ONGC stake sale cleared, auction to happen soon

ONGC disinvestment has been given nod by the Empowered Group of Ministers (EGoM) today for the 5% stake sale. The auction is expected to happen in a couple of days. The floor price for the auction is expected to be be disclosed in exchange notice. 

The ONGC stake sale is likely to fetch the exchequer around Rs 12,000 crore. The government is looking at various options to meet its disinvestment target which has been hit due to adverse market situation.

The shares of the company closed at Rs 283 as on 28th feb 2012, up 1% on the Bombay Stock Exchange ahead of the EGoM meeting.

Auto Industry: What to expect in budget 2012?

The two word answer to the above question is undoubtedly "higher tax". It is alsmost certain that the finance minister will levy higher taxes on the auto sector. However, it’s the quantum that will determine what happens to the stocks. Excise duty hike of 2% on passanger cars is almost discounted in the stocks. However some analysts believe that it can be reverted back to pre crisis levels of 12%

Considering the huge losses that oil marketing companies are having on diesel fuel sales, it is very likely that we could see a flat levy on diesel cars to compensate for the benefits of low running cost. This would place both petrol and diesel variants on par with each other from a cost point of view. This could dampen the sales of diesel cars and utility vehicles going forward.

Apart from four wheelers, the two wheeler maker could also see a two per cent increase in excise duty. However this move would be positive for Hero Motor Corp and Bajaj Auto as they derive 33 per cent and 20 per cent, respectively, of their total output from tax-free zones. This would result in increased realisations from production from tax-free zones. So an increase in levies would mean higher realisations for these companies which would be beneficial for the company's bottomline.

Wall Street Movie Download (1987 - 2010) : Free

Wall Street Part I released in 1987 was the classic Wall Street film. The highly popular Gordon Gekko character was born in this film. The film was based on a young and impatient stockbroker who is willing to do anything to get to the top, including trading on illegal inside information. Michael Douglas as Godon Gekko is outstanding in the movie. 

Wall Street Part II (Money Never Sleeps) released in 2010 is a sequel to Wall Street made in 1987. The movie is about bubbles and tries to depict what happend in 2008 crisis. Similar to part I Michael Douglas as Gordon Gekko is outstanding again. 

Watch the official trailer of the movie below in high definition.

To watch the full movie online or download a copy to you hard disk, use the following link. To download, use your temporary internet files directory to copy the cached version of the movie to your disk.  Wall Street Movie Download

Which Sector to Invest in 2012

Please vote and tell us which sector(s) or Industry you are most bullish on and betting on to generate maximum return for your portfolio. <.span>

You can also comment below to provide your justification for your choices. 

Please share this survey with your friends to get maximum response which will help all of us in understanding the mood of the nation. Best of luck...

Warren Buffett Letter to Shareholders 2011 - 2012 : PDF

Berkshire Hathaway Chairman, Mr. Buffett, sends an annual letter to all of its shareholders and he has been doing this every year since 1977. 

The letter is very informative and Warren Buffett don't forget to highlight his mistakes in the letter (if any), which is a part of a leadership style that has helped him build a company with 270,000 workers and draw crowds of more than 20,000 to hear him speak during annual general meeting. “A friend once asked me: If you’re so rich, why aren’t you smart?” Warren Buffett, said in a letter accompanying the 1996 annual report. 

If you are looking to read some or all of those letters then use the link to download them in PDF format:

Oil in not well - Nymex Crude tops $105

In the recent run up in stock markets all over the world there is something that bulls have completely ignored which is oil. Oil prices jumped to a nine-month high near $105 a barrel today in Asia after Iran said it halted crude exports to Britain and France in an escalation of a dispute over the West Asian country's nuclear programme.

With Nymex crude topping $105 and brent crude crossing $120 per barrel, bulls in India at least are expected to run out of steam. Oil is a significant threat to Indian fiscal situation which is already under strain and that threat could halt the rally that we are seeing in Indian stock markets. Couple of points to consider:

1. High oil prices increases the risk of passing on some escalation in cost to end consumers which will in turn escalate inflation which is still over RBI's comfort zone. So rate cuts that markets have discounted might not come which could disappoint investors. So the rate sensitives which has had the biggest rally could retrace some of their gains.

2. High oil prices means even higher subsidy and consequently higher fiscal deficit which is already expected to be way beyond govt's own projection of 4.5%. With budget round the corner, the finance minister will have very little flexibility in provide any sops to the industry or markets. In fact there is possibility that budget might be oriented towards increasing some or the other tax to reduce the fiscal deficit.

Hence investors should be very cautious at current levels and avoid chasing the rally.

Buy Adani Port and SEZ

After a pretty long gap InvestorZclub has come out with an investment idea. The reason for the gap has been continuous fall in risky assets and uncertainties in global markets in past 6 months. But sentiments are now much better and barring Greece, global economy is in a relatively better shape. It appears that even if markets falls it will not be very deep. Hence companies in promising sector, sound management and reasonable valuations can be bought at every dip.

One such company that fits all the above three criteria of InvestorZclub is Adani Ports and SEZ. Investors with a three-year perspective can consider exposure to company's stock which is currently ruling at a price of Rs.150 as on 17th Feb 2012. 

The company has taken advantage of the perennial capacity constraint in major ports to quickly build a premium clientele for itself. As a result, its volumes expanded a robust 27 per cent compounded annually in the last three years ending FY-11 as against a mere 3 per cent expansion managed by major ports. 

The company's diversified cargo profile, more third-party clients when compared with players such as Essar Ports and a good proportion of take-or-pay contracts with customers, make it a superior play among the three listed ports.

At 19 times its expected per share earnings for FY-13, the stock is at a discount to other port plays. Commissioning of Hazira and Marmugao ports will also add significantly to the top-line in FY 13-14. 

The best part of being a shareholder of this company is that ports business has very high entry barriers and takes humongous amount of time and money to setup. As a result the stock will always enjoy a premium valuation like Apollo hospitals.

Coal can be expected to remain Adani Ports' key volume driver. Much as the Government has assured domestic coal supply to power projects, there still remains a huge deficit that can only be met by importing coal. Diverse clients such as Maruti, IOC and HPCL also offer assured revenue streams. Adani Ports has also done reasonably well in leasing its SEZ land to companies such as Thermax, Mitsubishi and Bharat Forge besides the oil marketing companies.

This said, the stock of Adani Ports saw a sharp fall after its highly leveraged (Rs 8,600 crore) acquisition of the Australian port Abbott Point ballooned debt at its subsidiary. However, the point to note here is that Abbott Point's capacity at 50 million tonnes is only little less than Adani Ports' volume. The port has assured take-or-pay contracts with nine clients, including BHP Billiton, Rio Tinto and Mitsui. Its operating cash flows are expected to service the debt comfortably. A rough estimate suggests that interest cover of the consolidated entity will be 3-4 times. That means, Adani Ports' debt servicing, despite high leverage, will be comfortable.

Two, the bridge loans taken at 3 per cent are now being refinanced with debt (two-thirds in Australian dollars with rest in US dollars) that is expected to have interest rate of little over 6 per cent. Currency risk is mostly mitigated by using the Australian dollar to borrow and service debt.

The consolidated numbers are not yet available now. On a standalone basis, Adani Ports saw a 44 per cent growth in sales to Rs 1749 crore for the nine months ending December 2011 over a year ago. Net profits expanded 29 per cent to Rs 838 crore.

Considering all the above factors, one can start accumulating the stock on evry fall. 52 week high low for the stock is 170 / 111. At the current market price of Rs.150 it commands a market value of Rs. 30,000 crores.

Use the following link to download the latest research report on the company.

Sensex, Nifty gained for seventh straight week

Key benchmark indices gained for the seventh straight week to scale highest closing level in 28 weeks as latest government data showed that inflation in January eased to a 26-month low. Nifty continues to form higher highs throughout the week and finally closed above 5550 levels. 

Foreign institutional investors (FIIs) pumped in another 3500 crores during last week taking total for 2012 to 24,100 crores (till February), as per provisional data from the stock exchanges. The BSE benchmark Sensex was up by 540.70 points or 3.05% for the week to settle at 18289.35 levels. The NSE flagship Nifty ended at 5564.30 levels, up by 182.70 points or 3.40%. 

In February 2012 (till February 16), FIIs were net buyers to the tune of 11553 crore, while MFs were net sellers to the tune of 5860 crore.

Bharti Airtel Research Report - 2012

Bharti Airtel, being the largest telecom company in India, is being tracked by almost all major broking and research houses in India. 

Following are some of the latest research reports covering the prospects of Bharti Airtel in immediate future.

Bharti Airtel Research Report by Motilal Oswal , Angel Broking,  Prabhudas Liladhar

One Up On Wall Street ebook PDF: Free Download

The New York Times best seller "one up on wall street by Peter Lynch" has more than one million copies sold through out the world. Peter Lynch, the world's greatest and the most successful fund manager, was undoubtedly the best stock picker of his time. Anise C. Wallace of The New York Times says "Mr. Lynch investment record puts him in a league by himself ".

Any investor should pay heed to what Mr. Lynch has to say and this book is full of advises by Mr. Lynch himself. He has shared loads of his own personal experiences of stock picking during his tenure at Fidelity Magellan Fund, which is truly a priceless treasure for any equity investor. 

Use the following link to download this fabulous book in pdf format: One up on Wall Street by Peter Lynch

Stocks to avoid in 2012

Stock Markets globally has been on a tear away rally and has advanced around 20% in general in past 2 months. 

Indian stock markets also went up from the Nifty level of 4550 to 5600 since 20th Dec 2011. In this rally many stocks have either made 52 week high or are near their 52 week high. But there are some stocks which instead of going up are making fresh 52 week low. These stocks are usually in small cap category and has some kind of problem or the other. Hence retail investors should completely stay away from these stocks. 

The stocks which made fresh 52 week low as on Feb 17, 2012 are show below:

Income Tax Saving Options / Instruments in India : 2012

With financial year FY 2011 - 2012 ending soon, tax savings is usually a big headache. Where to invest, how much is the return and other questions boggles our mind. Hence InvestorZclub has compiled a list of instruments which would help you in knowing the products that can save you tax and generate good returns on your investments

Employee Provident Fund: EPF (80 C)

As pet IT Act 80C, EPF scheme offers a total yearly exemption of INR 1 lakh. In this fund, 10 % to 12 % of a person's basic salary gets deducted and the other 12 % is contributed by the employer.

Average returns: 9.5%

Maturity period: One can withdraw the entire amount in instances of leaving job, retirement after 58 years of age or taking VRS. Partial withdrawal can be done for home, medical related expenses.

Public Provident Fund : PPF (80 C)

PPF is also a tax saving option that falls within the Section 80 C of the Income Tax Act in India. However the maximum amount that one can deposit in a single year is 70,000.

Average returns: 8.6% compounded annually

Maturity period: 15 years

National Savings Certificate : NSC (80 C)

NSC scheme falls under the Section 80 C of the IT Act of India. Annual interest earned is deemed to be reinvested and qualifies for tax rebate for first 5 years. The scheme is available at Banks, post office or any broker.

Average returns: 8% compounded half yearly

Maturity period: Usually 5-10 years.

Equity Linked Savings Schemes : ELSS (80 C)

ELSS is a mutual funds that help you save taxes under Section 80C as well as generate equity based returns. ELSS is similar to a typical equity MF scheme. It has the potential to deliver good returns and at the same time save tax.

Average returns: Based on Market performance

Maturity period: Lock in period of only three years but one can remain invested for long.

Unit-linked Insurance Plans : ULIPs (80 C)

ULIP is a unique blend of investment and insurance and is eligible for 80C benefits. The premium, which is being paid by a customer, gets deducted with initial charges while the rest of the amount is invested. Aggressive ULIPs invests 80 % to 100 % in equities. The rest is invested in debt instruments. Under balanced ULIPs an individual can invest 40 % to 60 % in equities while conservative ULIPs allows one to invest up to 20 % in equities

Average returns: As per market situation

Lock-in period: 5 years

Tax Saving Deposits (80 C)

Investment up to Rs 1 lakh in these special tax saving bank fixed deposits also entails an investor tax deduction under Section 80C. Interest income taxability upon maturity.

Average returns: 9-9.5% annually. Rate of interest varies from one bank or post office to another.

Lock-in period: 5 years

Infrastructure Bonds (80 CCF)

Over and above the deduction allowed by the Section 80 C, one can save income tax on a maximum amount of Rs 20, 000, by investing in different infrastructure bonds under the Section 80 CCF of the Indian I-T Act. L&T, REC, IDFC are some of the large issuers of infrastructure bonds

Maximum deduction: Rs 20,000

Average returns: The rate of interest  varies from 8 % to 8.7%.

Maturity period: 5 to 10 years.

Life Insurance Premium (80 C)

Any premium payable by an investor to provide cover to his life is eligible for deduction under Section 80C.

Average returns: 6-7% annual in a typical endowment policy. However term policies do not provide any return, as they are meant for cover only.

Maturity period: Length of policy.

Health Insurance Premium (80 D)

Under section 80 D of the country's Income Tax Act. these policies offers a maximum deduction of Rs 35, 000. This deduction is calculated in addition to any other tax saving done as per the Section 80 C.

List of Stock Market based Movies: Must Watch for Traders and Investors

I have seen lot of stock market based movies sometimes for learning and sometimes for the sheer adrenalin rush. I particularly like following movies and would recommend investors and traders to see them as they not only provide good learning but also boils your blood and keep you on which is very essential in stock markets.

Margin Call (2011) : A taut, sinewy drama set in a Wall Street investment bank. 

Wall Street (1987) : The classic Wall street film. You will love Michael Douglas' character Gordan Gekko

Wall Street - Money never sleeps (2010) : Wall Street part 2. A sequel to the 1987 popular movie “Wall Street”.

Trader (1987) : A very brilliant movie. Story about Paul Tudor Jones and his day-to-day life as an active investor.

Pursuit of Happiness (2006) : A very touching movie based on the real life of Chris Gardner. Will Smith is as brilliant as ever.

Rogue Trader (1999) : British version of "Wall Street". 

Enron- The smartest guys in the room (2005) : Tale of Enron's rise and fall. One of the best documentaries ever made.

Quants - The Alchemists of Wall Street (2010) : A short but excellent documentary on quantitative analysts on Wall Street.

Warren Buffett Biography PDF : Free Download

Warren Buffett, the world's richest investor turned philanthropist, has turned the ailing textile business of Berkshire Hathaway into a multi billion dollar furniture to Insurance giant after acquiring it in 1965. 

At the age of six, Buffett purchased 6-packs of Coca Cola from his grandfather's grocery store for twenty five cents and resold each of the bottles for a nickel, pocketing a five cent profit. While other children his age were playing hopscotch and jacks, Warren was making money. Its very encouraging to see that buffett who used to sell coca cola on trolley at the age of Six is now the owner of Coca Cola. He is the largest shareholder of the company as on FEB 2012. 

At the age of eleven Buffet took his first step in the field of stock investing and purchased three shares of Cities Service Preferred at $38 per share. Shortly after buying the stock, it fell to just over $27 per share. A frightened but resilient Warren held his shares until they rebounded to $40. He promptly sold them - a mistake he would soon come to regret. Cities Service shot up to $200. The experience taught him one of the basic lessons of investing - patience is a virtue. More on Mr. Buffett in this exclusive and very interesting biography in pdf format.

Tips to succeed in equity investing: 4 Mantras to remember

We all know that the way to make returns higher than inflation is to invest in equities directly or indirectly. This helps investor grow their capital much faster and will help beat inflation inspite of sharp periods of decline. Direct equity investment involves buying and holding of shares of stock on a stock market by individuals and funds in anticipation of income from dividends and capital gain as the value of the stock rises.

If one remembers following points while investing in equities the chances of doing blunders reduces substantially.

1. Select stocks based on the company's performance

Collect historical data of the company in which you are planning to invest in and check their profit graph. They should be a minimum cap of around at least 20 - 25% on the returns from the capital invested by its shareholders.

Checking long term helps you assess the true value of the company while a shorter term of 6 months could just be a reflection of market mood rather than the solid foundation the company is based upon.

2. Strike the right balance and stick to it

- It is essential to take a very disciplined approach towards your stock plannhng.

- Be prepared to stumble over unexpected bumps when you start out or for that matter be prepared to be surprised from time to time as the volatility of the market is such.

- The best results await those who participate in the long drawn out game that last well over a number of years to the tune of 10-12 years to be precise.

- Strike a balance with your stocks, don’t accumulate too many and then again don’t invest in too little. A moderate diversification should be the key factor in striking this balance, i.e. perhaps say about 15 should be a good way to diversify for someone who wishes to stay invested in the long term.

- Understand the companies you are invested in and also keep a tab of the trading volumes of a particular stock purchased. This will help you estimate the percentage of active participation in that stock and is also a test of its liquidity quotient.

- Have a secure allocation plan in place, consult the experts and avoid temptation to buy too much into one single company.

3. Monitor and consistently evaluate the investments

Be in touch with every change that happens with regards to your stocks. During the lean times there might be good opportunities thrown up for the grabbing. Don’t lose sight of those if it makes investment sense for you. Figure out how you buy low at such points in time.

Keep track of the stock worth in order to determine if key elements that prompted you to buy the stocks in the first place are still secure in place or if your earlier expectations have been undermined. Keep track of the prices on your finance worksheet and subject them to a quarterly and yearly review. This will help you reassess and reallocate according your current risk capacity.

4. Errors are an individual’s portals of discovery

Your experience with stocks may be a mixed bag of both good and bad. Store away good pointers from the things that worked for you and learn from the bad experiences in perfecting your investment skills. Begin the exciting journey of making your every penny count!

ONGC Q3 FY 2011 - 2012 Result Analysis

Oil and Natural Gas Corporation (ONGC), India's largest oil and gas exploration company, reported a 4.8% decline in net profit at Rs 6,741 crore for the quarter ended December 2011 as against Rs 7,083 crore in December 2010.

Net sales too fell 2.5% to Rs 18,123 crore from Rs 18,586 crore in the same period a year ago. ONGC also reported a royalty reversal of Rs 3,142 crore as against an expectation of Rs 2,500 crore.

The company's stocks reacted negatively and fell 1.4% after the result announcement at Rs 282. However at current market price the stock is available at less than 10 time FY 13 expected EPS. For results press release use the following link:

Bharti Airtel Q3 FY 2011 - 2012 Result Analysis

Bharti Airtel, India's largest telecom service provider, grew its revenues by 7% to Rs 18,477 crore in Q3 of current fiscal over the September 2011 (Q2) quarter. Its earnings before interest, tax, depreciation and amortization grew 2.5% sequentially while net profit declined by 16.6% y-o-y and 1.5% q-o-q to Rs 1,011.3 crore. Bharti’s third quarter performance shows that while it has managed to grow revenues, maintaining profitability is increasingly becoming a challenge.

Bharti reported a higher than expected SG&A of Rs 3,465 crore compared to estimates of Rs 3,116.7 crore. The impact of this higher SG&A spend has hurt the bottom line by Rs 235 crore. The company’s EBITDA margins too have contracted sequentially from 33.6% in Q2 to 32.2% in Q3.

Bharti’s ARPM rose to Rs 0.446 compared with Rs 0.436 a quarter earlier. Consequently, the company’s ARPU (average revenue per user) improved by Rs 4 sequentially to Rs 187 during the quarter.

The stock rallied after the Supreme Court cancelled all 122 2G licences issued after 2008 as the market expected the competitive intensity to come off, but not all analysts are of this opinion. Many believe that telecom is a price-sensitive business and the competitive intensity will continue to prevail.