ICICI Lombard - Overseas Travel Insurance

Trading Ideas - 6/04/2010 - Previous disclaimers apply !

Following is our analysis on today’s trading session

Market Overview

• Negative: Increase in open interest by 6.9% with premium of 14 points turning into discount of 3 points implies “Fresh Built-up of short position”

Option Analysis

• Call Writing: Major Call writing was observed above 5,300 levels. 5,400 added open interest of 8.7 lacs shares and 5.8 lacs shares at 5,500. Concentration and second consecutive trading session for strong writing at 5,400 indicates upside momentum to exhaust around these levels.

• Put Writing:  Strong fresh writing observed for last 2 trading sessions across the strike prices. Majority of the activity was seen at 5,300, adding 21.5 lacs shares. So, we expect markets to take strong intermediate support at 5,300 and 5,200 for April series

Implications: Upward momentum in the market to continue till 5,400 with downward to be restricted to 5,300 for intermediate time. The range for the April Series would be 5,200 at downside and 5,400 at upside.

Keeping the same in mind following are the trading ideas for tomorrow:

•                    Bank of Baroda

o   Short @ 669 for a target of 654; stop loss at 673

•                    Bharat Forge

o   Long @ 260 for a target 264; stop loss at 258

•                    Biocon

o   Short @ 303 for a target of 295; stop loss at 306

•                    Kotak Mahindra Bank

o   Long @ 766 for a target of 776; stop loss at 762

To get this directly in your mailbox free of cost, just drop an email at dewang@denip.in or nimesh@denip.in

Thanks,

Dewang K. Mehta

DENIP Consultants - www.denip.in 

Reliance Mutual Fund Performance as on April 2010.

Performance of Mutual Fund schemes of Reliance Mutual Fund:

(Please click on the table to get a bigger view)

Thanks,
Nimesh.

LIC's Wealth Plus! Hurry Up Plan To Be Closed Soon..

Features:

1. Guaranteed Highest NAV of 7 year.
2. Very Attractive Returns.
3. Life cover.

Minimum Sum Assured:

• 3 years Premium Paying Term: 5 times the annualized premium
• Single Premium: 1.25 times the single premium.
• Maximum Sum assured:
• 3 years Premium Paying Term: 10 times the annualized premium if age at entry is upto 50 years
• 5 times the annualized premium if age at entry is 51 years and above

Single Premium:

1. 5 times the Single premium if age at entry is upto 40 years.
2. 2.5 times the Single premium if age at entry is 41 to 50 years.
3. 1.25 times the Single premium if age at entry is 51 years and above.
4. Minimum Yearly premium Rs. 20,000 for three years term policy and there is no limit on maximum premium.
5. Tax benefits.
6. Partial withdrawals allowed: Two Partial withdrawals are allowed in a policy year subject to certain conditions.
7. Limited Period Offer.
8. Extended life cover: A unique feature of the Plan is the extended life cover for 2 years after the completion of policy term of 8 years.
9. Maturity Benefit:

At the end of policy term and the policy is in full force, payment of fund value will be made based on

the highest NAV over the first 7 years of the policy or the NAV as applicable at the end of the policy

terms whichever is higher.

Death benefit:

In case of death during the policy term, the nominee shall receive Sum Assured under the basic plan together with the Policyholder’s Fund Value as death benefit. In case of death of the Life assured after the policy term, but before the expiry of extended period, the nominee shall receive the Sum Assured under the Basic Plan.

Accident Benefit:

Accident Benefit Option equal to the amount of life cover subject to minimum of Rs. 50,000 and maximum of Rs. 50 lakh is available subject to certain limits and conditions. Accident Benefit charge at the rate of Rs. 0.50 per thousand Accident Benefit Sum Assured per policy year will be levied every month.

Modes of Premium Payment for LIC Wealth Plus :

The premium can be paid either in a Single premium (One time investment) or for 3 years regularly at yearly, half-yearly, quarterly or monthly (through ECS).

Minimum Premium:

Minimum Premium for 3 years Premium Paying policies is Rs.20,000 p.a. whereas for Single premium policies it is Rs.40,000 For Monthly (ECS) mode the minimum premium is Rs.2,000 p.m.

Eligibility for LIC’s Wealth Plus:

Minimum Age at entry is 10 years (age last birthday)

Maximum Age at entry is 65 years (age nearer birthday).

Surrender Value:

LIC Wealth Plus can be surrendered only during the policy term. The surrender value, if any, is payable only after the completion of the third policy anniversary both under Single and 3 years Premium Paying Term contract. The surrender value will be the Policyholder’s Fund Value at the date of surrender. There will be no Surrender charge. The policy can not be surrendered during the extended life cover period.

Thanks,

Nimesh.

Weekly Market Outlook - HPCL, Mphasis, Petronet, WelspunGujarat. - Disclaimer Post Applies !!

Indian and Global Markets - Overview

This past week we saw the market open at 5280 levels and rose till 5329 before ending at 5290. We witnessed decent buying in the market because of the capital inflows from the FIIs. However we believe that Nifty will find it difficult to surpass the 5300 – 5350 level for the current week. A break out above 5325 – 5350 could take the Nifty to 5375 – 5400 levels. For this week we believe that all investors and traders should cut their leveraged positions and rather than going short on the market wait for the right opportunity for a direction change. On the charts it looks as if the Nifty is facing pressures to cross 5300 and a move above 5320 on a closing basis could take it to 5333 – 5350.

We believe that the corrective trading action in the last couple of days is healthy for the ongoing uptrend. Even if the indices were to pullback further and move down to the immediate support of 5200/17350 it would not damage the set-up. After seven consecutive weeks of gains, a week or two of sideways action would help the markets build a higher base from where the next phase of the uptrend could begin. The daily oscillators remain in sell mode while the RSI study has witnessed a minor breakdown. The moving averages are safely place below the price action and would provide support in case of further downside. We continue to believe that the strength in the US markets will not allow the Indian markets to correct much. The Dow (DJIA) and S&P 500 are looking set to test our target of 11000 and 1200 respectively. Overall it looks to be a volatile end to the weak likely within the 5250-5350 zones.

Consecutive third trading session for overall activity in call higher than put which signifies further weakness till 5,200.

Call Writing: Call writing observed across the strike prices except 5,100. Major addition of open interest in 5,300 of 6.3 lacs shares. Currently, 5,300 to act as major resistance for near term and 5,400 for April series on account of major concentration and PCR less than 0.50.

Put Writing: Strong fresh writing between 5,100 to 5,300 strike prices. 5,200 added open interest of 12.6 lacs shares and 2.8 lacs shares at 5,300. 5,200 to act as a major support for the April series on account of concentration of 60.7 lacs shares and PCR at 2.36.

Increase in open interest of Put below 5,300 and premium moving from 12 to 14 points indicates long positions were built up at lower levels around 5100 levels. We expect the market losing its upside momentum at current level on account of lower put with higher call writing above 5,300 strike prices, current month PCR declining from 1.6 to 1.4.

Profit booking would be viable strategy at current levels and go short above 5350 – 5400 levels.

In Thursdays trading sessions, FIIs were net buyers of Rs 433 crore with Gross buyers of Rs 2,778 crore and Gross Sellers of Rs 2,345 crore. DIIs were net sellers of Rs 357 crore with Gross buyers of Rs 1,425 crore and Gross sellers of Rs 1,782 crore. This implies that there is a “Fresh Build of Long positions” in the market.

Globally, there is a lot of improvement in economies worldwide. We heard the CEO of AIG, Mr. Robert Benmosche say that AIG was now less reliant on the US government and that AIG was on its way to repay the complete bail out money that was provided to it. Goldman Sachs was on its way to buy out a minor stake in a $4bn. hedge fund. Home sales as well as retail sales were seen rising in the US due to Easter and better bargains. Home sales in Manhattan have doubled for the first time since 2009.

Asian stocks climbed to an 11-week high, emerging-market currencies rallied and bond risk fell on signs an economic recovery is gathering pace in the U.S. and Japan, the world’s two largest economies. U.S. indices too ended up higher by almost 0.7% post the March employment numbers. Car sales were seen higher too due to better deals available in the market.

­Commodity Market Overview

This week will be bad for the commodities market. We believe that since the dollar is rising a sell off is bound to occur in the commodities market. We have attached the inventor to price graphs for 4 of the leading commodities globally. Aluminum, Zinc, & Copper should fall this week by at least a 1% - 2% along with Lead. We still maintain that Gold might cool off in the short term but is offering the best time to start buying it since inflation is on the rise. Crude oil seems to be consolidating and is poised for a breakout either on the downside or the upside. We would like to believe that Mr. Jim Rogers is right and that crude oil will fall till $65/bbl.

View on Indices - Weekly Outlook

1. Bank Nifty

a. This index has started facing resistance since the past few days and is now showing the first signs of weakness. This currently trading at 9507 and the upside for the moment is capped at 9550 - 9575 and lower end supports are placed at 8800 – 8880.

2. CNX 100

a. This index is trading at 5226 which is again a highly overbought level for this index. We believe that now the index has entered its resistance zone and one can short this index for a target of 5200 / 5170 / 5150.

3. CNX IT

a. This index is trading at 5984 and has seen significant amount of sell off since the past 4 sessions. We believe that one can now go long on this index at 5294 for a target of 6030 / 6050 / 6100. High risk trades can short this index with a target of 5818 with a stop loss placed at 6000. Since this index is on the verge of a break out or a break down, we believe that one can actually go long on some of the stocks that comprise this index while shorting the index or but PUTs.

4. Nifty Midcap 50

a. This index is trading at 2712 and is facing still resistance from 2720 -2750 levels. This index can test 2730 on the upside but we believe that the downside stands at 2700 / 2670 / 2650.

5. S&P CNX Nifty

a. This index is trading at 5290 and we believe that it is highly overbought. The upside for this index is capped at 5320 – 5350 but the downside supports come in at 5250 – 5275. High risk traders can short the Nifty at 5310 with a stop at 5325 and a target of 5263. However it would be prudent to stay with the trend and long Nifty at 5290 for a target of 5350.

 

Trading Stocks Ideas

1. Bharat Forge

a. This stock can be bought at 256 for a target of 265.

2. Hindustan Petroleum

a. This stock can be bought at 316 for a target of 330.

3. Mphasis Ltd.

a. This stock can be bought at 640 for a target of 660.

4. Petronet LNG

a. This stock can be bought at 79 for a target of 83

Speculative buy on open on Monday – Welspun Gujarat at 277 for a weekly target of 285. Stop loss at 274.

To get this post directly in your mailbox free of cost just drop us an email at dewang@denip.in / nimesh@denip.in


Thanks,
DENIP Consultants Pvt. LTd - Dewang K. Mehta & Nimesh P. Marfatia

A REPORT on Market outlook 2010 and the changes in Mutual fund industry.

Venue: BSE Convention Hall, Mumbai. Date: 25th March 2010.
Prepared By: Mr. Chintan Dedhia (MBA Student - Shah & Anchor Kutchhi Management College, Chembur Mumbai).

Introduction:
The conference was on Market outlook 2010 and the changes in Mutual fund industry. It was organized on 25th March 28, 2010 the conference started at 5:30 pm at the conventional hall B.S.E on the 1st floor, by Birla Sunlife Asset management Ltd, and was addressed by Mr. A Balasubramainan CIO of Birla Sunlife Asset Management Ltd. The co-speakers were:

1.Mr. Ashish Chauhan – Deputy CEO, Bombay Stock Exchange (B.S.E)
2.Mr. K.N Vaidyanathan – Ex Director, Securities and Exchange Board of India (SEBI).

Speeches Delivered:
Mr. Ashish Chauhan:
He gave a brief description about core facts of B.S.E and mutual fund industry.

Mutual funds:

• The Mutual Fund industry has around 4 crores of investors, net investors are around 3.5 crores(after removing the duplicates)
  
• Growth of mutual fund industry is almost parallel to the growth of stock markets.


• Indian MF industry grew at 29% CAGR in 2004-2008 which is 2nd next to China as against global average of 4% CAGR.
  

Mr. A Balasubramanian:
Mr. A Balasubramanian gave good insight on changes in Asset management industry and Market outlook of 2010, which included many core facts of the industry which are as follows.

• The contribution of India to Global GDP is 4.8%.
  
• From March 2005 till date the growth rate of GDP of India has increased from 6% to 8%.


• AUM to GDP ratio of India is estimated at 12.8% in 2010, which is far less than that of 50-70% in developed nations like US, UK and EU.
  
• Only 5.3% of the 6 lakh villages have commercial banks.


• The middle class segment is about 17 crores and it will increase to about 35 crores in the coming years which are much higher than it is right now.
  
• Indians continue to be the highest savers in the world with 35% saving rate.
  
• Mutual Funds are still 13% of Bank Deposits.


• The BRIC countries attract the major investments as they are the emerging markets and have a lot of opportunities.


• The Chinese MF industry grew at 69% CAGR and Indian MF industry grew at 29% CAGR.


• The Asset management industry manages funds of around 8 lakh crores, which is still small as compared to Banking and broking firms.

Then Mr. A Balasubramanian spoke about the returns that various funds offer and how the markets are changing by using the example of Telecom industry.

Fund’s Returns:

• Large Cap funds offer around 15% returns over long term and nearly 80% returns in the last year i.e. 2009.
  
• Average returns for the income funds are about 5% for 2 years.

Changing trends in Market – Telecom Sector

• The growth in telecom industry is calculated on the basis of ARPU i.e. Average Revenue Per User.
  
• Over the years the ARPU has decreased due to fall in call rates and tariffs, but the EBITA has increased due to deep penetration. For E.g.–IDEA had an ARPU of Rs.757 at the early stages when it launched its services but has reduced to Rs.214 currently.
• Thus profit margins have reduced but overall profits for the sector have increased decently due to increased volumes.
• In India 25% of the population have telephone connections.
• The telecom industry is growing much faster than that of China.

Mr. K. N. Vaidyanathan:
Mr. K. N. Vaidyanathan spoke about the changes which are going to take place in the Asset management Industry in the coming years, which are as follows.
He said that the Indian stock markets have met 3 Game Changers:

1. Met Strike – When BSE went electronic and technologically improved it met with strike from many of the market intermediaries and its employees.
   
2. Met Sneer – When the shares were suggested to be converted into DEMAT from physical form, in order to bring more transparency and reduce the constraints BSE & NSE faced sneers.
   
3. Met Skepticism – When the depository services were changed and CDSL and NSDL were introduced for database management and keeping the record of each and every trade, they faced skepticism.

Mr. Vaidyanathan said “As the football team has 11 players and 1 goal, each and every player works hard with all efforts towards that goal, SEBI is also trying to achieve the goal which is Investor protection”.

He also said that previously the scenario was different in the BSE the volume was only of Rs.300 crores in 1993 and also the brokers charged brokerage of around 2.5%

But now the scenario is changing in the following manner:

• The infrastructure of the secondary market has grown up thus reducing the cost.
• Reduction of the brokerage charged to .40% to .50%.

Changes in MF industry:

• A lot of money is paid as commission to the brokers, advisors, and distributors thus reduction of the fees will benefit investor.
• The sale and purchase of Mutual funds will be online thus making the process of investing and redemption quite simple and hassle free.
  
• There will be a single view terminal and kiosk with internet connections which will help investors to buy or sell any of the MF products from the Kiosks, thus increasing flexibility.
• Investors those who don’t have DEMAT a/c will have to open an electronic a/c for investing in the funds.
• The investors will be able to see the status of investments in all the funds on a single statement.
• Mutual funds will be governed which will give the investors a clear and transparent picture of the whole system.
• There will be investor awareness campaign with the help of Multimedia, T.V and Internet etc.
• But it will take still around 12-18 months to build the whole system.

Suggestions to MF industry by Mr. Vaidyanathan:

• MFs should treat the investors fairly and should not show any illusions.
• If they have 15-20 products then they should show the performance of all them instead of showing the performance of the 4-5 top performing one.
• Should guide the investor in his investment as per his requirement and capability.

After the speech delivered by Mr. Vaidyanathan there was a Question and Answer session wherein the questions were raised by the agents regarding the removal entry load and reduction of the trail commission, and satisfactory answers were given by them.

Thanks,
DENIP Consultants Pvt. Ltd.

Top Stock Picks for FY 2010 - Disclaimer Post Applies - Aban Offshore, SBIN, Welspun Gujarat, 3i Infotech, BF Utilities

Dear Investors,

Following are our stock picks for the first half of FY10. We have picked out 5 stocks that will earn an average return of 20% over the next 6 to 8 months.

Stock Name	Buy Qty.	Buy Price	Target	Amt. Invested	Amt. Return	Profit	Profit %
Aban Offshore	100	1,200	1,448	120,000	144,800	24,800	20.7%
State Bank of India	100	2,103	2,400	210,300	240,000	29,700	14.1%
Welspun Gujarat	100	277	320	27,700	32,000	4,300	15.5%
3i Infotech	100	79	90	7,870	9,000	1,130	14.4%
BF Utilities	100	877	1,200	87,700	120,000	32,300	36.8%
				453,570	545,800	92,230	20.3%

Top 5 stocks in year 2009 - 2010.

Investors have doubled their money during the financial year just ended while the BSE Sensex gained 81% to its Wednesday close at 17,528 and the broad-based NSE nifty index was up 74% to 5,249. Investors' wealth jumped from Rs 30.6 lakh crore on March 31, 2009 to Rs 61.5 lakh crore now as some of the frontline stocks more than quadrupled during the past fiscal year.

Thanks,
Nimesh.

MFs hold back dividend plans after SEBI diktat.

Some mutual funds have cancelled plans to distribute dividends to unitholders to comply with a recent circular by the Securities and Exchange Board of India (SEBI) that directed funds to change the way they source such payouts. The reversal of dividend payout plans follows clarification from the market regulator that the circular was effective from March 15 — the day it was announced.

As the circular did not mention the date from which the new rule would be applied, there was confusion about when would the new rule take effect. Some mutual funds, which assumed the circular would be effective April 1 — the new financial year —, went ahead with the dividend announcements. Some others, whichd planned dividends, did not make it public due to lack of clarity. But these announcements and proposals were reversed following a SEBI clarification to specific queries by mutual funds earlier and also to an industry representation on Monday on the matter.

UTI Mutual Fund has cancelled dividend payouts in three schemes. ICICI Prudential Mutual Fund, which proposed a dividend in one of its schemes, has shelved the plan. Sundaram BNP Paribas has also suspended plans to pay dividend in one of its schemes. Mutual fund distributors said some more fund houses may withdraw dividend announcements and plans.

The SEBI circular on March 15 directed the mutual fund industry to pay dividends only from realised gains and not from the unit premium reserve. An example of how it worked: if the face value of an equity diversified fund is Rs 10 apiece and its net asset value (NAV) rises to Rs 50, then Rs 40 goes to the unit premium account. So, if an investor bought units at Rs 50 apiece and a dividend was announced, it amounted to paying old unitholders from the proceeds received from the new unitholders.

“SEBI is concerned that payout of dividend through the unit reserve premium will lead to underfunding of reserves,” said a senior official of a mutual fund, on condition of anonymity. “The Companies Act stipulates that dividend be paid out of actual profits.”

So, now, mutual funds can pay dividends only from booked profits by that particular scheme. For instance, if the NAV rises from Rs 50 to Rs 60, mutual funds can only use Rs 10 to distribute dividends, only if profits were booked.

Industry officials said the step would reduce mutual funds’ capacity to pay liberal dividends and reduce the instances of ‘misselling’ by distributors. It is also expected to curb ‘dividend stripping’, wherein investors book a notional loss due to the reduction in the NAV of the scheme to the extent of the dividend paid out, and use it to offset capital gains tax elsewhere. Actually, the investor does not suffer any loss, because the dividend he receives is tax free. Often mutual funds encourage dividend stripping, to attract inflows into their schemes. In the past, distributors churned fees luring investors into equity schemes for dividends.

Source: economictimes.com
 
Thanks,
Nimesh.

Mr. Bhargav Pandya joins DENIP Consultants as Manager - Administration & Back Office.

We are proud to announce that Mr. Bhargav Pandya has joined DENIP Consultants Pvt. Ltd. as Manager - Administration & Back Office. Bhargav is a commerce graduate and has more than 5 years of work experience in fields like Accounts & Administration.

Before joining DENIP Consultants he was associated with Shubham Enterprise as Accounts Manager. I wish Bhargav all the best and I know he will do well in this role.

Thanks,
Nimesh.