Catch The Crash

Is it the time to pessimistic about the Indian Stock Market? If we go as per the macros and the experts, most people will say yes its the time to be pessimistic and advice you to stay away from the Indian Stock Market. But personally i don't think so. As per my view its the time to invest in stock market but in fundamentally strong stocks. People are being very pessimistic and are selling the fundamentally strong stocks also out of panic and fear and this has led to the price of some good stocks also falling down. One should take the benefit of this pessimism and invest in these stocks. When the market will revive and macros will turn to positive from negative then one can earn good returns. My this view has also got the support from an article in Economic Times. Bill McGlashan who heads TPG Growth, an investment platform for growth investments, is optimistic about India.

A testimony to his belief in Indian businesses is that he has moved his residence to Mumbai a couple of months ago. This is very unusual. So many private equity funds have been struggling to survive. And here we have an American who sees opportunity in India.

How does Bill manage to take a contrary view? He says, "Our discipline is around micro stories. We are more concerned about individual companies and try not to get bogged down too much by the macro." Take benefit of this fall of the market. I am not saying that market will not fall further but start investing now in a staggered manner, meaning that dont invest your money in a stock at once, buy at dips. Also invets in one sector. Diversify your portfolio.
Here are some recommendations from me :
IFCI-Financial Instituion
PFC-Finance
HDIL-Realty
TATA STEEL-Iron & Steel
INDIABULLS POWER-Power Genration
STERLING INTERNATIONAL-IT
DENA BANK-Banking

Is it worth doing business in India ?

That the Indian economy is facing challenges is not new. The country is facing a mountainous problem in the form of high deficits, weakening currency and failing investor confidence. This has hurt nearly every industry and company in the country. And this has prompted many of them to move beyond the country's borders to try and boost their fortunes. The country's policy framework has not really helped companies. The red tapism and bureaucratic procedures have made doing business next to impossible. The government dillydallying on existing policies has not helped the situation either. At the same time structural roadblocks have kept inflation high. To add to this is the problem of the falling Rupee. All this have forced RBI to keep interest rates high as well. Therefore the only way out for many companies is to move out of the country. Leading business tycoon, Kumar Manglam Birla has already indicated that he prefer to do business outside the country due to lack of transparency in the government policies. As things are worsening many more businesses seem to be opting to either cancel their expansion plans in India or to shift focus to overseas markets. The only way out is for the government to step in and do its job. But is it willing to do so?

Where will businessmen go? Is growth potential all that matters? The answer seems to be no. Some very critical factors that play a decisive role in where businessmen will invest are red tape, corruption, infrastructure, etc. India ranks very poorly on these important parameters. This explains why despite having great untapped growth potential, the Indian economy is struggling. And this is also why economic activity is shifting out of India. 

An article in The Economist very aptly articulates this point. Here are some noteworthy instances. Indian airplanes are usually serviced in Dubai, Malaysia and Singapore. Why not in India? The reasons are high penal taxes in India and high customs duties on imported spare parts. Many Indians have headquartered their businesses in Dubai. The reason is simple. Dubai offers a much better logistical base with its ports, air links and immigration rules. 

Take Singapore. It is said to be the largest hub for Indian trade. It thrives as an investment banking center owing to stringent regulation of India's banks and debt markets. Indian e-commerce firms too often get their data crunched in Singapore. Similar is the case with legal services. It is worth noting that at least half of all rupee trading takes place outside India. 

Then there is Colombo, a very important port in Sri Lanka. Of the containers bound to India, about 30% go via intermediate hubs fed by small vessels. Why so? There are majorly two reasons. Either big shipping lines do not want to deal with India's customs regime or their ships are too big for India's ports. 

One can understand economic activity moving out of developed economies owing to high costs. But for a developing country like India, it is a very grave sign. Policymakers ought to wake up before India's growth prospects go down the drain. 

Source : Equity Master

All Women Bank

Paving the way for setting up of all-women bank , the government on Thursday approved Rs 1,000-crore seed capital for Bhartiya Mahila Bank Ltd.

The Cabinet cleared setting up of all-women bank, sources said.

The proposed bank will be headquartered in New Delhi. It will start with 6 branches in North, South, West, Central and North Eastern part of the country.

The bank is expected to become profitable in five years of its operation.

The initial capital of Rs 1,000 crore for the bank has been so decided that the bank is not capital constrained for expansion of normal business, he had said.

The move to set up Bhartiya Mahila Bank is aimed at encouraging women in general and women self-help groups (SHGs) in particular, he had said.


The proposed bank is likely to be operational by November this year.

Companies warming up for raising funds through IPO

Even in this sluggish secondary market there are companies that have filed their applications for raising funds through primary market-IPO. Inox Wind, Shemaroo Entertainment & Trimax IT are set to raise funds through IPO.

Lets see whther these companies get the desired response from the investors. 

Experts say that untill there are 5 IPO's from different sector in a month for IPO, it cannot be called the revival of the primary market. So lets see whther these companies can do the magic and bring back the winds of succesful primary market. 

Highlights of New Companies Bill

-- The limit in respect of maximum number of companies in which a person may be appointed as auditor has been proposed as 20.

-- Independent directors' shall be excluded for the purpose of computing 'one third of retiring directors'.

-- Appointment of auditors for 5 years shall be subject to ratification by members at every Annual General Meeting.

-- 'Whole-time director' has been included in the definition of the term 'key managerial personnel'.

-- The term 'private placement' has been defined to bring clarity.

-- Maximum number of directors in a private company increased from 12 to 15 which can be increased further by special resolution.

-- Financial Year of any company can end only on March 31 and only exception is for companies, which are holding / subsidiary of a foreign entity requiring consolidation outside India, can have a different financial year with the approval of Tribunal.

-- To help in curbing a major source of corporate delinquency, introduces punishment for falsely inducing a person to enter into any agreement with bank or financial institution, with a view to obtaining credit facilities.

-  Under the new bill, companies are required to spend at least 2 per cent of their average net profits for the three immediately preceeding financial years on CSR. This is applicable to companies with a networth of Rs 500 crore or more, or Rs 1,000 crore turnover or Rs 5 crore net profits, who have to set up a corporate social responsibility committee. The companies will also have to give preference to the local areas of their operation for such spending. 

- The concept of One Person Company has been introduced in the new company law.

- The bill increased the number of members of private companies from 50 to 200. This allows companies access to large pool of capital without going public.

- The new bill gives recognition to transfer restrictions on inter-se shareholders – ‘Right of First Refusal’ will be enforceable. This would clear existing ambiguity on legal enforceability on transfer restrictions under JV/shareholder agreements.

- While the old bill only permitted merger of a foreign company with an Indian company, the new bill allows merger of Indian companies into foreign companies which would aid in consolidation of cross-border businesses/assets.

- The new bill permits merger of a listed company with an unlisted one, subject to exit opportunity being offered to shareholders of the listed company.

- While the old bill depended on precedents for merger of a subsidiary with a parent (or between two small companies), the new bill provides a separate and simplified regime for this without any approval from High Court.

- The new bill also gives rights for objections to schemes to only creditors who owed over 5 per cent and minority shareholders with over 10 per cent stake against no thresholds earlier.

- The new bill also has a detailed mechanism for acquisition of shares by majority shareholder from minority shareholders.

- The bill restricts creation of multi-layered holding structures, prohibiting making investments through more than two layers of investment companies.

- The new bill bans holding ‘Treasury Stock’, which is often used by companies to increase shareholding or future monetisation after consolidation.

Source : Internet 

New rules for Buy-Back

Market Regulator SEBI has declared new rules for the buy back. In the new rules the company has to repurchase minimum 50% of their offers. The companies have to complete the buy back in 6 months instead of the 12 months. Those not able to meet the target will be barred from launching new offers for a period of one year. Under the new norms the companies are required to keep 25% of the proposed offer in escrow account so as to check the non serious offers by the companies. These changes in the rules are meant to safeguard the interest of investors because some companies declare buyback in order to raise the prices of the stock.

Stock Recommendation-PFC,IFCI,DENA BANK

As we all know that these days markets are not performing well, so there are plenty of stocks that even though have strong fundamentals, are trading below their intrinsic value. Its the time to buy these undervalued stocks and hold them for certain period to enjoy good returns.

FDI rules for multi brand retail eased

In a bid to attract FDI into India, indian government has eased some rules in multi brand retail. These steps are taken because of the fact that even after 10 months of allowing FDI in multi brand retail no major companies have opened their stores in India.

Following are the changes :

• Foreign retailers are now allowed to open stores in cities having population of less than 1 million. Earlier it was not allowed. a relaxation was permitted only in case of states that do not have single city with the population of 1 million.
• Retailers can now source good from medium,small and micro enterprises, where the investment cap will be 2 million (earlier it was 1 million) to comply with their sourcing requirement of 30%.