Monthly Income Plan - Are they right for you?

Your company has given you a superb bonus or your savings have just added up to a nice seven figure sum.  So what are you planning to do with it? You'd love to earn some money off it, except that fixed deposits barely give you any returns these days and everything else is too risky. So if you're about to hide the money under your pillow only to start dipping into it every now and then for a shopping spree, we suggest you take a look at MIPs (Monthly Income Plans). No, they are nothing like SIPs (Systematic Investment Plans).

So what are Monthly Income Plans? As Investopedia explains it, MIPs ensure you receive a stable amount of funds each month to spend, which limits the risk of over-spending. Plus, you don't land up making random withdrawals and depleting your capital. But are they monthly income?


1. They are not monthly income.
When you think of Monthly Income Plans, you think a monthly income naturally. But the name itself is quite misleading. MIPs assure returns through the payment of monthly dividends. However, this is subject to the availability of distributable surplus. So, while fund houses try their best to pay investors regularly, this is not guaranteed.  

2. They are decent short-term investments.
Say you have a sum of 'nest egg' money (that is money you have collected for a specific purpose like your wedding or a down payment on a home). You will definitely need the money in the short term. At the most you can stay invested for two or three years, not more. In this case, MIPs are not a bad option.

3. They are not risk-free.
MIPs are dependent (to some extent) on the market. Though not completely equity-driven, your money is invested in equity as well as debt. About 15 to 25% is invested in equity and the rest in debt. So while these investments are relatively safe there is no guarantee that the markets won't crash and some of your capital could bear the brunt.

4. They are better than FDs.
Fixed deposits were once upon a time touted as the best short-term investments but not anymore. MIPs outgun FDs on two counts. Firstly, the dividend from MIPs is tax-free while FD interest is taxable. Moreover, banks deduct 10 to 20% as TDS so if you are not eligible for that amount of tax, you'll have to run around for a refund. Secondly, while FDs give you about 6 to 7% returns per annum, MIPs could give you 10 to 12%. But then again, that's because of the marginally greater risk involved in equities.  

MIPs are ideal if...

• You want to protect capital against inflation.
  When you are saving up for something like a foreign vacation or a down payment on a home etc where rates are likely to fluctuate due to inflation, MIPs are not a bad bet. They give you decent returns. Plus, you can further invest the dividend you receive protecting your capital against inflation all the while.


• You have retired/ are planning to retire!
  MIPs are better for those who are not earning a salary and need a regular flow of income. You could use the dividend payments for personal expenses, monthly bills etc without eroding your savings.

So if you think MIPs work for you, consult DENIP Consultants Private Limited - (022) 40156688 / 40156699 or email us at dewang@denip.in or nimesh@denip.in

Markets Today - 31/08/2010 - Disclaimer Post Applies

Decrease in Nifty premium to spot along with put shedding at higher strikes implies some weakness at current levels. Major put concentration than call at 5,400 indicates it to act as support for intermediate term and below that 5,300 in worst case scenario. The upside is capped at 5,500 on account of more call concentration than puts. Thus, the broad range for September series is 5,500 and 5,300 and we expect market to trade in this range.

Option Analysis:

·         Call writing: In September series, writing was seen between 5,600 and 5,100 with shedding at higher strikes. Maximum writing was witnessed at 5,400 CE and 5,300 CE of 4.53 lakh shares and 4.77 lakh shares with shedding at 5,700 CE of 2.48 lakh shares. Concentration is observed at 5,600 CE of 78 lakh shares.

·         Put Writing: Whereas in puts, maximum writing was witnessed at lower strikes and shedding at at-the-money and higher strikes. Major writing was seen at 5,300 PE of 11.68 lakh shares and major shedding at 5,500 PE of 6.3 lakh shares. Concentration is observed at 5,400 PE of 94.23 lakh shares.

Implications: Put concentration and call writing witnessed at 5,400 strike price indicates that this would be a crucial level for the markets, acting as support for intermediate term. We expect 5,400 to act as a major support and below that 5,300 whereas upside may be capped to 5,500.

FIIs and DIIs activity in capital market segment

·         FIIs were net buyers of Rs 184 crore with Gross buyers of Rs 1,418 crore and Gross Sellers of Rs 1,234 crore.

·         DIIs were net buyers of Rs 68.7 crore with Gross buyers of Rs 916 crore and Gross sellers of Rs 848 crore.

India VIX (Inverse relationship between Nifty and Indian VIX)

·         Volatility for 31^st August, 2010 close at 18.47 which is almost flat as compared to previous close, after touching an intraday high of 19.42 and low of 17.59.

Implications: Indian VIX did not change much for the day. We expect it to move upwards and are Bullish on the same which would have negative impact on Nifty.

Weekly Performance Snapshot (August 26, 2010)

Source: ICICI AMC.

Thank you,
Minita Aiya
Client Service Associate
DENIP Consultants Pvt. Ltd.

Birla Power Solutions Ltd declares dividend & bonus

Birla Power Solutions Ltd. Announces Dividend

Birla Power Solutions declares bonus in ratio 1:5

Source : moneycontrol.com

Thanks,
Gaurav Agarwal
Head Dealer
DENIP Consultants Pvt Ltd

Reliance acquires 14.12 pc stake in EIH for Rs. 1021 crores

Mukesh Ambani-led Reliance Industries today said it has acquired 14.12 per cent stake in EIH, that runs the Oberoi brand of hotels and resorts, for Rs 1,021 crore.


The purchase is through RIL's wholly-owned subsidiary Reliance Industries Investment and Holding Private Limited, from Oberoi Hotels Private Limited and certain other promoters of EIH Limited, RIL said in a statement.


"RIL's investment in EIH Limited has been made as the Oberoi family had developed the 'Oberoi Hotels' brand into a premier international brand in the luxury hospitality sector and as a result EIH Limited has excellent future prospects," the statement said.


RIL has full faith in and would support the management of EIH Limited and there is no change of management, operation or control of EIH Limited, it added.


Commenting on the stake sell, Oberoi Group Chairman PRS Oberoi said: "RIL desired to make a long term financial investment in the luxury hospitality industry. We are happy to encourage their investment in EIH Ltd. There is no change to control, management or operation of EIH."


The development comes less than two months after Oberoi ruled out selling promoter stake in EIH Ltd, although he said he could not stop rival ITC from buying shares in the open market.


The stake buy works out to Rs 184 per share while the stock ended today at Rs 150 per share on the BSE.


ITC Ltd which also increased its stake to 14.98 per cent in EIH Ltd triggering speculation that the FMCG-to-hospitality conglomerate could go for an open offer once it crosses the 15 per cent mark declined to comment on the deal. However, it reiterated that it will not make a hostile bid for EIH.


Source : www.moneycontrol.com; www.economictimes.com


Thanks,
Gaurav Agarwal
Head Dealer
DENIP Consultants Pvt Ltd

Markets Today - 30/08/2010 - Disclaimer Post Applies

Nifty is trading at premium to September series along with dividend of 5 points. Major put writing at 5,400 for last few trading sessions thus to act as major support for intermediate term and major call writing at higher levels with concentration at 5,600 to act as a resistance. Thus we expect markets to trade in a range.

Option Analysis:

·         Call writing: In September series, writing was seen at higher strikes. Maximum writing was witnessed at 5,700 CE and 5,600 CE of 8.66 lakh shares and 8.11 lakh shares in today’s trading session.  Concentration is observed at 5,600 CE of 77.76 lakh shares.

·         Put Writing: Whereas in puts, maximum writing was witnessed between 5,400 and 5,100 with maximum at 5,400 strike 6.22 lakh shares. Concentration is observed at 5,400 PE of 95.82 lakh shares.

Implications: Major call writing at higher strike with put writing at lower strikes indicates that markets to trade in a range where the upside is limited to 5,500 for intermediate term and above that 5,600. However, on the downside 5,400 is acting as a strong support for near term and 5,300 in worst case scenario.

FIIs and DIIs activity in capital market segment

·         FIIs were net buyers of Rs 184 crore with Gross buyers of Rs 1,418 crore and Gross Sellers of Rs 1,234 crore.

·         DIIs were net buyers of Rs 68.7 crore with Gross buyers of Rs 916 crore and Gross sellers of Rs 848 crore.

India VIX (Inverse relationship between Nifty and Indian VIX)

·         Volatility for 31^st August, 2010 close at 18.36 which is 6.47% lower as compared to previous close, after touching an intraday high of 19.63 and low of 16.60.

Implications: Indian VIX plunged by ~6.5% in today’s trading session. We expect it to move upwards and are Bullish on the same which would have negative impact on Nifty.

European Economic Confidence Highest in Two Years

European confidence in the economic outlook improved to the highest in more than two years in August after surging exports helped the economy expand at the fastest pace in four years in the second quarter.

An index of executive and consumer sentiment in the 16 Euro nations rose to 101.8 from a revised 101.1 in July, the European Commission in Brussels said in an e-mailed statement today. That’s the highest since March, 2008 and exceeded economists’ forecast for an increase to 101.6, based on the median of 28 estimates in a Bloomberg News survey.

European confidence may falter as the global recovery shows signs of weakening and governments step up spending cuts to trim budget deficits. The U.S. economy expanded less than initially anticipated in the second quarter and growth in Europe’s services and manufacturing industries slowed this month.

The Euro remained lower against the dollar after the report, and was down 0.3 percent to $1.2719 as of 10:05 a.m. in London. Bonds stayed higher, with the yield on the 10-year German bund down 4 basis points to 2.16%.

Cooling Economy

A gauge of confidence among consumers rose to minus 11 in August from minus 14 the previous month, today’s report showed. Manufacturing sentiment held at minus 4 and construction confidence remained at minus 29. Confidence within the service industries rose to 7 from 6.

The index is based on a survey of 130,000 executives and 40,000 consumers conducted in the first two weeks of the month.

European manufacturers have relied on faster-growing emerging economies to fuel earnings as households held back spending. German exports surged 8.2% in the second quarter, helping to power record economic growth. Bayerische Motoren Werke AG, the world’s largest maker of luxury cars based in Munich, said on Aug. 9 that sales rose 9.1% in July, spurred by demand from China.

Companies may find it hard to maintain revenue growth as the global economy cools. U.S. economic expansion slowed to 1.6% in the second quarter, lower than a 2.4% estimate issued last month. In the U.K., a gross-domestic-product report on Aug. 27 showed slower services growth than previously estimated and a drop in fixed investment.

Policy Response

The strong and stable growth will require appropriate and effective response from economic policy makers across a wide spectrum as well as private sector leaders.

European Central Bank officials will hold their next policy meeting on Sept. 2. The Financial Times reported today that the ECB is likely to extend emergency aid for the region’s banking industry into next year.

European governments from Italy to Spain have been forced to step up spending cuts to push down budget deficits and help restore investor confidence. The second half of 2010will probably be much less buoyant than the three months through June, when the Euro-area economy expanded 1%, the fastest in four years. Global economic conditions are beginning to cool down a little. The Euro-area generally is struggling.

Protracted Recovery

The commission’s gauge measuring manufacturers’ confidence in their export orders rose to minus 18 in August from minus 21 in July, today’s report showed. An index of overall order books rose to minus 19 from minus 21 and a gauge of employment expectations held at minus 6. Confidence in production expectations declined. Among services executives, a gauge of demand expectations for the next three months rose to 8, the highest in three months.

There will be a long, slow protracted recovery in Europe. Europe or the U.S. are not showing significant growth for the next five years at least.

Recession Risk

In London that risks of the euro-region economy slipping into another recession are increasing. If marked slowdown in key export markets achieved, the European economy is extremely exposed to that. It was clear that the growth momentum would moderate both in emerging markets and the U.S.

Source: www.bloomberg.com

Thank you,
Minita Aiya
Client Service Associate
DENIP Consultants Pvt. Ltd.

Intel Buys Infineon Wireless Radio Chip Unit for $1.4 Billion

Intel Corp., the world’s largest chipmaker, agreed to buy Infineon Technologies AG’s wireless unit for about $1.4 billion, gaining a foothold in the mobile - phone business it has struggled to crack for more than a decade.

Intel strengthens its position in the fast-growing smartphone market. Infineon sells its wireless unit at a time when the more cyclical business is running successfully. The transaction price is in line with expectations.

The acquisition of Infineon’s unit, on the heels of Intel’s $7.68 billion purchase of security software maker McAfee Inc., builds on Chief Executive Officer Paul Otellini’s plans to break the company’s reliance on the personal-computer market. Intel wants to get its processors into smartphones, such as Apple Inc.’s iPhone, a handset that uses an Infineon radio chip.

Infineon is selling a unit that has struggled to turn a profit, letting it focus on areas where it can grab the biggest market share such as the automotive and industrial sectors. Infineon trails San Diego-based Qualcomm Inc., which dominates the market for chips that control radio functions in phones.

In the near term, Intel could potentially equip every PC with 3G, which could accelerate its 3G volumes and directly challenge Qualcomm’s 3G dominance.

Intel Sales

Intel, which posted a record profit margin for the second quarter at 67%, gets more than 90% of its sales from the PC market. After an estimated 26% rebound in revenue this year, analysts predict that the Santa Clara, California-based company’s sales will increase about 5% next year, shy of the double-digit growth Intel itself targets.

The company generated $3.49 billion in cash from operations in the quarter and ended the period with more than $18 billion in reserve. It’s paying for McAfee in cash.

Intel is hitching its mobile ambitions to a scaled-down version of its PC chips called Atom. The company has signed agreements aimed at landing its products in devices made by Nokia Oyj and LG Electronics Inc., though it has yet to win a spot in a phone that’s currently on sale.

Intel was advised by Evercore Partners Inc., while JP Morgan advised Infineon.

The market for processors that run smartphones is dominated by technology from Cambridge, England-based ARM Holdings Plc, which licenses its designs to companies including Qualcomm, Dallas-based Texas Instruments Inc., and Samsung, in Suwon, South Korea. Qualcomm produces chips that combine the functions of applications and baseband processors, making it the largest supplier of chips for mobile phones.

Source: www.bloomberg.com

Thank you,
Minita Aiya
Client Service Associate
DENIP Consultant Pvt. Ltd.

Dividend Announced - DSP BlackRock Top 100 Equity Fund

Dividend Announced - DSP BlackRock Top 100 Equity Fund

The Trustees of DSP BlackRock Mutual Fund have declared a tax-free dividend as follows:

The dividend shall be payable only to those Unit Holders whose names appear in the register of Unit Holders of the Regular Plan of DSP BlackRock Top 100 Equity Fund (Dividend Option) as on Sep 03, 2010. Applications for subscription, redemption, switch-ins and switch-outs for the scheme will be accepted on Sep 03, 2010, subject to them being complete in all respects and received prior to 3.00 p.m.

Distribution of the above Dividend is subject to the availability and adequacy of distributable surplus. Pursuant to payment of Dividend, the NAV of the Regular Plan of the Scheme (Dividend Option) will fall to the extent of payout and statutory levy, if any.

All Unit Holders in the Dividen Option of the Scheme, whose names apper in the records of the Registrar, Computer Age Management Services Pvt. Ltd., as on the Record Date, will be entitled to receive the dividend.

Thank you,
Minita Aiya
Client Service Associate
DENIP Consultants Pvt. Ltd.

Birla Sun Life Returns

Thank you,
Minita Aiya
Client Service Associate
DENIP Consultants Pvt. Ltd.

MIP - SIP in Mutual Funds

As the markets are trading at high levels, we recommend investors to invest systematically in equities at different levels every month. For example if you have lump sum amount to be invested, then invest it in MIP and the returns that is generated from MIP should be invested in Mutual Fund SIP.

MIP in Mutual Funds will give approximately 12%-15% returns annually (returns given in last 5 years). SIP have the potential of giving returns of 20%-25% annually as per our study of funds for last 5-10 years.

For example: If one invests RS. 5 lakh in MIP, he can expect a return of Rs. 5000 p.m. at 12% every month from that MIP. He should Start Rs. 5000 SIP every month for next ten years.

Thus, after 10 years his investments in MIP will be Rs. 5 lakh + his investments in SIP will be Rs. 5000*120 months, i.e. rs. 6 lakh.

The SIP schemes that we recommend, have the potential of fetching around 20%-25% return annually. The returns are as per our research and are available on reputed websites such as on www.valueresearchonline.com.

Thus at the end of the tenure, i.e. after 10 years, the investment amount will be as below:








When equity markets are in the midst of a rally, a lot of investors are invested mainly in equities/equity-oriented funds. As a result, they end up with equity-heavy portfolios with little or no allocation to assets like debt/fixed income. When equity markets turn volatile, investors are often caught wrong-footed with their bloated equity portfolios. In such a market scenario, the debt component of the MIP can stabilize their portfolios.

What are MIPs?
MIPs invest predominantly in debt instruments with a small portion of assets allocated to equities. The equity component provides MIPs with just the edge it needs to outperform conventional debt funds. The equity component usually varies between 5%-30% of assets.

A noteworthy feature about MIPs is the wide range of options available to investors. MIPs can be segmented based on their equity allocations; for example conservative MIPs invest 5%-15% of their corpus in equities, while moderate MIPs invest 15%-20% of their corpus in equities and the aggressive ones invest 20%-30% of their corpus in equities (the three categories should not be taken as an industry standard, they have been defined for a better understanding of how MIPs are structured). Effectively, MIPs provide investors with the opportunity to invest in line with their risk appetites.

What is Systematic Investment Plan (SIP)?
SIP works on the principle of regular investments. It is like your recurring deposit where you put in a small amount every month. It allows you to invest in a MF by making smaller periodic investments (monthly or quarterly) in place of a heavy one-time investment i.e. SIP allows you to pay 10 periodic investments of Rs 500 each in place of a one-time investment of Rs 5,000 in an MF. Thus, you can invest in an MF without altering your other financial liabilities. It is imperative to understand the concept of rupee cost averaging and the power of compounding to better appreciate the working of SIPs.

While making small investments through SIP may not seem appealing at first, it enables investors to get into the habit of saving. And over the years, it can really add up and give you handsome returns. A monthly SIP of Rs 1000 at the rate of 9% would grow to Rs 6.69 lakh in 10 years, Rs 17.83 lakh in 30 years and Rs 44.20 lakh in 40 years.

1. Discipline
The cardinal rule of building your corpus is to stay focused, invest regularly and maintain discipline in your investing pattern. A few hundreds set aside every month will not affect your monthly disposable income. You will also find it easier to part with a few hundreds every month, rather than set aside a large sum for investing in one shot.

2. Power of compounding
Investment gurus always recommend that one must start investing early in life. One of the main reasons for doing that is the benefit of compounding. Let’s explain this with an example. Person A started investing Rs 10,000 per year at the age of 30. Person B started investing the same amount every year at the age of 35. When they attained the age of 60 respectively, A had built a corpus of Rs 12.23 lakh while person B’s corpus was only Rs 7.89 lakh. For this example, a rate of return of 8% compounded has been assumed. So the difference of Rs 50,000 in amount invested made a difference of more than Rs 4 lakh to their end-corpus. That difference is due to the effect of compounding. The longer the (compounding) period, the higher the returns.

Now, instead of investing Rs 10,000 each year, suppose A invested Rs 50,000 after every five years, starting at the age of 35. The total amount invested, thus remains the same -- Rs 3 lakh. However, when he is 60, his corpus will be Rs 10.43 lakh. Again, he loses the advantage of compounding in the early years.

3. Rupee cost averaging
This is especially true for investments in equities. When you invest the same amount in a fund at regular intervals over time, you buy more units when the price is lower. Thus, you would reduce your average cost per share (or per unit) over time. This strategy is called 'rupee cost averaging'. With a sensible and long-term investment approach, rupee cost averaging can smoothen out the market's ups and downs and reduce the risks of investing in volatile markets.

People who invest through SIPs capture the lows as well as the highs of the market. In an SIP, your average cost of investing comes down since you will go through all phases of the market, bull or bear.

4. Convenience
This is a very convenient way of investing. You have to just submit cheques along with the filled up enrolment form. The mutual fund will deposit the cheques on the requested date and credit the units to one’s account and will send the confirmation for the same.

5. Other advantages
• There are no entry loads on SIP investments.
• Capital gains, wherever applicable, are taxed on a first-in, first-out basis.

Source: www.moneycontrol.com; www.personalfn.com; http://www.valueresearchonline.com/.

Document Prepared by: Mr. Nimesh Marfatia (Director – DENIP Consultants Pvt. Ltd.)

Microsoft co-founder sues Google, Apple among others

SAN FRANCISCO: Microsoft Corp co-founder Paul Allen's Interval Licensing filed a lawsuit accusing 11 major corporations, including Apple, Google and Facebook, of infringing on its Internet search patents.

The company is asserting four patents against a cluster of defendants, including also AOL, eBay, Facebook, Netflix, Office Depot, OfficeMax, Staples, Yahoo and Google's YouTube, according to the suit. Allen co-founded Interval, which said in a press release that its patents were fundamental to e-commerce and search.

"This lawsuit is necessary to protect our investment in innovation," spokesman David Postman said. "We are not asserting patents that other companies have filed, nor are we buying patents originally assigned to someone else. These are patents developed by and for Interval." Facebook said it will fight the accusations.

AOL, Office Depot, Netflix and OfficeMax declined to comment. The other companies were not immediately available for comment.

"We believe this suit is completely without merit and we will fight it vigorously," said Facebook spokesman Andrew Noyes.

Source: http://economictimes.indiatimes.com/news/international-business/Microsoft-co-founder-sues-Google-Apple-among-others/articleshow/6448758.cms

Thank you,
Minita Aiya
Client Service Associate
DENIP Consultants Pvt. Ltd.

Weekly Market Update 20 to 27 August

source: www.iseindia.com

Thanks,

Gaurav Agarwal

Head Dealer

DENIP Consultants Pvt Ltd

NSE-BSE battle ends, SEBI clears smart order routing for all investors

MUMBAI: Capital market regulator the Securities and Exchange Board of India (Sebi) has approved the launch of smart order routing to every class of investors on stock exchanges, putting an end to the conflict between the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

By using smart order routing technology, investors will be able to obtain the best possible price while buying or selling shares, similar to what is being done manually by stock brokers, except that this technology makes it much faster to execute. Stock brokers say that smart order routing determines which exchanges offer the best price at any given time. Speed is the key to the success of programme trading. If the price feed is not fast enough, the software will be unable to capitalise on some of the opportunities that last for a second or less.

The BSE had said in a public forum that the NSE was dragging its feet on allowing smart order routing on fears that it may lose some of the orders, if this was allowed. The NSE, on its part, said that security concerns related to audit trail had prompted a second look at the proposal.

“Smart order routing would help in better price discovery and also increase electronic trading volume,” Parag Gude, MD-consolidated equities, Morgan Stanley

Algorithm-based trading or programme trading has really not taken off in a big way in India and one reason, say stock brokers, is a lack of liquidity beyond the top 15-20 most actively-traded stocks. The other reason is the systems at stock exchanges are not equipped to handle very heavy trade volumes when the market is unusually active.

According to Sebi, stock brokers, who are interested in offering the smart order routing facility, will have to apply to the respective stock exchanges, which, in turn, will have to communicate their decision to brokers within 30 days. Brokers will also have to submit a third-party system audit of its smart order routing system and software.

Stock exchanges will disseminate a list of approved system auditors (CISA or equivalent) qualified to undertake such system audits. System audit of the smart order routing systems and software will be periodically carried out by brokers, and certificate, in this regard will have to be submitted to the exchange.

Brokers will have to provide an undertaking that the new system will route orders in a neutral manner. They have to provide an alternative mode of trading system in case of failure, besides maintaining logs to facilitate an audit trail.

Stock exchanges will have to provide a unique identification number (UID) for orders placed through this facility and maintain data on all orders and trades. Within three months from implementation of the smart order routing, bourses will have to ensure that a system is put in place to time stamp market data feed that’s disseminated to the market.

The regulator has also stipulated that apart from strengthening investor grievance cells to address complaints, exchanges will also have to share necessary data as and when required in order to facilitate necessary examination in case of investor complaints.

The broker server routing orders will have to be located in India. The markets regulator has also asked stock exchanges to communicate the status of the implementation of the provisions of this circular in the monthly development report.


Source: http://economictimes.indiatimes.com/markets/stocks/market-news/NSE-BSE-battle-ends-Sebi-clears-smart-order-routing-for-all-investors/articleshow/6448585.cms

Thank you,
Minita Aiya
Client Service Associate
DENIP Consultants Pvt. Ltd.

Markets Today - 27/08/2010 - Disclaimer Post Applies

Nifty is trading at huge premium to September series along with 5 points dividend. Higher call concentration than puts at and above 5,500 strike prices along with major put concentration than calls at and below 5,400 levels indicates markets to be range bound. Thus, we see the markets to trade in the range of 5,500 and 5,400 on the downside and 5,300 in worst case scenario.

Option Analysis:

·         Call writing: In September series, writing was seen at higher strikes. Maximum writing was witnessed at 5,400 CE of 12 lakh shares and in 5,700 CE of 9.44 lakh shares in today’s trading session.  Concentration is observed at 5,600 CE of 69.64 lakh shares.

·         Put Writing: Whereas in puts, maximum writing was witnessed between 5,100 and 4,900 and also at 5,400 strikes. Maximum writing was seen at 5,400 PE of 15.12 lakh shares. Concentration is observed at 5,400 PE of 89.59 lakh shares.

Implications: Call writing at higher levels indicates less upside to be seen from current levels. Whereas, fresh put writing at lower levels with majority at 5,400 levels indicates strong support at lower levels. So we expect the market to trade in a narrow range of 5,500 and 5,400 for few trading sessions and 5,300 in worst case scenario.

FIIs and DIIs activity in capital market segment

·         FIIs were net sellers of Rs 108 crore with Gross buyers of Rs 1,811 crore and Gross Sellers of Rs 1,919 crore.

·         DIIs were net buyers of Rs 239 crore with Gross buyers of Rs 1,206 crore and Gross sellers of Rs 966 crore.

India VIX (Inverse relationship between Nifty and Indian VIX)

·         Volatility for 27^th August, 2010 close at 19.63 which is 14.86% higher as compared to previous close, after touching an intraday high of 19.63 and low of 15.28.

Implications: Indian VIX surged by 14.8% in today’s trading session and gave a closing at the high of the day. We expect it to move upwards and are Bullish on the same which would have negative impact on Nifty.

FINAL SUBSCRIPTION FIGURE FOR Gujarat Pipavav Port Limited IPO

Gujarat Pipavav Port Limited IPO

No. of Appl: 250278 (INCLUDES ASBA 43384)

Thank you,
Minita Aiya
Client Service Associate
DENIP Consultants Pvt. Ltd.

Market Snapshot - August Series - Disclaimer Post Applies

Market Snapshot for August Series – Gained ~68 points in August series

August series traded in a narrow range between 5,350-5,450 but it broke its narrow range and crucial level of 5,500 and hit a 30-month high during the last week. Nifty August future expired with a gain of 68 points i.e 1.27% in today’s trading session and settled at 5,477. FII were net buyers in 17 trading sessions out of 19 trading sessions. This is consecutive third series for the market to close in a positive zone.

Rollover– Negative Rollover cost of ~11bps in September series

Nifty has rolled 76% positions into next series, which in line as compared to July expiry (77%). Nifty September series would start with an OI of ` 173 bn outstanding positions in open interest as compared to ` 142 bn for start of August series. In today’s trading session around 279,700 contracts got rolled in September series. Nifty series holds total OI of 650,860 contracts which is 17.5% higher as compared to previous expiry. Market wide futures OI outstanding currently is ` 633 bn, which is 12% higher than (OI of ` 564) previous expiry. Market wide rolls is 80% which is in line as compared to last expiry (82%).

Outlook for September Series – Range Bound

In September series concentration is observed at 5,600 CE and 5,400 PE indicates the range for September series to be 5,600 on the upside whereas the downside is capped at 5,400 to act as a support for intermediate term and 5,300 in worst case scenario.

Sector-wise Rollovers

Highest long Roll: Bullish Signal

SUGAR (92.6%), FINANCE (89.4%), INFRASTRUCTURE (89.4%),

Highest Short Roll: Bearish Signal

CEMENT (85.2%)

Lowest Rollover

AUTOMOBILES (80.2%), BANKING (80.9%) , MEDIA (81.8%)

Stocks Rollovers

Highest long Roll: Bullish Signal

GTL (96.8%), PIRHEALTH (96%), WELCORP (95.4%)

Highest Short Roll: Bearish Signal

IFCI (92.7%), NHPC (92.4%), RELCAPITAL (91.7%)

Lowest Rollover

BOSCHLTD (47.8%), CHENNPETRO (55.1%), PETRONET (57.3%)

Stock Idea - 27/08/2010 - Disclaimer Post Applies

Following are the stock trading ideas for tomorrow:

·         Short Apollo Tyre at 74 for a target of 71.6 – Lot size  4000

o   Close trade at 72

·         Short Bharat Forge at 353.9  for a target of 350 – Lot size 1000

o   Idea Close price for the trade would be at 352

·         Long GTL Infra at 46.45 for a target of 48 – Lot size 8000

o   Ideal Close price for the trade would be at 47 / 47.5

·         Short GVKPIL at 46.2 for a target of 45 – Lot size 8000

o   Ideal Close price for the trade would be at 45.5

Keep stop losses as per your risk appetite and buy / sell price.

Markets Today - 26/08/2010 - Disclaimer Post Applies

Nifty trading at discount to September series, concentration and major writing observed at 5,600 CE and 5,400 PE indicates the range for September series to be 5,600 on the upside whereas the downside is capped at 5,400 to act as a support for intermediate term and 5,300 in worst case scenario.

Option Analysis:

·         Call writing: In September series, major writing was witnessed at 5,600 CE and 5,500 CE of 8.82 lakh shares 8.43 lakh shares respectively. Concentration is observed at 5,600 CE of 67.41 lakh shares.

·         Put Writing: Whereas in puts, maximum writing was witnessed at 5,400 PE of 10.25 lakh shares. Concentration is observed at 5,400 PE of 74.46 lakh shares.

Implications: In today’s trading session writing was witnessed across strike prices in calls as well as puts in September series. On the basis of major writing and concentration, the wide range for September series is 5,600 on the upside whereas 5,400 on the downside for intermediate term and 5,300 for worst case scenario.

FIIs and DIIs activity in capital market segment

·         FIIs were net sellers of Rs 276 crore with Gross buyers of Rs 3,639 crore and Gross Sellers of Rs 3,915 crore.

·         DIIs were net buyers of Rs 38 crore with Gross buyers of Rs 1,523 crore and Gross sellers of Rs 1,485 crore.

India VIX (Inverse relationship between Nifty and Indian VIX)

·         Volatility for 26^th August, 2010 close at 9.67 which is 9.67% lower as compared to previous close, after touching an intraday high of 18.92 and low of 16.90.

Implications: Indian VIX plunged by ~9.5% in today’s trading session. We expect it to move upwards and are Bullish on the same which would have negative impact on Nifty.

SUBSCRIPTION FIGURE FOR Gujarat Pipavav Port Limited IPO @ 1.00 PM as on 26th Aug 2010

Gujarat Pipavav Port Limited IPO
Category over Subscription

QIB 13.20
HNI 6.05
RET 2.20
Total 8.11

FOR QIB Category Issue closed on - 25th Aug 2010.
For Retail & HNI Category Issue closes on - 26th Aug 2010.

Thank you,
Minita Aiya
Client Service Associate
DENIP Consultants Pvt. Ltd.

VWAP Analysis - 26/08/2010 - August Expiry - Disclaimer Post applies

Following is a VWAP analysis:

VWAP: Volume Weighted Average Price. A VWAP is computed from a beginning cut-off time to an ending cut-off time, and is calculated by volume weighting all transactions during this time period. On the day of expiry, positions in futures either long or short which are cannot be rolled into next series, they are taken into VWAP and their equivalent cash positions are bought or sold in the last 30 minutes on expiry day.

·         TATAPOWER: The counter has witnessed weak rollovers with only 57% of the positions getting rolled into the next series as compared to 71% rolls seen on D-1 of July expiry. The average 6 months rolls on D-1 day are 70%. Since the start of the expiry the OI has risen by ~40% to 2.35 mn shares while the current  month OI is ~3.8 times the average daily volumes seen in the counter. The July month future was trading at a discount to the cash during the major part of the month. The stock witnessed good delivery positions during the series. Some amount of VWAP SELLING could be witnessed in the counter if rolls don’t pick up.

·         ULTRACEMCO: 39% of the positions have got rolled into the next series as compared to 66% rolls seen on D-1 of August expiry. The average 6 months rolls on D-1 day are 74%. The OI in the counter stands at 0.65 mn with nearly 20% positions being added through this month. The counter has been trading at a discount to cash during the major part of the month. The stock witnessed good delivery positions during the series. Lack of rollovers may trigger VWAP BUYING. The current month OI is ~4.6 times the average daily traded volumes.

·         AUROPHARMA: The counter has witnessed weak rollover with only 38% positions getting rolled into next series as compared to 77% rolls seen on D-1 of July expiry. The average roll of last 6 expiries on D-1 day is 78% in the counter. The counter added 38% positions in open interest during the series. The OI in the current month stands at 1.03 mn. The counter could witness VWAP SELLING if rolls do not pick up.

·         PETRONET: The stock witnessed 33% positions getting rolled into next series as compared to 55% rolls seen on D-1 of July expiry. The average rolls of last 6 expiry on D-1 day is 50% in the counter. Open interest has risen by ~70% and the OI outstanding in the current month is ~0.9 times the average daily traded volumes. Lack of rollover may trigger VWAP SELLING.

·         INDHOTEL: The counter added 99% positions in open interest during the series. The counter has witnessed rollover of 65% as of yesterday. The average roll of last 6 expiries on expiry day is 85% in the counter. The OI in the current month stands at 5.25 mn and is 2.75 times the average traded volume in the entire month. The counter traded at a premium to cash throughout the month. The counter could witness VWAP SELLING if rolls do not pick up.

Trading Ideas - 26/08/2010 - Disclaimer Post Applies

Following are the trades high risk trades can take:

·  Petronet Short on open / 112.3 or higher for a target of 109.6

o Close the position on 110

o Lot size 4000

·  TV 18 - Short on open / 88.3 or higher for a target of 86.8

o Close the position on 87

o Lot size 4000

·  Balrampur Chini - Short on open / 86.5 or higher for a target of 85.5 / 85.3

o Close the position on 85.9

o Lot size 4000 

These are august prices and its prudent to trade in the September series tomorrow, so keep an eye for the discount / premium on the prices.

Markets Today - 25/08/2010 - Disclaimer Post Applies

Nifty August series is trading at a premium to spot. Tomorrow being expiry we expect Nifty to expire between 5,500 on upside on account of more of call concentration than puts and 5,400 on downside on account of more put concentration than call and below that 5,350 to act as a strong support in worst case scenario. The wide range for September series on account of concentration is 5,600 and 5,400.

Option Analysis:

·         Call writing: In August series, major call concentration is witnessed at 5,600 CE of 97 lakh shares and fresh writing was seen at 5,500 CE of 10 lakh shares. In September series, maximum writing and concentration is seen at 5,600 PE of 59 lakh shares.

·         Put Writing: On the other hand, in August series major concentration in puts is observed at 5,300 and 5,400 of 125 lakh shares and 120 lakh shares respectively along with fresh writing witnessed at 5,300 PE and major shedding at 5,500 PE. However, in September series concentration is being witnessed at 5,400 PE of 64 lakh shares.

Implications: On back of concentration we expect August series to expire between 5,600 on the upside and 5,300 on downside. The wide range for September series on account of concentration is 5,600 and 5,400.

FIIs and DIIs activity in capital market segment

·         FIIs were net sellers of Rs 364 crore with Gross buyers of Rs 2,379 crore and Gross Sellers of Rs 2,744 crore.

·         DIIs were net sellers of Rs 266 crore with Gross buyers of Rs 1,159 crore and Gross sellers of Rs 1,159 crore.

India VIX (Inverse relationship between Nifty and Indian VIX)

·         Volatility for 25^th August, 2010 close at 18.92 which is 11.36% higher as compared to previous close, after touching an intraday high of 19.35 and low of 15.40.

Implications: Indian VIX surged ~11% in today’s trading session and touched an intraday high of ~19%. We expect it to move upwards and are Bullish on the same which would have negative impact on Nifty.