Peer Analysis for Stock Selection top – down approach to stock selection

Peer analysis is one of the most important steps for selecting a company over the other in the same industry. Before I move on to explain how peer analysis can be done by every investor, I would like to summarize the steps we generally use for selecting a stock. In financial terms, what most investors do for stock selection is called the top – down approach to stock selection. The top-down analysis can be explained in a simple way through the diagram below.
In my opinion the most difficult thing in the 3 step to stock selection is step 3. An investor can select the best industry, but if he/she is unable to choose the right company, then the entire analysis is of no use. Through this article I will try and give investors certain parameters which can be used to compare companies and hence choose the best among the best. This will lead to superior long term returns for every investor.

Before I talk about the parameters to look at for stock comparison, I would like to make the concept of peer companies clear to investors. Peer Company does not only mean companies in the same industry. Peer companies are companies which also have comparable revenue.

For Example:

Company “A” has revenue of 100 Crores

Company “B” has revenue of 5,000 Crores

Company “C” has revenue of 7,000 Crores

Company “D” has revenue of 150 Crores and

Company “E” has revenue of 200 Crores

All these companies are in the same industry. But all are not peer companies. Company “B” and “C” are peer companies, while company “A”, “D” and “E” are another set of peer companies.

The simple logic is that you cannot compare the financial parameters of a huge company with a small one. Its not justified and will not give a correct picture of which company is relatively good or bad. But when you compared the relatively same size companies then it gives a better idea of which company is better then the other based on certain financial parameters.

With the explanation of peer companies clear, I would now proceed and lay out the financial metrics which investors can use to compare companies. In the end I would take up the example of an industry and compare companies in that industry using the financial metrics discussed. This will make the concept clearer to readers.

Investors should note that this process of research does take time but its more then worth the effort if one can spot the right company. Moreover, investors put their hard earned money into companies and businesses. So it’s wise to make a well informed decision by spending some time doing personal research.

Income Statement Related Ratios:

1) PE Ratio: This is the most common ratio used for comparing companies. PE ratio simply means how much an investor is willing to pay in the market for Rs. 1 of company earnings. So, if a company has a PE ratio of 10, it means that investors are willing to pay Rs. 10 in the market for every rupee of the company earnings. When comparing companies the thumb rule is – lower the PE ratio the more undervalued the company is relative to its peers.

PE Ratio = Market Price of Company/ Earnings per Share

2) PEG Ratio: This ratio is applicable mainly to high growth industries. For companies growing at 50-60% or even more the PE ratio is not a great indicator of valuation. For such companies PEG ratio is used.

PEG Ratio = PE Ratio / Growth

For simplicity sake the growth here is the revenue growth rate for the company. Example: A company has a PE ratio of 50. This looks high and we would say that the company is overvalued. But suppose that the company is growing at 100% annually. So PEG ratio for the company is 0.5 (50/100). A PEG ratio of less then 1 means the company is undervalued with respect to its future growth potential. A PEG ratio of over 1 indicates that the company is overvalued with respect to its future growth potential.

3) Gross Margin, Operating Profit Margin and Net Profit Margin: It is very important to compare these margins for peer companies. If in the same industry a company has a better gross, operating and net profit margin then its peer then it makes a big difference. It shows that the company is more efficient and better equipped to control its cost then its peers.

Gross Margin = (Revenue – Cost of Sales/ Revenue)*100

Operating Profit Margin = (Earnings before Interest and Tax/Revenue)*100

Net Profit Margin = (Net Profit / Revenue)*100

4) Price/Sales Ratio: This is another simple to calculate as well a very useful ratio to do peer analysis and valuation. The lower the price/sales ratio, the more undervalued the stock is as compared to its peers.

Price/Sales Ratio = Stock Price/Sales per share

Sales per share can be calculated in the same way as we calculate EPS. I.e. Sales/Shares outstanding

Balance Sheet Related Ratios:

1) Return on Equity: This is one of the most important ratios as it shows how efficiently the company has been using the shareholders money. The higher the ratio the better it is and indicative of an efficient management. So among peer companies this ratio can be used as a big differentiator between good, medium or bad managements.

Return on Equity = Net Income/ Shareholders Equity

2) Return on Assets: This is another important ratio for giving investors an idea about how good the management is in utilizing its assets to generate returns for its shareholders. So the higher the ROA, the better is the company in extracting maximum use of its assets to generate returns for shareholders.

Return on Assets = Net Income / Total Assets

3) Debt Equity Ratio: For the same size companies in the same industry it is important to know the debt equity ratio. In general the lower the debt equity ratio the better it is for the company. The most important reason is that it reduces the interest burden for the company.

Debt Equity Ratio = Total Debt / Equity

Cash Flow Related Ratios

1) Operating Cash Flow per Share: This ratio is the most important ratio to look at in the cash flow in my opinion. This will give the real cash inflow for the company per share for any given year. So among same size companies, if a company has higher operating cash flow per share then it’s a much better bet then a company having low or negative operating cash flow per share.

Operating Cash Flow per share = Cash flow from operations / Number of shares outstanding

2) Capital Expenditure per share: It is the capital expenditure which tells how much the company will expand in the future in terms of its size and revenue. So among same size companies if a company is going for higher capital expenditure per share then its likely to have higher revenue growth also in the future. So among peer companies always go for the company with higher Capex per share.

Capital Expenditure per share = Capital expenditure / Number of shares outstanding

While these ratios are not the only thing one needs to do in order to select stocks, this process acts as a filter. So among 10 stocks in the same industry, an investor can narrow down the selection to 2-3 stocks using these ratios. Then other things can be looked into before making a final selection of stocks.

For a moment this process may look time consuming. But it works and to spend some time is essential before any investor puts his/her hard earned money in any business.

Value investing an investment approach: Significance and traps

Value investing is defined as an investment approach where an investor buys a stock which is undervalued as compared to its intrinsic price. Legendary investor, Benjamin Graham originated the concept of value investing. His follower, Warren Buffet, is also the greatest value investor known till date in the history of equity markets. According to Warren Buffet, value investing is the real form of investment, anything else is pure speculation.

The basic idea behind value investing is that many times market over reacts to negative news and rate good stocks below their fundamental values along with bad stocks. Value investing relies on fear psychology of market i.e. when there is fear in the market, everyone starts selling, be it a good stock or a bad stock. In this process, good stocks also come below their fundamental values. As and when the market sentiments improve, they finally reach their fundamental value.

Now, the million dollar question is how to identify a value stock. The answer is pretty simple.

A stock which satisfies following criteria can be classified as a value pick:

•Market cap is less than or equal to two-third of net current assets
•P/E of the stock is low as compared to the sector average
•PEG is less than 1
•Debt-to-equity ratio is less than 1
•Sales and EPS are rising year over year
•P/E is below its own past P/E (i.e. earnings rising but P/E declining)
•High returns on equity (RoE) as compared to industry average
•Price-to-book ratio less than or equal to 1
•Current ratio and quick ratio more than 1
•High dividend yield
•Low market-cap to sales ratio as compared to peers
•Company is generating enough cash
•Company has debt levels below its peers

Besides the above financial parameters, following criteria should also be met:

•Company brand name has strong reputation
•Company has strong market position
•Company has exceptional management
•Competitive advantages
•Product and market diversification

Points to be noted while doing value investing:

•A value investor should always look out for margin of safety. Buy a stock at 60-70% of its value price so that in case computation goes wrong and stock falls more, there are less chances of making loss. For example, if market cap of stock is already at two-third of its net current assets and stock is currently priced Rs 50, then buy the stock if it comes to Rs 30-35 (provided it satisfy other criteria too)
•Sell the stock when stock price reaches a point when the market-cap is equal to the net current assets of the company

•You should know how to differentiate a value stock and a cheap stock. Every stock which has been beaten down by the market is not a value pick. The company might be on the verge of bankruptcy or it might have been beaten down by the market for no fault of its own. Do proper research before investing. Investigate if there is any reason that justify the fall. If answer is no, it should be further looked into

•The risk is low in case of value investing as compared to growth investing provided you know the difference between a value stock and a cheap stock

•Value investing is not just finding the stocks hitting 52-week lows (even though they are mostly found from this list). It is about thoroughly understanding the business, carefully evaluating the company management and finally believing in the potential of the company

•As a value investor, you should have the courage to go against the crowd, staying focused on the long term goal and value, ignoring the short-term gains or losses. Value investing is a bottom up approach. A value investor ignores market sentiments and focus on business fundamentals and its intrinsic value.

•Understanding business story is crucial for value investing. Success cannot be achieved just by purely focusing on the fundamentals like Return on Equity or free cash flow. You should be good at understanding both the fundamentals, the story and how the two work together to define a great business

•You should have a long term focus to get real benefits of value investing. If you have done your homework right, you should not care what market is doing to the stock on a daily basis. Just look for a good price with respect to value and do not try to time the market

•Because of the wide popularity of this approach and the fact that all the information regarding companies is available so easily today through web, it is very difficult to find out companies that fulfill value investing criteria. Therefore, this strategy can be successfully applied only during extreme market panic situations. Value investing works best when stock market is at its historic lows like in current times. During bull period, it is difficult to find stocks below their intrinsic value. For example, during current bear markets, you can easily find out many value picks

•The basic problem with value investing is that new investors buy a weak stock which is in a strong downtrend thinking it a value pick. The stock then never picks up or makes further lows thereby increasing the losses multifold.

•As a value investor, you should have patience as many times market takes its own time to re-rate the stock.

When you go out for shopping, you look out for the best possible deals. You want a good quality product that will last for years at a fair price. Value investing is also about using the same approach while buying stocks i.e. buying a business that will create wealth for many years and that are available at fair prices.

Tips and advice for smart investors by Warren Buffet

1. Beware of companies displaying weak accounting.

2. Unintelligible footnotes usually indicate untrustworthy management.

3. Be suspicious of companies that trumpet earnings projections and growth expectations.

4. Suspect those CEOs who regularly claim they do know the future –and we become downright incredulous if they consistently reach their declared targets.

5. Managers that always promise to “make the numbers” will at some point be tempted to make up the numbers.

6. Derivatives are financial weapons of mass destruction.

7. A director whose moderate income is heavily dependent on directors’ fees is highly unlikely to offend a CEO or fellow directors, who in a major way will determine his reputation in corporate circles.

8. If regulators believe that “significant” money taints independence (and it certainly can), they have overlooked a massive class of possible offenders. (referring to outside directors)

Those attributes are two legs of our “entrance” strategy, the third being a sensible purchase price. We have no exit to strategy –we buy to keep.

That is one reason why Berkshire is usually the first- and sometimes the only –choice for sellers and their managers.

This is the synopsis of Warren Buffet speech in 2003.

Market seen opening lower; volatility may rise these days

The market is seen extending last five days’ losses as they play a catch-up with rest of its Asian peers which had witnessed a sell-off on Tuesday, 26 January 2010, when Indian markets were closed for a Republic Holiday. The S&P CNX Nifty futures for January 2010 expiry were trading 92.50 points lower in Singapore. Sentiment on the street may remain edgy following the recent selling drive by the foreign institutional investors.

Asian stocks were mixed today, 27 January 2010, as gains among health-care and consumer companies overshadowed declines by mining shares on lower commodity prices. Key benchmark indices in Japan, Singapore China and Taiwan were up by between 0.16% and 0.43%. However indices in Hong Kong and South Korea slipped 0.99% and 0.12% respectively.

Asian stocks suffered steep losses on Tuesday, 26 January 2010, after China implemented a previously ordered increase in reserve requirements for some banks.

US markets were little changed on Tuesday, 26 January 2010, as news that the senate has scheduled a hearing on President Obama’s bank proposal for next week rattledthe market.

The Dow Jones industrial average was down 2.57, or less than 0.1%, to 10,194.29. The S&P 500 index was down 4.61 points, or 0.4%, to 1,092.17. The Nasdaq Composite Index was down 7.07 points, or 0.3%, to 2,203.73.

In economic data watch, consumer confidence hit its highest level since September 2008. Its measure of confidence ticked up to 55.9 from an upwardly revised 53.6 in December.

In other news, the national retail federation reported that retail sales is likely to rise 2.5% this year, after a 2.5% drop in 2009.

Back home, the undertone was cautious ahead of derivatives expiry, RBI’s monetary policy and earnings from frontline companies.

Equities are likely to remain volatile in a truncated week as traders roll positions in the derivative segment from January 2010 series to February 2010 series ahead of the expiry of the near-month January 2010 contracts on Thursday, 28 January 2010.

The Reserve Bank of India (RBI) will hold its quarterly monetary policy review on 29 January 2010 and is widely expected to increase the cash reserve ratio (CRR) requirements for banks, but economists are divided on when it will raise interest rates. CRR is the level of cash that banks must keep in deposit with the central bank.

A CRR increase would have little impact on market, as investors have mostly factored in at least a 25 basis points increase in banks’ reserve requirement and steady interest rates. Increases in both the CRR and interest rates could however weigh onshares of banks as well as sectors such as auto and property on concerns loan demand may slow.

Aggregate results of 670 Indian companies showed 50% advance in net profit on 20% rise in sales in quarter ended December 2009 over the quarter ended December 2008.

Net profit of Hindalco Industries declined 21.60% to Rs 427.10 crore on a 29.56% increase in sales to Rs 5286.10 crore in Q3 December 2009 over Q3 December 2008.

Net profit of Hero Honda Motors rose 78.34% to Rs 535.77 crore on a 32.72% rise in sales to Rs 3814.42 crore in Q3 December 2009 over Q3 December 2008.

Net profit of Sterlite Industries India declined 77.16% to Rs 46.59 crore on a 39.83% increase in sales to Rs 3611.99 crore in Q3 December 2009 over Q3 December 2008.

Steel Authority of India, DLF, and HPCL are among the major result announcement on Wednesday, 27 January 2010.

Core sector, which comprises six key infrastructure industries, grew 6% in December 2009, compared with 5.3% growth in November 2009. The growth, signifying a recovery in industrial manufacturing, was primarily led by an increase in the production of finished steel, cement and electricity last month. The core sector growth stood at 0.7% in December 2008, due to the economic slowdown.

The sector, which accounts for 26.7% of the index of industrial production (IIP), grew 4.8% in April-December 2009 period, against 3.2% in the corresponding period of 2008-09, the commerce and industry ministry data showed on 23 January 2010.

As per reports, the government is considering an across-the-board increase in excise duty in Budget 2010-11, as it faces pressure to withdraw fiscal stimulus measures in the wake of a 16-year high fiscal deficit of 6.8% in the current financial year. One option being considered is an increase in Cenvat rate by 2% while leaving the service tax rate unchanged at 10%, reports citing an unnamed finance ministry official indicated. Cenvat refers to the median excise duty, tax on manufacture of goods, levied on nearly 90% of the goods made in the country.

Also more services could be brought under the tax net to allow the government to keep service tax rates unchanged. An alternative proposal is also under consideration which seeks an increase in excise rates in sectors that are doing well such as automobiles, instead of an across-the-board hike.

Source : Capitalmarket.com

Hindalco Inds, Hero Honda could be in focus post earnings

Net profit of Hindalco Industries declined 21.60% to Rs 427.10 crore on a 29.56% increase in sales to Rs 5286.10 crore in Q3 December 2009 over Q3 December 2008.

Net profit of Hero Honda Motors rose 78.34% to Rs 535.77 crore on a 32.72% rise in sales to Rs 3814.42 crore in Q3 December 2009 over Q3 December 2008.

Net profit of Sterlite Industries India declined 77.16% to Rs 46.59 crore on a 39.83% increase in sales to Rs 3611.99 crore in Q3 December 2009 over Q3 December 2008.

Steel Authority of India, DLF, and HPCL are among the major result announcement on Wednesday, 27 January 2010.

TRF received two orders worth Rs 611 crore from state-run utility NTPC for supply installation and commissioning of its coal handling plants.

Hotel Leelaventure’s board approved raising up to $130 million through a mix of a qualified isntitutional placement and issue of foreign currency convertible bonds. The funds will be used to cut debt and part finance its expansion plans.

Net profit of Pantaloon Retail India rose 51.07% to Rs 50.67 crore in the quarter ended December 2009 as against Rs 33.54 crore during the previous quarter ended December 2008. Sales rose 25.38% to Rs 1912.84 crore in the quarter ended December 2009 as against Rs 1525.68 crore during the previous quarter ended December 2008.

Net profit of Power Grid Corporation of India rose 31.02% to Rs 487.84 crore in the quarter ended December 2009 as against Rs 372.35 crore during the previous quarter ended December 2008. Sales rose 3.25% to Rs 1525.41 crore in the quarter ended December 2009 as against Rs 1477.44 crore during the previous quarter ended December 2008.

Godrej Industries reported net profit of Rs 16.91 crore in the quarter ended December 2009 as against net loss of Rs 3.39 crore during the previous quarter ended December 2008. Sales rose 13.70% to Rs 203.68 crore in the quarter ended December 2009 as against Rs 179.14 crore during the previous quarter ended December 2008.

Net profit of GlaxoSmithkline Consumer Healthcare rose 3.38% to Rs 33.68 crore in the quarter ended December 2009 as against Rs 32.58 crore during the previous quarter ended December 2008. Sales rose 26.11% to Rs 418.12 crore in the quarter ended December 2009 as against Rs 331.55 crore during the previous quarter ended December 2008.

Net profit of Cummins India rose 11.11% to Rs 148.16 crore in the quarter ended December 2009 as against Rs 133.34 crore during the previous quarter ended December 2008. Sales rose 8.71% to Rs 814.83 crore in the quarter ended December 2009 as against Rs 749.52 crore during the previous quarter ended December 2008.

Net profit of Indiabulls Financial Services rose 57.40% to Rs 57.12 crore in the quarter ended December 2009 as against Rs 36.29 crore during the previous quarter ended December 2008. Sales declined 25.16% to Rs 291.81 crore in the quarter ended December 2009 as against Rs 389.90 crore during the previous quarter ended December 2008.

Net profit of Hotel Leela Venture rose 40.78% to Rs 28.86 crore in the quarter ended December 2009 as against Rs 20.50 crore during the previous quarter ended December 2008. Sales rose 5.65% to Rs 126.46 crore in the quarter ended December 2009 as against Rs 119.70 crore during the previous quarter ended December 2008.

Nalco, Punjab National Bank, Union Bank of India, Dabur India, Bank of Baroda, Orbit Corporation, GMDC, Adani Enterprises, Adani Power, JM Financial, Firstsource Solutions, Everonn Education, Nagarjuna Construction, Patel Engineering, Binani Cement, MM Forgings, NOCIL, Trent, Bal Pharma, EL Forge, and Cholamandalam DBS Finance, among others will declare December 2009 ended quarter results on Wednesday.

Source : Capitalmarket.com

Sensex sheds 3.47% as euro zone fiscal woes curb risk appetite

The key benchmark indices tripped as as Europe’s sovereign debt, indications of weak US jobs data and a crash in commodity and energy prices raised fresh concerns over global economic recovery. The Sensex fell in 4 out of 5 trading sessions in the week ended Friday, 5 February 2010. The BSE Sensex fell below the psychological 16,000 mark.

Fiscal woes in Europe pushed global equities sharply lower on Friday 5 February 2010, as the cost of insuring Greece, Spain and Portugal’s debt against default rose sharply. European Commission’s endorsement Wednesday of Greece’s deficit-cutting plan failed to assuage investor fears.

The BSE Sensex declined 567.03 points or 3.47% to 15,790.73 in the week ended 5 February 2010. The S&P CNX Nifty fell 163,40 points or 3.34% to 4718.65.

The BSE BSE Mid-Cap index fell 2.5% and the BSE Small-Cap index fell 1.93%. Both the indices outperformed the Sensex.

Chairman of the prime minister’s economic advisory council C. Rangarajan on Friday said the government is no hurry to roll back economic stimulus measures in one go. He also said that efforts will be made in the budget later this month to lower the fiscal deficit. It has been pointed out repeatedly that the process of exit must be gradual, coordinated and must not be sudden, should not disrupt the economy and efforts will be made to bring down the fiscal deficit in the coming budget, Rangarajan said.

Following rising prices of potato and pulses, food inflation rose to 17.56% in the week ended 23 January 2010 from 17.40% in the previous week, government data released on Thursday showed. The inflation for primary articles, which include food and non-food items, marginally eased to 14.56% in the reporting week from 14.66% in the previous week. The fuel price index rose 5.88%

Pronab Sen, the country’s chief statistician, said on Wednesday the government should wait till May to roll back stimulus, as the strength of the demand recovery visible in available data may not be for real, pulling the finance minister, Pranab Mukherjee, away from a policy direction which the Reserve Bank of India (RBI) desires.

Reserve Bank of India (RBI) governor D Subbarao has for the first time, said the nation may have to take some measures towards capital control in the short term to avoid stark economic imbalances after acknowledging in the past the role played by fund flows in worsening inflation, boosting asset prices and destroying industry competitiveness.

The RBI will target inflation in the coming months, Subbarao said on Monday. Subbarao also said it is important for the government to withdraw the stimulus and that the government and central bank would have to coordinate in withdrawing stimulus. He reiterated that the economy is back to growth and added that the challenge is to accelerate momentum.

The Reserve Bank of India (RBI) will adjust monetary policy outside of its quarterly review cycle only under extraordinary circumstances, a deputy governor Subir Gokarn said on Monday.

Meanwhile, the business activity among Indian services companies expanded at its fastest pace in 16 months in January 2010, rising for a second straight month on sharp increase in new work orders, a survey showed. The HSBC Markit Business Activity Index, based on a survey of 400 Indian firms, rose to 58.96 in January 2010, its highest since September 2008, after rising to 57.41 in December 2009.

Earlier this month, another data showed that manufacturing activity grew at its fastest pace in almost 1-1/2 years in January 2010, driven by a sharp rise in new export orders that are supporting a recovery in the industrial sector. The HSBC Markit Purchasing Managers’ Index (PMI), based on a survey of 500 Indian companies, rose to 57.7 in January 2010, its strongest reading since August 2008 and up from 55.6 in December 2009.

Exports continued to rebound, rising an annual 9.3% in December to $14.6 billion, their second consecutive monthly rise, although the pace of annual growth was slower than the 18.2% registered in November. Imports increased by 27.2% in December from a year earlier to $24.75 billion while the trade deficit shrunk by a little over 28 percent to $76.24 billion for the April- December 2009 period.

India can gradually start raising interest rates as Asia’s third-largest economy is among the first to recover after the global financial crisis, the International Monetary Fund (IMF) said in a report published on 4 February 2010 on its website. India’s economy is one of the first in the world to recover and the central bank should take a gradual approach to ensure the recovery reaches its full potential, the IMF report said.

The International Monetary Fund sees the Indian economy coming back to potential by 2010-11 to log 8% growth from the current year’s 6.75 per cent. Still, the IMF’s assessment of GDP growth for the current fiscal is in contrast to the government’s projection of more than 7% and the RBI’s latest forecast of 7.5%

The two top stock exchanges, the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) have decided to hold a special trading session on Saturday, 6 February 2010, as NSE is testing an upgraded trading system. Trading will begin at 11:00 IST and end at 12:30 IST.

The advance estimates on economic growth for the current fiscal ending March 2010 will be released on Monday. It will be based on the provisional data for the first half of the year and partial data for third quarter and no data on the fourth quarter, which contributes the highest to the annual Gross Domestic Product.

As regards government’s divestment plan, Rural Electrification Corporation (REC) will be the next Government- owned entity to come out with a follow-on public offer (FPO). Its 17.1-crore share FPO will open on 19 February 2010 and will close on 23 February 2010. This will be followed by NMDC’s FPO.

As per reports, in the next fiscal, the Government is likely to divest its stake in state-run firms such as Engineers India, Coal India through initial public offers (IPOs) and Power Grid and Sail through FPOs.

Emerging market equity funds lost $1.6 billion in weekly withdrawals, the biggest outflows in 24 weeks, as earnings and Greece’s debt woes raised concerns that the global recovery may falter, the EPFR Global data indicated. Investors withdrew $516 million from Asian equities outside of Japan in the week ended 3 February 2010. Within Asia, China equity funds reported net outflows for the fifth time in six weeks while Indian funds lost $180 million, the most in 68 weeks

The key benchmark indices witnessed a divergent trend, with BSE Sensex closing flat and S&P CNX Nifty eking out small gains on Monday, 1 February 2010 after a strong intraday rebound triggered by upbeat economic data and higher monthly sales figures from two auto majors Maruti Suzuki and Mahindra & Mahindra. The BSE 30-share Sensex was down 1.93 points or 0.01% to 16,356.03 on that day.

Key benchmark indices declined reversing early gains on Tuesday, 2 January 2010 as investors turned cautious ahead of the opening of the large follow-on public offer (FPO) of state-run power generation firm NTPC on Wednesday, 3 February 2010. The BSE 30-share Sensex fell 192.59 points or 1.87% to 16,163.44 on Tuesday.

The key benchmark indices surged on Wednesday, 3 January 2010 on robust services sector data for January 2010 and firm global stocks boosted investor sentiment. The BSE 30-share Sensex rose 332.61 points or 2.06% to 16496.05 on that day.

Weak global cues casted their shadow on the domestic bourses on Thursday, 4 January 2010 which ended sharply lower following a late sell-off in index pivotals. The BSE 30-share Sensex was down 271.10 points or 1.64% to 16,224.95 on that day.

Sustained selling pressure kept key benchmark indices suppressed throughout the day on Friday, 5 February 2010. World stocks fell as Europe’s sovereign debt, indications of weak US jobs data and a crash in commodity and energy prices raised fresh concerns over global economic recovery. The BSE Sensex fell 431.58 points or 2.66% to 15,793.37 on that day.

Metal stocks declined on weak metal prices on London Metal Exchange. Hindalco Industries (down 6.21%), Tata Steel (down 3.26%), Sterlite Industries (down 2.13%), National Aluminium Company (down 4.8%) and Hindustan Zinc (down 7.52%), edged lower.

Index heavyweight Reliance Industries (RIL) fell 6.23%. As per reports RIL has submitted a $2 billion expression of interest for Value Creation Inc, a Canada-based private firm which holds oil sands assets.

India’s largest power utility firm by sales NTPC fell 4.64%. NTPC’s follow-on pubic offering (FPO) was fully bid on the last day of the issue on 5 February 2010. The FPO was subscribed 1.19 times. The FPO which opened for bidding on 3 February 2010 closed on Friday, 5 February 2010.

NTPC’s FPO is the first public issue which is adopting the French Auction route to raise funds. Under the French Auction model, institutional buyers are free to bid above a certain floor price. The highest bidder gets preference during the allotment of shares

The government currently holds an 89.5% stake in NTPC and it plans to dilute 5% through the FPO. At the floor price, the government would mop up Rs 8286 crore

Rate sensitive realty shares dropped on fears a hike in interest rate following inflationary pressures in the domestic economy may crimp housing demand. DLF (down 7.02%), Indiabulls Real Estate (down 7.28%) and Unitech (down 7.19 %) edged lower.

IT pivotals declined following poor US economic data. US is a key market for Indian IT firms. India’s second largest IT exporter by sales Infosys slipped 5.03%

India’s third largest software services exporter Wipro declined 1%. As per recent reports, Wipro Consumer Care and Lighting, the FMCG arm of Wipro, is in advanced talks to buy Nigeria-based skincare company, Tura International.

India’s largest IT exporter by sales Tata Consultancy Services fell 1.28%. Reportedly TCS’ Passport Seva Project, which aims to issue passports in flat three days, is all set to be launched in a week or two.

The National Association of Software and Service Companies (Nasscom) has projected export revenue to grow 13% to 15% to $56-$57 billion in the year to March 2011, below the previous outlook for

Source : Capitalmarket.com

AFP Loan Market Data Provides Corporate Loan Benchmarks

The Association for Financial Professionals (AFP) today announced that it has partnered with Thomson Reuters LPC to offer AFP members access to industry-leading information on current conditions in the corporate loan markets for investment grade and leveraged borrowers. The AFP Loan Market Data will be an important resource to finance professionals facing the prospect of negotiating corporate loans in a bank credit market that is still recovering from a historic shakeup.

Arranging a corporate credit facility is never a simple task. Companies seek favorable pricing, maximum credit, and limited financial covenants that might restrict corporate activities or decisions. Lenders, on the other hand, benefit from wider spreads, smaller exposure to each credit, and restrictive covenants that protect their interests. Most CFOs and treasurers are painfully aware that banks also use credit facility negotiation to ask for, or in many cases demand, a greater share of their commercial and investment banking fees.

“With over $2 trillion in corporate loans maturing before the end of 2012, corporate finance executives will be competing for access to a limited pool of available credit,” said Jim Kaitz, AFP President and CEO. “To get the credit they deserve at terms that are competitive for their organizations, CFOs and treasurers need to understand the pricing and terms on similar deals that are currently being executed.”

While most experienced finance executives have learned to play the negotiation game, many are finding that they must play with a new set of rules. They must renegotiate a mountain of corporate credit just as the world is emerging from the greatest banking crisis that any of us has ever experienced. In the upcoming cycle, negotiations will be further complicated by uncertain economic conditions and banks’ understandable protection of their balance sheets.

The AFP Loan Market Data, which is provided by Thomson Reuters LPC and featured in their weekly Gold Sheets publication and LoanConnector online service, provides benchmark pricing for recent investment grade and non-investment grade borrowers. Information available to AFP members includes average loan pricing, tenor, and size for a range of credit ratings, as well as information on the variation in pricing. Through Thomson Reuters LPC, corporate finance executives can subscribe to access more detailed information on the underlying deals that make up the benchmark pricing, as well as extensive analysis of the corporate loan markets.

“Promoting transparency in the syndicated loan market is vitally important to Thomson Reuters LPC. We are thrilled to be working with the AFP to bring timely and valuable loan information directly to the corporate treasurers and finance professionals that need it,” said Mike Lavin, Global Head of Thomson Reuters LPC.

Loan Financing – way of funding activities that would otherwise be impossible

Sometimes in a person’s life, there comes a time when money is tight, or money is needed quickly and that is when many people will turn to the use of loans. Loans are used when someone is borrowing money from an individual or an institution. Loans involve lending money to a person with terms of repayment laid out.

In modern society, a loan is a perfectly acceptable way of funding activities that would otherwise be impossible. Loans are provided to a variety of people for a variety of reasons. It may be that an individual wants a loan or that a company needs a loan; there are few limits. No matter what the purpose of the loan, there will almost certainly be formalities that have to be followed. For example, forms will have to be filled out and legal terms agreed. Very few people are able to borrow money for free. Generally, loans are a business transaction and a cost is placed on the loan.

Being able to borrow money is an opportunity not a right. People take loans for a variety of purposes and in a range of different values. Larger loans are generally available over a longer period of time and with better rates of interest, whereas smaller loans will be repayable over a shorter period of time and with higher rates of interest. These smaller loans are often used to meet a temporary need such as a holiday or to deal with redundancy.

Not everyone goes to the bank when they need a loan. Many loans are given between family members or friends. Even in these circumstances, it is still wise to have a signed agreement to prevent arguments in the future.

One form of loan that almost everyone has to rely upon at one time or another is a mortgage to assist with the purchase of a home. This type of loan requires certain criteria to be met and a financial advisor should be consulted. Terms will vary dramatically, depending on
the duration of the desired loan. Longer term borrowing
such as a mortgage is generally more cost effective than
shorter term borrowing like credit cards.

Students often take out loans to help with their studies.
Education can be expensive and lending institutions offer
many options designed specifically to help students get
through university or graduate school. These loans are
available to help with fees, accommodation and living
expenses. One of the major drawbacks of student loans is
that the loan will become a burden on the student as soon
as they start work and may affect their ability to get
other loans such as mortgages.

A loan may also be considered when someone is looking for a
new car. Companies that sell cars often offer their own
loans as an extra service or money can be borrowed from a
lending institution. Financing a car does not have to
involve a loan and many people prefer to lease a car so
that they can make regular changes.

Loans come in all sorts of sizes with a wide variety of
terms to suit just about any purpose. Most people need a
loan at least once during their life and as such the market
for providing loans has become much larger recently
offering a great choice for consumers.

Due to the nature of modern society there are now a wide
range of loans available for an even wider range of
purposes. At some point in life, the vast majority of
people will need a loan of some type, so shop around and
choose wisely.

Online Share Trading Advice you can use to invest in right direction

Online Share Trading Advice you can use

Take Stock I don’t put a lot of “stock” in stock picks. What I do put stock in is solid advice that helps me evaluate a company and choose which stock to invest in. MSN has a comprehensive money and investment site but what I like about it is the way they explain all the charts and graphs. Instead of actual online share trading advice, they give you the tools to select your own stocks.

They have all the information of course. They have the history and the latest news of the companies and they have a chart of what the “insiders” are doing, whether they are buying or selling. The fun part is you get all the information and then give yourself online share trading advice from everything you just learned. When you do take online share trading advice seriously, it’s important to know exactly where the information is coming from because the person trying to sell the stock might be the same person writing the “hot tip”. That’s why I prefer generic tools and information that will teach me the ropes but let me make my own decisions.

Stock Takes Now there’s

Article sites like CNN and the SEC (Securities and Exchange Commission) website that are going to carry a lot more weight with me when it comes to online share trading advice. As far as the SEC website, I can search company filings which are very detailed. Now, I’m not going to find online share trading advice at the SEC website but take that information and add it to the tools on MSN and the information on CNN online and you can make a pretty fair assessment of what’s going on at XYZ Company.
Ehow.com has what seems to be an unbiased tutorial on how to research and pick stocks online. A good rule of thumb is to beware of online share trading advice from the very website or company that wants you to purchase shares of their stock. When I am at MSN researching stocks, I am not looking at anything to do with MSN. It just boils down to the fact that you want to get objective information.

Beware too of message boards and forums that suggest certain stocks. I once was watching a forum where it seemed every other message was about this one certain stock and how the poster wanted to buy it. It didn’t take the rest of the forum long to figure out this was the same person with multiple identities trying to promote this particular stock. Once his cover was blown, we didn’t hear anymore from him.

Ask a doctor for your meducal problems free

Being Successful In Your Online Business by ecommerce sites

People who work online are entrepreneurs, and their websites are ecommerce sites. These people generally love the flexibility that they get from working online. They can set their own hours, working at 2 a.m. or during the day. They also can get away from their physical location more easily than any other business people. They can take the entire company with them whenthey go online. Millions of people sell their items online. How, then, do you make you business stand out?

First, you must develop a rapport with your customers. These people will keep your business alive, and it should not matter that you don’t see them face to face. Give good customer service. Be prompt in getting back to customers. They should feel they receive personalized
service despite the location of your storefront. You should also provide quality products for a good price. People won’t return if they don’t think they are getting a good deal.

Customers shouldn’t feel like they’re simply one of a number of customers. They should feel special. Give them more than just a product; give them a good customer experience. You should make it clear that you appreciate the business and want your customer to return. One way to do this online is to give coupons or offer other
items at discount prices. Give your returning customers special deals to keep them coming back.

You should have some knowledge of web design or at least be able to learn it. You must have a quality website to do business online. Begin with the basics on your site. Choose the colors that are the best for your type of business. Use softer colors if you deal with children’s
supplies; use green if you’re a financial site. Make these kinds of decisions. Think about what your customers will have in mind when they visit your site. The colors are very important in creating image.

Good website copy also is important. Many people focus on the aesthetics, such as color scheme, and the site’s functionality, usually meaning navigability. They fail to realize what good site copy will do for you. A little copy may go a long way in explaining your product, it
won’t help you if you’re depending on search engines to pick up your site. You’ll need optimized copy; you can find plenty of information on the Internet about how to optimize your copy. Plan your site carefully; it’s all your customers have to go on. Make changes often. A good
and updated site will attract customers.

One of the biggest challenges in ecommerce is convincing your customers that they can trust you. If you expect people to make payments online, this part is key. They should be told about encryption or firewalls that you have protecting their information. You also need a privacy policy, regarding the sharing of customers’ information. Con artists are alive and well online, and you need to make your customers feel safe.

All business etiquette in the brick and mortar world applies in the click and mortar world as well. Be respectful. Take your customers seriously. Operate your business honestly. These basic steps will help put you on the path to a successful Internet business.

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