As year 2010 is about to end, I would like to update the important happenings and events that occurs in Markets along with the major achievements of various companies.

I request you to read it as a whole..and as i always say..please leave your comments and suggest for further changes..

So here I go

2010 European sovereign debt crisis

The crisis primarily impacted the PIIGS (Portugual,Ireland,Italy,Greece,Spain). The governments of these nations habitually run large government budget deficits (difference between earnings and expenditure) which at the time of the crisis had suffered from bad governing with widespread corruption and tax evasion. The hardest hit was targeted by credit rating agencies as the weak link of the Eurozone. Fear that Greece's debt problems would cause lenders to stop lending to it, with the result that Greece would default on its sovereign debt, laid the hypothesis that such a default would cause lenders to stop lending money to the other PIIGS (Portugal, Ireland/Italy, Greece and Spain) as well, with the result that they would also eventually default on their sovereign debt. This default by Spain, Portugal, Italy and Greece was very large that resulted in bank losses so large that almost every bank in Europe would become insolvent due to the now uncollectible outstanding loans to those four countries.

Therefore a large GOM(Group of Ministers) of Eurozone decided on a mutual financial aid package of €750 billion and the European Central Bank announced that in the future it would support by explicit monetary help(related with interest rates).

Dealing with the Global Crisis, the economy is seems to be expanding after a recent shock. Indian Economy, however just felt the blow of the global economic recession and the real economic growth have seen a sharp fall but due to strong position of liquidity in the market, large corporations have access to capital in corporate credit markets.

	India’s Economic Outlook Projection
		2007	2008	2009	2010
GDP Growth		9.40%	7.30%	7.60%	8.30%
CPI		6.40%	9.30%	5.50%	4.90%

CPI-Consumer Price Index(ability of the people to buy)

In order to keep the economic growth during the time of worst recession, Federal authorities in India has announced the stimulus packages to prop-up the economic growth. To finance the stimulus packages, Indian Government has raised over $100 billion over the last four quarters in a way to finance the stimulus package. According to the latest data has zoomed to over 50% of the total GDP and India’s Central bank, Reserve Bank of India has started printing new currency notes.

The Indian economy has crossed a significant landmark with the SENSEX crossing the 20, 000 mark in September 2010, majorly due to high influx of foreign institutional investors (FIIs) investing in India. The FIIs have net infused US$ 17.9 billion so far in 2010 into the Indian economy, the highest ever yearly inflow.
Significantly, there is also an increase in the number of foreign firms investing in India in all sectors. The scope of business in India is majorly revolving around the automobile industry, retailing sector, FMCG(fastest moving consumer goods), besides retail and telecommunication. The number of manufacturing units coming up in India has also increased, clearly demonstrating the high potential of business in India.

And if we talk about the various sectors, the data would be as follows:-

Agriculture-India ranks second worldwide in farm output. Agriculture and allied sectors like forestry, logging and fishing accounted for 16.6% of the GDP in 2007, employed 60% of the total workforce and despite a steady decline of its share in the GDP, it’s still the largest economic sector and plays a significant role in the overall socio-economic development of India. The government is also doing considerable efforts for the agriculture industry like an amount of US$ 19 billion has been allocated for the Ministry of Agriculture during the Eleventh Five Year Plan.

IT Industry-IT Industry India is home to a large number of IT professionals, who have the necessary skill and expertise to meet the demands and expectations of the global IT industry. With IT biggies like Infosys, Cognizant, Wipro, Tata Consultancy Services, Accenture and several other IT firms operating in some of the major Indian cities, there is no shortage of job opportunities for the Indian software professionals. The average purchasing power of the common people of India has improved substantially. The consumption spending has recorded an all-time high. All these have improved the gross production of goods and services in the Indian economy. So in conclusion it can be said that the growth of India's IT industry has been active in facilitating the economic progress of India.

Telecommunications- The Indian telecommunications industry is one of the fastest growing in the world. According to the Telecom Regulatory Authority of India (TRAI), the number of telephone subscriber base in the country reached 653.92 million as on May 31, 2010.In March 2010, Bharti Airtel bought the African operations of Kuwait-based Zain Telecom for US$ 10.7 billion, driving the Indian player into the league of top ten telecom players globally. The Reserve Bank has liberalised the investment norms for Indian telecom companies by allowing them to invest in international cable systems. Recently 2G and 3G scandal has taken place in which a sum of Rs.1.72 lac crore has been deviated by subverting rules for spectrum bidding by the telecomm officials. Power- As the Indian economy continues to surge ahead, its power sector has been expanding concurrently to support the growth rate. The overall power generation in the country has increased from 723.793 billion unit (BU) during 2008-09 to 771.551 BU during the year 2009-10.

According to the Ministry of Power, India's total installed capacity as on October 31, 2010 is 1,67giga watt. A total of 30 projects were commissioned during 2010-11, with a total capacity of 7,020 MW. These include 22 thermal power plants and 8 hydro power plants. If we see further scope then Mr. Sushilkumar Shinde, Union Minister of Power, has stated that the scope for investment in the power sector over the next few years is well over US$ 300 billion. India expects investments of up to US$ 55 billion by 2015 in the renewable energy sector, which would generate 35 GW of power.

Other hits at Dalal Street was Coal India’s IPO, which was a grand success. Like investors were striking gold in coal. It soared nearly 40% on their first day of trading on the Mumbai stock market.The company fetched a mind boggling amount of Rs.2.36 lac crore which is 15 times the target of Rs.15,500 crore.

So,I guess that would be all, because already all of you must be tires of reading this..

But soon, I’ll be updating the growth and investments prospects for 2011

Lastly,I would like to wish all of you…A veryy Happy New Year..

May you all have a lovely time..

With all my best wishes and regards…

How Stocks work ?

How Stocks Trade ??
Most stocks are traded on stock exchanges as already mentioned(in India Bombay Stock Exchange and National Stock Exchange of India), which are places where buyers and sellers meet and decide on a price.

Before we go on, let's distinguish between the primary market and the secondary market. The primary market is where securities are created (by means of an IPO) while, in the secondary market is what people are referring to when they talk about the stock market. It is important to understand that the trading of a company's stock does not directly involve that company.

What Causes Stock Prices To Change ?
Stock prices change every day as a result of market forces. By this we mean that share prices change because of supply and demand. If more people want to buy a stock (demand) than sell it (supply), then the price moves up.

Conversely, if more people wanted to sell a stock than buy it, there would be greater supply than demand, and the price would fall. Understanding supply and demand is easy. What is difficult to comprehend is what makes people like a particular stock and dislike another stock. This comes down to figuring out what news is positive for a company and what news is negative.

That being said, the principal theory is that the price movement of a stock indicates what investors feel a company is worth. Don't equate a company's value with the stock price. The value of a company is its market capitalization, which is the stock price multiplied by the number of shares outstanding.

The most important factor that affects the value of a company is its earnings,its profits,and in the long run no company can survive without them. It makes sense when you think about it and try to analyse it. The reason behind this is that analysts base their future value of a company on their earnings projection. If a company's results surprise (are better than expected), the price jumps up. If a company's results disappoint (are worse than expected), then the price will fall.

The important things to grasp about this subject are the following:

1. At the most fundamental level(involves analyzing its financial statements and health, its management and competitive advantages, and its competitors and markets), supply and demand in the market determines stock price.

2. Price times the number of shares outstanding (market capitalization) is the value of a company. Comparing just the share price of two companies is meaningless.



3. Theoretically, earnings are what affect investors' valuation of a company, but there are other indicators that investors use to predict stock price. Remember, it is investors' sentiments, attitudes and expectations that
Thanks... ultimately affect stock prices.

4. There are many theories that try to explain the way stock prices move the way they do. Unfortunately, there is no one theory that can explain everything.
I will try to discuss the things further on regular basis...
let me know if you have any queries...

Section 80 and MSME's

All tax terms(mentioned before) are specified under section 80 as specified by IT (Income Tax) norms like
In order to encourage savings, the government gives tax breaks on certain financial products under Section 80C of the Income Tax Act. Investments made under such schemes are referred to as 80C investments. Under this section, you can invest a maximum of Rs l lakhs (which will now be extended to 2 lakhs in next slab)and if you are in the highest tax bracket of 30%, you save a tax of Rs 30,000. The various investment options under this section include:

Provident Fund & Voluntary Provident Fund


Public Provident Fund
Equity-Linked Savings Scheme
Life Insurance Premiums
Five-Year Bank fixed deposits
And rest I have already explained previously in this blog itself about the various tax saving bonds and schemes


So,We all have studied the concept of small and big scale industries in earlier classes but in India we have lesser number of large scale industries.
Country like India is 60%business coming from small scale industries covering almost each and every part of the country along with that they contribute 40% of the national growth,giving employment to 525 million people and they are further divided into
One other important term comprising economy is
MSME's
i.e. Micro, Small and Medium Enterprise
An enterprise is engaged in manufacturing, producing, processing or persevering of goods or services.
A.)A micro enterprise is the one where investment in plant and machinery (kind of small scale industry and investment does not exceeds 25 lakhs)
B.)A small enterprise includes investment in plant and machinery is between 25 lakhs to 5 crores
C.)A medium enterprise is the one where investment in plant and machinery (original cost excluding land and building and the items)is between 5 crores to 10 crores.
India has total 27 million MSME's

about me n d simple fundas....

Hello people...

I am Shradha

I am doing computer engineering..bt actually got so sick of it then g

radually my interest developed in Economi and now I love monitoring Share Markets, Global moves….

So ,here in this blog I am going to explain how Markets and Economy work both nationally and internationally….but firstly we will start with the basics of doing trading…So that the people who are completely unaware of how these works,they’l get some knowledge atleast…

I hope you all will like the idea and concepts….

Starting from the essentials and then I’ l move on to the daily updates………..

Firstly there comes MONEY MARKET-it refers to the short term instruments like Govt. Securities, Treasury Bills, Bonds etc. its held by RBI-Reserve Bank of India.

Secondly there is CAPITAL MARKET which is the market for long term funds but different from the money markets, it implies for the large amount of capital ,here the amount of funds are raised by Individuals, Companies, Financial Agencies.etc

For that u must know what a share market is….it can have many definitions

Like it’s a place where all the securities, derivatives of different-different companies are kept and traded at specific prices….

The stock market is one of the most important sources for corporation to raise amount of funds with them. This allows business to be traded publically and to move up additional capital for expansion by selling shares to public.

.Instruments of trading in stocks

There can be many ways through which one can invest money, but make sure you invest the one which you can afford to lose also because it considers a very sensitive matter sometimes.

So the methods are:-

1.Shares-first is shares that most of us know. Like in today’s modern financial world,share trading is done through DEMAT account where we can buy and sell shares in electronic form and trade on them online.

And the profit or losses are credited or deducted into our bank account respectively.

2. Stock options –its different from share trading as it gives an opportunity to the owner with two choices namely:-

i.Buy(call)-gives the buyer of the option the right but not the obligation to buy the underlying at the strike price.

ii.Sell(put)- gives the buyer of the option the right but not the obligation to sell the underlying at the strike price.

3.ESOPS-i.e Employee Stock Options- which are awarded by a Company to their Employees as a form of incentive compensation.

4.ETF-Exchange Traded Funds that is they are not like shares so that you can buy or sell them but rather they have some net asset value. It’s a combination of mutual funds and investment fund.

Gold ETF are the best examples-it’s like Gold in paper form to be precise it’s gold which is purchased on ETF in paper form but it contains underlying asset value of the amount of Gold purchased.

5. IPO-Initial Public Offer-These are the first lot of shares issued by a company to public in order to raise their funds. Whenever a company releases an IPO, it involves underwriters who sell shares to public.

Once listing is done, shares are issued it allows a company to have large volumes of capital for their future growth and the new shareholders have a right to future profits distributed by the company and the right to a capital distribution in case of a suspension.

One more thing, Share Markets are been classifies into Primary Market in which finances are provided by issuing different types of securities to investors(IPO’s) and Secondary Market in which there is sale and purchase of shares in Stock Exchanges(Equity Shares, Convertible Bonds)

So those were some basics of mechanism of Share Market.Now let me tell you something about Indian Markets..

In India we have Stock Exchanges situated in Mumbai

1.Bombay Stock Exchange(BSE)- provides information on SENSEX

Sensex.. i.e. sensitive index it is called so because it gets its so indifferent and is calculated after every 10 seconds. It is calculated on account of 30 Indian Companies (BHEL,RELIANCE etc..) which are given 100 base points each and according to them it works.

2.National Stock Exchange(NSE)-provides information on NIFTY(younger brother of sensex you can say) because as SENSEX works on 100 base points, NIFTY works on 50 base points.

SENSEX and NIFTY are the indices for Indian Markets.

Market Regulator

SEBI-Securities and Exchange Board of India

It was set up by Government of India in 1992 so as to maintain Indian Markets, to keep in mind the benefit if investors, to maintain development in Economy in order to compete globally.

Now raises the question how these markets work, how they move….

See it depends like if the profits of a company increases, its reputation is good enough, it is doing trade growth is worth the effort,then automatically its shares will go up and vice-versa.

Like wise many factors are responsible as in:-

FII-Foreign Institutional Investors

Banks-Like the way they are holding all kind of rates…

All these are controlled by RBI(Reserve Bank of India) namely

1. CRR-Cash Reserve Ratio-It refers to the bank’s cash reserves which it has to keep with RBI in order to maintain to ensure bank’s liquidity (flow of money) and solvency.

2. SLR-Statutory Liquidity Ratio-It refers to the amount of gold along with some Corporate Bonds and Treasury Bills that RBI keeps with itself.

3. Repo Rate- Repo rate is the rate at which our banks borrow rupees from RBI. A reduction in the repo rate will help banks to get money at a cheaper rate.So in order to inject liquidity into the system.

4. Reverse Repo Rate- Reverse Repo rate is the rate at which Reserve Bank of India (RBI) borrows money from banks. It can cause the money to be drawn out of the banking system thereby absorbing out the liquidity.

5. BPLR-Basic Prime Lending Rate-at which RBI lends money to other banks

6. PLR-Prime Lending Rate-the basic rate at which other banks lend money to customers.

So that’s all for now..i think my information must be useful….

U can post ur comments,queries and suggestions even..

N u can follow me on twitter,ctch me on facebook as well….

Hey thnks fr all ur comments….

So people…

Here we go further and now I l let you know that how you get the benefits and profits from Share Trading and Stocks…

1. Suppose you buy some company’s 500 shares and the very next day it increased by Rs.5

Then if u will sell it you will get a profit of Rs.2500 but there will be deduction of some taxes along with that…namely bank’s cost, STT(securities transaction tax which’s kept by Govt. as a part of deduction on our profit and earnings) and if you trading from a private bank’s trading account then their must be some hidden charges so you must clarify all the terms and conditions and if you operating from a Broking Firm then it has cut some part of your profit as their charges.

2. Dividends- are recompense made by a corporation to its shareholder members , or as a bonus or its like the amount company distribute among its investors after getting profits. It’s a fixed amount allocated per share which are given at a fixed schedule.

And there are many ways for the analysis of a particular stock.Like fundamentally i.e. which’s based on the Economic Status, Financial Reports, and Balance Sheet of the company.

Check for the EPS ratio i.e. earnings per share. See its concept is,

For example, companies A and B both earn Rs.100, but company A has 10 shares, so each share holder has in effect earned Rs.10.

On the other hand, if company B has 50 shares and they too have earned Rs.100 then each shareholder has earned Rs.2.

So by this calculate which one can provide you with more profit.

Second one would be PEG ratio-price earnings to growth ratio-as it symbolizes from the name it’s the relative mark between the stock price, the company’s EPS and its expected growth,

PEG = (P/E) / (projected growth in earnings)

Technically, the lower the PEG number, the less you pay for each unit of future earnings growth. So, to put it very simply, we are interested in stocks with a low PEG value, because it will be cheaper and not higher one (expensive)

And lower the PEG means higher is the intensification.

Thanks all for your support and ideas…

Like my friend Abhijeet suggested me to include a glossary to explain the meanings of words….

1.Government Securities-Government securities are sovereign securities which are issued by the Reserve Bank of India on behalf of Government of India, it issue bonds to raise money for spending on infrastructure projects or for their day-to-day expenditure.

When investors buy a bond, they are loaning their money for a certain period of time to the issuer (i.e. the govt.) usually at a fixed rate of interest. In return, bond holders get back the loan amount at maturity; plus interest payments at periodical interval.

For more clarity, I will explain by an example that how this works:-

A client purchases 7.40% GOI 2012 for face value(i.e. the printed value over which surcharge and other taxes are levied) of Rs. 10 lakhs.@ Rs.101.80, i.e. the client pays Rs.101.80 for every unit of government security(means per Govt. security) having a face value of Rs. 100/- The settlement is due on October 3, 2010. What is the amount to be paid by the client?

The last interest payment date for the current year is 3rd May 2010. The calculation would be made as follows:

Face value of Rs. 10 lacs.@ Rs.101.80%.

Therefore the principal amount payable is Rs.10 lacs X 101.80% =Rs.10,18,000

Last interest payment date was May 3, 2010 and settlement date is October 3, 2010. Therefore the interest has to be paid for 150 days (including 3rd May, and excluding October 3, 2010)

(28 days of May, including 3rd May, up to 30th May + 30 days of June, July, August and September + 2 days of October). Since the settlement is on October 3, 2010, that date is excluded,that is how payment is calculated with respect to time,

Interest payable = 10 lacs X 7.40% X 150 = Rs. 30833.33.

360 X 100

Total amount payable by client (by Govt.) =10,18,000+30833.33=Rs. 10,48,833.33

I think all of you must be aware with the term

NSC-National Saving Certificates-It’s a kind of certificate issued in almost all Indian Post Offices, against the amount of money paid. Its Rate of interest is 8% compounded half yearly. Its very beneficial as these Certificates can be pledged as security against a loan to banks/ Govt. Institutions. Moreover it is exempted from taxes after its maturity.

Mutual funds- They come to the rescue, allowing investors the opportunity to profit from India without in-depth knowledge of the Indian market. With a mutual fund from India, investors can pool their money with that of others and benefit from the market and investing expertise of a professional manager.

These funds offer liquidity and the opportunity to purchase and sell shares at prices related to their net asset values (NAVs). They do not have a fixed maturity date.

For investing in Mutual Funds:-

1. Go Online and look for different plans like we have different companies in India like Birla Sun Life Insurance Fund, CholaMandlam Mutual Fund, HDFC Mutual Fund, ING Vyasa Mutual Fund etc.

2. Exposure to Markets - All you must have seen in certain advertisements on Television….

“Mutual Funds are subjected to Market Risks.”

This statement implies that the client before getting these funds should perform an analysis because ultimately it’s their money which’s being invested.

For this we need an R & T agent that is Registrar and Transfer agents. An R&T agent typically acts as a third-party on behalf of a fund house. An R&T agent also helps investors with information and detail on new fund offers, dividend distributions or even maturity dates in case of FMPs (fixed maturity plans).

Now we come to the Taxes part….

What is Tax?

Tax is the amount of money which is deducted from our salary/income and deposited to the Government to raise funds for the development of country.

Its managed by IT(Income Tax Department of India).It issues a PAN number(permanent account number)to the one who’s either employed in job, doing some business in simple words who’s got income in anyway. But it’s not like the one who’s a student, a housewife they can’t get it. It’s a necessary part which works as an ID (identity proof) in many ways.

E.g. for opening bank account, for doing various money transactions…

It works in the manner if you doing any kind of money operations through a bank(say)then whatever activity you do like deposit, withdrawal, trading. All the details are forwarded to IT through your PAN card number (which is been given to bank while opening the account).

Now discussing about the various types of TAXES:-

1. Corporate Tax-Indian companies pay on their profits.

Tax other than corporate tax-paid by non-corporate assesses...like us

2. FBT(fringe benefit tax)-given to employees on business expenses like on their foreign trips, attending trade fairs and other business conferences held abroad.

3. STT(Securities Transaction Tax)-tax on profits of sale of shares held over a year(long term capital gains tax) ,that is the tax which is to be paid by share holder when he/she sells its shares.

4. Customs-if you got anything brought from overseas. Govt. fill its own coffers n protects Indian industry by charging heavy duty on those products.

5. Union excise duty-tax levied on goods manufactured in India.

6. Service tax-extra cost added on sell cost and other services taken. The objective behind levying service tax is to reduce the degree of intensity of taxation on manufacturing and trade without forcing the government to compromise on the revenue needs

7. MAT (Minimum Alternative Tax)-Indian companies pay 30% tax on profits as per the IT-act. If the company’s liability is less than 10% den it has to pay MAT of 15% on its booked profit (which is to be stated earlier in the balance sheet of the company that how much profit it produces on an average), and even if once they are unable to give good results, still they are bounded to pay the minimum tax specified.

8. VAT (Value Added Tax)-Govt. levy this on goods at point of sale based on difference b/w value output n input used in producing it.It avoids cascading of taxes as product passes through different stages of production/value addition.

9. GST (Goods and Services tax)-contains all indirect taxes levied on goods at both centre n state level. It’s is a part of the proposed tax reforms that center round evolving an efficient and harmonized consumption tax system in the country.

That does all for now please do tell me if further any other basics are required….