slump

[konqueror_vivek]

Originally Posted by shalabhkumar

Dude,

Quick points:

+ I dont see market falling more than 10% from where it stands today. My logic is that the day when left pulled the plug out from the govt the market went up. See anyways we have election early next year. So even if the govt falls then the election might happen few months before the schedule.

The reason behind the rally day before was not that the Left pulled the plug, it was PM's strong willing-ness for nuclear deal, there are so many power and energy companies which will get substaintial benefit from it. ONGC is one big example.

As far as elections are considered, if Govt fails to prove majority in coming session, it will be a sorry stage for India, at these heated inflation levels, we will be facing election expenditure, which will be far expensive for Indian economy - this is a very big factor, you cant discount this.

+ I feel the govt will prove the majority and will go for the N-Deal. I see this a major boost for the eco. If i have to pick between the Deal and early election, will pick the Deal.

This is quite paradoxical, one hand you are taking Nuclear deal and other hand you have elections, there will be no deal if the Govt fails to pass the bill in parliament - remember India is still a democratic nation

+ I dont believe in PE and all too much. My logic is that if Sensex went till 21K few months back I m sure that after few months it will regain that level.

Why do you think market got a bounce back from 3,850 levels ? Had there been no connection with PE and markets, there had been no bounce back. You cant imagine big FII's and hedge fund managers make their traders on the terminals watching markets all the time. The strategy for each market is designed on techincals and PE multiple for any capital market is among the important factors, you cant neglect that.

+ I havent seen any major eco decisions by the govt in last 4 years (no privatization, N-Deal, Indo-Iran pipeline etcs). So I feel the market was indifferent with the government. So even it falls who cares. Not that we are in between any major eco reforms

Thanks
SK

Markets for any country have a strong correlation with the Fiscal and Monetary policy on which Govt has a big say! Economic decisions are very crucial, economic growth projections and Inflation numbers are inversely correlated, and mind you policies do have an impact on markets.

[raghav507]

hi puys,
recently read on moneycontrol that DLF has set the price for buyback as Rs. 600/share...
i have 100 of them allotted at IPO price...
plz guide me on what is buy back and how can i avail it...
as many experts say that the realty market is not good...
although i can hold it for a longer term but i am in dilemma...

[Lightning]

Originally Posted by raghav507

hi puys,
recently read on moneycontrol that DLF has set the price for buyback as Rs. 600/share...
i have 100 of them allotted at IPO price...
plz guide me on what is buy back and how can i avail it...
as many experts say that the realty market is not good...
although i can hold it for a longer term but i am in dilemma...

As the readers know, buyback refers to buying of outstanding shares by a company which in turn reduces the number of shares available in the market (public). This buy back offer may be called by the management because of following reasons:

1. Promoters think that the current market price (CMP) of the share does not justify the fundamentals of the company and the share at CMP is undervalued. So they announce the buy back thus giving positive signal to the investors that all is well with the company fundamentals and that the share should command higher valuations.
2. Tax benefits are also a reason for buyback as dividends are taxed at higher rate than capital gains, so companies prefer buyback to reward their investors instead of distributing cash.
3. If a company has good amount of unused cash and the management feels that there is no other good opportunity in the market other than their own company, they may put the cash towards buying back their own shares so that investors may be rewarded.
4. Buy back also improves the ratios such as ROA, ROE, P/E as outstanding shares (Equity) and Assets (Cash) get reduced.
5. Buyback also helps to increase promoter's stake so that predators can be put at bay.

Now in case of DLF, the promoters go by the logic of point 1, they beleive that DLF@ 360-375 was grossly undervalued, so their CFO came out with statement that they would buy back their shares as they have enough cash to do so and they want to win the confidence of investors that all is well with the company. Please remember that DLF has agreed to buy 22M shares.

The company is looking at a buy-back because the current share price does not reflect the intrinsic value of the shares, Ramesh Sanka, group chief financial officer, said. Point 1
“This (buy-back) is being done to take care of shareholders’ interest by announcing the right price for the shares,” he said. “It is also a strategic move of sharing returns with investors.” Point 2 & 3

The company is planning to buy a maximum of 22 million equity shares, which constitutes 1.1 per cent to 1.29 per cent of the total equity base of the company. After the buy-back, the promoters' shareholding in the company will go up to 89.3 per cent from 88.1 per cent.

So in that case, not all your holdings will be taken in buyback. I mean suppose out of 100 shares, say 10 will be taken in buyback depending upon number of applications they receive. So price should hover around 480-530. (Arbitrage opportunities might also arise) But that does not gurantee that it will not fall. (Reliance Infrastructure is an example where the share price continued to plunge)

Other companies on Buy back are Godrej Industries, SRF.

Cheers!

[shalabhkumar]

Originally Posted by i_m_listening

in my opinion it does matter if the govt falls or if there is any political instability in the economy

elections > increased govt spending > increased fiscal deficit > increase in money supply > further surge in inflation > RBI hikes interest rates/crr > capital spending gets hurt > growth derails > mkts enter slump

Hey,I completely agree with this. But when an election cost around 500 crs. I think India can live with this. I ment that if govt falls it will puch back eco reforms by 6 months. Which is the time for the new govt to start working. ThanksSK

[konqueror_vivek]

Originally Posted by shalabhkumar

Hey,I completely agree with this. But when an election cost around 500 crs. I think India can live with this. I ment that if govt falls it will puch back eco reforms by 6 months. Which is the time for the new govt to start working. ThanksSK

You just under-estimated election expenditure by huge margin, election expenditure should be around 3,200 Cr for Election commission (assuming Inflation stays below 10.0%), this is excluding the political parties expenditure, which however, no party discloses.

At current situation, elections will take Indian economy to see further downside, no one wants election at this stage, may be next year, when the Inflation dust gets settled.

[Lightning]

The figures for April were revised downwards. That is a cause for concern. So does this mean that if the May figures are also revised, the actual numbers would be lower, more sharply?

Inflation is growing at the fastest pace while industrial production is growing at the slowest pace. There are undoubtedly some tough times ahead for India Inc. Rising interest rates, soaring inflation, cut down in buying by the Indian consumers, will all leave a further telling effect on the bottomlines of the Indian companies. Auto companies are seriously contemplating cutting down production. Rising costs, if it does not come down soon, might start impacting expansions and other greenfield projects, leading to further slowdown. The Govt is taking all measures to reduce prices, as that is a priority right now but this is surely causing the economic growth to slowdown.

Caution may prevail on the bourses in the near term as, along with the economic factors, the country is now going through political uncertainty too. All would now depend on the first quarter results and more importantly on whether, the government will be able to win confidence vote in the parliament.

Cheers!!

[mahi101987]

can anybody suggest me some sites regarding info and tips to invest in stock markets

are there any sites where we can do virtual trading ??

please suggest me ..

[AMIT_007_001]

Originally Posted by mahi101987

can anybody suggest me some sites regarding info and tips to invest in stock markets

are there any sites where we can do virtual trading ??

please suggest me ..

Buddy ...
The best resource for all the latest info & news updates is
www.moneycontrol.com

It has some really powerful features..

Also u can try
www.equitymaster.com

[AMIT_007_001]

Puys ,

It seems that bad news continue pouring in Indian Business Scenario. Acc. to a report S & P is looking to cut indian credit rating if the credit woes continue.
Refer to the article..

http://www.moneycontrol.com/india/ne...e/13/00/346673