Thursday, July 19, 2012
What is a equity - sector fund and its types
A sector or an equity fund can
be commonly defined as a fund that invests in equities more commonly known as
stocks. They are in contrast with bond funds and monetary funds. They are
mainly in the form of shares with some amount of cash existing with them. The
cash amount is generally small. In contrast to bonds, notes or other
securities, they maybe also classified as a mutual fund or an exchange-traded
fund.
The objective of an equity fund
is long-term growth through various capital gains, though previously dividends
were also viewed as an all important source of total return. Some specific
equity funds focus on a certain sector in the market and mark it towards a
certain level of risk.
A sector fund is identified by
several properties. Sector funds have a specific style, for e.g., value or
growth. Funds are invested solely by the securities from one country or from
various countries. Funds may or may not focus on some size of a company that
might be small-cap, large-cap or mid-cap. Funds which allow involvement of some
components of share picking are said to be managed actively. While index funds
try as much as possible to be mirror specific stock market indices.
There are different types of
Sector funds.
1)
Index Fund: Index funds allow investment in securities to mirror a market
index. An index fund purchases and sell securities in a manner that reflects
the composition of the selected index.
2)
Growth Fund: A growth fund invests in the stock of companies that are growing
at a furious pace. These growing companies tend to re-invest most of their
profits for research and development rather than paying dividends to its
investors.
3)
Value Fund: A fund that allows investments of “value” in stocks. Companies that
are rated as value stocks usually are old and established business setups that
pay dividends.
4)
Sector Fund: A fund that invests only in a particular area of industry is known
as sector fund. Most sector funds have a minimum leverage of 25% of their
assets invested in this specialty.
5)
Income Fund: An equity income fund lays more emphasis on the current income
over growth. The objective of the funds might be accomplished when investment
of stock companies with long records of dividend payments such as utility
stocks, blue chip stocks and preferred stocks are given more importance.
The other various types of funds
are:
1)
Option income Funds
2)
Balance Funds
3)
Asset allocation Fund
4)
Fund of Funds
5)
Hedge Funds
Online
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Wednesday, July 18, 2012
The Importance of Equity
When an investor’s fund represents
the leftover interest in assets of an organization, which has been spread
amongst individual shareholders of common or preferred stock, is known as
equity. Whenever a business is setup, its owners invest some funds in the
business to finance its day-to-day operations. This creates a liability on the
business in the form of capital because the business has a separate identity
from its owner’s altogether.
Business, for the purpose of
accounting, is considered as a sum of liability and asset. This is also known
as the accounting equation. After all the liabilities have been accounted for,
the positive remainder is used by the owner’s interest in the business.
This definition is useful in the
understanding of the liquidation process in case of bankruptcy. Initially, all
the secured creditors are paid against the proceeds from the assets. Thereafter
a series of creditors who are ranked in the sequence of their priority have the
next claim or rights on the residual proceeds.
The ownership equity is the last
or residual claim against these assets which are paid only after all other
creditors are paid to. Normally in such cases where creditors even cannot hold
enough money to pay their bills, not even to reimumbrse the owner’s equity.
Therefore the owner’s equity is
reduced to zero or negligible. The ownership equity is also popularly known as
a risk capital or liable capital.
When an individual or a firm buy
and hold shares of a particular stock in a stock market, it is known as equity
investment. They do so in anticipation of income from various dividends and
capital gains as the value of the share increases. Equity holders receive
voting rights, to exercise their vote on candidates for board of directors in
the company they have a stake in. They can also allow certain major
transactions and residual rights that they share in the company’s profits as
well as in recovering some part of the company’s assets in the event that it
folds, though they generally have the lowest and backward priority while recovering
their investment. This also means that the acquisition of equity
participation in a private limited company or a startup company.
When investment is made in an
infant company, it is known as a venture capital investment and is generally
regarded as a high risk than investing in listed concerned situations. These
equities which are held by private individuals are often known as mutual funds
or other forms of collective investment schemes, many of which have its prices
quoted and listed in financial newspapers or magazines.
These mutual funds are managed
typically by prominent fund management firms. Such holdings allow various
individual investors to get a variety of funds and get the skill of the
professional fund managers in charge of the funds. As an alternative, which is
generally followed by large investors and pension funds, they hold shares
directly in an institutional environment.
Many clients who hold their own
portfolios are known as segregated funds which in contrary are the pooled
mutual fund alternatives.
For investors who believe in
trading on the move. Angel Swift for smart phones is a specially designed
application for mobile phones with touch feature and smart display. It can
support multiple advanced smart phones. It allows real time access to
stock-portfolio, charts and much more. A perfect guide for investors who trade
in the extensively trade in the stock markets.
Monday, July 16, 2012
The advantages of commodity trading
Commodity trading is yet another form of trading online.
With a plethora of varieties to choose from, the investor is offered a bouquet
of various commodities to choose from and invest in what he thinks might bring
him the best results and desirable profit.
Learning about commodity trading is quite a difficult task
because it involves in learning of numerous concepts that are often involved by
complicated financial transactions and regulations. As long as one has learnt
about history, the ever continuous development about the commodity markets, he
will have a better chance of making a good profit in the commodity markets. One
must avoid venturing in the market without any prior knowledge. It can often
lead to disastrous results.
First and foremost, the investor must choose a specialty in
the trade. The investor must avoid doing it himself and the most
effective way to learn on how to be an effective trader in the commodity market
is to learn through experience and some unique styles and techniques that come
along with these experiences. Though most people chose to take references from
various book, magazines and online articles for knowing other’s perspective on
trading, it is always better to gain firsthand information via a direct
guidance and training programmes. If anyone knows any people in the market
or have friends who have had experience in the commodity market, they should
not hesitate from asking them for their inputs or their ways of trading and
regarding their techniques and strategies.
Various online brokers will also provide their traders with
real time information, quotes, prices and access to charts with various
indicators. This is of a great help to them which aids them in analyzing
the market that affect the traded commodities. Traders often have an advantage
of being provided with a lot of necessary information that they need in order
to make their trading a successful one. The ones that manage their trading
accounts and activities might be attainable to profits that they might have
aimed for.
Though the online
commodity trading also comes with risks just like other forms of
trading, people are actually able to decrease the risks especially if they keep
themselves well-informed and are able to analyze the market accurately. Traders
should be aware of their trading activities so that they do not make the
mistake of over-trading because of a possible loss that may occur.
Traders are accepted to discipline themselves especially not
to over-trade and indulge in heavy losses and engage themselves in
over-trading.
They are also well-informed about impulsive trading and its
consequences which lead to financial problems in the future. In order to
overcome these hurdles, they may achieve their financial goals through online
commodities trading.
Tuesday, July 10, 2012
Mobile Trading: Has it made our lives simpler & easier?
Gone are the days when traders and investors used to stand in
a closed hall and shout on the top of their voices to trade. With Technology
making its mark on our lives for good, the halls have been replaced by computer
systems and mobile devices. Today share trading has become as easy as a click
of a button of the mouse! It has actually become that simple.
Most of the Share Brokers, have been constantly working
overtime to make online share trading easier for its investor customers. They
have been creating user-friendly platforms and terminals along with intensive
training workshops for its customers, so that they get the maximum by investing
in share markets. These terminals also quote live quotes and share prices
for the benefit of investors, so that they can make the decision of
buying/purchasing stocks.
Off late, trading on mobile phones has become the new trend.
With people constantly on the move, trading on computer systems has made way
for trading on PDA’s, mobile phones, etc. With the advent of these devices and
their ever increasing use, many share brokers have developed terminals with the
assistance of their software development teams, platforms that are compatible
and can be used for share trading online on these devices itself.
The utmost benefit of mobile trading is that it allows
users, priority to traders to gain a real time access to their individual
trading platforms without actually having to be in front of their trading
terminals. A strong and stable platform for share trading on mobile
phones come with various and added features which increase the experience of
traders. It has many built-in features that update its users regarding any
impactful circumstances in the share market. Thus, the traders can make the
most of any impactful incidents in their trades in a timely manner. This is now
possible even if they are not in front of their trading terminals.
In mobile phones, most of the trading terminals work in
‘online mode’ and require constant internet connectivity. This can be a problem
as not only the person may end up discharging all his battery but also use up
his entire resources and internet connectivity for keeping the terminal active.
However, many share brokers and investors keep separate
handsets for a direct and constant access to the terminal, so that they can
take any important decision during any critical occurrences in the share
market.
Mobile phones may have made life simpler and easier, but
their invasion in the trading markets have certainly made things easier for
people who prefer heavy investments and would like to be as close as possible
to the markets.
Angel Broking is one of the top broking firms in India that
provides latest, up-to-date online trading platforms that assist you in mobile
trading in the Indian share market.
Thursday, June 28, 2012
Indian stock market and companies daily report (June 29, 2012, Friday)
The Indian markets are expected to open in green tracking positive cues from SGX Nifty. Asian shares and the euro were under pressure as European leaders argued over how to ease borrowing strains in Italy and Spain and stop the euro zone debt crisis spreading, with investors fearful of US reaction to the deadlock.
US stocks saw significant weakness throughout much of the trading day on Thursday, the markets staged a significant recovery attempt in the final hour of trading. The major averages climbed well off their worst levels of the day but still closed in negative territory. Lingering concerns about the financial situation in Europe contributed to the early weakness on Wall Street along with a negative reaction to the Supreme Court's decision to uphold President Obama's healthcare reform law, including the law's individual insurance mandate.
Continued expectations of government action to revive domestic growth helped Indian shares shrug off weak global cues on Thursday. The rupee also traded firm, bolstered by dollar selling by banks and exporters after PM sought to give a big push to the sagging economy.
Markets Today
The trend deciding level for the day is 16,981 / 5,145 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 17,043 – 17,096 / 5,164 – 5,178 levels. However, if NIFTY trades below 16,981 / 5,145 levels for the first half-an-hour of trade then it may correct up to 16,928 – 16,866 / 5,130 – 5,111 levels.
Coal India gets NTPC's de-allocated coal mines
Media reports suggest that Coal Ministry has given three de-allocated mines to Coal India (CIL) and has asked CIL to appoint mine developers to begin the production from these blocks at the earliest. The three allocated blocks include Brahmini, Chichro Patsimal and Damogoria blocks. We believe CIL will start developing these blocks, but it is unlikely to commence production from these blocks in the near term. Hence, we await further clarity on this matter. Thus, we maintain our estimates on CIL and recommend a Neutral rating on the stock.
SBI cuts its lending rates for exporters by 50bp
State Bank of India (SBI) has reduced its lending rates for export credit by 50bp w.e.f. June 23, 2012, responding to recent RBI action of enhancing the limit for export credit refinance (ECR) from 15% to 50%. We expect the bank to report NIM of 3.7% and 3.4% for FY2013 and FY2014, respectively. At the CMP, the stock is trading at 1.2x FY2014E ABV (after adjusting for value of subsidiaries). We recommend a Buy rating on the stock with a target price of Rs.2,469.
CG inaugurates new EHV switchgear manufacturing facility in Brazil
CG (Crompton Greaves Ltd) commenced operations of its new Extra High Voltage (EHV) Switchgear manufacturing facility in Brazil. It will manufacture a full range of EHV switchgear targeted at the Brazilian Utility market segment. It intends to differentiate by introducing its latest models and provide Brazilian customers with a 30 per cent reduced lead time. CG expects to reach $50mn during the first year of operations. CG has already received more than USD 6 million worth of orders from Utilities such as CEMIG, CPFL, CEEE, RGE and Toshiba. We maintain our Buy on the stock with a target of Rs.142.
Petrol price cut by Rs.2.46/litre
Oil marketing companies (OMCs) have reduced petrol prices by Rs.2.46/liter. OMCs had already cut petrol prices by Rs.2.02/liter on June 3, 2012. Petrol prices have been lowered due to declining global crude oil prices over the past one month. Brent crude oil price has declined from US$103/bbl on May 31, 2012, to US$93/bbl as on June 28, 2012. Since petrol prices are not included in the calculation of under-recoveries, we do not change our estimates for underrecoveries for FY2013. We maintain our Buy rating on ONGC with a target price of Rs.321 and maintain our Accumulate rating on GAIL with a target price of Rs.389.
DoT to slap penalties Rs.1,594cr on five mobile phone firms this week
The telecoms department (DoT) will this week formally slap penalties totaling Rs.1,594crore on five mobile phone firms, after it rejected their defence against charges that accused them of understating revenues and paying less levies. The DoT plans to send demand notices to Bharti Airtel, Idea Cellular, Vodafone, Tata Teleservices, Tata Communications and RCom by the month-end. Earlier this year, these companies were slapped with showcause notices after a DoT appointed panel endorsed the findings of external auditors, which said these operators had understated revenues by Rs.10,268cr during 2006-07 and 2007-08. Since telcos pay 6-10% of their annual revenue as license fee and 2-6% as spectrum usage charges, reporting lower revenue brings down the component they have to share with the government. The DoT had also obtained the law ministry's approval prior to sending out showcause notices. But all telcos had denied any wrongdoing and slammed the DoT panel's findings.
The department has estimated that Bharti Airtel will have to pay penalties to the tune of Rs.292cr while for Vodafone it will be Rs.254cr. The penalty for Idea works to Rs.113cr, Tata Teleservices at Rs.273cr and Tata Communications at about Rs.120cr while RCom will have to pay about Rs.551crore. This includes interest and other related fines for the alleged violations. We continue to maintain our Neutral view on the overall telecom sector owing to regularity uncertainties as well as increase in interest payments of various companies (Bharti Airtel, RCom) which has got forex debt in their books due to sharp INR depreciation.
PM moves to soften GAAR
As per media reports, Prime Minister Manmohan Singh has kicked off a review of the controversial changes that scared away foreign investors. PM has asked finance ministry officials to examine the whole gamut of tax issues concerning portfolio investors which include the General Anti-avoidance Rules (GAAR) intended to check tax evasion by creating structures sans commercial substance. With regard to the new provision to tax overseas transactions involving Indian assets for capital gains, the sources did not even rule out a clarification that no past deals would be taken up in such cases even if the assessment process was not complete. The PMO has sought clarifications on all tax issues (pertaining to investors) and expects clarifications on indirect transfers pertaining to FIIs will be issued in a few weeks.
EU summit works on short-term support for Spain, Italy
Italy and Spain, battling searing market pressure in the euro zone's widening debt crisis, blocked agreement on measures to promote growth at a European Union summit on Thursday to demand urgent action to bring down their borrowing costs. As per three EU sources, work was focused on using the euro zone's temporary EFSF rescue fund and a future permanent ESM bailout fund to buy new Spanish and Italian bonds as they were issued to underpin their bond auctions. The funds will have a maximum firepower of €500bn once the ESM is fully stocked in 2013, minus €100bn already earmarked to aid Spanish banks. It is expected that an agreement could be clinched at a meeting of the 17 euro zone leaders today after the regular 27-nation EU summit ends.
In draft summit conclusions, subject to amendment today, the leaders were set to ask the EU's top four officials to produce a detailed, time-bound roadmap in December leading to a genuine economic and monetary union. European Council President and European Commission President have set long-term goals of creating a euro zone treasury to issue joint bonds in the medium-term, and establishing a banking union with central supervision, a joint deposit guarantee and a resolution fund.
Economic and Political News
- Private airlines may get subsidy for flying to northeast
- Petrol price cut by Rs 2.46/litre, scope for more reduction
- Indian economic confidence slips in May on weak rupee, inflation
- Land deals in India to drop by 20% this yr to Rs 15k cr: C&W
Corporate News
- SAIL consortium may sigh pact with Afghanistan next month
- Bajaj Auto may hike prices as rupee fall raises input costs
- Gati forms JV with Japanese firm to reduce debt, interest cost
- Lanco commissions Bangalore-Mangalore toll road
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