Friday, August 17, 2012

(1:12 PM 08/17/2012) NIFTY SELL CALL UPDATE: BOOK A PROFIT AT 5385 OR TRAIL UR SL AT 5325 FOR NEXT TGTS

12:04 PM 17/08/2012 SELL BAJAJ AUTO FUT BELOW 1686 FOR TARGET OF 1670-1660 STOP LOSS 1696

(11:12 AM 08/17/2012) NIFTY FUT SELL ARND 5408-12 SL 5451 TGT 5372/5345 : NSE

Tuesday, August 14, 2012

11:19 AM 08-14-2012 OOK FULL PROFIT IN TECHM AT 808.5

(11:04 AM 08/14/2012) NICKEL AUG BUY ARND 861 SL 853.40 TGT 868.50/875 : MCX

11:01 AM 08-14-2012 OOK PARTIAL PROFIT IN TECHM AT 811 AND MOVE SL TO COST

Today's Commodity Updates

Gold trading range for the day is 29937-30257.Gold settled flat as ongoing speculation that central banks around the world would soon announce fresh stimulus measures. There are expectations that China will cut its banks RRR following the release of downbeat data last week. Gold traders are also looking ahead to the Fed’s next policy meeting on September 12 and 13.

Silver trading range for the day is 53060-53852.Silver ended lower getting pressure from base metals and crude prices. Market participants will be watching US data on retail sales, inflation and housing during the week Japans GDP growth for 2Q dropped to 1.4%, missing market expectations of 2.7% also weighed on prices.

Crude trading range for the day is 5076-5250.Crude ended with gains on concerns about North Sea supply and Middle East tensions. Sluggish economic indicators fueled sentiment that central banks around world will take steps to spur recovery U.S. crude oil stockpiles were forecast to have declined last week for a third straight week, on lower imports.

10:36 AM 08-14-2012 BUY BHARTI AIRTEL 280 CALL AROUND 1.8-1.5 FOR TARGET OF 3-5

SELL TECHM FUT AT CMP OR AROUND 817-819 FOR TARGET OF 805-795 STOP LOSS 828

10:15 AM 08-14-2012 BUY BANK OF INDIA cash ABOVE 277,TARGET 283,SL 273.90

Monday, August 13, 2012

2:31 PM 13/08/2012 NIFTY SL HIT EXIT COUNTER

1:50 PM 13/08/2012 BUY BGR ENERGY AT CMP OR AROUND 274-272 FOR TARGETOF 280-286 STOP LOSS 268 CASH LEVELS

1:41 PM 13/08/2012 JINDALSTEL 407 FIRST TARGET ALMOST ACHIVED USE TRAILING S T ONEXT TRAGET OF 402

(1:40 PM 08/13/2012) COPPER SELL CALL TGT 412.50 ACHIEVED

Investing Rules – How to Invest in Stocks

Investment is defined as putting aside certain sum of money with the expectation of gain in future. We invest our money in various financial products like gold, real estate, bonds, stocks with the aim of getting better returns over this money instead of keeping it idle in savings account.

Before Investing we should Ideally

Assess income and expenditure

Before investing we all should be aware of the total monthly income and total expenditure so that an estimated amount can be calculated. This amount can give an idea about the excess amount or the amount which can be saved.

Make Financial goals

It is advisable to jot down the financial goals on a piece of paper so that money can be invested accordingly basis the time horizon.

Know Oneself

It is essential to analyze one`s own risk taking capability and financial personality basis which amount can be invested in high risk or a low risk instrument.

In this article we shall discuss regarding rules of investing and stock market basics some of which may be specific to stock market trading whereas other may apply to all investment products.

1. Diversify

There is a common Saying:- “ don’t put all eggs in one nest.”

This rule works with all investment products. Nobody can predict the future as there could be a sudden economic, political or any other change which may lead to huge losses if investment is done in similar products. Thus investing only in equities or investing solely in debt is not advisable. In case of a mixed portfolio the impact of loss would not be enormous.

Example:-Mr. Ahuja had purchased shares of Satyam Computer services for a total value of Rs.50000 in November 2007 as he received a bonus from his company. He had invested the entire amount in 1 particular company. Everything was working fine in Mr. Ahuja`s portfolio till 2009 but suddenly things began to change as the scam came in place. After the scam, entire portfolio was in red due to excessive purchase of one particular stock.

CBI has confirmed that total loss to investors due to this scam is Rs.14, 162 Crore.

2. Make a Thorough Research

This rule also applies to all investment categories. Before investing one should make a detailed research about the quality of the companies selected. Quality signifies strong management team and a proven track record.

3. Not To Panic

It applies particularly to stock market investing. It usually happens that in case of crash of a stock market, people get panic and they sell off their holdings the very next day. But instead of selling at the first stage itself one should review his portfolio and then decide if the stock has lost its attractiveness and if more attractive stocks are available in market.

4. Expect Corrections to Happen

It`s been observed that many investors believe in only one sided direction of markets like in case of downturn people loose faith in equity products and stop investing in these products. But in reality markets tend to return to the mean over time which means market extremes never lasts forever be it optimism or pessimism.

Also when there are no more buyers, the market turns lower and vice versa.

5. Know Your Risk Tolerance

As highlighted previously also it is very essential that the investors analyze their risk tolerance level and accordingly select the investment products as some of the products/ stocks are more risky than others. One should figure how much downside one can tolerate without selling

6. Portfolio Monitoring

It becomes very essential to keep a track on the portfolio regularly as nothing is permanent. High return generating products may lead to huge losses for the investors after some years if the company is going through a bad time.

Example:-the shares of Kingfisher Airlines which were attractive once upon a time no longer attract the investors due to crisis within the company.

7. Don’t Follow Others Blindly

When the prices are high a lot of people are actively buying the stocks. When price is low demand is also low as the people are pessimistic and also discouraged. Thus the entire market collapses. We should adopt an independent thinking instead of blindly following what other are following.

Benjamin Graham says” Buy when people are pessimistic and sell when they are optimistic.”

8. Avoid Fear and Greed

Greed and fear are human emotions which create obstacles in the path of successful investing. One should follow a disciplined approach to trading and should be able to figure out time to exit. There will be corrections as stocks go up and down.

9. Remain Flexible and Open Minded

There is no particular investment which remains best throughout. Depending on the situation one needs to switch to different investment avenues. If a planner suggests to shift the amount to bonds or other debt products looking at the volatility one should be flexible enough to support the advisor

10. Invest For Max Real Return

One should take into account the real return after taking into consideration the impact of taxes and inflation.

Real Rate of Return= {(1+ rate of interest)/(1+inflation rate)-1} *100

Example:-if inflation is 6% and rate of return is 10%, the real rate of return equals:-

{(1.10/1.06)-1}*100=3.77%

11. Learn From Your Mistakes

We should not be discouraged from the losses rather earlier mistakes should be taken as a learning experience. We should analyze and check what went wrong previously so that same mistake can be rectified in future.

12. Don’t Buy Market Trends

We should not base our decision on what`s happening now. The individual stocks can rise in a bear market and fall in bull market. Thus we should study all the factors before taking any decision.

Conclusion

Investors should carefully read all offer documents and do a detailed study about the various products available in the market and should know stock market basics before investing. These rules would also be helpful in making a right investment choice.

LME Inventories: Copper -2075, Aluminium +6775, Nickel -672, Zinc -3300, Lead -2150

(1:29 PM 08/13/2012) SILVER SEPT SELL ARND 53550-580 SL 53741 TGT 53401/53225 : MCX

Shanghai Futures Exchange Warehouse Stocks Daily :

COPPER : UP 27,ALUMINIUM : UP 3332,ZINC : DOWN 599,LEAD : UP 1319,RUBBER : UP 1190.

1:10 PM 13/08/2012 Sell MCX Aluminium (Aug) at 102.90-102.80 for targeting 101.90 with Sl above 103.35

12:55 PM 13/08/2012 BOOK PARTIAL PROFIT I NJINDALSTEE LAT 409.5 AND MOVE SL TO COST

12:45 PM 13/08/2012 risky trade - sell nifty fut around 5336-5340 for target of 5305 stop loss 5350

12:41 PM 13/08/2012 CLOSE TATAMOTORS AT 228-228.3

12:25 PM 13/08/2012 SELL JINDALSTEL FUTURE AT RISE AROIUND 413-414 SL 417 TARGET 406-402

12:10 PM 13/08/2012 BUY IN SMALL QTY GODREJIND AT CMP OR AROUND 242-241 FOR TARGET OF 247-252 STOP LOSS 237.5 CASH LEVELS

(12:04 PM 08/13/2012) COPPER SELL CALL UPDTATE : BOOK A PROFIT AT 413.25 OR TRAIL UR SL AT 415.10 FOR NEXT TGTS

12:06 PM 13/08/2012 FIRST TARGET HIT IN SBIN USE TRAILING SL TO NEXT TARGET OF 1920

12:03 PM 13/08/2012 SBIN AT 1896 BOOK PARTIL PROFIT AND MOVE SL TO COST

(11:17 AM 08/13/2012) COPPER AUG SEL ARND 414.30-.50 SL 416.60 TGT 412.50/410.10 : MCX

10:34 AM 08-13-2012 Buy MCX-SX USDINR (Aug) above 55.45 for targeting 55.62 with Sl below 55.34

Today's Commodity Updates

Gold trading range for the day is 30002-30060.Gold rose after soft Chinese data and downward revisions to Euro growth forecasts fueled that central banks will intervene. Bullion broke ranks with declining equities after latest Chinese data showed July exports rose just 1%SPDR gold trust holdings gained by 3.21 tonnes to 1258.15 tonnes.

Silver trading range for the day is 53453-53543.Silver settled flat and support can be seen on sentiment that central banks will stimulate their economies . Fed officials have said they cannot rule out rolling out a third round of asset purchases from banks. China reported last week that its trade surplus narrowed unexpectedly in July, dropping to $25.1bn.

Crude trading range for the day is 5092-5174.Crude oil ended with gains on Saturday after prices dropped pressured by demand worries on downbeat Chinese economic data. IEA upped its forecast for global oil demand for this year, forecasting demand to grow by 900,000bpdCuts to European growth estimates for next year sent oil falling as well.

(6:06 PM 08/10/2012) SILVER SELL CALL TGT 53180 ACHIEVED

6:02 PM 10/08/2012 Kindly exit from zinc at 102.10

5:41 PM 10/08/2012 Sell MCX Copper (Aug) at 413-412.80 for targeting 410 with SL above 414.20

(5:33 PM 08/10/2012) LEAD SELL CALL TGT 105.15 AHCIEVED

4:32 PM 08/10/2012) SILVER STBT CALL UPDATE: BOOK A PROFIT AT 53280 REST HOLD WITH SL 53450

MCX-SX started trading in Currency Options

Clients may please note that MCX-sx has commenced trading in the currency options contracts on USD-INR spot rate in the Currency Derivatives Segment of the Exchange from August 10, 2012.

Kindly see the details in circular of exchange .

http://www.mcx-sx.com/MCXSXUploads/ExchangeCircular/2012/August/English/Circular_(818)__Introduction_of_Currency_Options_contracts_on_USD-INR_Spot_Rate.pdf

(3:29 PM 08/10/2012) LEAD SELL CALL UPDATE: BOOK A PROFIT AT 105.30 OR TRAIL UR SL AT 105.80 FOR NEXT TGTS

(3:23 PM 08/10/2012) MENTHA AUG BUY ARND 1375-76 SL 1363.50 TGT 1387/1395 : MCX

3:13 PM 10/08/2012 CARRY DRREDDY SELL TRADE

2:43 PM 10/08/2012 Target hit in Crude Oil, Book full profit at 5120 and exit from counter

2:42 PM 10/08/2012 BOOK FULL PROFIT IN PFC @ 183.80

Shanghai Futures Exchange Warehouse Stocks Weekly

Shanghai Futures Exchange Warehouse Stocks Weekly : COPPER : DOWN 6059, ALUMINIUM : UP 2399, ZINC : DOWN 1371, LEAD : UP 377, RUBBER : UP 4176.

(12:58 PM 08/10/2012) GOLD SELL CALL TGT 29925 AHIEVED

12:57 PM 10/08/2012 Sell MCX Zinc (Aug) at 102.30-102.20 for targeting 101.40 with SL above 102.60

12:43 PM 10/08/2012 Book Partial Profit in Crude Oil at 5130-5135, rest hold for target with SL at cost

12:23 PM 10/08/2012 Sell MCX Crude Oil (Aug) below 5145 for targeting 5120 with SL above 5155

11:30 AM 10/08/2012 Buy MCX Natural Gas (Aug) at 163-163.50 for targeting 166 with SL below 161.60

(11:12 AM 08/10/2012) GOLD OCT SELL ARND 29980-90 SL 30056 TGT 29925/29860 : MCX

11:11 AM 10/08/2012 SELL DRREDDY @ 1652, SL ABOVE 1660, TGT 1640-1630.

Today's Commodity Updates

Gold trading range for the day is 29829-30049.Gold gains as slowing growth in Chinas factory output mildly boosted investor hopes for more monetary stimulus. Chinas factory activity slowed unexpectedly in July to its weakest in more than three years. Physical demand from India looked likely to remain sluggish ahead of the festival season which begins this month.

Silver trading range for the day is 53195-53767.Silver settled firm as speculation over whether world central banks will implement further stimulus measures supported Chinas factory activity slowed unexpectedly in July to its weakest in more than 3years, leaving room for more stimulus Bullion investors appeared to be on sidelines waiting for possible hints from Fed and other central bankers meeting.

Crude trading range for the day is 5124-5218.Crude oil gains edging higher alongside equities after weekly jobless claims unexpectedly dropped. Top oil exporter Saudi Arabia pumped 9.8 mln barrels bpd of crude oil in July, cutting output by 300,000 bpd from June OPEC may have to reduce its forecast for growth in world oil demand in 2013 by 20 percent.

10:47 AM 10/08/2012 BOOK PARTIAL PROFIT IN PFC @ 186.75

(10:36 AM 08/10/2012) LEAD AUG SELL ARND 105.60-.70 SL 106.35 TGT 105.15/104.50 : MCX

10:36 AM 10/08/2012 SELL PFC @ 188, SL ABOVE 189.50, TGT 185-183

China Economic Updates

CHINA ECON : Imports +4.7% in July YY vs +6.3% in June YY., Exports +1.0% in July YY vs 11.3% in June YY., Trade Balance $25.15B in July vs $31.72B in June., China Trade Surplus $25.1B vs Expected Surplus $35.2B. WEAK FOR CRUDE AND BASEMETAL

Thursday, August 9, 2012

(5:06 PM 08/09/2012) SILVER SEPT SELL ARND 53380-400 SL 53610 TGT 53180/53050 : MCX

2:18 PM 09/08/2012 SELL NIFTY FUTURE AT 5350-60 SL 5370 TARGET 5300

(2:17 PM 08/09/2012) LEAD SELL CALL UPDATE: BOOK A PROFIT AT 105.25 OR TRAIL UR SL AT 105.80 FOR NEXT TGTS

BOOK BHEL AT 229.5 and icici bank sl hit exit counter

(2:12 PM 08/09/2012) JEERA SELL UPDATE: BOOK A PROFIT AT 15835 OR TRAIL UR SL AT 16050 FOR NEXT TGTS

LME Inventories: Copper -2000, Aluminium -5650, Nickel +204, Zinc -8175, Lead -1075

(12:45 PM 08/09/2012) NICKEL AUG SELL BELOW 867 SL 876.50 TGT 857.50/851 : MCX

TODAY NATURAL GAS STORAGE : EXP : 30B PREV : 28B. ACTUAL IS AT 8.00PM

(12:09 PM 08/09/2012) RMSEED BUY CALL TGT 4369 ACHEIVED

11:27 AM 09/08/2012 Exit from Buy and Sell MCX Lead (Aug) at 105.80-105.70 for targeting 104.70 with SL above 106.30

(11:28 AM 08/09/2012) RMSEED BUY CALL UPDATE: BOOK A PROFIT AT 4360 OR REST HOLD WITH SL 4305

(11:06 AM 08/09/2012)RMSEED SEPT BUY ARND 4320-25 SL 4277 TGT 4369/4398:NCDEX

(10:30 AM 08/09/2012) JEERA SEPT SELL ARND 15950-970 SL 15332 TGT 15615/15450 : NCDEX

(10:25 AM 08/09/2012) LEAD AUG BUY ARND 105.70 SL 105.15 TGT 106.25/106.70 : MCX

(10:23 AM 08/09/2012) COPPER AUG BUY ARND 419. SL 416.90 TGT 421.10/423.20 ; MCX

Commodity Updates

Gold trading range for the day is 29730-30002.Gold inched up but remained in tight range due to investor uncertainty about whether central banks would act to stimulate economies. Rosengren said the Fed should launch another round of QE of whatever size and duration to get economy on feet. Fitch put Germanys AAA credit rating outlook stable, which was owing to strong upward momentum of Germanys economy. Gold is trading below 50DMA, which is at 30013, now intraday gold is holding support at 29730 and resistance at 30002.

Silver trading range for the day is 52839-53905.Silver settled flat on hopes that central banks in Europe and the US will launch more stimulus measures. Also pressure mounted after German industrial orders fell more than expected in June Euro group President Jean-Claude Junker discussed a Greek exit from the euro zone again. Silver is trading below 50DMA, which is at 53781, with intraday support seen at 52839 and resistance at 53905.

Crude trading range for the day is 5081-5269.Crude oil dropped from highs despite a bullish inventory report, as traders took profits. Prices seen support from expected drops in North Sea output in September and falling U.S. crude oil inventories. EIA said U.S. crude oil inventories decreased by 3.7 million barrels in the week ending August 3Crude is holding with a support at 5081 and resistance will be likely at 5269.

6:32 PM 08/08/2012 Buy MCX Crude Oil (Aug) at 5170-5175 for targeting 5205 with SL below 5150

(6:20 PM 08/08/2012) CRUDE SELL CALL SL TRIGGERED

5:13 PM 08/08/2012 Buy MCX Natural Gas (Aug) between 163.60-163 for targeting 168 with SL below 161.10

(4:54 PM 08/08/2012) GOLD SELL CALL SL TRIGGERED

(4:28 PM 08/08/2012) ALUMINIUM BUY CALL TGT 104.80 ACHIEVED

(4:05 PM 08/08/2012) COPPER BUY ARND 417.50 SL 415.20 TGT 419.80/422.10 : MCX

(3:10 PM 08/08/2012) ALUMINIUM BUY CALL TGT 104.40 ALMOST ACHIEVED (MADE HIGH 104.35)

(3:06 PM 08/08/2012) NIFTY SELL CALL UPDATE: INTRADAY TRADERS CAN BOOK A PROFIT AT 5348 OR REST HOLD WITH SL AT COST FOR TGT 5315/5270

BOOK PARTIAL PROFIT IN ABB AT 812 AND MOVE SL TO COST

2:57 PM 08/08/2012 BUY ABB AOBE 806 FOR TARGET OF 815-820 STOP LOSS 795 CASH LEVELS

2:52 PM 08/08/2012 BOOK PROFIT IN ICICI BANK AT 964

(2:23 PM 08/08/2012) NIFTY FUT SELL ARND 5390-95 AL 5440 TGT 5348/5315 : NSE

(1:48 PM 08/08/2012) SILVER SELL CALL UPDATE: BOOK A PROFIT AT 53230 OR TRAIL UR SL AT 53345 FOR NEXT TGTS ( AS COUNTER FACING STRONG SUPPORT AT 53220 )

1:43 PM 08-08-2012 Book partial Profit in USDINR at 55.24-55.25, rest hold for target with SL at cost

1:38 PM 08-08-2012 Target hit in Lead, Book Full profit at 105.50 and exit from counter

LME Inventories: Copper +550, Aluminium -5800, Nickel -66, Zinc -2500, Lead -1150

Shanghai Futures Exchange Warehouse Stocks Daily :

COPPER : DOWN 300, ALUMINIUM : DOWN 50, ZINC : DOWN 150, RUBBER : UP 400

1:18 PM 08/08/2012 Sell MCX-SX USDINR (Aug) below 55.31 for targeting 55.15 with SL above 55.41

1:14 PM 08/08/2012 Book Partial profit in Lead at 105.30-105.25, rest hold for target with SL at cost

1:08 PM 08/08/2012 CLOSE RELIANCE SHORT TRADE AT 794-795

(12:58 PM 08/08/2012)SELL CRUDEOIL AUG ARND 5145-50 SL 5173 TGT 5125/5100:MCX

(12:49 PM 08/08/2012)RMSEED BUY CALL UPDATE: BOOK A PROFIT AT 4435 OR TRAIL UR SL AT 4410 FOR NEXT TGT

(12:35 PM 08/08/2012) EXIT FROM COPPER SELL CALL ARND COST ( WAIT FOR FRESH CALL)

(12:33 PM 08/08/2012) ALUMINIUM AUG BUY ABOVE 103.80 SL 103.15 TGT 104.40/104.80 : MCX

12:23 PM 08/08/2012 CAIRN SL HIT EXIT FROM COUNTER

12:17 PM 08/08/2012 SELL ICICI BANK FUT BELOW 969 FOR TARGET OF 960-955 STOP LOSS 976

12:05 PM 08/08/2012 SELL SBIN FUT BELOW 2075 FOR TARGET OF 2050-2030 STOP LOSS 2091

(12:03 PM 08/08/2012) GOLD OCT SELL BELOW 29799 SL 29851 TGT 29752/29710: MCX

12:03 PM 08/08/2012 CLOSE SBIN TRADE AT 2082

11:44 AM 08/08/2012) SILVER SEPT SELL ARND 53295-315 SL 53570 TGT 53070/52800 : MCX

11:28 AM 08/08/2012 RANBAXY AT 521.8 FIRST TARGET ALMOST ACHIVED USE TRAILING SL TO NEXT TARGET OF 526

11:06 AM 08/08/2012 BOOK PARTIAL PROFIT IN RANBAXY AT 519 AND MOVE SL OT COST

11:04 AM 08/08/2012 BUY SBIN AT CMP OR AROUN 2077-2075 FOR TARGET OF 2090-2110 STOP LOSS 2060

(10:51 AM 08/08/2012) RMSEED SEPT BUY ARND 4415-20 SL 4370 TGT 4460/4490 : NCDEX

10:47 AM 08/08/2012 Buy MCX Lead (Aug) between 104.85-104.90 for targeting 105.50 with SL below 104.40

10:25 AM 08/08/2012 SELL RELIANCE FUT AROUN 795-797 FOR TARGETOF 785-780 STOP LOSS 803.5

Today's Commodity Updates

Gold trading range for the day is 29598-30082.Gold ended lower as investors were uncertain about whether central banks would act to stimulate sputtering economies. Building expectations that ECB will buy debt from distressed countries like Spain and Greece sparked a risk. S&P revised Greece’s outlook to negative, saying debt-ridden euro zone country could need more help.

Silver trading range for the day is 53139-53611.Silver ended with slight gains as investors were uncertain about whether central banks would act to stimulate sputtering economies. Building expectations that ECB will buy debt from distressed countries like Spain and Greece sparked a risk. Overall the metal traded in a tight range of less than $1 an ounce, swinging between slight gains and losses. Silver is trading below 50DMA, which is at 53779, with intraday support seen at 53139 and resistance at 53611.

Crude trading range for the day is 5046-5246.Crude oil jumped on falling North Sea output, support for more bond buying by Fed and Middle East tensions. EIA raised its forecast for global oil use by 190,000 barrels a day from last month’s estimate. Today crude oil inventories: EXP: -0.6M PREV: -6.5M. Actual is at 8.00PMCrude is holding with a support at 5046 and resistance will be likely at 5246.

10:15 AM 08/08/2012 BUY RANBAXY FUT AT CMP OR AROUN 515-514 FOR TARGET OF 522-526 STOP LOSS 509.8

(10:05 AM 08/08/2012) COPPER AUG SELL ARND 417 SL 419.40 TGT 414.60/412.10 : MCX

Tuesday, August 7, 2012

6:24 PM 07/08/2012 Buy MCX Crude Oil (Aug) at 5090-5095 for targeting 5125 with Sl below 5070

(6:11 PM 08/07/2012) SILVER SEPT SELL ARND 53480-500 SL 53660 TGT 53340/53105 : MCX

5:31 PM 07/08/2012 SL hit in Gold, Kindly Exit

5:42 PM 07/08/2012 Buy MCX Zinc (Aug) at 102.60-102.70 for targeting 103.50 with SL below 102.20

(5:22 PM 08/07/2012) SILVER SELL CALL TGT 53300 ACHIEVED

(4:32 PM 08/07/2012) SILVER SELL CALL UPDATE: BOOK A PROFIT AT 53350 OR TRAIL UR SL AT 53505 FOR NEXT TGTS

4:08 PM 08/07/2012 Buy MCX Gold (Oct) at 29915-29925 for targeting 30020 with Stop Loss below 29864

(4:05 PM 08/07/2012) GOLD SELL CALL TGT 29925 ALMOST ACHIEVED IT MADE LOW SO FAR 29927 BOOK FULL PROFIT & EXIT

4:00 PM 08/07/2012) COPPER BUY CALL TGT 417.90 ACHIEVED

CLOSE ALL INTRADAY POSISITONS AT CMP AND STAY NEUTRAL in Equity segment

2:25 PM 07/08/2012 BOOK PARTIAL PRFOTI N ICICI BANK AT 978.5 AND MOVE SL TO COST

1:54 PM 08/07/2012) COPPER BUY CALL UPDATE: BOOK A PROFIT AT 417 OR TRAIL UR SL AT 415.40 FOR NEXT TGTS

(1:53 PM 08/07/2012) NICKEL AUG BUY ARND 877-78 SL 871.90 TGT 883.10/887 : MCX

(1:37 PM 08/07/2012) SILVER SEPT SELL ARND 53430-450 SL 53570 TGT 53300/53105 : MCX

LME Inventories

Copper -900, Aluminium -5775, Nickel +678, Zinc -1250, Lead -525

1:23 PM 08/07/2012) COPPER AUG BUY ARND 415.70-415.90 SL 413.90 TGT 417.90/421 : MCX

(1:05 PM 08/07/2012) GOLD SELL CALL UPDATE: BOOK A PROFIT AT 29962 OR TRAIL UR SL AT 30005 FOR NEXT TGTS

(12:54 PM 08/07/2012) RMSEED BUY CALL UPDATE: BOOK A PROFIT AT 4448 OR TRAIL UR SL AT 4418 FOR NEXT TGTS

12:53 PM 07/08/2012 BUY KOTAK BANK FUT AT CMP OR AROUND 560-559 FOR TARGET OF 570-575 STOP LOSS 554.8

12:11 PM 07/08/2012 SELL BATA INDIA FUT BELOW 920 FOR TARGET OF 913-906 SL

CLOSE BATA INDIA TRADE AT 920-921

(12:06 PM 08/07/2012) RMSEED SEPT BUY ARND 4425-30 SL 4389 TGT 4465/4495 : NCDEX

(11:43 AM 08/07/2012) GOLD OCT SELL ARND 29980-85 SL 30042 TGT 29925/29890 : MCX

11:12 AM 07/08/2012 BUY BATA INDIA CMP OR AROUND 921-922 FOR TARGET O 930-940 STOP LOSS 914 CASH LEVELS

11:03 AM 07/08/2012 BUY ICICI BANK FUT ABOVE 974 FOR TARGET OF 984-994 STOP LOSS 964

10:56 AM 07/08/2012 BUY ADANIENT AT CMP OR AROUND 183-182.7 FOR TARGET OF 1886-189 STOP LOSS 179.8

CASTORSEED MARGIN UPDATE

Additional Margin of 5% (in cash) on both the Long side and Short side will be imposed on all running contracts and yet to be launched contracts in Castor Seed with effect from beginning of day Wednesday, August 08, 2012.

Today's Commodity Updates

Gold trading range for the day is 29796-30070.Gold ended with gains on gains in U.S. equities and crude oil. Muted moves in U.S. dollar give gold little direction after last week’s swings. Inflows into Gold ETF also picked up after a soft July, with data from the largest showing its holdings up 3tns so far this month. Gold is trading below 50DMA, which is at 30020, now intraday gold is holding support at 29796 and resistance at 30070.

Silver trading range for the day is 53019-53607.Silver settled flat as ongoing sentiment that central banks around the world will likely stimulate their economies The sentiment in Europe’s government debt market improved, with two year Spanish yields falling Holdings at i-shares silver trust rose by 163.42 tonnes to 9742.43 tonnes. Silver is trading below 50DMA, which is at 53833, with intraday support seen at 53019 and resistance at 53607.

Crude trading range for the day is 5016-5130.Crude oil ended with gains as investors became commodity bullish on strong equity market performance Tropical Storm Ernesto gained strength in the Caribbean Sea east of Nicaragua and will probably become a hurricane today. None of tropical storm developments in Atlantic Ocean are currently forecast to threaten oil supplies. Crude is holding with a support at 5016 and resistance will be likely at 5130.

Copper trading range for the day is 410.7-416.7.Copper gains after encouraging comments from top

Support and Resistance

NIFTY LEVELS- R-1 5330 R-2 5360 S-1 5310 S-2 5295 S-3 5275
BANKNIFTY- R-1 10665 R-2 10750 S-1 10560 S-2 10500 S-3 10400

Monday, August 6, 2012

5:04 PM 06/08/2012 Buy MCX Crude Oil (August) at 5060-5065 for targeting 5108 with SL below 5045

What is National Pension Scheme in India (NPS)

Regardless of how much one earns; all individuals try and create a pool of savings for their retirement. The government tries to promote this by adopting various measures like compulsory deduction of PF and EPF, encouraging savings by allowing tax exemptions or introducing schemes like National Pension Scheme 2012

Not many people in India know what is NPS?

National Pension Scheme in India (NPS Scheme) is amongst many investment options that are promoted (but not so well know so far) by the government of India but there is a major difference between NPS scheme and other government scheme. National Pension Scheme website details arehttps://www.npscra.nsdl.co.in/

Unlike most government schemes where you get guaranteed returns NPS returns will depend on the efficiency those managing it. So is it a government promoted mutual fund? Read on to understand how the scheme works.

National Pension Scheme 2012 in India

National Pension Scheme details are mentioned below:

Individuals between the age of 18 and 60 years are eligible to apply for NPS account
A Tier I account where contributions are made and withdrawals are not permissible
Later Tier II account can be opened from where withdrawals can be made
There are 22 registered Points of Presence (PoP) (across the country) which serve as customer service centers. A few banks and financial institutions have been designated to do so.
Once you approach the PoP and complete the formalities you will be registered with the CRA (Central Recordkeeping Agency) and will be issued Permanent Retirement Account Number (PRAN).
NPS form is available from PFRDA website i.e www.pfrda.org.in
There is no cap on the maximum amount that a person can invest; the minimum investment size is Rs. 500/month or Rs. 6000 annually.
Fund management charges are almost negligible at 0.0009% and there are some other costs which are quite low as compared to a mutual fund
Other National Pension Scheme details includes that you could choose from a list of six fund managers which are State Bank of India, UTI, ICICI Prudential, Kotak Mahindra, IDFC and Reliance.
The investor also has the option to invest in three different investment styles namely i.e high risk, medium risk and low risk. There is no cap on the amount you invest in low risk and medium risk fund styles, but you can invest only 50% of your fund corpus in high risk fund style. Further to your knowledge, the high risk investment option invest upto 50% in equity linked instruments or index funds which replicate Sensex
There are two options available in NPS account i.e “Auto Choice Option” and “Active Choice Option”. If you are exercising the first option, the money of the investor would be invested in various asset classes as per the investor’s age. If you select the active option, you are required to select one of three investment styles mentioned above

NPS – Swavalamban Scheme

Swavalamban scheme under NPS was launched in September, 2010 under which the Central Government will contribute Rs 1000 per year to each NPS account opened in financial year 2010-11 or in the next three years i.e 2011-12, 2012-13 and financial year 2013-14. Also adding to it, all NPS account opened in 2009-10 will also be eligible under Swavalamban scheme. The eligibility criteria for this scheme is that the investor must contribute a minimum of Rs 1000 and a maximum of Rs 6000 to NPS account per year.

Withdrawals in NPS Account Post and Pre Retirement

If you are aged less than 60 – You are required to invest a minimum of 80% of your pension money accumulated to purchase a life annuity from IRDA. You may withdraw remaining 20% of your amount.

On attaining the age of 60 – You are required to invest a minimum of 40% of your accumulated wealth to purchase a life annuity from IRDA. You may withdraw the remaining amount in a lump sum way or in a phased manner till the age of 70

Death of Investor – In such a case the nominee of the investor can withdraw 100% of the wealth accumulated in the NPS account

Is NPS Scheme a Mutual Fund?

The answer is yes and no? It is like a mutual fund basic philosophy of investment (where the pooled money is invested in different options) and there are professionals to manage of your money yet the scheme is very different operationally.

First let us understand how is NPS like a mutual fund; first things first the returns are not guaranteed just like in a Mutual Fund. Mutual fund provide an option where in you could invest in equity or debt instruments and also in different company stocks indirectly; NPS allows you to do the same.

Now for the differences: If you choose an Infrastructure mutual fund then all your money gets invested in stocks of infrastructure companies. If you choose a balanced fund then you get a mix of debt and equity but the proportion is decided by the fund manager which means that you have no say in it. So in case after some years you want to change your mix of investment you cannot do so. Well the NPS scheme gives you a choice to do so; the investor can choose a mix of different type of asset classes and can also change it as time goes by.

You can create your own portfolio by choosing between Equity(E) which is high risk and high return, fixed income instruments( C) that offer medium returns at medium risk and pure debt instruments (G) with have almost no risk and offer lower returns. Since the idea is to promote stability post retirement the government has decided the equity limit has 50% in any portfolio. This aspect also differentiates it from a mutual fund where if you want all your money can be invested in equity.

Currently the equity part goes to index funds; the fixed income portion constitutes liquid funds, fixed deposits, infrastructure bonds and corporate debt instruments. Pure debt options are central government securities.

Another interesting aspect of the NPS pension fund is that you can change this mix as your age progresses. Just consider this example; Ashish starts the NPS investment at 25 and below is an illustration of how he varies the portfolio mix depending on his age

When Ashish is younger his risk taking capacity is higher and he would like to invest more in Equity and create wealth. As his age progresses he moves away from equity to safer options but does not do away with equity completely. This is just for example sakes many people might want to completely avoid equity by the time they turn 55.

In case the investor does not choose an investment mix himself/herself then the money is invested as per the default option created by the government. This default option has been designed keeping in mind the individual’s risk taking capacity at various stages in life. At the age of 18 the default option will invest 50% of the funds in equity, 30% in fixed income instruments and 20% in pure debt instruments. This remains static till the person turns 36 after which the equity and fixed income contribution decreases and pure debt increases. When the person reaches 55 then 80% will be equity and 10% each for rest of the two.

As stated above there are six fund manager to choose from so if you are not happy with one you could switch to another fund manager unlike a mutual fund where you will have to exit the fund in case you are unhappy which would mean more charges and more formalities

Performance of NPS

Though the scheme is not very old and judging it will be a little premature however certain things can be concluded from its performance in the last few years.

Due to the low fund management cost banks etc are not pushing it.

All funds performed much lower as compared to their benchmark in the Equity allocation segment.

In the C and G options the performance of all funds was way above the benchmark.

For an aggressive investor the NPS will not be a good option as the low return on equity lowered the overall returns but for a conservative or balanced investment it is a good option.

Though not advertised aggressively the NPS pension fund scheme is gaining momentum albeit a little slowly. The NPS scheme despite its differences is pitched against the mutual funds for comparison. If you are looking at investing in a niche fund like like infrastructure, IT or gold gold ETFs or you are an aggressive investor then this scheme is not for you. But for a safe kind of player National Pension Scheme in India 2012 is an option worth exploring due to its low charges and the government backing

3:03 PM 06/08/2012 BUY TCS FUT ABOVE 1240 FOR TARGET OF 1250-1260 STOP LOS 1228.8

3:01 PM 06/08/2012 CLOSE BHARTI TRADE AROUN 298-298.5

(2:31 PM 08/06/2012) SILVER BUY CALL UPDATE: BOOK A PROFIT AT 53405 OR TRAIL UR SL AT 53249 FOR NEXT TGTS

LME Inventories:

LME Inventories: Copper +1225, Aluminium +15975, Nickel +678, Zinc -2425, Lead -550

(2:10 PM 08/06/2012) SILVER SEPT BUY ARND 53300-320 SL 53145 TGT 53460/53650 : MCX

10:29 AM 06/08/2012 BUY BHARTI FUT AT CMP OR AROUND 298.5-297.5 FOR TARGET FO 304-308 STOP LOSS 295.5

9:53 AM 06/08/2012 CAIRN INDIAN 341.5 BOOK PARTIAL PRFIT AND MOVE SL TO COST CASH LEVELS

Saturday, August 4, 2012

Important Lessons from Financial Crisis

There is a talk of US Crisis and European Crisis on every financial street. When we talk about India, the financial crisis of 2008 and slowdown in 2011 has made us taught how to behave while taking investment decisions. While understanding the various reasons for financial crisis, there is urgent need to take lessons from the financial crisis of 2008 and slowdown in 2011. The various learnings from financial crisis can be:

You can’t expect a secular bull run

Period of 2003-2007 was a period of secular bull rally for Indian stock markets. Markets went from 4000 Sensex levels to 21000 levels in just 4 years. Everybody was expecting a further rise at that point of time. But just the opposite thing happened and markets fell to 7700 odd levels in next 8 months. An important point to learn here is you can’t expect a secular bull rally in equity markets for years together. There would be periods when markets will be in an uptrend zone and numerous periods when markets would be in a downtrend zone. Avoiding panic during downtrend and greed during uptrend is the key learning here.

Avoid Fear of Markets Becoming Almost Zero

Whenever a financial crisis takes place, a lot of people become over bearish about the economy as a whole and tend to sell their investments in extreme panic. But what I learnt from financial crisis is that one should not expect his investments to become almost zero. After the effect of global financial crisis in 2008, a lot of investors sold their investments at rock bottom prices in a fear that their investments would become nil if they hold it for more time. But the stock markets gave more than 100% returns in a year after that and some stocks rose by almost 400%. I also want to make my readers remind of “Great Depression of 1929”. Even during those times the stock prices didn’t become zero.

You must have debt in your Portfolio

One of the important learnings from financial crisis of 2008 was that one must have debt component in his/her portfolio which will save an investment portfolio during adverse times like f 2008 and 2011. If you are maintaining 70:30 as equity to debt component in your portfolio, it means 30% of your investment portfolio would keep getting 7-8% annualised returns as against getting hit by 50-60% in financial recession

Invest in Quality Stocks only

Don’t take the risk of investing in penny stocks or stocks with the value of less than Rs 20 as these companies are the worst hit stocks during any financial crisis. If you are not good at researching stocks, look forward for the option to invest in equity mutual funds where near to 100% of your capital is invested in stocks under the guidance of professional and experienced fund manager who understands market better than you. Invest in a portfolio of stocks across various sectors rather than investing in a single stock.

Don’t try to time the volatile markets

Every retail investor expects the markets to fall further during the falling markets during financial crisis. In such a time, don’t try to time the market by delaying your investment decision and in the end losing out on an opportunity to invest at lower levels. Try to invest in parts at every fall of the market and average out your investments

Stock Markets Over React to Bad News

As we can see during 2008 crisis in US, the stocks over reacted to the bad news in United States and the stocks fell more than expected and thus offering ample opportunities to investors to invest at lower levels and make good money.

Friday, August 3, 2012

Employment

U.S ZONE : Non-Farm Employment Change : ACT: 163K EXP: 101K PREV: 80K, Unemployment Rate : ACT: 8.3% EXP: 8.2% PREV: 8.2%, Average Hourly Earnings m/m : ACT: 0.1% VS EXP: 0.2% PREV: 0.3% =

3:20 PM 08-03-2012 HOLD TATAGLOBAL TRADE WITH EXISTING LEVELS

3:18 PM 08-03-2012 DELIVRY BUY - BUY CAIRN AROUND 335-334 FOR TARGETOF 350-360 STOP LOSS 325 CASH LEVELS

2:57 PM 08-03-2012 DELIVERY CALL - BUY NMDC AROUND 186-185 FOR TARGE OF 200-215 STOP LOSS BELOW 174 CASH LEVELS

(2:52 PM 08/03/2012) SILVER SELL CALL UPDATE: BOOK A PROFIT AT 52915 OR TRAIL UR SL AT 53040 FOR FURTHER TGTS ( AS MKT HAS SLUGGISH MOVEMENT)

2:25 PM 08-03-2012 CLOSE DVISI LAB TRADE AT 1115

BOOK PARTIAL PROFIT IN BHARTI AT 298.3 AND MOVE SL TO COST

LME Inventory:

Copper Stocks -2075 MT, Aluminium Stocks -6450 MT, Nickel Stocks +264 MT, Zinc Stocks -2375 MT, and Lead Stocks -1750 MT.

No fresh positions allowed in Potato during staggered delivery

Clients may please note that no fresh Buy/Sell positions shall be allowed during the period of staggered delivery in all running contracts of Potato(Agra),Potato(Tarkeshwar) and the contracts yet to be launched.

AGRO MARGIN UPDATE:

Minimum Initial Margin of 10% of the value of the contract or VaR based margin whichever is higher will be imposed on all running contracts and yet to be launched contracts of Wheat (WHTSMQDELI) and Sugar (SUGARM200) with effect from beginning of trading day Monday, August 06, 2012.

11:39 AM 08-03-2012 BUY MCX COPPER AUGUST AT 412.55-412.65, WITH SL AT 411, FOR TARGET 415.5

11:41 AM 08-03-2012 Buy Bharti around 296-297, Tgt Rs 305-310, SL 294

10:37 AM 03/08/2012 FIRST TARGET HIT BOOK PARTIAL PROFIT AND MOVE S LTO COST IN CUMMINS

10:34 AM 03/08/2012 BUY TATAGLOBAL ABOVE 132 FOR TARGET OF 136-140 STOP LOSS 128.8 CASH LEVELS

10:32 AM 03/08/2012 BUY CUMMINS AT CMP OR ARUND 465-463 FOR TARGET OF 475-485 STOP LOSS 458 CASH LEVELS

Thursday, August 2, 2012

6:25 PM 02/08/2012 Sell MCX Crude Oil (Aug) at 4940-4935 for targeting 4895 with SL above 4960

6:22 PM 02/08/2012 Sell MCX Aluminium (Aug) at 103.20-103.30 for targeting 102.40 with SL above 103.70

6:20 PM 02/08/2012 Book Partial profit in Zinc at 101.60-101.50, rest hold for target with SL at cost

MARKET WILL REMAIN VOLATILE AS ECB DRAGHI S SPEECH IS GOING ON.

Book Partial Profit in Gold at 30010-30020, rest hold for target with SL at cost

6:12 PM 02/08/2012 Sell MCX Gold (Oct) at 30070-30060 for targeting 29950 with SL above 30110

6:10 PM 02/08/2012 Sell MCX Zinc (Aug) at 102-101.95 for targeting 101.05 with SL above 102.40

(6:05 PM 08/02/2012) SILVER BUY CALL TGT 53490 ACHIEVED

(5:24 PM 08/02/2012) SILVER BUY CALL UPDATE: BOOK A PROFIT AT 53415 OR TRAIL UR SL AT 53115 FOR NEXT TGTS

(3:29 PM 08/02/2012) SILVER SEPT. BUY ARND 53230-50 SL53950 TGT 53490/53700 : MCX

3:26 PM 02/08/2012 PLS IGNORE ICICI BANK TRADE CALL NOT INTIATED

HOLD TCS TRADE WITH WXISTING LEVELS

3:03 PM 02/08/2012 BOOK PARTIAL PROFIT N ZEEL AT 168.3 AND MOVE SL TO COST

2:32 PM 02/08/2012 SL hit in Lead, Kindly exit from counter

2:01 PM 02/08/2012 Book full profit in USDINR at 56.08-56.070, and exit from counter

LME Inventories: Copper -1825, Aluminium -7525, Nickel -306, Zinc -2450, Lead +2075

1:21 PM 02/08/2012 SELL BAJAJ AUTO AROUND 1617-1619 FOR TARGET OF 1609-1595 STOP LOSS 1630

12:53 PM 02/08/2012 SELL TCS FFUT AROUND AT CMP OR AROUND 1238-1240 FOR TARGETOF 1230-1220 STOP LOSS 1251

12:50 PM 02/08/2012 Buy MCX Copper (Aug) 417.50-417.60 for targeting 420.80 with SL below 416

12:10 PM 02/08/2012 book partial profit in federal bank at 409.3 and move sl to cost

11:57 AM 02/08/2012 Buy MCX Lead (Aug) at 105.80-105.70 for targeting 106.70 with SL below 105.30

11:42 AM 02/08/2012 SELL ICICIBANK FUTURE BELOW 956 SL 966 TARGET 940-928

(11:36 AM 08/02/2012) MENTHA AUG SELL ARND 1355-56 SL 1371.20 TGT 1340.50/1330 : MCX

11:15 AM 02/08/2012 buy ZEEL at cmp or arouond 166-165 for target of 170-174 stop loss 162.8 cash levels

11:06 AM 02/08/2012 sell federal baank fut at cmp ao around 412-413 for target of 402-396 stop loss 417.2

10:57 AM 02/08/2012 Buy MCX-SX USDINR(Aug) at 56.0300-56.0200 for targeting 56.24 with SL below 55.89

(10:47 AM 08/02/2012) NICKEL AUG BUY ARND 879.50-80.50 SL 874.50 TGT 885/891 : MCX

Wednesday, August 1, 2012

(5:51 PM 08/01/2012) SILVER SELL CALL TGT 53550 AHCIEVED

Benefits of Mutual Fund

Almost all financial Investment available today are in the from of Mutual Funds. Mutual Funds, as we described are basically on OUTSOURCING AGENCY where we give them our money to manage as they are more specialized and they charge a free to manage it.

Now there are certain advantages when we deal with Mutual Funds:

1. Professional investment management

Fund Managers handling your money are those people who have through knowledge and immense experience in the field of financial Market. There is always a team of people who look after investments. There are processes and research based investment is done both in bond/ Debt and Equity market. If you were to look at the average return based various Equity Funds and the return generated by overall market, you will find that Fund Managers have done their job well and they have given better return that the overall market in long run.

2. Diversification

Diversification is needed for the safety and stability of your investment portfolio. Since Mutual Fund is pool money and through this pool, a manager invest in various stock and securities, it gives benefit of diversification to common investor. He/ She just to invest in the common pool and thru this pool, diversification can be done. For Individual investor. it is not possible to have diversification in real sense as the amount of investment is often too small to buy different securities.

3. Low Cost

Going by train is going to be always cheaper than going by your own vehicle. The same rule applies to Mutual Funds as well. Since they deal with huge amount of money pooled by thousand of investor, their cost of handling comes down. Economies of Large scale pulls the cost of handling money to much low levels.

4. Convenience

Investing in Mutual Funds is like 123.

1.Choose a Scheme

2. Fill the form which would take less a minute.

3. Remit a cheque in favor of scheme.

Also after you have invested, the post investment activities like withdrawal, changes etc are much easy to operate.

5. Flexibility

Since the investment in Mutual Funds are denominated in terms of UNITS, there is lot of flexibility that you carry. You think of any permutation and combination of adjustment that you require, it can be done. For example, you can invest in parts, you can withdraw in parts, you can switch in parts to other scheme as well. In fact, there is no flexible investment tool than Mutual Funds available for investors.

6. Liquidity

The investment done in Mutual Funds are always available for withdrawal expect in case of Tax Saving schemes and schemes that carries mandatory lock-in as its feature. the money can be withdrawn or redeemed just by singing a redemption from and , money gets credited to your bank in 1-3 working days.In fact, we keep guiding investor that unless you require tax savings, don’t get into any schemes which locks your money. The fact of the matter is that manufacturer of financial products like insurance etc. comes whith lock- in products more for their benefits or for benefits of agents.

7. Transparency

Transparency is the key benefit of investing in Mutual Funds. You as an investor would know where your money is invested, what is the value of their investment on closure of each working day. The regulator SEBI, has also mandated various other clauses which makes mutual fund investment crystal clear. The charges levied are also clear which is the main concern for most of the investor.

8. Variety

There are plenty of options available for an investor to choose from. Depending on his time horizon, his needs, his return expectation, he can choose as per his per his objective. you have option in Debt, Equity , money market, Gold, ETF, International Market and what not markets.

9. Tax Benefit

Tax benefits on Mutual Funds keep changing time to time. According to taxation on mutual fund in financial year 2010-2011 few of the tax benefits are:

No long term gain tax on sell of equity mutual fund(long term here means 1 year plus)
Tax free dividend
No dividend distribution tax in case of equity mutual fund
Benefit of indexation in case of debt mutual fund
Lower long term gain tax in comparison to any other interest bearing product

5:09 PM 01/08/2012 Sell MCX Copper (Aug) below 418.90 for targeting 416.50 with SL above 420.40

Everything that you want to know about ETFs (Exchange Traded Funds)

ETF as an investment concept has failed in India. The introductory stride has been lost. Even with 10 years of existence in Indian markets they have not able to make any space in investor’s portfolio. If we talk about Indian Mutual Fund industry ETF share is less than 1% & if we remove Gold ETFs which were or are in fancy these days picture is even worse. But let’s first understand basics about ETF & then see why I started with a negative statement.

What is ETF?

If we talk about the structure of the ETFs, it is same as Mutual Funds – basket of few stocks. If we talk about category it is just a replica of index funds which is made to replicate an index. Eg Gold ETF, Nifty ETF, Bank Nifty ETF, Hangseng ETF etc. ETF stands for Exchange Traded Fund because they are listed on stock exchange. In most of the case these are passive funds where fund manager’s role is negligible.

How ETF Works?

ETF Comparison with Open-ended Mutual Funds & Close Ended Mutual Funds

	Open Ended Fund	Closed Ended Fund	Exchange Traded Fund
Fund Size	Flexible	Fixed	Flexible
NAV	Daily	Daily	Real-Time
Liquidity Provider	Fund Itself	Stock Market	Stock Market / Fund Itself
Availability	Fund Itself	Through Exchange where listed	Through Exchange where listed / Fund itself.
Portfolio Disclosure	Disclosed monthly	Disclosed monthly	Daily/Real-time
Intra-Day Trading	Not possible	Expensive	Possible at low cost

Source – Benchmark AMC

ETF Benefits

As we have seen that ETFs work like Mutual Funds. so basic benefits of both are same like Diversification, Transparency, Tax benefit etc. Few more advantages:

Any time NAV: In mutual funds whenever you put your investment/redemption you will get closing NAV of that particular day but in ETF you can buy it anytime during the trading hours.

Low Asset Management Cost: As ETF are passive funds they don’t have to incur fund management charges, plus they are sold without intermediaries that keep total cost low.

International Exposure: If you would like to invest in international markets, ETF is a better way as it gives you diversification benefit in that marked & you also know much about those countries active funds. Globally there are many ETFs which focus on Indian Markets – you can check India ETF List at Onemint.

Why ETF Failed in India?

The reason should not be performance because most of the ETFs are passive funds in India and try to mimic performance of some Index. Performance wise certain ETFs like Gold have given more and consistent returns than the broad market in the last 2-3 volatile years. But main reason looks…

Index Vs Diversified Funds: If we compare equity ETFs performance with diversified equity mutual funds in longer horizons, ETFs looks far behind.

Expense Ratio: Biggest benefit an investor seeks in ETF is lower expenses but even on this aspect Indian funds scores low. Internationally ETFs average charges are close to .53% but in India most of the equity related ETFs are charging more that this – some even charging 1%. Vanguard which is one of the biggest ETF players charges just .16% & in some cases as low as .07%. This is possible due to economies of scale but still difference is huge.

Other incidental Charges: Over & above the basic fees investor has to pay brokerage & other charges relating to manage his equity account. Many investors who just wish to invest in MF find it inconvenient to maintain a demat account with a broker.

Skewed Indexes: Top 3 stocks in Sensex Reliance, Infosys & ICICI make 27% of the index even nifty which is having 50 stocks – top 3 contribute more than 24%. This is even worse for sector index – in bankex top 2 stock weightage is more than 50%.

Liquidity: Liquidity is not very good in most of the Indian ETFs. So, sometime when you want to buy the units are not available and when you go for sell, there are no buyers.

How ETFs can become popular in India?

ETF are traded through stock exchanges & are suggested by brokers – not by mutual fund advisors. ETF are meant for passive long term investors & that’s not a good thing for a stock broker. Stock brokers earn on volumes rather than if somebody holds it for long term so there is clear conflict of interest. So I don’t think much can be done on this but if investors are made aware about the benefits there is a chance that things can be better in future. One more thing that can be done is bringing the variety right now. Most of the ETF are either Gold or large cap equity funds. Only 2 ETF are there which give you international exposure – so there is still scope to bring variety which can increase the interest. Even on commodity side there is a big scope but there is no clarity who will govern them – due to conflict between Securities and Exchange Board of India (SEBI) and Forward Market Commission (FMC) even Silver ETFs are stuck.

ETF in India Vs US

In US ETF are there from last 20 years – as a segment is growing at a pace of 32% every year & biggest reasons that comes out is the lower cost, fund managers ability to beat broader index & the variety of ETF available. Indian ETF fails on all these criteria’s. Biggest ETF in US is $89 Billion which is more than half of the Indian Mutual Fund Industry Size. And total ETF assets in US stands at $1 trillion which is close to 2/3 of total Indian Market capitalization. In US there are more than 2000 ETFs listed & in India number is less than 30 – another 13 are with SEBI for clearance. So one can clearly see the difference but this is the same case if we talk about Indian Mutual Funds – in US 39% of the households invest more than 50% of their financial assets through Mutual Funds but in India less than 1% have ever invested a penny in it. This can be blamed to poor Financial Literacy in India, lack of distribution facilities, higher operational cost and quality manpower.

Is there some hope for ETF

India is a fast growing economy & with kind of demography we have a big scope for newer & better financial products. Goldman Sach who is a big player in ETF has signaled regarding the growth of ETF by buying India’s Benchmark AMC which was a niche ETF player. Even IDBI AMCs is focusing on Index Funds & Motilal Oswal AMC trying something new with ETFs shows it’s a beginning towards passive investing. Hope for a better picture of ETF in future.

In Last

tough to Control Emotions: When you have a demat account it is very tough that you will only be holding ETFs – someday you will also be tempted to buy or trade in direct equity. Which may turn out dangerous for your financial health.

Home

Friday, August 17, 2012

Tuesday, August 14, 2012

Monday, August 13, 2012

Before Investing we should Ideally

Conclusion

Friday, August 10, 2012

Thursday, August 9, 2012

Wednesday, August 8, 2012

Tuesday, August 7, 2012

Monday, August 6, 2012