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Today (7th Jan 2009) the Sensex fell 749 points (over 7% drop) - a huge drop wiping out billions of dollars from the market.

Investors in Satyam Computer Services lost Rs 9,400 crore after the stock dropped 78% following Mr Raju’s disclosures about inflated numbers: bank balance, revenues and net profit figures for several years including the last quarter ended September 30, ’08.

The Satyam debacle has stunned the corporate world and investors with its fraud disclosure. Given the magnitude of the accounting fraud, it has raised serious concerns over the quality of corporate governance and accounting practices followed by Indian corporates.

Following Satyam revelation, investors also dumped many other companies as well from various sectors, which are not known to good/clean corporate governance practices. Most impacted among them were Real Estate Stocks (which are perceived to complex/unclear books and asset valuation).

Traders and Brokers said shares of companies with registered offices in Delhi and Hyderabad were sold-off in large numbers because of market perception that companies incorporated in these cities do not strictly follow good practices of corporate governance.

Overall, we are now going to see reduced valuation (P/E) by for  many mid-cap stocks where similar risks are a possibility.

Based on a careful analysis of technical charts and business updates, we have prepared the following table for the current quarter outlook for NIFTY 50 stocks. We have factored the upside in market post the current pain. These levels we have seen along with the recommendation should hold good for these NIFTY 50 stocks in the short to medium term exclusively for equity basis. Derivative trading is neither considered nor recommended during these times.

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NIFTY FIFTY STOCK OUTLOOK for Year ending 31.12.2008
Published Date 1st October 2008.

Symbol > LTP > Last Corporate Action > Year-End Target >  Buying Levels/ Recommendation

1. ICICIBANK    550.9    AGM/DIVIDEND - 110%    800    Below 550
2. RELIANCE    1906.7    DIVIDEND-RS.13 PER SHARE    2200    1880
3. INFOSYSTCH    1449.3    INTERIM DIVIDEND    1750    1460
4. SBIN    1504.45    DIV-RS.21.50 PER SHARE    1700    1500
5. LT    1216.1    BONUS 1:1    1500    1240
6. BHEL    1591.55    AGM/FINAL DIVIDEND- 62.5%    2000    1620
7. RELINFRA    780.6    AGM/DIVIDEND - 63%    Not recommended    Short at current levels
8. DLF    345.3    AGM/DIVIDEND - 100%    300    Short at current levels
9. HDFC    2207.05    AGM/DIV-RS.25 PER SHARE    2400    2200
10. BHARTIARTL    790.7    ANNUAL GENERAL MEETING    920    760
11. SATYAMCOMP    318.95    AGM/DIVIDEND - 125%    425    308
12. SUZLON    150.8    AGM/DIVIDEND-RE.1 PER SH.    240    142
13. HDFCBANK    1295.25    ANNUAL GENERAL MEETING    1700    1255
14. SAIL    123.45    AGM/DIVIDEND - 18%    131    118
15. ITC    192.4    AGM/DIV-RE. 3.50/- PR SHR    204    188
16. RCOM    343.25    AGM/DIVIDEND - 15%    Not recommended    Short at current levels
17. RPL    140.25    ANNUAL GENERAL MEETING    196    142
18. TATASTEEL    438.35    AGM/DIVIDEND - 160%    492    425
19. HINDUNILVR    254.35    INT DIV-RS.3.50 PER SHAREPURPOSE REVISED    261    241
20. TCS    671.75    INT DIV - RS.3 PER SHARE PURPOSE REVISED    790    664
21. UNITECH    115.4    AGM/DIVIDEND - 12.5%    Not recommended    Stay away
22. ONGC    1040.75    AGM/DIVIDEND - 140%    1220    1000
23. RANBAXY    251.5    AGM/DIV-RS.6/- PER SHARE    Not recommended    Stay away
24. RPOWER    154.65    BONUS 3:5    Not recommended    Use for day trading
25. STER    431.2    AGM/DIVIDEND - 200%    Not recommended    Stay away
26. CAIRN    212.2    AGM    246    202
27. NTPC    173.95    AGM/FINAL DIVIDEND - 8%    236    Must Buy
28. TATAPOWER    949.35    AGM/DIVIDEND - 105%    1268    Must Buy
29. HEROHONDA    874.7    AGM/DIVIDEND - 950%    Not recommended    Stay away from auto
30. BPCL    363    AGM/DIVIDEND - 40%    Not recommended    Use for day trading
31. TATAMOTORS    339.65    RIGHTS EQ 1:6/DIF VOT 1:6    320    Use for day trading
32. PNB    494.05    AGM/DIVIDEND - 130%    535    476
33. MARUTI    700.75    AGM/DIVIDEND - 100%    Not recommended    Stay away from auto
34. ABB    791    AGM/DIV-RS2.20 PER SHARE    1100    Must Buy
35. GAIL    415.05    BONUS 1:2    440    404
36. IDEA    73.9    Annual General Meeting    Not recommended    Must use for day trading
37. M&M    508.75    AGM/DIVIDEND - 115% PURPOSE REVISED    Not recommended    Stay away from auto
38. HINDALCO    98.95    RHS 3:7@PREM RS95/DIV185%    Not recommended    Stay away from non-ferrous metals
39. WIPRO    349.2    AGM/DIV-RS.4 PER SHARE    446    Buy on dips
40. SIEMENS    400.75    BONUS 1:1    510    SISL news?
41. SUNPHARMA    1452.95    DIVIDEND - 210%    Not recommended    Stay away
42. ACC    629.4    INT DIV - RS.10 PER SHAREPURPOSE REVISED    Not recommended    Stay away from cement/construction/realty
43. CIPLA    232.55    DIVIDEND - RS.2 PER SHARE    Not recommended    Stay away
44. POWERGRID    88.65    AGM/DIVIDEND - 7%    112    Must Buy
45. HCLTECH    205.8    AGM/DIVIDEND - 150%    165    AXON deal - Short at current levels
46. TATACOMM    464.2    AGM/DIV-RS.4.50 PER SHARE    Not recommended    Stay away
47. GRASIM    1767.9    DIVIDEND-RS.30/- PR SHARE    Not recommended    Stay away from cement/construction/realty
48. ZEEL    204.45    AGM/DIVIDEND-200%    Not recommended    NA
49. NATIONALUM    369.85    AGM/DIVIDEND - 15%    340    Use for day trading
50. AMBUJACEM    78.8    INTERIM DIVIDEND - 60%    Not recommended    Stay away from cement/construction/realty

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Please note: The above recommendations and all other posts on this site, come with the our Disclaimer. You acknowledge that our views are not specific investment advice for your case.

Commodities Market is an upcoming and fiercely growing market after the Stock Market. In this, Multi-Commodities like Bullion (Gold, Silver), Cement, Chemicals, Cotton, Dry Fruits, Food Grains, Gur & Sugar, Iron & Steel, Jute & Jute Goods, Kirana, Metals, etc. are traded on a day to day basis. Interests of individual investors are catching on fast in this type of Exchange.

There are 3 National Exchanges for enabling the purchase and sale of commodities, futures and options. These are:

1. Multi-Commodity Exchange of India Ltd. (MCX)
2. National Commodities and Derivatives Exchange Ltd. (NCDEX)
3. National Multi-Commodity Exchange of India Ltd.

Under these 3 National Exchanges, there are a dozen active Bourses for trading, more than 2,000 brokers operating in 6,000 terminals and 10,000 active traders. All these are tracking the commodities prices round the clock. In the very First year of its commencement, Commodities Trading in India clocked an annual turnover of Rs.1400 Billion and is estimated to cross Rs.10,000 Billion during this fiscal alone.

The MCX has setup centres in Ahmedabad, Mumbai and Delhi for physical delivery of futures contracts in commodities. It plans to spread this network to Kolkata and Chennai. The NCDEX has recently launched in association with International Petroleum Exchange, London (IPE), the IPE Brent Crude Futures Contract, which is a landmark step towards integrating Indian Energy Markets with global Energy Markets. The MCX has tied up with Chicago Climate Exchange to trade in Carbon and Sulphur Financial Instruments for the global emissions marketplace. In near future, MCX will tie-up with, European Climate Exchange.

The Commodities and Futures Market has a separate regulator called the Forwards Markets Commission (FMC). The FMC has been setup on the lines of the Securities and Exchange Board of India (SEBI) and has statutorily received the autonomous governing body status.

As the Commodities Market is in infancy stage and on the aggressive growth path, it requires innovations, ideas. The human resource required to operate the market and exchange is tremendous. The Exchange needs professionals from all walks of life. They are : Graduates (BComs, BScs), Post Graduates (Economics, Labour, Agriculture), Chartered Accountants, Company Secretaries, Cost & Works Accountants, MBAs (Finance, Operations, Systems, Human Resource, Marketing, International Business), Law Graduates, MCAs, MCMs and so on. Having the National Stock Exchange’s Certification in Financial Markets (NCFM) is an added advantage. The pay packages range from Rs 4 lacs to Rs 6 lacs p.a.

These professionals are required for Business Development, Market Operations, Warehousing, Research & Development, Network & Security, Corporate Communication, Product Knowledge Management, Liaisoning, Corporate Relations, Human Resource, Secretarial, Legal Compliances, Customer Relations, Estate Management and so on.

Recently, Welingar Institute of Management Development and Research, Mumbai and Multi - Commodity Stock Exchange of India (MCX) have jointly announced India’s First 3 month Part Time / Distance Learning “Diploma In Commodities Trading (DICT)”.

Author: Anand Arvind Wadadekar

The Securities and Exchange Board of India (SEBI) is one of two regulators of India’s derivatives market. The other, the Forward Markets Commission (FMC) oversees futures on physical commodities where SEBI administers financial products. SEBI is an independent agency created in 1992 and is a department in the Ministry of Consumer Affairs Food and Public Distribution.

As of 03 April, 2007, there were 996 Foreign Institutional Investors (FII) directly registered with SEBI. FIIs, in most cases, must receive approval from SEBI before they can commence trading in India.

There are 4 ways for an FII to access the India market.

1. Direct Registration: XYZ Capital (XYZ) registers itself as a FII with SEBI. XYZ must be regulated by an overseas regulator. The FII will then pay SEBI an US$10,000 registration fee to gain a 3 year license. Depending on the track record and experience of XYZ Capital registration can take from 1 month to 1 year. Trading occurs through a local broker under XYZ’s FII license. XYZ also requires an onshore local bank and custody account.

2. Sub Account: XYZ becomes a sub account (SAC) of another FII by first registering itself with SEBI. The registration fee payable to SEBI is US$ 2,000. The license is valid as long as the FII’s SEBI account where XYZ holds its sub account is valid. Trading in the name of SAC occurs through a local broker and an onshore bank and custody account must be opened.

3. Mauritius: XYZ acquires an FII registration under the main Master fund. XYZ registers a 100% subsidiary in Mauritius (XYZM) which becomes the sub account of XYZ. Trading is carried out through a local broker in the name of XYZM. The additional cost of setting up a Mauritius entity and annual audit, director fees, etc. must be considered. Trading occurs through a local broker under XYZ’s FII license. XYZ also requires an onshore local bank and custody account. According to the Double Taxation Avoidance Act (DTAA)between India and Mauritius, Capital Gains arising from sale of shares is taxable in the country of residence of the shareholder and not in the country of residence of the Company whose shares have been sold. Therefore, a Company resident in Mauritius selling shares of Indian Company will not pay tax in India. Since there is no Capital Gains tax in Mauritius it will escape tax altogether.is restricted by position limits and inventory. However, there is no need to deal with a local broker, no capital gains tax, no local bank or custody accounts and no extra set up time and cost. SEBI has cleared Short selling by institutions and will initially be restricted to 159 stocks in which derivatives trading is allowed.

4. Offshore Access: XYZ approaches an offshore investment bank and accesses India indirectly though offshore products such as Total Return Swaps. Using an over-the-counter instrument known as a participatory note or PN, a FII takes a position in the Indian market, then issues a PN with the same nominal value to XYZ. Of course the transaction costs are twice as much to XYZ and the FII.

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