Master And Student - All About Stock Markets

Axis Mutual Fund has launched an open-ended Gold ETF, Axis Gold ETF. This is yet another Gold ETF similar to already existing Gold Bees and other ETFs. During the new fund offer (NFO) period, retail investors can apply for minimum of Rs.5,000 and multiples of Re.1.

After the NFO period, the fund will be traded on the National Stock Exchange and traded like equity shares. The fund will be open for subscription from October 20 to November 3.

Why Gold ETFs ?

Gold ETFs lets you buy Gold without the necessity of taking physical delivery and without the associated risks of physical storage and impurities.

Is Gold a good investment opportunity even at this prices?

Gold has seen a steady rise since last 5 years with an annualized return of about 24%, currently trading about Rs.2000 per gram. But over 15-20 year period it tends to average less than 10% . Currently high price rise in Gold prices is due to global risk-aversion and supply constraints, as production has dropped.

Is this price rise sustainable and how much one can invest in these funds?

For the past 2 years investments in Gold has yielded more than 50%,  this doesn't mean gold will tend to keep on rising further to get sustainable returns.  Any investment in gold can be considered as an insurance and diversification only.  Therefore investors need not allocate their entire amount or large junk of their portfolio in such Gold Funds. One could invest about 10% of their portfolio only , if they haven't already invested in earlier such schemes.

Coal India Limited, a Navratna PSU, is entering the capital markets with a public issue of 63 crore equity shares. This issue, slated to be the largest primary market offering in the history of the Indian Stock Markets, will garner around Rs. 15,000 crore.

Coal India is the world’s largest coal producing company, as well as the world’s largest coal reserve holder. The company has 471 mines across the country and manages over 80% of India's annual coal demand.

Details of the issue:
Issue Open: Oct 18, 2010 - Oct 21, 2010.
Issue Size: 631,636,440 Equity Shares of Rs. 10.
Face Value: Rs. 10 Per Equity Share.
Issue Price: Rs.225 - Rs.245 Per Equity Share.
Listing At: BSE, NSE.


Fundamental Details:

For FY10, the company reported total income of Rs. 52,592 crore with net profit of Rs. 9,834 crore, resulting in an EPS of Rs. 15.5. Comparing with NMDC, around a P/E of 16-17, the announced price band  of  Rs.225-Rs.245, is a  reasonably good price to invest for long term investors. A 5% discount offered for retail investors could add as an extra cushion factor. Investors can apply for this issue with a long term view and not for listing gains alone.

Both the premier exchanges BSE and NSE are to kick off pre-open call auction section, soon. The pre-open call auction session will be for 15 minutes between 9 am and 9.15 am. The session would work as follows: The first eight minutes will be reserved for order entry, modification and cancellation, the next four minutes will be kept for order matching and trade confirmation. The remaining three minutes will be the buffer period to facilitate the transition from pre-open session to the normal market.

Initially, the call auction session will be applicable for Nifty-50 scrips and Sensex-30 scrips. More scrips will be gradually added to the list. Normal trading in other stocks will begin as at 9.15 am.

What is this pre-open session all about?

Indian markets have seen huge volatility, particularly during open trades. In the past few years, indices have hit the down circuit quite a few times and up circuit once. Call auction at pre-open will help arrive at a proper price, removing volatility and freak trades.

How does this order matching works?

In a Call Auction market, orders are gathered for execution at predetermined times when the market is called. At the call, all buy orders are aggregated into a downward sloping demand function and all sell orders are aggregated in an upward sloping supply function.The logic of order batching which is core to the Call Auction mechanism is well explained here.

Call Auctions across the world have been applied to various sessions during the trading day at the Open, Close and during trading halts. So, hopefully no more freak trades of abnormal highs and lows.

The international derivatives exchange EUREX, jointly operated by Deutsche Bourse AG and SIX Swiss Exchange, organizes markets globally. Since 2007, Deutsche Bourse holds a five percent stake in the Bombay Stock Exchange. EUREX is home to the Euro zone interest rate and equity index benchmark derivatives.

EUREX will be the first exchange to launch Indian equity index futures and options outside India. Offering futures and options on one single platform allows market participants to use combined trading strategies (for example volatility trades) and permits cross margining between the two contracts.

With the launch of SENSEX derivatives EUREX, it provides new opportunities for customers seeking an appropriate hedging tool for Indian exposure or arbitrage trading EUREX SENSEX Futures and Options will be denominated in U.S. dollars and settled in cash.

More details about the contracts are available at Sensex Futures And Options