Master And Student - All About Stock Markets

The Customer Confidence Index (CCI) is an indicator which defines the degree of optimism on the state of the economy that consumers are expressing through their activities of savings and spending. It is a crucial tool that enables the user to understand the consumer’s mindset.The world’s first CCI was introduced in the USA in 1985, and has a sample of 5000 people.

Recently in India, The CNBC-TV18 Boston Analytics Consumer Confidence Index was launched which is designed to reflect the aspects of the Indian economy like employment, savings, spending, inflation, and real estate through the eyes of the Indian consumer.

The CNBC-TV18 Boston Analytics Consumer Confidence Index will be released every month and shall be based on a sample size of about 10,000 respondents spanning all the metros and major 15 cities in India, thus making it the largest Consumer Confidence Index in the world. The index will be based on the level of consumer confidence over time on various parameters like Current Situation, Future Expectations, Employment,Inflation, Consumer Spending, Savings and Real Estate.

Meanwhile,the CNBC-TV18 Boston Analytics Consumer Confidence Index dipped 4.2% in May from 74.1 in April. The Future Expectations Confidence Index also declined 6.8% — from 77.6 in April to 72.3 in May. This was the lowest reading of indices since Jan 2008.

And Markets on a roll !

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What is Black Swan Theory ?

The Black Swan theory refers to a large-impact, tough-to-predict, and rare event beyond the realm of normal expectations. The term Black Swan comes from the assumption that 'All swans are white'. In that context, a black swan was a metaphor for something that could not exist or not possible.

The "Black Swan" theory refers to events of large consequence and their dominant role in history. Black Swan events are a special category of what is called outliers.

What has got Black Swan theory got to do with Indian Markets now?

The Indian Stock Markets hit the upper circuit of 10/15/20% which hasn't happened before. This is a Black Swan Event, a rare event - no one expected. Particularly this is a Black Swan for the bears since markets have hit lower circuit many times before, but not the upper circuit.

Identifying a Black Swan Event.

1. The event is a surprise.
2. The event has a major impact.
3. After the fact, the event is rationalized by hindsight, as if it had been expected.

Another example of a Black Swan Event - Your stock broker gives a buy call and it works :)
If come to know any such events post it in the comments section.

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Indeed it was a historic day in Indian Stock Markets. Within opening of few minutes, the BSE Sensex and Nifty hit the upper circuit of 15%, trading being halted for 2 hrs. Later another 5%, halted the trade for the rest of the day. Everyone is bullish, once again.

There are a lot of predictions out there on what the markets will do tomorrow, and the day after... but what should really matter to you and ask yourselves that , is this possibly the start of a long-term rally in stock prices ?

But think again and hold back your enthusiasm just yet.. there is every chance that egged on, once again, by over-enthusiastic TV anchors and unscrupulous brokers, you will go out and invest in stocks which over the long-term will disappoint.

You don’t want to do that.

This is the time to lay the foundations for a wealthy future. Not the time to speculate in momentum stocks. So be very careful, as you always should be, in what you invest in.

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Nifty futures in Singapore stock exchange is up more than 10% at 4053. Singapore Nifty or SGX Nifty is up 368 points from previous close of 3685. On back of UPA coming back to power, Indian markets are expected to open strongly. Prelude to that Singapore nifty has a given an indication of the opening.

Though many Asian Markets are trading weak, Singapore nifty is currently trading at 4060 points.

Such strong opening suggests that many players seem to have been caught on the wrong foot, by selling nifty futures and higher call options of nifty.

One should not rule out the possibility of smart operators booking profits at the opening. Therefore, investors should not get carried away with sheer exuberance.

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The current Election results will have a major impact on Indian Stock Markets. What has changed from the previous set-up? The Left is out of the Government and UPA is emerging as the majority coalition without the regional parties. These two points are major positives for the markets.

As always, it is sentiments which rules anything. The sentiments are buoyant to boost the moods all over. Also FIIs, assured now by the political stability at the Center, will be interested more in investing in India.

At this juncture markets having already run-up 4k points from 8k to 12K, what should a retail investor do now?

As UPA coming to power, we hope to see privatization taking off in a big way, the financial sector reforms, especially for the banking and insurance sectors. So these sectors and stocks in these sectors are a good place to invest into. Many stocks in the Stockwatch section belong to Banking sectors. Also major PSU stocks like HPCL, BPCL, IOC too can be looked into.

These positives doesn't mean, one should jump into markets on Monday and buy, because on Monday, markets are expected to open up in a big way. There is no point in investing when markets are up 700/800 points up. Also the Global negatives are still in place and nothing fundamentally has changed.

Traders can ride the momentum with strict stop loss in place. But as far as investors are concerned , any sharp correction in markets can be used to buy fundamentally good stocks. Again the old rule stays fit - Buy low, Sell high ! Identify yourselves whether you are investor or short term trader, before committing funds now.

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Entrecard makes an announcement about Yommy - a Micro Payment System is based on "Credits". By using this system you can transfer money to each other with a transaction fee as low as 0.01!

Anyone can create a profile on Yommy and increase their "Trust" score based on several factors including account verifications, network of friends, user feedback, and transactions.

Yommy also allows you to send and receive payments using our "Credit" system. Users can purchase credits and sent it to anyone as a form of payment. The credits can then be converted back to cash anytime. By using the credit system, the Trust score will increase giving customers more confidence to engage in more transactions with you.

Just give it a try ! Sign up now.

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George Soros's erstwhile partner Jim Rogers believes that the dollar is overvalued and after the recent rally against most currencies could end up in currency crisis.The rally in the U.S. currency has been driven by investors covering their shorts, Rogers, said in an interview with Bloomberg.

The dollar has climbed against all of the Global 10 currencies except the yen over the past 12 months.The U.S. currency was at $1.3592 per euro today from $1.3582. He expects Dollar crisis probably this fall or the fall of 2010.

Rogers sounded negative on equities in general and US equities in particular. "The market in the US went up very powerfully for nine weeks in a row, so of course it's time for a correction. Fundamentals haven't changed if you ask me. I don't see the stock market as a great place to be in the next two to three years".

Meanwhile Indian markets went up 4% today, despite most of the Asian Markets ending in red, driven by huge FII flows.

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Tatas, SBI, Infosys among World's Top Companies.

The Tatas, India's premier bank - State Bank of India (SBI) and top IT Giant - Infosys Technologies are among 17 Indian firms that figure among the top 50 in a list of the world's 200 most reputable companies. With a score of 81 on a scale of 0-100, the US-based Reputation Institute ranked the Tata Group 11th above global corporate giants like Google, Microsoft, General electric, Toyota, Coca-Cola, Intel and Unilever. SBI is ranked 29th with a score of 78.11 and Infosys is at 39th, with a pulse score of 77.45.

Italy-based chocolate producer Ferrero was ranked as the most reputable company. Johnson & Johnson, which placed first in the US for reputation, lands third globally.

The Reputation Institute's global pulse of 600 companies is a measure of corporate reputation calculated by averaging perceptions of four indicators, trust, esteem, admiration and good feeling, obtained from a representative sample of at least 100 respondents in the companies' home countries.

"However it is the people of India who love their companies the best," noted US business magazine Forbes. "Of India's 27 corporations ranked by the institute, 24 placed them above the average. Seventeen of them landed in the top third of the list."

There is no doubt that Indian corporates are doing their best to make India a super power.

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Bharat Electronics BEL - Q4 Results Update.
During the quarter, BEL has been able to maintain its margins at elevated levels of 30%. On a sequential basis (not strictly comparable due to skewed revenue booking), margins have expanded by 500 bps. Employee cost is higher on account of wage revision.

While the order backlog is strong, bureaucracy in defence matters poses the risk of execution taking longer period.The order book as on April 01, 2009 is estimated to be around Rs 100 bn, which is up 5.8%. Order backlog provides a revenue visibility of 26 months. However, for the year we estimate order inflows to have grown by 10% in FY09.


Strategic tie-ups with global defence majors.

BEL is looking for new growth opportunities through organic or inorganic growth. In this direction, BEL is discussing with reputed foreign and Indian players for forming joint venture companies in India, in the areas of defence electronics, namely electro optics, airborne electronic warfare, missile electronics and guidance systems, microwave super components, etc. The company has also appointed KPMG to identify future growth opportunities for the company.

India is one of the largest defence equipment importers in the world. This is attracting several global defence majors to India. The U.S. defence manufacturer Northrop Grumman has recently entered into an agreement with Bharat Electronics Limited to manufacture components of the F-16 fire control radar.

Pact with Boeing to establish a facility in India to test military products:
Boeing co of US has recently announced that it has signed an pact with BEL to set up a facility for analysis and experimentation of military products and equipments. Boeing has similar centers in Australia and the U.K., the statement said.

Valuations.

At the current price, BEL is trading at 8.1x FY10E earnings. The stock tends to outperform during times of economic uncertainties. The stock has gone up more than 100% since last mentioned in StockWatch section and it is quoting at Rs.1000. So investors could wait for better entry points.

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HDFC Bank - Q4 Results Update.

Recently HDFC Bank has reported its Q4FY09 numbers. HDFC bank has reported its merged numbers with Centurion Bank of Punjab Ltd (CBoP) for Q4FY09. The merger of CBoP with HDFC Bank became effective on May 23, 2008. Therefore, these results are not comparable. Net interest income (NII) and net profits have risen 12.8% and 33.9%, respectively, for Q4FY09.

NIM stood at 4.2% during Q4FY09; Strong CASA growth (44.4% at the end of FY09) was very heartening to watch. Moderation was visible in the asset growth, which grew 29% on the average during Q4FY09 vis-à-vis the corresponding quarter last year. During the period, net NPA also increased both in absolute as well as in percentage terms.

HDFC bank would continue to enjoy the valuation premium vis-à-vis its peers on back of one of the highest CASA, high and stable margins, high RoE, cleaner asset quality and a large share of fee-income to its total income.

HDFC Bank has consistently delivered a growth of around 30% (YoY) in net profit for the past 28 quarters. However, it has rallied 40% in last one month from its recent lows. At CMP of Rs.1170, the stock is fairly valued and therefore, investors can wait for better entry points.

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