Reliance Mutual Fund gets back the crown

The battle for the leadership position in the mutual fund industry continued in March, with Reliance Mutual Fund snatching back the crown it had ceded to Prudential ICICI MF the previous month, reports The Economic Times.

Reliance MF’s assets under management (AUM) as of March 31, 2007 was at Rs 46,307 crore, while Prudential ICICI MF was a distant second at Rs 37,870 crore.

However, as per latest numbers available on Amfi website, the total AUM of all MFs put together has fallen by around Rs 8,500 crore due to year-end related redemptions. Reliance Mutual was an exception to the trend, with its AUM rising around Rs 3,000 crore.

"The growth in our assets has been largely due to the seven odd FMPs which we launched last month which raised more than Rs 4,000 crore," says Vikrant Gugnani, president of Reliance Mutual. "Since liquid funds form a very small part of our corpus, we are partly insulated from the liquidity crunches affecting the system at the end of every quarter," he adds.

Gugnani says that a large part of investment in FMPs is coming from retail investors. A FMP is a type of a mutual fund that invests in debt financial instruments whose maturity date coincides with a specific time period indicated in advance by the fund, and hence the name ‘Fixed Maturity Plan’.

Meanwhile, advance tax outflows, banks and institutions pulling out funds on account of CRR hikes and tight liquidity have meant that most fund houses have seen a contraction in their assets under management. The huge outflow of Rs 30,000 crore towards the advance tax payments in March led to severe crunch in the money market, with the call money rates shooting up to a 10-year high of 60%.

This meant that banks and other financial instruments would prefer to invest directly in the market rather than coming via mutual funds. Call money is money on call or overnight funds borrowed by a bank to meet their daily asset-liability mismatch.

The benchmark indices also posted negative returns on a month to month basis, which further fuelled the shrinking in AUMs. Reliance MF has also become the first mutual fund house to cross $10 billion in assets under management.

Prudential ICICI MF is now ICICI Prudential MF

Prudential ICICI Mutual Fund will be called ICICI Prudential Mutual Fund from on Monday, reflecting the change in shareholding pattern of ICICI Bank and Prudential Plc in the asset management company and the trust company.

The names of the asset management company and the trust company have also been changed to ICICI Prudential Asset Management Company and ICICI Prudential Trust.

The names of schemes too will reflect the change with the prefix ICICI Prudential appearing before the specific scheme name, a company release said. However, there is no change in the composition of the board, management or operations.

"There are no changes whatsoever in the management, operations or individual roles. Our focus has always been the customer and our actions are always driven by our commitment to maximise customer outcome," company managing director Pankaj Razdan said in the release.

How is a Multi Manager different from an FoF?

Lets not digress. This discussion is not about the problems of a FoF per se, but about how Optimix has worked around this by adopting the Multi Manager Equity Fund approach. So in short, OMMEF will not invest in other mutual funds but instead take advice from them to create a portfolio of the scheme. Consequently, all the aforementioned tax benefits will be available. Also, this would be at no extra cost to the investor as the expense ratio will be similar to that applicable to normal equity oriented funds.
Possible limitations of the approach
(1) Possibility of a conflict of interest:
While the idea seems good on paper, there are some potential downsides. Fund management advice is coming essentially from other fund houses. I smell the possibility of a conflict of interest here. The reason is that at the end of the day, the customers of OMMEF and the advisor fund houses (whichever they are) are from the same pool. They are -- you and I – and eventually if OMMEF is performing better, then our monies would move to OMMEF rather than the advising fund houses. This is one area where Optimix will have to take care.
(2) Too many cooks syndrome:
The second area of concern is the "too many cooks syndrome". There is a reason why a ship has one master, a team has one captain and an army has one commander. The person at the helm is the one who provides the vision, guidance and leadership. When this comes from multiple diverse sources, it could lead to disorientation and chaos. Managing the managers may not prove to be an easy task as they may be left pointing to each other when accountability for performance or lack thereof arises.
The upside
That being said, the above weakness can well prove to be strength if harnessed and managed well. Just like many hands make less work, many minds should together be able to arrive at better and more informed decisions. OMMEF provides a whole other level of risk diversification for investors. A mutual fund is essentially a risk diversification tool as the investment is spread over a number of stocks. OMMEF will spread the investment over fund managers too. One may fail, the possibility of all failing is that much lesser.
Conclusion
OMMEF is the second such ‘multi manager’ offering from Optimix, the first being Optimix RetireInvest Fund Series 1 (ORIFS1). The latter scheme too, being launched only in December, its too early to tell whether this approach will work well or not. As mentioned above, it would depend upon the selection of the fund managers and how well Optimix is able to oversee them. However, at the end of the day, I feel the positives outweigh the negatives and investors looking to invest in a portfolio arrived at by the best minds in the industry with the associated tax benefits should take exposure. Issue closes on April 5.

Review: Optimix Multi Manager Equity Fund

Optimix Multi Manager Equity Fund is an equity fund where the fund management function will be largely outsourced. Normally a mutual fund scheme has a single fund manager. Though he may have a team working with him, ultimately the decision to invest rests with him as a single individual. However, in a ‘Multi Manager’ Fund, as the name suggests, the portfolio is constructed based on the inputs of multiple fund managers.

This is how it will work. Optimix will identify the best, top performing fund houses and portfolio managers and construct the portfolio of the scheme based on their inputs. Up to 50% to 60% of the portfolio of OMMEF will be constructed based on the recommendations of what Optimix calls the core managers. The balance will be done based on the advice of ‘satellite managers’. Specialists will be chosen as per the investment type i.e. Large Cap, Mid cap or Small cap and even on investment style i.e. Growth, Value or Blended. That being said, Optimix will retain the discretion to decide on the allocation of any particular style or type of investment in the portfolio depending upon its evaluation and view of the market.

Analysis

Optimix as a fund house started its operations as a specialist in Fund of Funds (FoF). A FoF is a scheme that invests in other mutual fund schemes as per its evaluation of the best on offer. It does not directly invest in equity.

A FoF is a good concept. It resolves the main dilemma of any investor --- amongst the plethora of options, in which mutual fund scheme do I invest in? Eventually, he takes a decision based on his limited understanding or upon the advice of an agent who may be more motivated by the commissions he earns than the investor’s interest. Of course, not all intermediaries are guilty of this practice but deciding upon which advice is really unbiased and which is not is another problem altogether for the investor.


So here was a readymade solution where Optimix as a fund house did the hard work for the investor through the mechanism of a FoF. One would have thought that the government would have encouraged this idea given the fact that it protects investor interest. However, this was not to be. A FoF is still being treated as a lesser child by denying it tax benefits that a normal equity scheme gets. And what are these?

Long-term capital gains are tax-free only upon sale of an equity-oriented mutual fund. Dividend is tax-free only for equity oriented mutual fund. Short-term capital gains are taxed at the beneficial 10% rate only for equity oriented mutual fund. And what is an equity oriented mutual fund? One which invests in equity shares. Now, a FoF technically doesn’t invest in equity shares, it invests in other equity oriented mutual funds. Therefore, going strictly by the words of the law, tax benefits stand denied. However, in spirit, FoF investments are no different than the ones made by a normal equity oriented scheme. But so far, the government has been turning a blind eye to this blatant injustice. And an idea, which is not only good for investors but also for the health of the market, in general is dying a slow but sure death.

Sensex may touch 11,500 on downside in April: Experts

The markets ended with marginal gains on the last trading day of the week. Opening week, markets picked up some momentum during the noon trades, but could not sustain its position at the higher levels and ended the day with slim gains.
However, the midcap and smallcap indices outperformed the broader markets. The volumes were relatively low even in today's session. Metal stocks were star performers followed by banking and capital good stocks. Tata Steel, Reliance Energy, Grasim, Hindalco, ACC were among the gainers on the indices.
On weekly basis, the indices end in red down about 2% mainly due to the carnage on Monday.
Sensex closed up 69.31 points or 0.54% to end the day at 12856.08, while the Nifty up 18.75 points or 0.50% at 3752. The BSE Midcap Index ended at 5,319.95 up 39.88 points or 0.76%. The BSE Smallcap Index ended at 6,456.37 up 70 points or 1.1%.

About 1623 shares advanced, 840 shares declined, and 67 shares are unchanged.
Dilip Bhat of Prabhudas Liladher feels that people are keenly anticipating the pronouncements for 2007-08. According to him, people are not in a hurry to build their position, which will probably pan out over the next one-and-a-half to two months, till results start flowing in and companies start giving guidance - at that time, everyone would probe the management about the impact of the particular measures that they have taken.
"So I think in the coming few weeks perhaps the best policy would be to wait and possibly if you are really a long-term investor then if the markets come off then one can probably buy on a selective basis," he sums up.

Bhat is confident that Q4 will clearly be a good quarter. For the month of April, he expects anywhere between the 11,500-12,000 range on the downward side, while on the upside, he sees about 12,700-12,800.

Investment advisor PN Vijay is relieved to see some confidence and composure returning to a truncated week. “The advance decline ratios have been very encouraging for the last three days; yesterday it was 3:1, today it is almost 5:1, which means there is broad participation, I am not too worried about the lack of volumes because that volume is noise volume of intra-day traders. To round it all almost all the sectors are participating, like banking, metal, real estate, cement, all joining the party. So it’s a good day for the market,” he says.

As far expectations from the earnings go, he feels that it is difficult to make a call, as the global forces as well as domestic inflation have presently hit the market. Bhat says, “Generally people are expecting this quarter earnings to be extremely good even for beaten down sectors like cement, except for banking, which will get it on the back side. Even autos will have good earnings for this quarter.".

In case of bad results, markets would plummet, but if there are decent results, he expects people to check if inflation and interest rates are coming down, which is when the bull market will start reassuring itself.

How to become a prudent investor?

Past Performance and Maximum Returns are the two most dangerous terms in the world of equity investing. However, understanding these concepts well will take you one step forward to becoming a prudent investor.

"I want to maximize my returns". I cannot say how many times I have come across this statement when I ask people their objectives. I am sure most of the readers of this article might have this objective in their mind.


Mutual Fund Houses through agents, distributors, advisors, and advertisements in personal finance magazines, billboards and television tend to do a rock show of their past performance. It’s sad to know that the core focus of mutual fund advertising is past performance and yet it’s the only thing that these funds cannot sell and investors cannot buy. Can the fund sell you a 40% return p.a of the last 5 years for the next 5 years? Clearly the answer is ‘No’. So what does a fund mean when it suggests a 40% performance in 5 years? Does it mean that the next 5 years are going to be similar or even closer to this? Though we all know the answer to this, somewhere these past figures influence our decision and help us focus only on the returns part of the equation.
Now ask the same person about his risk tolerance or specifically "How much short term loss can you tolerate to achieve your objectives" and the answer can be from 0 to 10% depending on whom you are talking to. People cannot digest the fact that there can be short term loss when investing in equity but in reality it can be as high as 35-38% as we have all witnessed in May 2006 and 20% in a few weeks recently or more as amply demonstrated in 2000 technology meltdown. You will have read it several times that time in the market is more important than timing the market. In the short run, equities can go up and down but in the long run and in an era of growth & opportunity, equity will go northwards. Therefore it is very important to take stock of your Investment Time Horizon. It is one of the most important variables that will help determine how much money you should allocate to equity.

Author Jeremy Siegel in his book “Stocks for the Long Run” has the following table and an explanation of the table contents.

Risk	Holding Period
Tolerance	1 year	5 years	10 years	30 years
Ultra-conservative (Minimum Risk)	7.0%	25.0%	40.6%	71.3%
Conservative	25.0%	42.4%	61.3%	89.7%
Moderate	50.0%	62.7%	86.0%	112.9%
Risk-taking	75.0%	77.0%	104.3%	131.5%

The above table indicates the percentage of an investor’s portfolio that should be in equity based on the investor’s risk tolerance and time horizon. Several classes of investors were analyzed right from the ultraconservative who demand maximum safety no matter whatever be the return to the aggressive who is willing to take additional risks for extra returns. If you read the table carefully, you will see that the recommended equity allocation increases dramatically as the holding period increases. Even the ultraconservative can have around 3/4th of his/her portfolio in equities if the holding period is 30 years or more. Conservative investors should have nearly 90% equity exposure for a 30-year or more holding period and aggressive investors can have more than 100% exposure to equity. This allocation can be achieved by borrowing or leveraging an all equity portfolio.
This does not mean that you should have the same asset allocation as given above. An individual’s asset allocation will vary according to his liquidity need, goals , risk profile and time horizon. So opt for one that gives you an ability to sleep well during turbulent times.

And finally do not give undue importance to PAST PERFORMANCE.
There are two track records for any investment. The first one that is flashed everywhere has just ended, and hence it is known as the PAST PERFORMANCE. It can only tell you how the fund has performed in the past several weeks, months or years and the risks the fund manager has taken to achieve those returns. But it cannot tell you anything about it’s future performance. The second track record will start the moment you invest your money. This is the only track record that matters and is important to you, and it may or may not be similar to its past performance.
Just because you have earned fabulous returns in the past following a mid cap strategy does not necessarily mean it will fetch the same results. But somehow our mind is trained to believe that this is going to be the case and decisions are generally based on this theory.
One of the statements that I have come across in a book on Wealth Management makes a brilliant statement “Uncared wealth is one risk you can’t afford. Money has plenty of natural enemies-inflation, politics and ignorance”. To this list I add my two paise (read cents) “Past Perfomance and Maximum Returns”.

Trading Tips

These are some of the trading rules which are universally valid for stock trading. Take a print out and nail it on your desk.

Rules:
Never risk more than 10% of your trading capital in a single trade.
Always use stop loss orders.( Here you should know your loss you can give in a situation where the trade starts going against you.)
Never do overtrading.
Never let a profit run into a loss.
Don't enter a trade if you are unsure of the trend.
When in doubt, get out, and don't get in when in doubt.
Only trade active markets.
Distribute your risks equally among different markets.
Never limit your orders. Trade at the markets.
Extra monies from successful trades should be placed in a separate account.
Never trade to scalp a profit.
Never average a loss.
Never get out of the market because you have lost patience, or get in because you are anxiously waiting.
Avoid taking small profits and large losses.
Never cancel a stop loss after you have placed it.
Avoid getting in and out of the market too soon.
Be willing to make money from both sides of the market.
Never buy or sell just because the price is low or high.
Never hedge a losing position.
Never change your position without a good reason.
Avoid trading after long periods of success or failure.
Don't try to guess tops or bottoms.
Don't follow a blind man's advice.
Avoid getting in wrong and out wrong; or getting in right and out wrong. This is making a double mistake.
When you lose don't blame it on luck.

How SAM WALMART ruled

How did Sam Walton, the founder of Wal-Mart, overtake retailing behemoths like Kmart, Sears, Woolworths, Service Merchandise and Montgomery Ward?

I think Sam Walton's competitors and his early suppliers underestimated his passion and commitment for his rural retailing discounting strategy. Because Sam Walton started his business by focusing on the underserved customers in rural America he "flew below the competitive radar". Kmart, Sears, Woolworths, Service Merchandise and Montgomery Ward all opened stores in metropolitan areas while Sam Walton challenged the status quo by opening big stores in small towns. It was a commonly held belief at that time that there wasn't enough business in small towns to justify opening "big box" stores. As it turned out the market area for his stores drew customers from a 50 mile radius. That's how attractive his low price strategy was in small town America. Sam Walton intentionally presented himself to the retail world as a small time operator lulling his larger competitors into a false sense of security. As it turns out in the early days his competitors didn't take him seriously. By the time his competitors figured out Wal-Mart was a real competitor it was too late. Sam Walton had already established his Every Day Low Prices (EDLP) Strategy in his rural stores in the southern USA, and by the time he embarked on opening stores in metropolitan areas he had the financial wherewithal to compete very effectively. Sam Walton's focus on low prices, exceeding customer expectations and fanatical focus on controlling expenses allowed him to steal market share from his larger competitors who were slow to change. By the time they figured out that Sam Walton had shifted the traditional retail paradigm his competitors were unable to adapt.

Sam Walton reportedly followed a set of rules to which he has credited his success. What are his 10 rules? Sam Walton credited his "10 Rules" as the secret behind his success in business and in life. Here is the list:


Rule #1:
COMMIT to achieving success and always be passionate

Rule #2:
SHARE your success with those who have helped you

Rule #3:
MOTIVATE yourself and others to achieve your dreams

Rule #4:
COMMUNICATE with people and show you care

Rule #5:
APPRECIATE and recognise people for their effort and results

Rule #6:
CELEBRATE your own and other's accomplishments

Rule #7:
LISTEN to others and learn from their ideas

Rule #8:
EXCEED the expectations of others by setting high standards

Rule #9:
CONTROL your expenses and save your way to prosperity

Rule #10:
SWIM UPSTREAM, be different, and challenge the status quo

As you look closely at his 10 Rules you will see that one of his rules is about commitment as a leader, one is about serving customers, one is about controlling expenses, one is about risk-taking and six are about how to treat people.

Given Sam Walton's regard for his people, this must have had strong implications on your role as Director of People at Wal-Mart's corporate HQ. How did Sam Walton's leadership guide you personally during your tenure with the company?

Sam Walton's high regard for people put a great deal of additional pressure on my role as Director of People. At Wal-Mart Sam Walton called his Human Resources department the "People Division." In actuality, Mr Sam (we all called him Mr Sam out of respect) felt that "managing human resources" was the responsibility of every manager and supervisor in the company. He told me that he wouldn't need a "People Division" if the management team would use "golden rule" values by always treating the employees as business partners or "associates." To this day Wal-Mart leaders refer their employees as associates. While I was there Sam Walton focused the People Division on staffing, training and associate relations. Because he held people in such high regard it placed a great deal of pressure on everyone in the People Division to live up to his expectations. We focused on three areas: Hiring the best, providing the best training and being the best place to work. The cultural mantra at Wal-Mart: "Our People Make the Difference." This saying was emblazoned across the sides of trucks and posted in the break rooms in the distribution centers and stores. Mr. Sam once said, "If you take care of the associates (employees), the associates (employees) will take care of the customers and the business will take care of itself."

Are the challenges that Wal-Mart faces today similar to those you faced when you were Director of People there?

In terms of the sheer size of the company its executives face daunting challenges never faced by a leadership team before. In terms of people and serving customers the challenges remain the same. Wal-Mart teaches its leadership team to simplify everything they do. They are taught to think about one store at a time, one department at a

time and one customer at a time, otherwise the tasks at hand are overwhelming. The key to the Wal-Mart strategy then and now is "simplification." Its leaders are taught to simplify everything they do with its strategy, "Think Small, Start Small and Scale Up." The difference in approach is in keeping with Sam Walton's rule about "swimming upstream" by challenging the approach company leaders take to solve problems. He used to tell us, "If everyone else in business is doing it this way why don't we try doing it the opposite way!" He believed by taking this approach you were likely to find the sustainable competitive advantage.

The world is a very different place today from when Sam Walton came up with these rules. How applicable are they still?

A company could follow all these rules but still not be as successful as Wal-Mart. In fact, we haven't seen another Wal-Mart. What could be the missing ingredients? Rob Walton, who is the chairman of the board and the son of Sam Walton, wrote the foreword for my book: The 10 Rules of Sam Walton. He stated, "As large as Wal-Mart has become, we still find ourselves referring to Dad's 'Rules for a Successful Business,' embodied in this book." The 10 Rules are timeless because they are, for the most part, simple commonsense notions. Sam Walton would be the first to tell you that simple ideas have the best chance of being understood, followed and executed. That's the beauty of the simplicity of his rules. Sam Walton's goal was to make Wal-Mart the best retailer around not the biggest. His idea of success was providing the right products at the lowest price and providing great service. If the leaders at other companies are willing to focus on running an excellent operation, treating their people right and serving their customers they can be just as successful. I know that to be truly successful in any endeavour requires personal commitment on the part of the leader, commitment on the part of the followers and a belief in a dream. The 10 rules are a blueprint for success, which catapulted Sam Walton from a single store owner in the Ozark Mountains of Arkansas to become the most successful merchant in the history of the world. Will any other company or individual business leader achieve what Sam Walton has achieved? If an ordinary man like Sam Walton can achieve the extraordinary, it is possible someone else can too.


Michael Bergdahl is an international speaker, author and business coach. He was Director of People for Wal-Mart's headquarters in Bentonville, Arkansas, where he worked directly with Sam Walton.

Central Bank shortlists 5 bankers for public offer

Central Bank of India, a mid-sized Mumbai-based public sector bank, has finalised five merchant bankers for its initial public offer. The IPO, expected by end-May 2007, is expected to raise around Rs 1,000 crore equity capital.

Central Bank of India, a mid-sized Mumbai-based public sector bank, has finalised five merchant bankers for its initial public offer (IPO). The IPO, expected by end-May 2007, is expected to raise around Rs 1,000 crore equity capital.

The bank has received all regulatory clearances for converting about 71% of its large equity base into preference shares. The proposal for conversion of shares, which was stuck at the Reserve Bank of India (RBI), was recently cleared by the government.

The RBI was averse to allowing banks to convert 70% of their equity into preference shares. Earlier, the RBI had sought to put 40% cap on conversion of equity into preference shares.

Central Bank officials said of the Rs 1,124.14 crore equity capital, Rs 800 crore would be converted into preference shares. The conversion will lower the bank’s paid-up equity capital to Rs 324.14, which will help the bank price its IPO better as its earnings per share improve.

The bank has appointed IDBI Capital markets, Kotak Securities, ICICI Securities, Citigroup and Enam Financials as the lead book-runners.

The bank is negotiating with the government for the coupon rate on the preference shares. The government wants a floating coupon rate of 100 basis points above the Reserve Bank of India’s (RBI) repo rate, which is currently at 7.75%. The RBI lends overnight funds to banks at the repo rate.

Central Bank, which had planned to get listed in the fourth quarter of 2006-07, as on December 31, 2006, had a total business of Rs 1,21,301 crore, comprising deposits of Rs 74,974 crore and advances of Rs 46,327 crore, reports Business Standard.

Coal India public offer likely in FY08

Coal India is likely to enter capital markets with a public offer in FY08.

CIL has an equity base of Rs 6,316 crore. It is the holding company of seven coal producing companies.

They are: Northern Coalfields, South Eastern Coalfields, Western Coalfields, Mahanadi Coalfields, Eastern Coalfields, Bharat Coking Coal and Central Coalfields.

CIL is also the holding company of Coal Mining and Development Planning Institution, the R&D arm.

According to the plans, CIL is likely to go public and not its subsidiaries.

SEBI says can probe complaints against DLF

Doing a U-turn on the DLF IPO case, market regulator SEBI has submitted before the Delhi High Court that it can probe complaints against companies that intend to get listed.

"There is no direct bar (on investigation) in the case of non-listed companies," the SEBI counsel informed the bench headed by Justice Tirath Singh Thakur in response to a query whether there was any direct bar against such probe in the SEBI Act.

Securities and Exchange Board of India, earlier in its affidavit, had said that it cannot investigate complaints made against the real estate major as it was an unlisted company.


It had then said that the Ministry of Company Affairs was the right authority to deal with grievances in case of non- listed companies.

SEBI's U-turn came yesterday during hearing on a PIL by Society for Consumers' Investors and Protection (SCIP), which had sought a probe into DLF's conversion of debentures into equity shares.

The counsel for petitioner B R Schadeva cited the provisions under SEBI Act and Companies Act, which said that SEBI can investigate complaints against those companies which intend to get listed. In this case, DLF had filed red herring prospectus with SEBI, which clearly showed that the company wanted to get listed on the exchange.

The court later declined to pass any interim order on staying the proposed over Rs 10,000 crore IPO by DLF, saying that "you (petitioner) have always remedy available to approach this court."

Rupee near eight-year high of 42.90/Dollar

The Rupee has touched near eight-year high of Rs 42.90/dollar.

At 10:28 am, the rupee is trading at Rs 42.90 per dollar against its previous close of Rs 43.0875.

"Rupee is expected to be traded sronger in the range of Rs 42.95 to Rs 43.10 on the back of strong inflows. It would take cue from the stock market. Traders are watching for RBI's activity in the market, said Amit Agarwal, BNP Paribas.

Asian And US markets

Asian Markets:

Asian markets are trading higher, Japan's Nikkei surged 1.53% or 264.60 points at 17,508.65, Hong Kong's Heng Seng gained 0.79% or 158.82 points at 20,161.52, Taiwan's Taiwan Weighted advanced 0.68% or 53.63 points at 7,986.54, Singapore's Straits Times rose 0.80% or 26.44 points at 3,314.80 and South Korea's Seoul Composite was up 1.14% or 16.71 points at 1,480.46.

US Market:

The Dow rose 128 points, or 1.03%, to 12,510.30 -- its highest close since Feb. 26, the day before it made its 416-point plunge. The blue chip index is back in positive territory for the year, and 276 points below its record close of 12,786.64, reached Feb. 20.

Mkt ends higher for 2nd straight day: HDFC outperforms

The markets ended higher for the second straight session on the back of buying seen in scrips across sectors. The markets traded withThe rally was inline with Asian markets. Capital goods, power, pharma and metal stocks were among the major gainers. Select auto stocks were under pressure. The volumes were very low and the midcap index underperformed the broader markets. BHEL and NTPC continued the uptrend and were the top gainers and the other gainers were HDFC and Zee Entertainment.

Sensex closed up 162.19 points or 1.28% at 12786.77, and the Nifty up 42.60 points or 1.15% at 3733.25.

About 1535 shares have advanced, 893 shares declined, and 79 shares are unchanged.

The BSE Midcap Index ended at 5,280.07 up 43.7 points or 0.83%.
The BSE Smallcap Index ended at 6,386.48 up 73 points or 1.2%.
The BSE Bankex was up 1.2% at 6,253.61. Centurion BoP, ICICI Bank, HDFC Bank, Kotak Mahindra, Bank of Baroda moved upwards.
The BSE Capital Goods Index was up 2.2% at 8,912.32. Praj Industries, Crompton Greave, Aban Offshore, BHEL, Bharat Elec closed higher.
The BSE Health Care Index was up 2% at 3,645.99. Novartis India, Nicholas Pirama, Divis Labs, Dr Reddys Labs, Aurobindo Pharm closed higher.
The BSE Metal Index closed at 8,366.76 up 1.8%. Guj NRE Coke, Hind Zinc, Sterlite Ind, Tata Steel, Welspun Guj advanced higher.
The BSE FMCG Index closed flat at 1,713.11. Colgate, Nestle, Tata Tea, Nirma closed higher.
BSE Oil and Gas Index closed higher at 6,371.32 up 1.3%. GAIL, Reliance, Reliance Natura, BPCL ended in green.
The BSE IT Index gained 1% at 4,814.24. I-Flex Solution, HCL Tech, Patni Computer, Wipro closed higher.
The BSE Auto Index closed at 4,591.92 down 0.4%.
The NSE cash turnover was at Rs 6966.06 crore and the NSE F&O turnover was at Rs 22068.38 crore. The BSE cash turnover was Rs 3219.45 crore. Total market wide turnover was at Rs 32253.89 crore.

Tips on how to earn money with a home business

Everyone wants tips on how to earn money with a home based business. It never seems to amaze me that a lot of people with a work at home business are not earning some money.
When I got to question a few of these people about why they are not earning any money, I found out why!

People, you have to do something to earn something! Just because you have joined a MLM or affiliate program, don’t think just by sitting back you will earn some money. NOT TRUE!!!
So I have tried to make it easy on these people by coming up with the necessary things you need to do to earn money from home.

If you honestly do these things, and still don’t make any money then maybe a home business is not for you. But you need to be honest about this and put out the effort.

1. When you first start with a work at home business, set out at least an hour a day devoted to your business.
2. Spend the first day advertising your business on the free classified websites, there are literally thousands of these sites to advertise on.
3. If you have a website for your business, then spend day 2 submitting your website to all of the search engines, Yahoo, MSN, Google, AOL, etc.
4. Day 3 start submitting to ezines, this is a very good way to promote your business.
5. Day 4 start by writing an article to use in the yahoo groups. And with this article your can promote your website at the end of the article.
6. Day 5 submit your business to the various business message boards, there are lots out there that let you post an ad for your home business.
7. Day 6 you will want to start advancing up and checking for “Leads” that are interested in starting a home business. When you find a good source you will want to start emailing them. To do this you will want a good auto responder to handle the high volume of emails.
8. Day 7 you will want to start this process all over again.
You can do these steps in any order, but remember persistence is the key. Spend an hour a day for the first 30 days on these 7 items. Each day promote your business in a different way.

Within 30 days you will start to see the rewards of your work that you only spent 7-10 hours a week on!

Further more don’t expect to get rich overnight. The businesses offering “pie in the sky” so to speak do yourself a favor and stay away from those type of offers.

Do yourself a favor when you get involved with a work at home business. You owe it to yourself to give it an honest try. Nothing will happen, if you don’t do anything.

Some more downside before stability returns

The markets opened with a lower gap yesterday and proceeded to sink lower through the day. The benchmark indices lost over 4.5% as the markets factored in the rate hike by the RBI. The traded volumes were lower than the previous session as the retail players withdrew from the fray in a state of shock.

The market breadth was highly negative as the BSE and NSE combined figures were 1 : 3 and the capitalisation of the breadth was also negative.

The indices continued to slide till the fag end of the session and the market breadth remained negative. While these are indicators of weakness, a pullback dead cat bounce cannot be ruled out for Tuesday. Traders must note that these pullbacks are very unreliable and terminate without a warning, thereby trapping amateur traders. Since the 3792 support level advocated for Monday did not hold (Friday's note was composed without the CRR trigger factored in) and the index shaved off almost 5 % on an intraday basis, the likelihood of further nervousness and downsides cannot be ruled out in the coming few sessions. The 3555 double bottom support does not appear to be sacrosanct anymore and the fall below this threshold will confirm a fresh selling wave unfolding upon the markets.

The coming session will witness intraday levels of 3712 on upsides in case the markets bounce for any reason. Declines may violate the 3550 levels shortly.

The outlook for the markets today is that of absolute caution as the charts suggest some more downsides before stability returns. Stay away from bottom fishing for now.

Tech stocks could lose 12-15% in 3-4 weeks

The market is not looking to stabilise at a particular level. It is too volatile now a days. Since February, the Sensex has slipped over 8% and the Nifty by 7.67% till Monday, March 26, 2007.
In the same period, BSE IT Index lost 6.33%. Some technology stocks could lose 12-15% in the next 3-4 weeks, said Technical Analyst Gautam Shah of JMMS Technicals. He also believes that the next leg of the downtrend has begun.

In an interview , Shah said, "I guess clearly there is something wrong somewhere in technology. Last week, you saw the Sensex gain 1000 points and Infosys just did not move. So I guess there is something on the charts, which suggests that some of these technology stocks could lose as much as 12-15% in the next 3-4 weeks, we are maintaining our view."

"Therefore, investors holding on to some of the technology stocks can either just get out, maybe buy back 15% lower or look to hedge their positions because technology and telecom, which have been the best performers in the last one year are likely to be the worst hit in the next few months", he suggests.

Today technology stocks have been hammered more than other stocks. The BSE IT Index is down nearly 3%, which includes, HCL Technologies is the top loser, down nearly 5.5% following TCS by 4.8% and Patni by 4.3%.

Should investors buy bank stocks now?

With the recent hike in CRR by the Reserve Bank of India, bank stocks are taking it on the chin. The Bankex is down about 5-6% today, and in the last few months, banks have corrected significantly. Is this the best opportunity to buy bank stocks?
Anil Manghnani of Modern Shares and Stock Brokers believes that such a dip warrants a buy in the banking space. He mentions, "If you look at many of the PSU stocks, they already, in the recent fall, came to last June levels. So most of the interest rate negative news has already been factored into the prices. A fall in the banking stocks, just looking at the longer term charts on the Bankex still warrants a buy."
Head of Research at Karvy Stock Broking, Hemindra Hazari sees great value in banking stocks at current levels and recommends to buy into this weakness. He advises, "Our recommendation to our clients is to buy into this weakness because I expect banks to announce sharp increases in their PLRs with a minimum PLR increase expected of about 50 bps. Thereafter, you could see some correction in the net interest margin."
More importantly, he observes that some of the PSU banks like Bank of Baroda, Union Bank, Indian Bank, are trading very close to the FY07 book values. He adds, "This indicates that the market expects banks to report losses kind of FY08, which I think is a tall order because in the worse case scenario, you could see profits declining. But I do not see losses coming in. Therefore, we see great value in these bank stocks and that’s what we are recommending to our clients."
However, Rajen Shah of Angel Broking holds a different view. According to him, one should stay away from banking stocks and that bank stocks may face another 5-7% drop. Advises Shah, "I would keep away from banking stocks and that is what we have been advising for the past four months to actually be away from this sector, which is actually very sensitive to rate hikes. We are seeing the hike in the rates actually taking its toll on the banking stocks. I would still be cautious on the banking stocks. Maybe we could even possibly see another 5-7% kind of drop in banking stocks"

SpiceJet hopes to break even by FY08

SpiceJet has announced its third quarter results. The company’s third quarter operating revenues stood at Rs 246 crore versus Rs 132 crore on YoY basis. Its net loss stood at Rs 21 crore as compared with profit of Rs 4.3 crore, YoY.

MD and CEO of SpiceJet, Siddhanta Sharma states that they will strive for break even in FY08. Spice Jet hopes to bring non fuel costs down by 7-8% and bring fleet from 11 to 19 aircrafts by March '08. He adds that the load factor stands at 77% and is line with last year.
According to him, every 1% increase in fuel cost hits bottomline by 4%. He informs that they have decided to stick to the surchage of Rs 750 and have not rolled back any congestion fee.

Mkts may fall hard today; RBI move to slow economy down

The RBI injected a lot of interesting news into the financial markets on Friday evening and this is the morning when the markets will react to it first. The reaction will not be good.
The bond markets and the forex markets have got a flight because they are trading today because they would have taken or the bond markets would have certainly taken a bit of a hit but stocks markets, I fear, may not be spared.
Brace yourself for a bit of a whammy this morning led by all banking stocks. The RBI’s move will have deep ramifications for the entire market and the economy.
I think we will fall quite hard today. What has happened on Friday is indicative of what might continue to happen for the next 6-12 months and the sooner you recognize what is happening, the better for you.
Things are changing very fast and these are not good things for equity markets. Interest rates have moved quite a bit in the last 6-9 months and there is no indication that interest rates have stopped hardening much that people would like to believe.
This will slow the economy down, this will hit lot of sectors quite directly. I think from an equity market perspective, both from a macro perspective that rates have gone up and higher interest rates are bad news for equities as also the sectoral impact, which might happen for many sectors is not good news.
I think now you need to sit back, take a hard look and ask yourself some hard questions on what this means for equity markets and you will see the fist knee jerk reaction today but the bigger ramifications might unfold over the next few weeks as the market grapples with how exactly the environment is changed and is about to change.
We will not get over this with a just one day sell off; I do not know how much we will sell off today 200-400 points that’s anybody’s guess but more importantly this is not a one day problem this will linger in the market for a while now. So I think we are getting into a sticky patch; we have already got into a sticky patch and the sticky patch is getting elongated with every such announcement, which is coming in from the Central Bank.
Impact on banks:
I think banks will be slammed for the right reasons. Don’t expect the PSU bank Chairman to say much on this because sometimes they stay in denial.
ICICI Bank has come out and said that they are going to raise home loan rates by 1%. Take a firm cue from that,that rates are going to go up across the system unless the FM calls the banks and tells them not to.
The Bank of Baroda Chairman expressed a great deal of satisfaction about the fact that credit growth has not slowed down. I think it is quite ironic because as long he keeps on saying this, the RBI will not stop hardening rates.
So the end game is clear,RBI is the whip master and it will go on cracking the whip till credit growth goes down, whatever the PSU bank Chairman have to say.
It is a sticky situation for bank stocks. I know many bank analysts are in denial about this for the last three months and many said, that it is great time to buy banks three months bank and since then most banks have come off 25-30%. They are still saying it is a great time to buy banks but banks do not perform in a rising interest rate scenario and one can keep denying that but it will not perform.
So there is more pain for banks today and what we are discussing right now is just the tip of ice berg in terms of the pain that we can see, which is higher interest rates, lower margins, lower credit growth but what we cannot see is whether, because of some cooldown in asset prices or because of interest rates going up, one can potentially sometime in the next 6 -12 months be presented with a NPA problem and if that happens then you have to re-look at banks once again and so temporarily they will fall, regardless of what price to book values are like, but by how much I do not know.

Sensex sees 2nd biggest single day pt fall ever

Rate hike spooked the markets today, the markets saw the second biggest fall in absolute terms closing near the day's low. The RBI hiked the Cash Reserve Ratio by 50 bps to 6.50% (in two tranches of 25 bps each) and the Repo Rate from 7.50% to 7.75% with immediate effect.
Rate sensitive sectors banking, auto and real estate stocks bore the brunt of hike in rates. The breadth was extremely negative. Auto numbers for March came in mixed, Bajaj Auto and Hero Honda disappointed while, TVS and Maruti Udyog beat street expectations.
Mkt near lowest point of day: Sensex down nearly 600 pts

The markets are trading near day's low on sustained selling seen in scrips. Sensex and Nifty have moved deeper in the red.
At 14.51 pm IST, the Sensex is down 570.12 points or 4.36% at 12501.98, and the Nifty down 181.60 points or 4.75% at 3639.95.
About 660 shares have advanced, 1688 shares declined, and 61 shares are unchanged.
Index heavyweight Hindustan Lever was trading at Rs 195.05 down 4.97% from its previous close of Rs 205.25.
Index heavyweight Reliance was trading at Rs 1,326.00 down 3.09% from its previous close of Rs 1,368.35.
Tech major Infosys was trading at Rs 1,931.75 down 4.02% from its previous close of Rs 2,012.60.
Cigarette major ITC was trading at Rs 147.00 down 2.26% from its previous close of Rs 150.40.
Refinery major HPCL was trading at Rs 240.95 down 2.33% from its previous close of Rs 246.70.
Relentless selling drags Sensex nearly 500 points
The markets have slipped deeper in the red on sustained selling pressure in scrips across sectors led by auto, banking and capital good stocks.
At 2.01 pm IST, the Sensex is down 504.77 points or 3.86% at 12567.33, and the Nifty down 163.75 points or 4.28% at 3657.8.
About 669 shares have advanced, 1605 shares declined, and 65 shares are unchanged.
Ranbaxy, VSNL and Tata Power are among the gainers on the indices.
Maruti Udyog, Tata Motors, Bajaj Auto, SBI, PNB and OBC are among the major losers on the indices.
Index heavyweight Hindustan Lever was trading at Rs 196.75 down 4.14% from its previous close of Rs 205.25.
Index heavyweight Reliance was trading at Rs 1,336.00 down 2.36% from its previous close of Rs 1,368.35.
Tech major Infosys was trading at Rs 1,968.70 down 2.18% from its previous close of Rs 2,012.60.
Cigarette major ITC was trading at Rs 148.10 down 1.53% from its previous close of Rs 150.40.
Refinery major HPCL was trading at Rs 241.95 down 1.93% from its previous close of Rs 246.70.
Markets collapse: Auto, bank crash; sugar smiles
The markets continue to trade in deep red on account of heavy selling seen in scrips across sectors.
At 12.43 pm IST, the Sensex is down 429.62 points or 3.29% at 12642.48, and the Nifty down 133.90 points or 3.50% at 3687.65.
About 658 shares have advanced, 1493 shares declined, and 53 shares are unchanged.
Ranbaxy, VSNL and Tata Power are among the gainers on the indices.
Maruti Udyog, Tata Motors, Bajaj Auto, SBI, PNB and OBC are among the major losers on the indices.
Index heavyweight Hindustan Lever was trading at Rs 197.00 down 4.02% from its previous close of Rs 205.25.
Index heavyweight Reliance was trading at Rs 1,335.90 down 2.37% from its previous close of Rs 1,368.35.
Tech major Infosys was trading at Rs 1,965.00 down 2.37% from its previous close of Rs 2,012.60.
Cigarette major ITC was trading at Rs 148.50 down 1.26% from its previous close of Rs 150.40.
Refinery major HPCL was trading at Rs 242.50 down 1.7% from its previous close of Rs 246.70.
Markets collapse: Auto, bank crash; sugar smiles
The cut in the markets is getting sharper with heavy selling seen in scrips across sectors. All the BSE sector indices are trading in red; leading the downtrend are banking and auto stocks. However, sugar stocks are holding some of their gains.
At 11.47 am IST, the Sensex is down 420.99 points or 3.22% at 12651.11, and the Nifty down 129.90 points or 3.40% at 3691.65.
About 575 shares have advanced, 1432 shares declined, and 49 shares are unchanged.
Tata Motors, Bajaj Auto, SBI, PNB and OBC are among the major losers on the indices.
Index heavyweight Hindustan Lever was trading at Rs 197.55 down 3.75% from its previous close of Rs 205.25.
Index heavyweight Reliance was trading at Rs 1,328.50 down 2.91% from its previous close of Rs 1,368.35.
Tech major Infosys was trading at Rs 1,976.40 down 1.8% from its previous close of Rs 2,012.60.
Cigarette major ITC was trading at Rs 148.50 down 1.26% from its previous close of Rs 150.40.
Refinery major HPCL was trading at Rs 242.50 down 1.7% from its previous close of Rs 246.70.
Panic selling continues: Sensex, Nifty down nearly 3%
The markets continue to trade under pressure on the back of panic selling being witnessed across the sectors since morning. All the BSE indices are trading in red led by banking and capital goods. Sugar stocks have managed to stand out.
At 11.03 am IST, the Sensex is down 371.62 points or 2.84% at 12700.48, and the Nifty down 123.00 points or 3.22% at 3698.55. About 520 shares have advanced, 1307 shares declined, and 35 shares are unchanged.
Top losers on the Sensex are Bajaj Auto at Rs 2,282.80 down 5.88%, Tata Motors at Rs 685 down 5.87% and Maruti Udyog at Rs 775.65 down 5.37%.
Top losers on the Nifty are PNB at Rs 434.95 down 8.28%, Oriental Bank at Rs 174.15 down 7.19% and Bajaj Auto at Rs 2,275 down 6.29%.
Index heavyweight Hindustan Lever was trading at Rs 199.70 down 2.7% from its previous close of Rs 205.25.
Index heavyweight Reliance was trading at Rs 1,339.90 down 2.08% from its previous close of Rs 1,368.35.
Tech major Infosys was trading at Rs 1,986.75 down 1.28% from its previous close of Rs 2,012.60.
Cigarette major ITC was trading at Rs 149.00 down 0.93% from its previous close of Rs 150.40.
Refinery major HPCL was trading at Rs 243.80 down 1.18% from its previous close of Rs 246.70.

Mkts plunge on CRR hike: Banks, real estate bleed

On the first trading day of FY07-08, the markets opened with heavy gap down on account of recent monetary tightening from RBI in the form of CRR and Repo rate hike to tame inflation followed by disappointing sales figure of Bajaj Auto. However, cues from Asian markets are positive as they were trading firm with moderate gains.
At 9:56 am, Sensex was down 317 points at 12754 and Nifty was down 80 points at 3740. Major losers in the opening trade were Reliance Industries, Rel Comm, ICICI Bank, SBI, Bank of India, Bharti, Bajaj Auto, Infosys.

Asian Markets:

Asian stocks were mostly higher today, with Japan's Nikkei average advancing on gains in Honda Motor Co. as investors shrugged off a survey that showed sentiment among Japanese companies weakened for the first time in a year.
Hong Kong's Heng Seng advanced 0.71% or 139.93 points at 19,940.86, Japan's Nikkei gained 0.52% or 89.52 points at 17,377.17, Taiwan's Taiwan Weighted rose 0.47% or 37.42 points at ,921.83, Singapore's Straits Times surged 0.76% or 24.61 points at 3,255.85 and South Korea's Seoul Composite was up 0.73% or 10.59 points at 1,463.14.

MF NAVs continue positive momentum as mkts end in green

Equity diversified NAVs continued their bullish mood for the second straight session and recovered earlier losses as the markets ended in green for the second consecutive day. The Sensex ended up 92.44 points or 0.71% at 13072.1, and the Nifty closed up 23.45 points or 0.62% at 3821.55.

All sectoral funds advanced. The BSE Auto, Bankex, FMCG, Healthcare and IT indices rose by 1.36%, 0.53%, 1.57%, 1.89% and 0.50%, respectively.

Long term debt funds also finished with positive returns; out of total 82 long term debt funds 52 advanced while 30 funds declined.

Balanced and tax saving funds advanced sharply.
Equity diversified NAVs end higher for second straight session All sectoral funds advance Long term debt funds finish with positive returns

Among the equity diversified funds, the top gainers were DBS Chola Midcap Fund (G) up 0.57%, Tata Service Industries Fund (G) up 0.36% and DBS Chola Global Advantage Fund (G) up 0.28%. The top losers were BOB Growth Fund (G) down 1.59%, UTI Dynamic Fund (G) down 1.45% and JM Equity Fund (G) down 1.35%.

Among the tax saving funds, the top losers were Taurus Libra Tax Shield down 1.80%, BOB ELSS 96 down 1.43% and Escorts Tax Plan (G) down 1.08%.

Among the sector funds, the top gainers were Birla MNC Fund (G) up 0.26%, SBI Magnum IT Fund up 0.48% and Reliance Media & Entertainment Fund (G) up 1.27%. The top losers were JM Financial Services Sector Fund (G) down 1.91%, UTI Banking Sector Fund (G) down 1.56% and SBI Magnum Pharma Fund (G) down 1.34%.

Among the balanced funds, the top gainers were Principal Child Benefit Fund - Future Guard Plan up 0.09%, Principal Child Benefit Fund - Career Builder Plan up 0.09% and Sundaram BNP Paribas Balanced Fund (G) up 0.03%. The top losers were BOB Balance Fund (G) down 1.74%, Escorts Balanced Fund (G) down 0.91% and Principal Balanced Fund (G) down 0.73%.