Master And Student - All About Stock Markets

Mobile Trading is to kick-off soon in Indian Capital Markets, as the market regulator SEBI has given approval for the same. Currently, many brokers are providing web-based mobile trading, but the current form of mobile trading using wireless technology (including laptops with data card that use internet protocol), would make things lot easier for active traders.

Both the stock exchanges BSE and NSE are ready to provide the facility as soon the brokers set up their systems. The applications for mobile trading can be downloaded by the customers from their brokerage websites. The procedures for trading are same as that of online trading - on submitting an order to buy or sell shares, traders will be provided with the order confirmation and similarly modification or cancellation facilities will also be provided.

The traders would be aware of risks and difficulties involved in online trading, similarly they should also be aware of the possible risks involved in mobile trading too. Hope adequate steps are taken by the service providers and brokerages, to prevent misuse of this facility by unauthorised persons. As India is one of the fastest growing mobile phone markets and equally active trading population, the mobile trading is likely to be a hit.

Gujarat Pipavav Port which has developed and operates APM Terminals Pipavav, is coming out a public issue of 1.1 crore shares in the price band at Rs 42-48/share. The company promoted by APM Terminals Mauritius, has multi-cargo and multi-user operations. Other major shareholders include IDBI Bank and IDBI Trusteeship services.

Details of the issue:

Issue Open: Aug 23, 2010 - Aug 26, 2010.
Face Value: Rs. 10 Per Equity Share.
Issue Price: Rs. 42 - Rs. 48 Per Equity Share.
Listing At: BSE, NSE.

Fundamental Details:

The majority of the proceeds of this IPO will be used towards repayment of loan of about Rs.300 crs. By doing this the Debt/Equity of the company is expected to significantly reduce from 4.7x in September 2009 to 0.9x in CY12. The reduction in interest costs will help improve the profit margins significantly.

Currently the Book Value of the company is Rs.10 and at a price of Rs.48, the issue is done at 5 times the Book Value, which is expensive. Though there would be listing gains,due to positive market sentiment, long-term investors can wait before committing funds.

Mutual funds are excellent means to participate in equity markets and we have seen some of the mutual fund schemes like HDFC Top 200 which have given exceptional returns over 3-5 year periods. Similarly, let us look some of the Top Systematic Investment Plans in Equity Funds which have given consistent returns over the past few years.

Why invest through SIP?

Systematic Investment Plan (SIP) a good plan offered by mutual funds to help you save systematically and regularly.  SIP makes you to take part in the equity markets without trying to second-guess its movements and  one need not worry too much about ups and downs of the markets.

So how the investments through SIP have performed?

Check out the table below, which shows the 1,3 and 5 year SIP returns of HDFC Equity, Reliance Growth, HDFC Top 200 and Reliance Regular Savings . The 3 year returns are 22-28% per annum and 5 year returns are 20-21% p.a as on date.


As you see above, the returns are exceptionally good, if invested with a 3 to 5 year time frame. SIP makes you disciplined in your savings and to get the most out of it,  invest with a long term view. Also the advantages of investing in mutual funds are many like,  no-entry-load, SIP amount as low as Rs.500 ( even Rs.100 in some of the funds) and auto-debit from bank accounts.

Hence apart from your one-time or single investments in mutual funds, SIP investments should be integral part your investment planning. When it comes to investing, long term results are rewarding and disciplined investing rewards you more !

Reliance Regular Savings Fund is one of the many schemes from Reliance Mutual Fund, which have performed well since the last few years. The scheme is benchmarked against BSE 100, whose 5 year return is 18% whereas the fund's % year return is about 25%, which clearly exhibits its outpeformance.

Snapshot of the fund:

Reliance Regular Savings Fund is an open-ended fund whose primary objective is to seek capital appreciation and consistent returns by actively investing in equity and equity related securities. The entry load is nil and exit load is 1% if redeemed withing one year. The minimum investment is Rs.500 and SIP is available. The fund size is about 3000 cr, which is pretty much okay like any other  major schemes.

Performance:

This scheme was launched in 2005, and currently the NAV of the Growth scheme of this fund stands at Rs.30.The 5 year return is 24% p.a which is spectacular by any means. The 1 year and 3 year returns stand at 31% and 21% respectively, which speaks of it consistent performance over longer period.

Why invest in mutual funds?

As we have seen with HDFC Top 200 Fund, returns from mutual funds are consistent. For an average investor, it is a difficult task to decide which stock to buy, how much to buy and when to sell.Investing in mutual funds offer diversification to reduce risk substantially.

Though one can invest in stocks directly, after considerable research, it is not a bad idea to invest some amount in mutual funds.

Bajaj Corp Ltd has come out with an IPO of 45 lakh shares of Rs.5 each in the price band of Rs.630-Rs.650. Bajaj Corp is India’s one of the largest producer of hair oils and some of its brands include Bajaj Almond Drops, Brahmi Amla, and Jasmine Hair Oil.

The proceeds of this IPO is to be used for diversificatin by foraying into new products, supported by heavy spending on advertising and promotion.

Details of the issue:

Issue Open: Aug 02, 2010 - Aug 05, 2010.
Issue Price: Rs. 630 - Rs. 660.
Issue Size: Rs. 283.50 - 297.00 Crore
Market Lot: 10 Shares.
Listing At: BSE, NSE.

Fundamental updates:

For FY10, the company's revenues were Rs. 330 crores and its net profit was Rs. 84 crores, thereby earning an EPS of Rs. 33. At the upper price band the P/E works out to about 20 times. Currently most of the FMCG companies are trading in the P/E band of 25-30 and over long term FMCG companies have performed well. Though the issue is not cheap,  it offers decent upside over medium to long term, as well listing gains too.