25 May 2012

Information Technology - Matrix Re-defined; sector update : Edelweiss PDF link


Balance of Payments - Stress to ease : Edelweiss PDF link


FII & DII trading activity across NSE and BSE 25-05-2012


FII DERIVATIVES STATISTICS FOR 25-May-2012


25/5/12: Categories Turnover (BSE) (Rs. crore) Clients NRI Proprietary Trade Data


25/5/12: DII trading activity on BSE and NSE on Capital Market Segment


25/5/12: FII trading activity on BSE and NSE on Capital Market Segment


NSE, Bulk deals, 25-May-2012


BSE, Bulk deals, 25/5/2012


Canara Bank (CBK IN) N: 4QFY12 – continuing margin and asset quality woes:: HSBC Research,

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Bata India -Focus on Premium Portfolio To increase market penetration:: Nirmal Bang

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City Union Bank - TP: ` 70 Buy :Dolat Capital

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Bharat Forge Limited - Forging ahead :Antique

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Dish TV India Ltd- : ACCUMULATE TARGET PRICE : RS.68: Kotak Sec

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Hindustan Construction (HINCON) And the sad tale continues… ICICI Sec

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Fund Talk: Too many cooks spoil the broth :Business Line

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It is important to understand that wealth creation happens through appropriate asset allocation. A plethora of funds can make your portfolio unwieldly and also result in duplication.
I am 27 years old, working in a financial services firm. I invest Rs 10,000 every month in mutual funds, as follows: Rs 1,000 in DSP Blackrock Top 100 Equity, Rs 2,000 in Franklin India Bluechip, Rs 1,000 in Fidelity Equity, Rs 1,000 in IDFC Premier Equity, Rs 2,000 in Templeton India Pension Plan, Rs 2,000 in Axis Equity and Rs 1,000 in DSP Blackrock Focus 25.
I am looking to stay invested for the next 15-20 years. My financial goals are basically wealth generation over a period of time and a good retirement corpus.
I can currently invest an additional Rs 2,000-3,000 a month. I want to add a bit of debt component to my portfolio. Can I add HDFC Balanced/Prudence or Birla Sun Life Dynamic Bond? Do I opt for growth or dividend options?
Please advise and suggest changes to my portfolio.
Rajaram
There are many good things to the way you are going about the task of generating a healthy corpus.
Starting early is the best among them, as is your ability to invest a reasonable some of money in mutual funds for a fairly long period of 15-20 years.
What is more, you are even willing to step up investments, indicating a fair level of savings discipline.
If you can invest Rs 12,000 per month for the next 20 years, you will be able to generate a corpus of about Rs 1.2 crore, if the returns are 12 per cent per annum, a reasonable expectation.
That said, you have far too many funds in your portfolio, offering a poor mix. You can do with considerable rebalancing.
Invest Rs 4,000 in Franklin India Bluechip, Rs 3,000 in IDFC Premier Equity and add Rs 3,000 in Canara Robeco Equity Diversified. These would give you exposure to large-, mid- and multi-cap funds.
If you have a low risk appetite, for the debt fund, you can choose between HDFC Multiple Yield and Birla Sun Life Dynamic Bond and park Rs 2,000 there.
Although DSPBR Top 100 has a good track record, it is a large-cap fund and would cause duplication of theme with Franklin Bluechip. So you can exit it.
DSPBR Focus 25 has had a disappointing run and you can get out of this fund too.
Templeton India Pension Fund may not be suitable for the long term as it is a debt-oriented fund and may not be able to match equity returns. Its returns have lagged even its category over 3-5 year timeframes.
With the change in management, we are not sure about Fidelity Equity's prospects and would prefer a ‘wait and watch' approach.
Axis Equity has a track record of a little over two years and has not been able to contain downsides well compared with standard benchmarks.
Coming to the second part about choosing growth or dividend option, we would generally prefer you taking the former route. Dividends from mutual funds means simply pulling a part of your NAV out and giving it back to you in cash.Unless you need the cash or can redeploy it suitably, you should choose the growth option.
It is also important to understand that wealth creation happens through appropriate asset allocation. This should be done by investing in equity, debt, gold and real-estate, in accordance with your age, risk appetite and time horizon.
Review your portfolio once every year to weed out underperformers and rebalance.
***I am 50 years old and serving in a PSU Bank. I have invested some amount in mutual funds as given below. HDFC Top 200 - Rs 1.80 lakh, HDFC Equity Rs 40,000, Reliance Equity Opportunities Rs 40,000, DSPBR Top 100 Equity Rs 43,000, Sundaram Tax Saver Rs 40,000.
At present I have running SIPs in Quantum Long Term Equity, UTI Dividend Yield and IDFC Premier Equity of Rs 2,000, Rs 1,000 and and Rs 2,000, respectively.
I will be in need of money after five years. I am expecting Rs 10 lakh. Is the target feasible?
Brij Lal Dhiman
The funds that you hold in your portfolio are all fairly good, with a proven track record of delivering returns over the long-term. You may have gone slightly overweight on HDFC Top 200, but that's no cause for worry as it has a solid performance report over the years.
You can exit the tax saving fund if you have completed the lock-in. Switch to HDFC Balanced instead.
Given your age, we hope you have made sufficient allocations to debt as well.
In five years' time, you can manage a Rs 10-lakh corpus, if your lump-sum and SIPs earn 12 per cent per annum. Book profits in case you make abnormal gains in any year ahead of your proposed timeline.

Acquiring large land parcels is difficult without Govt help :: Business Line

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A Parliamentary Panel's recommendation that the Government stay away from land acquisition in public-private partnership projects will hit large projects, according to developers in the National Capital Region (NCR). The recommendation to let the private player handle the land acquisition through open market alone will stall projects. The Government should intervene when needed to acquire the last 20 per cent of large land parcel to enable contiguity, said Mr Pankaj Bajaj, President, Confederation of Real Estate Developers' Association of India, NCR. In a press release from the Confederation, Mr Bajaj said large projects in the country are stuck due to land aggregation issues. Industry needs the Government's help. This is in vogue in China and other competing economies where the government facilitates industry. Land acquisition should strike a balance between the interest of the farmers and the need of industry to get large parcels of contiguous land. The new provisions do not address the need of the industry, especially large-scale projects. Not just 5,000 acres, but it is practically impossible to assemble even 100 acres at times. Government intervention is desirable to acquire the last 20 per cent of any large land parcel in the interest of contiguity.
Office space demand in Chennai low
Office space offtake in Chennai nearly came down by half quarter-on-quarter in the first quarter of 2012, according to DTZ Research. At about 6.5 lakh sq. ft being occupied in the quarter, the offtake is more than 50 per cent down. But estimates indicate that there is a demand for about 15 lakh sq. ft of office space mostly in information technology and allied sectors. But deals are not likely to happen in the short term. About 3 lakh sq. ft of office space was handed over for fit-outs in the central business districts taking the total stock in Chennai to 480 lakh sq. ft. In the current year about 37 lakh sq. ft of new supply is expected. This is just abut 30 per cent of the space added yearly between 2007 and 2009. Supply is expected to remain subdued for at least the next three years. Average rents remain unchanged at about Rs 30 a sq. ft in peripheral areas; Rs 40-60 in secondary business districts; and over Rs 65 in primary areas. These are likely to remain at these levels at least for six months.

Jewellery sale is capital gains taxable :: Business Line,

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I am in the 30 per cent tax bracket. Based on reading various articles, I understand that if I invest in mutual fund's liquid/liquid plus schemes by opting for daily/weekly dividend reinvestment option, the Asset Management Company (AMC) would deduct TDS @ 13.84 per cent whenever they distribute and reinvest the dividend amount. This is the only tax that I would be subjected to and hence I can avail tax benefit of 16.06 per cent (30.9 minus 13.84)
If I invest in monthly income plan of mutual funds and opt for dividend pay-out option, the AMC would deduct TDS @ 13.84 per cent and whatever amount I get as dividend will not be subjected to any further tax. Again I can save on the tax front to the extent of 16.06 per cent. Is my understanding correct?
— Parameswari
According to the tax laws in India, dividend income received under the above two options is exempt in the hands of the unit holder, irrespective of the dividend plan opted. Accordingly, no TDS is deducted by the AMC at the time of paying the dividends to its unit holders.
However, the mutual fund is liable to pay DDT (Dividend distribution tax) on any amount of income distributed by it to its unit holders at the rates specified in section 115R of the Income Tax Act, 1961.
I am 82 years old and also an Income Tax Assessee. My pension including arrears of D.A. for the financial year 2011-12 (assessment year 2012-13) is Rs 2,36,206.
Other sources of interest income from SCSS and FD A/c for the assessment year is Rs 2,08,994. Thus the total income comes to Rs 4,45,200. I have also invested Rs 1,00,000 in tax saving FD u/s 80c and Rs 20,000 in PFC bonds u/s 80ccF.
On June 12, 2009 my wife died and I inherited the movable asset (old silver and gold ornaments) as gift. These ornaments were gifted by our relatives at the time of our marriage in 1958.
She authorised me to make use of the sale proceeds of the ornaments for meeting domestic expenses and the balance to retain for my medical expenditure.
Accordingly, I sold the ornaments to the jewellery shop during the assessment year and realised the amount in two cheques totalling Rs 2,08,378 and obtained the receipt from the shop for having sold the same.
Now, my queries are:
Whether the amount received by cheques from jewellery shop is to be included in my tax returns.
Please let me know whether the cheque amount is treated as income for the assessment year.
Whether I should claim exemption by including it as tax-free income.
If the exemption is to be claimed please let me know under which section of the I-T Act it is exempted.
— M. Ramaswamaiah
Jewellery qualifies to be a capital asset according to the tax laws in India. Any income arising from its sale will be taxed as capital gains.
In view of the fact that the capital asset is held for more than 36 months, the gain from its sale would be taxable as long term capital gains and benefit of indexation will be available.
The amount received on sale of jewellery is regarded as full value of consideration in order to compute the capital gains. Fair Market Value of jewellery as on April 1,1981 can be considered as the cost of acquisition of the assessee since the asset was acquired prior to April 1,1981. There are authorised valuers who can assist in calculating this value.
Capital gains so computed may be claimed as exempt in case it is invested in accordance with the terms and conditions as specified under section 54EC (i.e. the gain is invested in the long term specified asset) or/and section 54F (i.e. purchase/construction of residential house) etc. of the I-T Act, 1961.

Policy paralysis has delayed capacity additions in the steel, aluminium and mining space :: Business Line,

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Despite stellar margins and an economy with scope for consuming a lot more metals, there are a few dark clouds on the horizon for metal and mining companies. This could disrupt their volumes and pricing power.
Royalty ranks among the highest expenses for miners in India. The Mining and Minerals Development and Regulations Bill proposes that miners other than coal-miners make a payment that matches their royalty outgo. Coal mining companies are required to pay 26 per cent of their pit-head operating profits.
While coal and iron ore miners may have scope to pass-through costs, the same cannot be said for non-ferrous miners who price their wares on a par with international prices. This will take a substantial bite of their margins.

‘PASSING THE PARCEL'

The ministries managing the environment, mining, coal, steel and rural development are also playing ‘passing the parcel' with Bills intended to enable investments in the mining and metals segment. Policy paralysis has made it impossible to open new mines. It has also delayed capacity additions in the steel, aluminium and mining space.
The ongoing ban in Karnataka with little sign of quick resolution is another sign of trouble. States have also been slow in granting mining leases which could speed up capacity additions.
Employee costs for sector players, including Coal India, NMDC, MOIL and Hindustan Zinc, have almost doubled since 2007. Coal India had agreed to a 25 per cent increase in wages in January 2012. Even this is reported to have left unions unimpressed. Such hikes could make mining a lot more expensive.

DISTRIBUTION HURDLES

Distribution has been a bottleneck for the likes of Coal India and NMDC which have often been short on rakes to send out the ore they mine to consumers.
Freight rail rates have also been bumped up regularly, adding to the margin strain.
Rising coal prices have made energy generation far more expensive. If domestic coal output is not ramped up, energy bills are only bound to get higher (aided by a weaker rupee). Domestic coal prices could also increase if Coal India prices its output based on gross calorific value method again.

Feeling the economy's pulse :Business Line

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While lead indicators point that India may be back on the high growth path soon, the road ahead is not without challenges.
The contraction in the latest IIP numbers and the surge in inflation in April have raised question marks over growth prospects of the country. What lies ahead for the Indian economy?

CLI IN ‘RECOVERY' MODE

A good lead indicator of the pulse of the economy is the OECD Composite Leading Indicators (CLI). This OECD Index is designed to signal the level of economic activity towards which a country is headed, about six months in advance.
For example, back in February 2009, when pessimism was still high in the air, the CLI pointed to a possible trough in economic activity in India, indicating the beginning of an upswing. This indeed played out later in 2009-10. Similarly, the latest report (March 2012) points out that India is currently at a ‘turning point' in economic activity, implying that the slowdown is bottoming out. This is substantiated by steadily rising index points in the last six months. From about 97.8 points in October 2011, the index has moved to 98.9 points in March.
With ‘100' remaining the long-term trend line, a CLI below 100 but progressively rising, denotes that an economy is in the recovery stage. It can be expected to move into the ‘expansion' zone (that is, reading above 100) soon, if this trend continues.

PROMISING PMI

Another lead indicator is the HSBC-Markit Purchasing Managers' Index (PMI).
Surveying purchasing executives in about 850 manufacturing and service companies in India, this number captures the trends in parameters such as new order flows, stocks of items purchased, backlogs of work, employment levels and suppliers' delivery times.
Hence, unlike the Index of Industrial Production (IIP) which reflects the on-the-ground production levels, the PMI is designed to indicate industrial activity in advance. 50 points is the line that differentiates expansion (>50) from contraction (<50).
The manufacturing PMI posted 54.9 points in April 2012, slightly higher than the 54.7 points recorded in March.
Though the PMI has declined since the January peak of 57.5 points, sub-components of the survey indicate that growth prospects remain good.
For instance, the survey points to new business orders increasing since December 2011. Export orders too remain strong.
The PMI has contracted from the peak only because of constraints such as power cuts and raw material shortages. Hence, while the demand has been robust, infrastructure bottlenecks have prevented the companies from taking full advantage of this.
In fact, the slowdown in demand, as reflected in the PMI index, seen last year has gradually been wearing off from as early as October 2011 itself.
Improved demand has also seen employment levels in the manufacturing sector go up in each of the last four months, putting an end to the period of job losses seen in 2011.
The PMI of service industries too point to similar trends. Although lower than the January peak of 58 points, the services PMI expanded to 52. 8 points in April, up from 52.3 points in the previous month.
Besides, in the latest round of survey, service sector managers have yet again expressed positive sentiments on their outlook for business activity in the forthcoming months. They anticipate higher activity levels in the next one year, taking the degree of optimism to the highest in ten months.

CHALLENGES REMAIN

While these indicators point that India may be back on the high growth path soon, the road ahead is not without challenges. For one, if capacity and infrastructure constraints are not addressed, it will lead to slower order executions, putting brakes on the pace of growth.
The manufacturing PMI survey already points to increasing backlog of work in the last few months, despite sustained rise in employment levels to meet the growing order books.
The second deterrent to growth emanates from inflation. Again, both the PMI surveys point to cost inflation. The survey of manufacturing companies says that the cost inflation in April was the strongest since August 2011.
A depreciating rupee only puts more pressure on input prices by making raw material imports costlier.
While companies have been able to pass on rising prices to customers so far, how much more they can, before it begins affecting demand, remains to be seen. If interest rates begin moving higher again, it will make things more difficult.

Petrol Price Hike: A token relief of Rs. 1.50 in offing :HT


Not so rewarding card rewards :: Business Line

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Pleased as Punch that the credit card you're considering gives you one reward point for every Rs 50 you spend on it? You may want to look at what you will get from redeeming those reward points first.

ENCOURAGING SPENDING

The reward points system works thus - one point is awarded for every multiple of a fixed amount spent on the card. For example, for Axis Silver Credit Card, every Rs 100 you spend will deliver one reward point. These points are totalled at the end of every billing cycle. So if you had spent say, Rs 13,250 in a month, the number of points is 132.
Once you reach a threshold, these points can be converted into various gifts. Each gift is worth a certain number of points.
The more advanced the card type, such as a platinum or signature against a gold, the fewer are the points needed to convert into a gift. For instance, gifts such as a donation to CRY worth Rs 500 will require 800 points for an Axis Platinum Credit Card. The same Rs 500 calls for 3,900 points on the Silver card.
To look at what benefit your card will deliver, check the amount of spending needed to amass points. A lot also depends on the type of gift being offered.
To illustrate, consider HDFC Bank's Gold card. Requiring 820 points, a gift voucher from Costa Coffee for Rs 100 is the cheapest item in terms of points. This card gives out 1 point for every spending of Rs 150.
This means you will have to spend as much as Rs 1,23,000 to avail of a voucher worth just Rs 100. The picture is a little better with the Signature card, where the amount to be spent for the same voucher comes to Rs 30,750.
The rewards system varies with banks. Some offer better deals than others. For instance, Citibank's Gold card needs spending of Rs 20,000 to avail of the cheapest 200 points-items such as a Cookie man gift voucher worth Rs 100.

OTHER REWARDS

Some credit cards promote certain themes such as travel, fuel and so on. In such cases, benefits may be a bit better than a simple rewards program. In Axis Bank's Titanium Smart Traveller card, for example, spending on air, train and bus bookings, or hotels and travel packages delivers points at twice the regular rate. Similarly, fuel cards offer refunds of fuel surcharge, or then points can be used to buy fuel instead.
In some cards, points can be used to get air miles.
The math involved is how many points you need to collect to make a trip. Other benefits to look for, which are more useful than simple rewards, are cash backs on spending in grocery and department stores. Cards offer up to 5 per cent refund of spending you do in grocery and department stores.
But even in these cases, take the rewards programme with a pinch of salt. In air miles, for instance, look at the participating airlines. Standard Chartered, for instance, has only Kingfisher Airlines and Jet Airways. Fuel surcharge refunds are subject to ceilings. Cash backs can be availed at participating outlets only.
The bottom-line is, take a closer look at the rewards programmes. Most banks put up the details on their Web sites. Also, there are other factors, such as interest rate, payment period, credit limits, fees, and so on that take precedence.

Canara Bank- Huge restructuring pipeline to impact profitability: Emkay

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The rise and rise of Petrol Prices!! HT


FII DERIVATIVES STATISTICS FOR 24-May-2012


May 25: Business News Tablet (click on link to read article) : IFCI Financial Services Limited

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How fear affects our financial decisions:Business Line

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Consider this. An advertisement features the positive effects of a dietary supplement that provides vitamins which your body currently lacks.
Another advertisement for the same supplement shows a person suffering from bad health because of the lack of this vitamin!
Which advertisement is likely to prompt you to buy the product? If you are typical consumer, you will be swayed by the advertisement that shows the person suffering! Why?
Suppose you are driving when you witness an accident on a highway.
You will most likely cut your speed— an involuntary response after witnessing the accident! You will also be cautious, at least till you reach your destination. Why? The accident you witness activates your amygdale — the part of your brain that triggers fear response. This, in turn, leads to another interesting behaviour.
You fear that the incident may happen to you as well! This fear involuntarily prompts you to cut your speed and become cautious. But the fear is not permanent.
You will most likely revert to your earlier speed, as soon as you forget the accident. Likewise, the fear response in your brain will prompt you to consider the advertisement that shows the person suffering due to lack of vitamins. That could well prompt you to try the product!

MEDICAL INSURANCE

It is the same behaviour that prompts many individuals to buy medical insurance! If you just saw your friend or relative incur heavy medical expenses, you will most likely want to buy a health insurance yourself.
Of course, unless you follow up with an insurance agent and buy one as soon as possible, the fear of having to incur large medical expenses will fade away!
It is no different with your investment decisions. Most people do not plan for their retirement… until it is too late! In an attempt to encourage people to plan better, behavioural psychologists conducted an experiment, where subjects were shown simulated photograph of their older selves. Researchers found that seeing their older self prompted many subjects to act on their retirement plan!
This experiment and similar ones show that we typically act out of fear. It is small wonder that marketers target our fear psychosis to peddle products. You will, for instance, buy a costly, high-quality toy because you are informed that low-quality products have lead content that may harm your child.
Similarly, you will undergo a costly medical procedure if you are advised that not doing so may be fatal. You cannot squarely blame the marketers and experts who offer such advice— you are unlikely to see the virtue of buying a high-quality toy or undergoing a costly-but-important procedure. Blame it partly on your fear!

Part rollback of petrol hike likely by end-May :ET

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SGX Nifty 4,913.00 -5.00(Singapore exchange) Indian Markets to open DOWN today

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Secured Bonds of 12.15% Religare Finvest available at 12.75% p.a. yield

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