Mumbai, May 13 Investors no longer have to wait for weeks for refund of their IPO application money.
The application money earmarked for an IPO will now remain in the applicant’s bank account till the allotment is finalised, thus eliminating the refund process, SEBI said on Tuesday, addressing a long-standing grouse among investors, particularly in the retail segment.
“The modalities in this regard would be worked out separately,” said a news release from SEBI, issued after its Board met on Tuesday.
“The Board approved, in principle, the concept of making lien on bank account as an alternative mode of payment in public/rights issues.”
This means that the money marked for the IPO will not be used for any other payment obligation during that period.
At the same time, the applicant will enjoy the interest payable on the amount.
This would also reduce the burden on registrars and merchant bankers. But bankers to the issue can no longer enjoy the floating interest, said officials associated with the IPO process.
Most important of all, investors would not have to wait for their refund money. It also ensures that a liquidity crisis such as that of January 2008 does not occur again.
Wednesday, May 14, 2008
Sunday, May 11, 2008
Down Trend in Nifty Future
Source: Business Line May 11,2008
As we had expected, the Nifty future saw a sharp fall last week. It closed at 4986.7 as against the previous week’s close of 5246.5, shedding a good five per cent in the process. The week also saw Nifty future’s premium over the spot come down sharply. From over 18 points last week, the premium gap has now narrowed to under eight points. The average daily turnover for the week also dipped to Rs 32,657 crore as compared with the previous week’s turnover of Rs 34,000 crore.
However, the overall market wide open interest positions improved to Rs 70,868 crore (Rs 67,581 crore).
Last week, we had presented two strategies: 1) Going short on Nifty future keeping the stop-loss at 5350; and straddle by buying 5300 call an put. Both the strategies would have generated handsome profits for investors.
We had advised investors to carry the second strategy (straddle) till expiry. However, since the straddle spread is in the money now, investors may be better off closing the position on Monday itself.
Outlook
We expect the Nifty future to continue its downtrend next week. While it has an immediate support at 4950, any dip below this level can take it to 4750 levels. On the other hand, any reversal from its immediate support can see the Nifty future bounce back to 5110 levels. As has been mentioned in this column previously, the bearish undertone in the market will continue to remain as long as the Nifty future remains below 5850. Till such time, the probability of Nifty future falling back to its January lows of 4400 level remains high.
Recommendation
We present the following strategies for our investors:
1) Consider going short on Nifty future with a stop-loss at 5050.
2) Investors can also consider buying Nifty 5000 put, which closed the week at Rs 132.5. However, note that these strategies should be closed within two days.
Implied volatility
Implied volatilities for puts remained firm at around 31 per cent, while calls IV increased to 32 per cent (19 per cent). The increase in call implied volatilities suggests that lot of traders have written call, particularly 5200 and 5300 strikes.
Besides, Nifty VIX also jumped 13.7 per cent to 27.53 from last week’s level of 24.21, highlighting the nervous mood of market participants. Typically, a rise in VIX suggests accumulation of puts in expectation of a bearish market condition.
Volume wide put/call ratio increased to 1.18 (1.15) and open interest PCR to 1.36 (1.40). The decrease in open interest PCR suggests that lot of traders would have squared-off their put positions as the Nifty tumbled quite sharply last week.
Stock futures
Follow-up
SBI (1822.4): We had presented a positive outlook on the stock and advised investors to go long on the counter if it moved past 1840 levels. However, the stock failed to breach this resistance zone. However, it touched our targeted support level of 1675 on the downside.
Reliance Industries (2528): The sharp fall with heightened volume on Friday turned the sentiment weak for the stock. The stock faces a strong resistance at 2584, while it finds support at 2400. Any dip below the support would weaken the stock substantially. We remain bearish on the stock. Investors can consider going short on the counter with a stop loss at 2584.
FIIs trend
The cumulative FII position as percentage of total gross market position in the F&O market (as on May 9) was 40.91 per cent. FIIs were mainly net sellers in the derivatives market last week. They now hold index futures worth Rs 19,539.37 crore (Rs 18,936.9 crore) and stock futures worth Rs 20,097.43 crore (Rs 19,386.05 crore).
As we had expected, the Nifty future saw a sharp fall last week. It closed at 4986.7 as against the previous week’s close of 5246.5, shedding a good five per cent in the process. The week also saw Nifty future’s premium over the spot come down sharply. From over 18 points last week, the premium gap has now narrowed to under eight points. The average daily turnover for the week also dipped to Rs 32,657 crore as compared with the previous week’s turnover of Rs 34,000 crore.
However, the overall market wide open interest positions improved to Rs 70,868 crore (Rs 67,581 crore).
Last week, we had presented two strategies: 1) Going short on Nifty future keeping the stop-loss at 5350; and straddle by buying 5300 call an put. Both the strategies would have generated handsome profits for investors.
We had advised investors to carry the second strategy (straddle) till expiry. However, since the straddle spread is in the money now, investors may be better off closing the position on Monday itself.
Outlook
We expect the Nifty future to continue its downtrend next week. While it has an immediate support at 4950, any dip below this level can take it to 4750 levels. On the other hand, any reversal from its immediate support can see the Nifty future bounce back to 5110 levels. As has been mentioned in this column previously, the bearish undertone in the market will continue to remain as long as the Nifty future remains below 5850. Till such time, the probability of Nifty future falling back to its January lows of 4400 level remains high.
Recommendation
We present the following strategies for our investors:
1) Consider going short on Nifty future with a stop-loss at 5050.
2) Investors can also consider buying Nifty 5000 put, which closed the week at Rs 132.5. However, note that these strategies should be closed within two days.
Implied volatility
Implied volatilities for puts remained firm at around 31 per cent, while calls IV increased to 32 per cent (19 per cent). The increase in call implied volatilities suggests that lot of traders have written call, particularly 5200 and 5300 strikes.
Besides, Nifty VIX also jumped 13.7 per cent to 27.53 from last week’s level of 24.21, highlighting the nervous mood of market participants. Typically, a rise in VIX suggests accumulation of puts in expectation of a bearish market condition.
Volume wide put/call ratio increased to 1.18 (1.15) and open interest PCR to 1.36 (1.40). The decrease in open interest PCR suggests that lot of traders would have squared-off their put positions as the Nifty tumbled quite sharply last week.
Stock futures
Follow-up
SBI (1822.4): We had presented a positive outlook on the stock and advised investors to go long on the counter if it moved past 1840 levels. However, the stock failed to breach this resistance zone. However, it touched our targeted support level of 1675 on the downside.
Reliance Industries (2528): The sharp fall with heightened volume on Friday turned the sentiment weak for the stock. The stock faces a strong resistance at 2584, while it finds support at 2400. Any dip below the support would weaken the stock substantially. We remain bearish on the stock. Investors can consider going short on the counter with a stop loss at 2584.
FIIs trend
The cumulative FII position as percentage of total gross market position in the F&O market (as on May 9) was 40.91 per cent. FIIs were mainly net sellers in the derivatives market last week. They now hold index futures worth Rs 19,539.37 crore (Rs 18,936.9 crore) and stock futures worth Rs 20,097.43 crore (Rs 19,386.05 crore).
Thursday, May 8, 2008
Gold Investing made simple
If one wants to invest in gold for as a long term investment, now it is easier than ever. Gold ETFs are available to buy and sell like an ordinary share.These are exchange traded funds launched by mutual fund houses.we dont actually need to carry the actual gold.
Benefits of buying gold etfs are:
Safety and security
Long term commitments
Transparency and liquidity
cost effective
Each unit of etf tracks the price of 1 gm pure gold.
Benefits of buying gold etfs are:
Safety and security
Long term commitments
Transparency and liquidity
cost effective
Each unit of etf tracks the price of 1 gm pure gold.
Sunday, March 9, 2008
Mutual Fund Concept
CONCEPT
A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realised are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.
ADVANTAGES OF MUTUAL FUNDS
The advantages of investing in a Mutual Fund are:
Professional Management
Diversification
Convenient Administration
Return Potential
Low Costs
Liquidity
Transparency
Flexibility
Choice of schemes
Tax benefits
Well regulated
TYPES OF MUTUAL FUND SCHEMES
Wide variety of Mutual Fund Schemes exist to cater to the needs such as financial position, risk tolerance and return expectations etc. The table below gives an overview into the existing types of schemes in the Industry.
FREQUENTLY USED TERMS
Net Asset Value (NAV)
Net Asset Value is the market value of the assets of the scheme minus its liabilities. The per unit NAV is the net asset value of the scheme divided by the number of units outstanding on the Valuation Date.
Sale Price
Is the price you pay when you invest in a scheme. Also called Offer Price. It may include a sales load.
Repurchase Price
Is the price at which a close-ended scheme repurchases its units and it may include a back-end load. This is also called Bid Price.
Redemption Price
Is the price at which open-ended schemes repurchase their units and close-ended schemes redeem their units on maturity. Such prices are NAV related.
Sales Load
Is a charge collected by a scheme when it sells the units. Also called, ‘Front-end’ load. Schemes that do not charge a load are called ‘No Load’ schemes.
Repurchase or ‘Back-end’Load
Is a charge collected by a scheme when it buys back the units from the unitholders
A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realised are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.
ADVANTAGES OF MUTUAL FUNDS
The advantages of investing in a Mutual Fund are:
Professional Management
Diversification
Convenient Administration
Return Potential
Low Costs
Liquidity
Transparency
Flexibility
Choice of schemes
Tax benefits
Well regulated
TYPES OF MUTUAL FUND SCHEMES
Wide variety of Mutual Fund Schemes exist to cater to the needs such as financial position, risk tolerance and return expectations etc. The table below gives an overview into the existing types of schemes in the Industry.
FREQUENTLY USED TERMS
Net Asset Value (NAV)
Net Asset Value is the market value of the assets of the scheme minus its liabilities. The per unit NAV is the net asset value of the scheme divided by the number of units outstanding on the Valuation Date.
Sale Price
Is the price you pay when you invest in a scheme. Also called Offer Price. It may include a sales load.
Repurchase Price
Is the price at which a close-ended scheme repurchases its units and it may include a back-end load. This is also called Bid Price.
Redemption Price
Is the price at which open-ended schemes repurchase their units and close-ended schemes redeem their units on maturity. Such prices are NAV related.
Sales Load
Is a charge collected by a scheme when it sells the units. Also called, ‘Front-end’ load. Schemes that do not charge a load are called ‘No Load’ schemes.
Repurchase or ‘Back-end’Load
Is a charge collected by a scheme when it buys back the units from the unitholders
Saturday, March 8, 2008
Trading method using RSI signal
Trading Signals:
Different signals are used in trending and ranging markets. The most important signals are taken from overbought and oversold levels, divergences and failure swings.
Use trailing buy- and sell-stops to time entry into trades.
Ranging Markets:
Set the Overbought level at 70 and Oversold at 30.
Go long when RSI falls below the 30 level and rises back above it or on a bullish divergence where the first trough is below 30.
Go short when RSI rises above the 70 level and falls back below it or on a bearish divergence where the first peak is above 70.
Trending Markets:
Only take signals in the direction of the trend.
Go long, in an up-trend, when RSI falls below 40 and rises back above it.
Go short, in a down-trend, when RSI rises above 60 and falls back below it.
Exit using a trend indicator.
Different signals are used in trending and ranging markets. The most important signals are taken from overbought and oversold levels, divergences and failure swings.
Use trailing buy- and sell-stops to time entry into trades.
Ranging Markets:
Set the Overbought level at 70 and Oversold at 30.
Go long when RSI falls below the 30 level and rises back above it or on a bullish divergence where the first trough is below 30.
Go short when RSI rises above the 70 level and falls back below it or on a bearish divergence where the first peak is above 70.
Trending Markets:
Only take signals in the direction of the trend.
Go long, in an up-trend, when RSI falls below 40 and rises back above it.
Go short, in a down-trend, when RSI rises above 60 and falls back below it.
Exit using a trend indicator.
Friday, March 7, 2008
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