VALUE PICK FROM INDIAN STOCK MARKETS. The highlight of the current rally is undoubtedly the active participation of domestic institutional investors DIIswho, along with foreign investors, have collectively invested Rs 84, crore year-to-date in domestic stocks for the year till May 31, Historical pattern suggests whenever the market rallied on account of increased liquidity, it has always turned volatile in the short run.

From a valuation perspective too, the market is no longer cheap. BSE In such interesting times, it is imperative for investors to revisit some of the investment fundamentals; the important one being striking the right balance between greed and fear while investing.

It is always better to exercise caution than be sorry and regret later, particularly, when equity prices are soaring at an all-time high. This rally is happening especially at a time when earnings are yet to catch up. However, going forward, this landscape is likely to improve given the positive macro-economic factors and a steady recovery in the economy. Also, the positive effect of the recent government reforms is likely to further help the recovery process. Once the earnings growth materialises, there is a possibility that valuations may get realigned with historical valuations.

You must value the business in order to value the stock. With the market inching upward to new all-time highs, investors generally tend to become greedy expecting further gains. This may not necessarily be the right move and calls for rebalancing of portfolio. As the value of the equity component of your portfolio goes up, your original balance can get skewed.

However, investors should always keep in mind that no asset class will move in one straight line, be it upward or downwards for a long time. This holds true, especially for financial assets, as the volatility is more pronounced in them. With the rise in the market, the portfolio value may have swelled and one may be tempted to make fresh investments to capture most of the opportunities offered by the market. But this is the time one has to be cautious and fortify the gains. These funds invest in equity or debt as per the attractiveness of that particular asset class and dynamically manage the same.

When equities are cheap, the fund allocation towards equity increases in order to tap the available opportunities and vice-versa. The construct of these funds ensures that an investor has exposure to both debt and equity asset classes within a single fund.

The matrix used to arrive at the proportion is generally based on relative attractiveness of each of the asset class and, hence, these funds are dynamically managed. Further, the bold economic reforms embarked upon by the government have set the stage right for good times for the Indian equity market.

The domestic equity market is on a roll with the benchmark indices currently hovering at all-time highs. Sebi Read more at: Posted by VALUEPICK at Share to Twitter Share to Facebook.

Wednesday, May 31, AMULYA LEASING -RESULT UPDATE. Posted by VALUEPICK at 9: Tuesday, May 23, MULTIBASE INDIA - STEADY GROWTH. Posted by VALUEPICK at 5: Sunday, May 14, Using Enterprise Value To Compare Companies.

Investopedia The enterprise value - or EV for short - is an indicator of how the market attributes value to a firm as a whole. Enterprise value is a term coined by analysts to discuss the aggregate value of a company as an enterprise rather than just focusing on its current market capitalization.

It measures how much you need to fork out to buy an entire public company. When sizing up a company, investors get a clearer picture of real value with EV than with market capitalization.

Why doesn't market capitalization properly represent a firm's value? It leaves a lot of important factors out, such as a company's debt on the one hand and its cash reserves on the other. Enterprise value is basically a modification of market cap, as it incorporates debt and cash for determining a company's valuation. The Calculation Simply put, EV is the sum of a company's market cap and its net debt.

To compute the EV, first calculate the company's market cap, add total debt including long- and short-term debt reported in the balance sheet and subtract cash and investments also reported in the balance sheet. Market capitalization is the share price multiplied by the number of outstanding shares. This number tells you what you would have to pay to buy every share of the company. Therefore, rather than telling you the company's value, market cap simply represents the company's price tag.

The Role of Debt and Cash Why are debt and cash considered when valuing a firm? If the firm is sold to a new owner, the buyer has to pay the equity value in acquisitions, price is typically set higher than the market price and must also repay the firm's debts.

Of course, the buyer gets to keep the cash available with the firm, which is why cash needs to be deducted from the firm's price as represented by market cap. Think of two companies that have equal market caps. One has no debt on its balance sheet while the other one is debt heavy. The debt-laden company will be making interest payments on the debt over the years. Preferred stock and convertibles that pay interest should also be considered debt for the purposes of calculating value.

So, even though the two companies have equal market caps, the company with debt is worth more. Long-term debt serves effectively to increase the value of a company, making any assessments that take only the stock into account preliminary at best.

VALUE PICK FROM INDIAN STOCK MARKETS

Cash and short-term investments, by contrast, have the opposite effect. They decrease the effective price an acquirer has to pay. Ratio Matters Frankly, knowing a company's EV alone is not all that useful. You can learn more about a company by comparing EV to a measure of the company's cash flow or EBIT.

Comparative ratios demonstrate nicely how EV works better than market cap for assessing companies with differing debt or cash levels or, in other words, differing capital structures. It is important to use EBIT - earnings before interest and tax - in the comparative ratio because EV assumes that, upon the acquisition of a form filling jobs from home in kerala, its acquirer immediately pays debt and consumes cash, not accounting for interest costs or how to become rich in indian stock market income.

Even better is free cash flow, which helps avoid other accounting distortions. The Bottom Line The value of EV lies in its ability to compare companies with different capital structures. By using enterprise value instead of market capitalization to look at the value of a company, investors get a more accurate sense of whether or not a company is truly undervalued.

Tuesday, May 9, WEBSOL ENERGY - RESULT UPDATE. Posted by VALUEPICK at 2: Saturday, May 6, Managing The Risks In Value Investing. This section describes the key risks to be aware of and offers guidance on how to mitigate them. Key Risks Basing Your Calculations on the Wrong Numbers Since value investing decisions are partly based on an analysis of financial statements, it is imperative that these calculations be performed correctly. Using the wrong numbers, performing the wrong calculation or making a mathematical typo can result in basing an investment decision on faulty information.

Such a mistake could mean making a poor investment or missing out on a great one. If you aren't yet confident in your ability to read and how to become rich in indian stock market financial statements and reports, keep studying these subjects and don't place any trades until you're truly ready.

Some years, companies will experience unusually large losses or gains from events such as natural disasters, corporate restructuring or unusual lawsuits and will report these on the income statement under a label such stockton certified farmers market "extraordinary item — gain" or "extraordinary item — loss.

However, think critically about these items, and use your judgment. Jmd forex pvt limited a company has a pattern of reporting the same extraordinary item year after year it might not be too extraordinary.

Also, if there are unexpected losses year after year, this can be a sign that the company is having financial problems. Extraordinary items are supposed to be unusual and nonrecurring. Also beware a pattern of write-offs. One of the biggest risks in value investing lies in overpaying for a stock. When you underpay for a stock, you reduce the amount of money you could lose if the stock performs poorly.

The closer you pay to the stock's notorious big ft junior mafia get money lyrics market value — or even worse, if you overpay — the bigger your risk of losing capital.

Recall that one of the fundamental principles of value investing is to build a margin of safety into all of your investments. This means purchasing stocks at a price of around two-thirds or less of their inherent value.

Value investors want to risk as little capital as possible in potentially overvalued assets, so they try not to overpay for investments. Conventional investment wisdom says that investing in individual stocks can be a high-risk strategy. Instead, we are taught to invest in multiple stocks or stock indexes so that we have exposure to a wide variety of companies and economic sectors.

However, some value investors believe that you can have a diversified portfolio marketing of livestock products in kenya if you only own a small number of stocks, as long as you choose stocks that represent different industries and sectors of the economy. Value investor and investment manager Christopher H. Browne recommends owning a minimum of 10 stocks in his "Little Book of Value Investing.

On the other hand, the authors of "Value Investing for Dummies, 2nd. They why a call option price rises when interest rates rise investing in only a few companies and watching them closely.

Of course, this advice assumes that you are great at choosing winners, which may not be the case, particularly if you are a value-investing novice.

It is difficult to ignore your emotions when making investment decisions. Even if you can take a detached, critical standpoint when evaluating numbers, fear and excitement creep in when it comes time to actually use part of your hard-earned savings to purchase a stock. More importantly, how much money does wayne rooney earn each week you have purchased the stock, you may be tempted to sell it if the price falls.

You must remember that to be a value investor means to avoid the herd-mentality investment behaviors of buying when a stock's price is rising and selling when it is falling. Such behavior will destroy your returns. Playing follow-the-leader in investing can quickly become a dangerous game. Value-investing is a long-term strategy. Warren Buffett, for example, buys stocks with the intention of holding them almost indefinitely.

He once said "I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years. Basing Your Investment Decisions daily stock tips bse nse Fraudulent Accounting Statements. After the accounting scandals associated with Enron, WorldCom and other companies, it would be easy to let our fears of false accounting statements prevent us from investing in stocks.

Selecting individual stocks requires trusting the numbers that companies report about themselves on their balance sheets and income statements.

Sure, regulations have been tightened and statements are audited by independent accounting firms, but regulations have failed in the past and accountants have become their clients' bedfellows. How do you know if you can trust what you read?

One strategy is to read the footnotes. They follow the statements and explain the company's accounting methods and elaborate on reported results. If the footnotes are unintelligible or the information they present seems unreasonable, you'll have a better idea on whether to pass on the company.

Not Comparing Apples to Apples. Comparing a company's stock nifty put call ratio analysis that of its competitors is one way value investors analyze their potential investments.

However, companies differ in their accounting policies in ways that are perfectly legal. Also you might not be able to compare companies from different industries. If companies use different accounting principles, you will need to adjust the numbers to compare apples to apples; otherwise you can't accurately compare two companies on this metric. Selling at the Wrong Time. Even if you do everything right in terms of researching and purchasing your stocks, your entire strategy can fall apart if you sell at the wrong time.

The wrong time to sell is when the market is suffering and stock prices are falling simply because investors are panicking, not because they are assessing the value of the quality of the underlying companies they have invested in. Another bad time to sell is when a stock's price falls because its earnings have fallen short of analysts' predictions.

The ideal time to sell your stock is when shares are overpriced relative to the company's intrinsic value. However, sometimes a significant change in the company or the industry that lowers the company's intrinsic value might also warrant a sale if you see losses on the horizon.

It can be tricky not to confuse these times with general investor panic. Also, if part of your investment strategy involves passing on wealth to your heirs, the right time to sell may be never at least for a portion of your portfolio. Posted by VALUEPICK at 6: Sunday, April 30, 3 Simple Steps To Building Wealth. You need to make it. This means that before you can begin to save or invest, you need to have a long-term source of income that's sufficient to have some left over after you've covered your necessities.

You need to save it. Once you have an income that's enough to cover your basics, you need to develop a proactive savings plan. You need to invest it. Once you've set aside a monthly savings goal, you need to invest it prudently.

Consider what you enjoy. You will perform better and be more likely to succeed financially doing something you enjoy. Consider what you're good at. Look at what you do well and how you can use those talents to earn a living. Consider what will pay well.

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Look at careers using what you enjoy and do well that will meet your financial expectations. Consider how to get there educational requirements, etc. Determine the education requirements, if any, needed to pursue your options. Track your spending for at least a month. You may want to use a financial software package to help you do this. If not, your checkbook is the best place to start. Either way, make sure you categorize your expenditures. Sometimes just being aware of how much you are spending will help you control your spending habits.

Break down your wants and needs. The need for food, shelter and clothing are obvious, but you also need to address less obvious needs. For instance, you may realize you're eating lunch at a restaurant every day. Bringing your own lunch to work two or more days a week will help you save money. Adjust according to your changing needs. As you go along, you probably will find that you've over- or under-budgeted a particular item and need to adjust your budget accordingly.

Build your cushion — you never really know what's around the corner. You should aim to save around three to six months' worth of living expenses.

This prepares you for financial setbacks, such as job loss or health problems. If saving this cushion seems daunting, start small. Posted by VALUEPICK at 8: Saturday, April 22, Are you a lay investor? Trading in derivatives could make your money vanish Normal 0 false false false EN-US X-NONE X-NONE Courtesy: It seems that many drug-users start with mild narcotics like marijuana and gradually move up to harder stuff like heroin and crack.

The default Indian saver saves all of his or her money in deposits with banks or post offices or the government. Some of these people—perhaps about two crores of them—start investing in equity funds. The gateway investment to equity funds is often a tax-saving fund—one of the so-called ELSS funds. As ELSS investments come with a lock-in, they are forced to stay put for three years, which is a reasonably long period to see good gains. For most of these investors, the idea that equity funds can get you good returns becomes an obvious.

So far, so good. This person often goes by the name of a wealth manager or a relationship manager or something like that and is generally employed by a bank or a stockbroker.

The logic given is simple: Since you know that equity returns are better than a bank deposit, let me introduce you to the form of equity that can get you the highest possible returns from equity, which is effendo. Effendo is closely related to a Harry Potter spell called Evanesco which makes things vanish.

Effendo can make money vanish as if by magic, as it regularly does for investors lured into short-term trading using these types of investment avenues.

How to become rich by trading in Stock Market

Actually, effendo does not make money vanish, as much as it transfers it magically into the bank accounts of your broker. Now I know the whole shpiel about how derivatives provide depth and breadth to the stock markets, but for a vast majority of small investors, they are none of that.

Instead, as Warren Buffet pointed out, they are nothing but financial weapons of mass destruction.

How to Make Money in Stock Market in India - odomujekadox.web.fc2.com

The answer to that question lies in one of the distortions that have crept it into the Indian stock markets ever since derivatives trading began. Derivatives like futures and options can be used to protect traders against risk, acting like an insurance policy.

The real problem is not that using futures and options in this manner is possible, but that almost every part of the equities trading industry is dedicated to getting customers into this kind of trading. This kind of institutional behaviour is certainly disappointing, but not surprising. However, the important point is that savers should save themselves from being herded into such kind of trading.

About Me VALUEPICK An Investor in Indian Stock Market for the past 24 years. Mail me at - valuepick gmail. Economic Times Blogs Loading Live Traffic Live Traffic Stats. There was an error in this gadget.