How Can NRI's Benefit From The Falling Indian Rupee

The Indian Rupee is at War and is the worst Asian currency. On one side imports and associated business are becoming costlier whereas exports are making good money. Recent Q3 revenue of Indian  companies driven by exports reported higher revenue in terms of Rupees, thanks to Rupee Falling.   The fluctuation of Rupee Vs Dollar has been a boon to NRI (Non Resident Indians). Around six month ago the USD – INR exchange rate was hovering around Rs 44 to $ 1 whereas today it is Rs 50.5238.  The better exchange rate coupled with investment option,  is visible in the World bank Report. The Report states that Indians across the world are leading the global remittance.  

Just sending money is not enough. You need to plan it. Some of the ways NRI can utilize the Rupee Vs Dollar fluctuations are

1-      If you have bought a home loan in India, now you can transfer more money to finish the pending EMI(Equated Monthly Installment) at the earliest. Good News is that Reserve Bank of India has decided to remove Prepayment penalty on home loans. In addition Prospective buyers can also invest freshly in real estate market.   So a flat that used to cost Rs 1 crore (1,00,00,000) 6 months back is now available to NRIs at less price. This is equivalent to a builder offering you a cash discount .  Having trouble doing the math? Just google and you will get your answer

2-      The Indian stock market is at its low.  Lot of blue-chip stocks, with strong fundamentals are available at bargain price. Investing in equity is one of the good options. You can set up a Systematic Investment Plan (SIP) to buy the stocks.  Global debt crisis, slowing world economies and rising inflation etc can cause stock markets to fall further. So SIP is a good alternative.

3-      The interest rates on NRE (Non-resident External) and NRO(Non-Resident Ordinary) accounts have increased. The money you save in these accounts will provide you better returns due to higher rates.  Current NRO account interest rates for 1 year is in the range of 9.00% to 9.25% at banks such as HDFC Bank and Bank of Baroda. Transfer money to these accounts and save more money during Rupee Falling

4-      There are people who want to do good to the society. You might be thinking that a small contribution will not make a good difference. But if you transfer $100, it is equivalent to Rs 5000. This contribution will not only help you get tax rebate but also help a person in need

 Keep In mind the different options you have and with good planning you can utilize the current Rupee Vs Dollar fluctuations to your advantage. Remember with every opportunity there is also a risk. For instance if you buy a mortgage loan for long term, the favorable exchange rate will not stay forever. So you might have to shell out more money to meet your ambitions. So before you spend, consider other personal goals and the availability of funds before making use of the Rupee Falling

Application Supported by Blocked amount

SEBI has recently introduced a new process popularly referred to as ASBA (Application Supported by Blocked amount) process. Under this process, the bid amount is blocked in your account at the time of bidding. If and when an allotment is made against your application to the extent of money due on the shares allotted, your account will be debited and the money will be remitted to the company. Therefore, the bid amount remains in your account earning interest during the whole process period. Your account will be debited only to the extent of shares allotted, if any, and the remaining amount will be unblocked. There will be no refund as such and therefore the problems related to non-receipt of refund will not be encountered by you. This is a facility extended by some self certified syndicate bankers (SCSBs) who have registered as such with SEBI. Currently the following banks have been identified as SCSB banks.

#	Name of the bank	#	Name of the bank
1.	Axis Bank Ltd	19.	Kotak Mahindra Bank Ltd.
2.	State Bank of Hyderabad	20.	Bank of India
3.	Corporation Bank	21.	CITI Bank
4.	State Bank of Travancore	22.	IndusInd Bank
5.	IDBI Bank Ltd.	23.	Allahabad Bank
6.	State Bank of Bikaner and Jaipur	24.	Karur Vysya Bank Ltd.
7.	YES Bank Ltd.	25.	The Federal Bank
8.	Punjab National Bank	26.	Indian Bank
9.	Deutsche Bank	27.	Central Bank of India
10.	Union Bank of India	28.	Oriental Bank of Commerce
11.	HDFC Bank Ltd.	29.	Standard Chartered Bank
12.	Bank of Baroda	30.	J P Morgan Chase Bank, N.A.
13.	ICICI Bank Ltd	31.	Nutan Nagarik Sahakari Bank Ltd.
14.	Vijaya Bank	32.	UCO Bank
15.	Bank of Maharashtra	33.	Canara Bank
16.	State Bank of India	34.	United Bank of India
17.	Andhra Bank	35.	Syndicate Bank
18.	HSBC Ltd.	36.	South Indian Bank

SEBI may register more SCSB (Self Certified Syndicate Bank) banks as and when they undergo the self certification process. In case your bank is not one of the SCSB as on date/you are not dealing with any of the bank listed above, you are requested to verify with them as to whether they have got subsequently registered as SCSB.

In case you are the client of any of the above banks and you wish to apply, we strongly advise you to consider making an application under the ASBA process. Should you require more details on this, please do write to us.

In case your bank is not an SCSB bank, you may participate in the FPO/IPO through the normal conventional process. Here again, we request you to ensure the following:

1. The application form is filled in all respects and duly signed by the applicants.
2. The demat account details provided therein pertain to the applicants.
3. The bank account details registered with the depository are correct.
4. In case you have not provided the 9 (nine) digit MICR code to the depository participant, please do the same, so that refunds, if any, can be sent through electronic means wherever possible.
5. Please retain the photocopy of the entire application for your future reference.
6. Please ensure that your application is submitted to one of the bidding centers listed in the inner pages of the application booklet.
7. We find that a large number of banks, particularly in the nationalized sector, have brought their branches under total computerization / core bank solution. In the process, account numbers of their clients have under gone changes. Please ensure that the account number registered with your DP is the current new number allotted, by the bank.

This communication is not to be construed as an invitation for applying in the FPO /IPO and the decision to apply shall be taken by you on your own / and / or in consultation with your financial advisor.

For other features of ASBA process, you are advised to go through the circulars hosted on the website of SEBI.

Indian economy grows by 8.8 per cent in Q1(2010)

Economy grew by an impressive 8.8% during the quarter ended June on the back of robust manufacturing growth.

However, certain sectors like financial services restrained the growth in economy, which had recorded 6 per cent growth rate in April-June 2009-10.

Agriculture and allied activities grew by 2.8 per cent, higher than 1.9 per cent in the year-ago period, but it is nowhere between the target of four per cent pegged by the government in the medium term.

Manufacturing expanded by strong 12.4 per cent in April-June, 2010 against a mere 3.8 per cent growth rate in the same period last year.

Construction too grew by 7.5 per cent compared to 4.6 per cent.

Among services, financial, insurance and real estate services expanded by just 8 per cent, against a growth rate of 11.8 per cent in the year-ago quarter, while community social and personal services growth slowed down to 6.7 per cent, against 7.6 per cent a year ago.

However, trade, hotels and communication services rose by 12.2 per cent, against 5.5 per cent during April-June 2009.

The government expects economy to grow by 8.5 per cent this fiscal. Though the GDP numbers for the April-June quarter are higher than that of 8.6 per cent in the previous quarter, they lag expectations of 8.9-9.4 per cent forecast by various experts.

Read more: Indian economy grows by 8.8% in Apr-Jun - India Business - Business - The Times of India http://timesofindia.indiatimes.com/business/india-business/Indian-economy-grows-by-88-in-Apr-Jun-/articleshow/6466840.cms#ixzz0yHCBxkmb

Cranes Software - Will be delisted from NSE

Really saddened on the news that cranes software Trading will be suspend from 3rd september.
Allahabad bank J&K bank JMP sec has holding approx 1.2 percent each.seven percent holding is with KURUTO fund.biggest share holder is now small investors

Promoter holding coming down from 36.68% to 14.52% probably because pledged shares were kept as collateral. Company officials are mum. Investors like me are doomed

NSE notice
Members of the Exchange are hereby informed that trading in the equity shares of Cranes Software International Limited will be suspended w.e.f. September 03, 2010 (i.e. closing hours of trading on September 02, 2010) as the company has failed to respond satisfactorily to the notice of the Exchange for non-compliance with the provisions of listing agreement

P/E ratio plays big role in investment decisions

Source:http://economictimes.indiatimes.com/quickiearticleshow/6390513.cms

Price-earning (P/E) ratio is commonly used while taking investment decisions by many investors. P/E ratio is the ratio between the market price and earnings per share. The ratio indicates the market price of a share vis-a-vis its earnings.

According to one view, lower the P/E ratio, the better it is for investors, as there are chances of higher appreciation. According to others, it is the other way round. Of course, there are exceptions to these theories as well.

P/E ratio is calculated as market value of each share divided by its earnings. For example, if a company's stock price is Rs 200 and it has an earnings per share of Rs 5, the PE ratio is Rs 40 (Rs 200 divided by Rs 5).

High P/E means high projected earnings in the future

The earnings per share can be taken for the full year or for the last few quarters. It can also be taken from estimates of earnings expected in the next few quarters.

Sometimes, the P/E ratio is referred to as the 'multiple', because it shows how much investors are willing to pay per rupee of earnings. In general, a high P/E means high projected earnings in the future.

However, a P/E ratio actually doesn't tell you a whole lot by itself. It's usually only useful while you compare companies in the same industry, or a company's own historical P/Es.

The higher the P/E, the more you are paying for an estimated stream of earnings. Investors usually are willing to pay a higher P/E for companies they judge will be growing faster than the norm even though they do not pay those earnings out in dividends but retain them to fund future growth.

Higher P/E produces greater upside potential

If that growth is realised, the price of the company's stock usually grows faster than the price of a company with a slower growth or higher dividend-paying company. So, the higher P/E produces greater upside potential.

However, if the estimated earnings are not realised or the stock itself loses favour with investors, the downside potential is greater as well. The risk is not just in the ability of the company to earn profits, but also in the higher price you pay relative to its earnings.

If a company goes from a P/E of 50 to a P/E of 25 and maintains earnings of Rs 5 a share, your investment goes from a value of Rs 250 per share to a value of Rs 125 per share even though the company is still earning profits.

P/E ratio is used to value a company

P/E ratio is a commonly used way to value a company and to determine what a company's stock should be worth.

Generally, a company with a high P/E ratio is expensive when compared with a company with a low P/E ratio, since with a high P/E ratio one is paying a larger multiple against a company's earnings.

Higher P/E ratios are often associated with 'growth stocks', or companies that are growing faster than average. Investors believe that such a company's earnings will be higher in future.

Usually, this yardstick is used to analyse whether a stock is under-valued, overvalued or trading at fair value by investors planning to buy stocks.

low P/E does not mean cheap stock!!!!

Sudha, a housewife had just returned from her weekly kitty party session. She immediately turned on her computer at home and went to one of the trading websites. She was impatient. Mrs. Kumar at the kitty party had just mentioned how she had tried her luck at stock investing. She explained the thumb rule of of finding stocks at low P/E’ s being a good bet and went on bragging about how she had a earned a good Rs. 10000 in one month. As soon as Sudha heard this her thoughts were only on getting home early & finding stocks with low P/E s to invest in. She immediately logged on to one of the financial trading websites & looked for stocks that traded at price to earnings ratio less than 10 (a ratio Mrs. Kumar had mentioned as being a good buy.) She was excited to find some 50 stocks trading at a P/E of less than 10. Wow she thought!!! She was going to be rich soon too. She invested randomly in the top 10 stocks in the list. So what do you think happened to Sudha after 6 months…… Let’s see…

Well six months later, when Sudha checked her portfolio, Sudha realized she was in deep trouble. Forget high returns, 9 out of her 10 investments had reached pitfall levels. She was in heavy losses. After studying the stocks for a while she realized that most of the companies she had invested in were small risky companies, with extremely erratic earnings. She realized being undervalued was not the reason for the stocks having a low P/E. The main reason was the sudden jump in earnings, in most cases due to the sale of an outside business asset.

A stock that trades at a low P/E is not always cheap!!! P/E is the market price of the share divided by the current earnings per share. The problem mainly lies in the earnings per share. The number of outstanding shares in the market too brings a difference in the P/E ratio.

Companies having a history of erratic earnings will trade at low P/E s when they witness upward swings in their earnings. These are high risk stocks and investing in them becomes more of a gamble. Consider the stock below:

Year 2006 2007 2008 2009
Stock Price 23 30 25 15
Earnings 0.72 4 0.5 0.32
P/E 32 7.5 50 46.88

Many innocent investors would have been caught in the trap in 2007, just by looking at the attractive P/E. Any investment in the year 2007 would have given nothing but losses to the investor for the next 2 years.

Consider the example of TVS Motors – In March, 2003 it was trading around Rs.40 and at a low P/E level of 7.5. Seems like a great candidate for applying the P/E thumbrule, doesn’t it? However March 2003 was a great time for the company with a 129% increase in profits – the result a seemingly attractive low P/E. However investing in the company in March 2003 would have given nothing but losses to an investor over a 5 year period. For the next 5 years, the company saw its profits falling & in March 2008 the company’s stock price was Rs. 34 and was trading at a P/E of 28. Buying at a low P/E of 7.5 and selling at a high P/E of 28 brought nothing but losses to the investor.

The other likely reasons for a company trading at a low P/E, could be the company has had a history of trading at a low P/E. Even its industry P/E plays a role here. Probably the companies in the industry have had low P/E trends.

Even when I initially entered the world of stock investing, I always used to end up considering stocks with a low P/E, conveniently assuming that they are cheap. It was only when I was guided by my colleagues at the company I work & they introduced me to the concept of value investing I realized that there are a number of myths in the stock investing world; one of the most dangerous ones being that a stock with a low P/E is a cheap buy.

Hence, for beginners in the stock investing world, beware of stocks with unusually low P/E s. There could be many reasons for this. Always check on the past fundamentals of the company, study why the market is undervaluing the stock; maybe the company is up to some goof up etc. Don’t always use the thumb rule of low P/E and invest blindly!!!


Source:http://stockshastra.moneyworks4me.com/learn/a-stock-that-trades-at-a-low-pe-is-not-always-cheap/

Birla Cotsyn (India) Ltd

When i opened the times of india, i found a full page advertisement of this company.It is part of Yash Birla Group. What i was astonished was that they are giving 4.5% of bonus and 1:5 bonus shares to celebrate 60 years jubilee.

http://economictimes.indiatimes.com/stocks.cms?ticker=birla+&pagenumber=1&pagesize=30&companyid=21607&matchcompanyname=false


the face value of this share is 1.Future plans of the company are
Rs200 crore investment in retail foray
Rs150 crore in yarn processing
Rs75 crore each in expansion of existing yarn capacity and manufacturing of garments

PE ratio 32.53
EPS (Rs) 0.04
Mkt Cap (Rs Cr) 275.40

Though it is a birla group company, it is surprising that it is available at such a low price.Record date for Bonus share is yet to be announced.
Some of my friends have bought this stock today.
http://www.dnaindia.com/mumbai/report_birla-cotsyn-draws-up-rs-500-crore-capex-plans-for-expansion_1422026