The Market Mirror

WEALTH CREATORS???

This might come as an eye-opener for people who choose to downplay Sensex’s scintillating run as a “pure numbers game.” Indian equity markets have been one of the top performing markets when it comes to wealth creation, witnessing an 89 per cent expansion in the total market capitalisation in 2007.

Wealth creation


This compares to a Sensex return of 63 per cent on a year-to-date basis. Though markets such as China (whopping 215 per cent gain) are ahead of India in wealth creation, India (89 per cent) scores higher than markets such as Brazil (86 per cent), Thailand (51 per cent) and South Korea (49 per cent) in terms of expansion in market cap this year.

Overall, the total market cap for Indian stocks accounts for 2.5 per cent of the world market cap share – at over $1,540 billion (Rs 61 lakh crore) at current market levels. The total market capitalisation has grown 2.2 times from Rs 25,56,700 crore at the beginning of 2007.

While emerging markets have posted strong performances, the developed economies have lagged in wealth creation this year.

The market capitalisation of the UK and the US have grown by a measly 7 and 9 per cent, respectively, this year while Japan has seen its total investor wealth drop by three per cent. Index returns too have been higher for emerging markets as compared to the developed ones.







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lol dada, i really wanted to know but was too lazy to check that's what happens when market go one way, we get to lazy to do anything but just do sight seeing of our portfolio...

The Reserve Bank of India’s move to hike cash reserve ratio by 50 basis points is likely to reduce the availability of rupee-denominated capital for real estate developers.

According to industry insiders and bankers, this may, however, have a marginal impact on the cost of debt. Stock analysts felt the impact on the realty counters was negative in the face of restrictions on fund flow and cost implications.

The 14-stock BSE Realty Index finished up 2.36 per cent with 50 per cent advancing. DLF, with a top weightage of 36.04 per cent, was up 5.78 per cent owing to better results and the 100 per cent interim. The losers were Akruti Nirman, HDIL, Mahindra Gesco, Omaxe, Parsvnath, Peninsula and Phoenix. The other six were marginal gainers or movers for specific fundamental reasons.

“The RBI over the last two to three quarters has maintained a hard stance on lending to real estate developers. The CRR hike will make flow to the builders tighter. However, there will be a marginal impact on the cost of debt,” Mr Ankur Srivastava, Managing Director of DTZ, a global property consultancy firm, told Business Line. Real estate prices are unlikely to be affected as a result of the CRR hike, he maintained.

“The unwillingness of RBI to support the real estate (developers) sector has already created a situation of credit slowdown from banks. The move will only force developers to look more towards private equity, public issue, placement, overseas float or channel in money through SPVs and FCCBs, albeit at a relatively higher cost,” a Kolkata-based developer said on condition of anonymity.

However, bankers and analysts are apprehensive that the RBI, while going forward may restrict overseas funds to the sector, depending on the evolving dollar supply and currency scenario. According to Mr JC Sharma, Managing Director of Sobha Developers, “as private equity is not so cheap, banks have so far remained the preferred source for most developers. Cost of funding is not an issue for big developers; it’s the availability that matters” .

May hit small players

Amit, an avid investor in equity mutual funds, claims with great pride to his friend Yogesh that he has invested in 50- odd equity oriented schemes till date and this is the 51st investment.

He further boasts that he plans to take the number to 80 by the end of the year. Yogesh is surprised and wonders how to keep track of such a large portfolio. Amit says that he does not monitor his portfolio, but goes strictly by the advice given by his investment advisor.

This story may apply equally well to many mutual fund investors.

There is a common notion that the greater the diversification, the higher the gains, and the better the returns. However, investors have to watch out for the perils of over-diversification. Diversification involves costs — more paperwork, higher transaction costs and costs of opportunities lost.

Mutual Fund: A risk diversifier


Fund investing is different from stock investing. A mutual fund is a risk diversifier in itself. It invests in a basket of equities, enabling one to earn the benefits of investing in a diversified portfolio with even a small outlay. If you go for diversification even with mutual fund holdings, it is a distinct possibility that the very purpose of investment may be defeated.

This is because it can nullify the very purpose of fund investing, which is to outperform the benchmark. At any point of time, a few funds in your portfolio may be laggards or underperformers. This may pull down the overall performance of your MF investment.

The NFO trail


Fund houses, in a race for increasing the assets under management, have taken to rolling out a steady stream of new fund offers (NFOs). The advice received from your next door financial advisor is that your needs are best met by subscribing to NFOs of specialised mutual fund with fanciful names.

There are funds operating in different market cap segments — large, medium, small and micro-cap funds.

There is a fund for investing in companies that will benefit from increased infrastructure spending and one for only companies that will benefit from increased consumer spending. There are even funds that specialise in companies of all sizes, which are no different from plain diversified funds.

Investor’s dilemma


At the end of the day, you have an investor who ends up steadily adding to his fund portfolio so that he does not miss out on any of these ‘opportunities’.

This is due to lack of understanding of the mutual fund concept (some people approach them much like stocks). The concept of a mutual fund makes sense only when the individual investor does not have to figure out which companies to invest in or which fund to invest in.

If the predicament of choosing stocks is to be replaced by that of figuring out whether a given bit of money should go into this theme fund or that one, then nothing much has been achieved. This kind of investing doesn’t help anyone, except the mutual fund distributors.

What should the investor do?


A basket of more than 15 to 20 funds, each based on a different theme, is impossible to monitor and organise. Instead of investing a few thousand rupees in every new fund offer, a Systematic Investment Plan in funds with a good record may help you create a substantial asset base for yourself over a period of time. Investors not too savvy with themes or sectors should best stick to ‘diversified equity funds’ only.

Do remember equity investments give healthy returns in the long run. No other asset class can match them in terms of liquidity, returns, and convenience of investing. Hence have a systematic approach to investing in a basket of time-tested funds, this is the best way to build a solid portfolio......................HAPPY INVESTING!!!!!!!!!!!!!1

Upgrade from auto’s to ‘ultra’ small cars, Bajaj ishtyle!!!!!!!!!!!!!!!!!!!

News from one more ‘future’ car maker. Bajaj Auto, India’s leading two wheeler manufacturer, as most of us know, has got into tie-up with Nissan and Renault. And they are making a car which is going to be in real takkar with Tata Motors' small car.



Well, this joint venture is about making an ‘ultra’ low cost small car. Tata’s are making a small car and Bajaj is making an ultra small car. Something bigger than a two-wheeler but smaller than the usual cars? The general perception is that those on two-wheelers right now, will graduate into these small cars. The company has explained that this will be an upgrade from a three-wheeler to four-wheeler. From autorickshaw to car? So is Bajaj Auto making cars for their own customers, something like a forward integration?



Even the cost is being pegged around Tata’s small car. Renault and Nissan is looking at pegging the car at a tag of $3000 or Rs.1.17 lakhs as against Tata’s Rs.1 lakh cost, which, given the rising rupee, seems doubtful at this point of time.



The Tata small car is expected to be launched by next year, so Bajaj Auto, which is targeting a launch around 2010, will have ready reckoners from Tata’s small car, a list of do’s and don’ts. But then, Tata’s will have the advantage of being the first and that’s a big plus. Maruti is a standing example of how being first helps a company race ahead of the crowd.



The prototype of the ultra small car is expected to be ready by December 2007. Bajaj Auto’s in-house R&D team is developing a higher capacity engine and also the car’s body, chassis and dynamics. Now that’s what we call “hamara Bajaj!”

boy you remind me of that robonews which Traderji had put few months back...

Ahem...Traderji any hand in this one ?

Ha ha ha

lol czar

leave him in peace czar, he is certainly better than robonews which used to spawn new threads everytime.

pankaj

Hi
Can any one tell why Jindal Steel & Power is showing such a run up.
Regards
Rajiv

THE REFINED ELEPHANT.............


It is a company that has yet to commence production but its stock is valued higher than the combined worth of all its competitors put together. The market cap of Reliance Petroleum, at today’s closing price of Rs 246.30 on the BSE, beat the combined market cap of Indian Oil, Bharat Petroleum, Hindustan Petroleum, Essar Oil, MRPL, Chennai Petroleum and BRPL put together. ..........

While Reliance Petroleum’s market cap was Rs 1,10,835 crore, that of the others added up to Rs 1,05,204 crore ...........

Reliance Petroleum is building a 29-million-tonne refinery at Jamnagar, which is expected to be commissioned by the middle of next year. In comparison, the combined refining capacity of the competitors over which it is now valued is about 115 million tonnes. They also have a combined turnover of Rs 5,12,000 crore and net profit of over Rs 12,000 crore (as of 2006-07). Reliance Petroleum, as of now, has no operational income whatsoever.

The Reliance Petroleum stock has had a dream run in the last two months more than doubling its price from Rs 111.80 on August 30 to Rs 246.30 today. During the same period, Indian Oil’s share has appreciated by 25 per cent and Bharat Petroleum’s by 10 per cent while the Hindustan Petroleum stock has stayed flat..................................

Gold touches 18-month high on global cues
NEW DELHI: Tracking firm global cues, gold prices on Thursday zoomed to 18-month high of Rs 10,250 per ten gram on the bullion market here due to brisk buying by stockists and jewellery fabricators.

The market, already having firm tone on heavy demand for the current festival and marriage season, gathered momentum after reports of a steep rise in gold prices in international markets.

The gold in international markets reach closer to a 28-year high of $800 an ounce and pushed up the precious metal's rate to a level last seen in May 2006.

Global bullion markets turned strong after the US Federal Reserve cut interest rate by 25 basis points last night to 4.5 per cent to create more liquidity to avoid the subprime impact in the American housing sector.

Marketmen said heavy buying by stockists and jewellery fabricators for festivals such as Diwali, and marriage season boosted buying in the market.

They said crude oil surging to new record peaks and dollar weakening in forex markets also raised the demand for dollar-priced precious metals as a safe haven.

Standard gold and ornaments zoomed to touch over 18 month high level by adding Rs 150 each at Rs 10,250 and Rs 10,100 per ten grams respectively, a level last seen on May 19, 2006.

Sovereign also rose by Rs 150 at Rs 8,250 per piece of eight gram. Silver ready registered a gain of Rs 450 at Rs 19,100 per kilo and weekly-based delivery by Rs 50 at Rs 18,950 per kilo.

Silver coins were quoted higher by Rs 200 at Rs 24,900 for buying and Rs 25,000 for selling of 100 coins. -