Bhavishya Nirman Bonds

• High Security CRISIL - AAA
• High Liquidity Tradable a BSE
• High Return 12.18% Simple Post Tax Return
• Offer Min Price 8500/- and Return as 12.18%

By NABARD - National Bank for Agriculturae and Rural Development

website - http://www.nabard.org/#

DDA has come up with around 5010 flats in various parts of Delhi. Allotment will be decided by computerized draw; result would also be available at DDA’s website: http://www.dda.org.in/

How to apply for DDA Flats ?

The application forms along with brochure will be available from the DDA sales counter at Vikas Sadan, almost all branches of AXIS Bank, HDFC Bank, ICICI Bank and IDBI Bank, besides the Vikas Sadan branches of State Bank of India and Central Bank of India. The cost of the application form and brochure is Rs.100. The registration amount under the scheme is Rs.1.5 lac. The Registration amount has to be deposited along with the application form by a banker’s cheque/demand draft and no payment by cheque is acceptable. The applicant can have five preferences for flats of all categories. Applicant has to submit the self-attested copy of PAN and proof of residence. Those who apply under the reserve category would have to submit a certificate to that effect. The allotment to eligible applicants will be made through a computerised draw based on random number techniques. The results of the draw will be displayed on the notice board at Vikas Sadan and would also be available at http://www.dda.org.in/

The earnest money can be financed by banks. Check net charges on earnest by different banks in Delhi.

Net Loan Charges -

• SBI - Rs 5050
• Central Bank of India - Rs 5680
• AXIS - Rs 5678
• ICICI BANK - Rs 5900

How to save entry load of upto 2.25%

The Securities & Exchange Board of India (SEBI) now offers investors an opportunity to invest in mutual funds without paying entry load of upto 2.25%. To avoid paying the entry load you now have to invest directly with the Mutual Fund i.e. you have to submit the form directly to the Mutual Fund without the assistance of any agent/distributor.

What is an Asset Management Company (AMC)?

The company that manages a mutual fund is called an AMC. For all practical purposes, it is an organized form of a "money portfolio manager". An AMC may have several mutual fund schemes with similar or varied investment objectives. The AMC hires a professional money manager, who buys and sells securities in line with the fund's stated objective.

How does "entry load" eat into your investment returns?

A 2.25% entry load sounds small. But it still bites a chunk off your returns over a long period of time. For instance, Rs 1 lakh invested directly in the no-load option of an equity fund that grows at a rate of 15% over a period of 20 years yields around Rs 16.36 lakh against Rs 15.99 lakh that a load fund would return—a difference of Rs 36,820. This is because even a small sum of 2.25% gets compounded over the years.

The pinch remains the same even in a systematic investment plan (SIP). As SIPs entail investments on a regular basis, say every month, you end up paying entry loads on all your investment instalments. Assume you had invested Rs 5,000 in Reliance Vision Fund (RVF) on January 1, 2003 through a monthly SIP. If you had withdrawn your entire investment after five years, on December 31, 2007, you would have got back Rs 11.52 lakh in the no-load option and Rs 11.25 lakh in a load option, a difference of a cool Rs 25,914.

Some AMCs offer online investing on their websites. Get connected to these websites and start investing - ICICI Pru - https://www.icicipruamc.com/InvOnline/invest.asp Fidelity - https://www.fidelity.co.in/transact/index.html SBI - http://www.sbimf.com/index.asp Kotak Mutual - http://www.kotakmutual.com/kmw/online/online_transaction.htm HDFC Mutual - http://www.hdfcfund.com/InvestorCorner/ContentDisplay.aspx?ReportID=BFEFEABD-F9F7-4004-90BA-705FED83BB18 Birla SunLife - https://www.birlasunlife.com/BirlaSunLife/Mutual_Fund/BSLAMC_Mybsfs/AMCindex.aspx

Why Reliance Capital is best bet ?

Rel AMC Fy 10 AUM of 188698crs (assuming 40% CAGR ) At a valuation multiple of 6% of AUM one year forward, Rel AMC is valued at 437/share for its 95% stake. Life Insurance Third largest player by FY11. New Business Premium of Rs.75 bn in FY10, 17% margins, multiple of 20 with RelCap's stake being 95% = 984/share General Insurance Second largest player by FY10. Since i dont know how to value this business, I have considered recent valuation of Bajaj Allianz by HSBC. They valued it at Rs.2800 crs = 114/share Broking & Distribution Assuming a PAT of 300crs and a One year forward PE multiple of 15 = 183/share Consumer Finance Company's Networth of 9000 crs in FY10 = 366/share Investments Valued at 6500 crs = 264/share Total = 2348/share based on FY10E. The above valuation does not include ARC, possible foray into banking, commodity exchange.

Top 4 ELSS Funds for tax savings

Principal Personal Tax Saver

• NAV : Rs. 138.08
• 3 Year Returns : 51.11%
• 1 Year Returns : 85.54%

Sundaram BNP Paribas Tax Saver(G)

• NAV : Rs. 47.30
• 3 Year Returns : 52.89%
• 1 Year Returns : 67.57%

Fidelity Tax Advantage Fund - Growth

• NAV : Rs. 19.64
• 3 Year Returns : N/A
• 1 Year Returns : 57.65%

HDFC Tax Saver

• NAV : Rs. 86.50
• 3 Year Returns : 48.70%
• 1 Year Returns : 38.71%

After going through the above analysis, Investment - Snakes & Ladder is of the view that a prudent Investor should put his money in Principal Taxgain and Sundaram BNP Paribas Tax Saver(G) Fund. For those who do not want liquidity at regular intervals, Growth option would be good. For those, who want regular tax free returns in their hands, choose the Dividend Payout Option.

Mundra Port & SEZ Ltd - Buy and Hold for one year

• Sector : Infrastructure
• CMP : Rs. 894
• 52 Weeks High : Rs. 1150
• 52 Weeks Low : Rs. 440
• Best Buy @ below Rs.850
• My targets are -
• Target 1- 1150
• Target 2- 1500 (In Half Year)
• Target 3- 2000 (In One Year)
• Risk : Low

About the Company

Mundra Port is Adani Group promoted company. It has exclusive right to develop and operate Mundra Port (a leading sea port located in Kutch, Gujarat) and related facilities for 30 years, starting from February 17, 2001. Mundra Port provides port services for bulk cargo, container cargo, crude oil cargo and other value-added port services including railway services. Adani Group is a diversified group with around Rs.16000 crore turnover. Adani Group is involve in businesses like commodities trading, coal mining, power trading, power generation, real estate development, agro processing and logistics, shipping and port operations. In 2006 Mundra Port received approval as a developer of a multi-product SEZ at Mundra and the surrounding areas, which will be the first port based multi product SEZs in India. Mundra SEZ will provide integrated infrastructure including world-class Industrial, Business, and Social infrastructure like development of Industrial plots, Commercial and Residential buildings, Schools, Colleges, Hospital, Entertainment, Sports and Recreation facilities.

Strengths

Debt to Equity ratio has decreased from 3.08 times in FY03 to 2.71 times in FY07. The total debt component has increased from Rs.40.3 crore in FY03 to Rs.126.01 crore in FY07. NPM has increased from 25.31% in FY05 to 28.30% in FY07. This is mainly due to tax exemption enjoyed by the company in the FY07.

Weakness

Inventory turnover ratio has decreased from 93.98 in FY05 to 77.14 in FY07. Debtors’ turnover ratio has decreased to 2.75 times in FY07 from 8.68 times in FY03. For the same period debtors’ collection period has increased for 42.05 days to 132.72 days. OPM has decreased from 65.69% in FY05 to 55.88% in FY07. This is owing to the increase in cargo volume and usage of mechanization for cargo handling and storage. Top 5 customers of the company contribute 50.9% of the total revenue in FY07. This share has increased from last year which was 39.7%. This represents too much dependence on a few customers.

Disclaimer : I am holding the above stock, so this may influence my recomandation.

Dhirubhai - Dhirajlal Hirachand Ambani

Founder Chairman, Reliance Industries Limited, India [December 28, 1932 - July 6, 2002]

Reliance was founded as a textile mill in 1966 by Dhirubhai H. Ambani, the founder Chairman of the Reliance group. It continued to be a textile company until the early eighties. Reliance later started seizing opportunities thrown up by a combination of the growing Indian economy and the opening up of the regulation-driven sectors of the economy. These included petrochemicals and plastics. Beginning with the early eighties, Reliance pursued a policy of backward integration from textiles as well as diversification. It set up world-scale facilities for manufacturing polyester and textile intermediates, plastics and polymer intermediates, detergent intermediates, etc.

Career:

At the age of 17 went to Aden (now part of Yemen) and worked for A. Besse & Co. Ltd., the sole selling distributor of Shell products. In the year 1958 returned to Mumbai and started his first company, Reliance Commercial Corporation, a commodity trading and export house. In the year 1966, as a first step in Reliance's highly successful strategy of backward integration, he started the textile mill in Naroda, Ahmedabad. In the year 1975, a technical team from the World Bank certified that the Reliance textile plant was "excellent by developed country standards." In the year 1977, the company went public. Credited with a number of financial innovations in the Indian capital markets. Today, the Reliance Group has one of the largest family of shareholders in the world. With an investment of over Rs 36,000 crore (US$ 9 billion) in petroleum refining, petrochemicals, power generation, telecommunication services and a port terminal in a three-year time frame, has steered the Reliance Group to its current status as India's leading textiles-petroleum-petrochemicals-power-telecom player.

Reliance Commercial Corporation

When he was 16 years old, he moved to Aden,Yemen. He worked as a dispatch clerk with A. Besse & Co. Two years later A. Besse & Co. became the distributors for Shell products and Dhirubhai was promoted to manage the company’s oil-filling station at the port of Aden. Ten years later, Dhirubhai returned to India and started the Reliance Commercial Corporation with a capital of Rs.15,000.00. The primary business of Reliance Commercial Corporation was to import polyester yarn and export spices.

The business was setup in partnership with Champaklal Damani, his second cousin, who used to be with him in Aden, Yemen. The first office of the Reliance Commercial Corporation was set up at the Narsinathan Street in Masjid Bunder. It was a 350 Sq. Ft. room with a telephone, one table and three chairs. Initially, they had two assistants to help them with their business. In 1965, Champaklal Damani and Dhirubhai Ambani ended their partnership and Dhirubhai started on his own. It is believed that both had different temperaments and a different take on how to conduct business. While Mr. Damani was a cautious trader and did not believe in building yarn inventories, Dhirubhai was a known risk taker and he considered that building inventories, anticipating a price rise, and making profits through that was good for growth. During this period, Dhirubhai and his family used to stay in one bedroom apartment at the Jaihind Estate in Bhuleshwar, Mumbai. In 1968, he moved to an upmarket apartment at Altamount Road in South Mumbai.

Reliance Textiles Sensing a good opportunity in the textile business, Dhirubhai started his first textile mill at Naroda, in Ahmedabad in the year 1966. Textiles were manufactured using polyester fibre yarn. Dhirubhai started the brand "Vimal", which was named after his elder brother Ramaniklal Ambani's son, Vimal Ambani. Extensive marketing of the brand "Vimal" in the interiors of India made it a household name. Franchise retail outlets were started and they used to sell "only Vimal" brand of textiles. In the year 1975, a Technical team from the World Bank visited the Reliance Textiles' Manufacturing unit. This unit has the rare distinction of being certified as "excellent even by developed country standards" during that period. Initial Public Offering

Dhirubhai Ambani is credited with starting the equity cult in India. More than 58,000 investors from various parts of India subscribed to Reliance's IPO in 1977. Dhirubhai was able to convince people of rural Gujarat that being shareholders of his company will only bring returns to their investment.

Reliance Industries holds the distinction that it is the only Public Limited Company whose several Annual General Meetings were held in stadiums. In 1986, The Annual General Meeting of Reliance Industries was held in Cross Maidan, Mumbai and was attended by more than 35,000 shareholders and the Reliance family.

Dhirubhai managed to convince a large number of first-time retail investors to participate in the unfolding Reliance story and put their hard-earned money in the Reliance Textile IPO, promising them, in exchange for their trust, substantial returns on their investments. Dhirubhai's Control Over Stock Exchanges

In 1982, Reliance Industries came up against a rights issue regarding partly convertible debentures. It was rumored that company was making all efforts to ensure that their stock prices did not slide an inch. Sensing an opportunity, a bear cartel which was a group of stock brokers from Calcutta started to short sell the shares of Reliance. To counter this, a group of stock brokers till recently referred to as "Friends of Reliance" started to buy the short sold shares of Reliance Industries on the Bombay Stock Exchange.

The Bear Cartel was acting on the belief that the Bulls would be short of cash to complete the transactions and would be ready for settlement under the "Badla" trading system prevalent in Bombay Stock Exchange during those days. The bulls kept on buying and a price of Rs. 152 per share was maintained till the day of settlement. On the day of settlement, the Bear Cartel was taken aback when the Bulls demanded a physical delivery of shares. To complete the transaction, the much needed cash was provided to the stock brokers who had bought shares of Reliance, by none other than Dhirubhai Ambani. In the case of non-settlement, the Bulls demanded an "Unbadla" (a penalty sum) of Rs. 35 per share. With this, the demand increased and the shares of Reliance shot above 180 rupees in minutes. The settlement caused an enormous uproar in the market and Dhirubhai Ambani was the unquestioned king of the stock markets. He proved to his detractors just how dangerous it was to play with Reliance.

The situation was getting completely out of control. To find a solution to this situation, the Bombay Stock Exchange was closed for three business days. Authorities from the Bombay Stock Exchange intervened in the matter and brought down the "Unbadla" rate to Rs. 2 with a stipulation that the Bear Cartel had to deliver the shares within the next few days. The Bear Cartel bought shares of Reliance from the market at higher price levels and it was also learnt that Dhirubhai Ambani himself supplied those shares to the Bear Cartel and earned a healthy profit out of The Bear Cartel's adventure.

After this incident, many questions were raised by his detractors and the press. Not many people were able to understand as to how a yarn trader till a few years ago was able to get in such a huge amount of cash flow during a crisis period. The answer to this was provided by the then finance minister, Pranab Mukherjee in the parliament. He informed the house that a Non-Resident Indian had invested up to Rs. 220 Million in Reliance during 1982-83. These investments were routed through many companies like Crocodile, Lota and Fiasco. These companies were primarily registered in Isle of Man. The interesting factor was that all the promoters or owners of these companies had a common surname Shah. An investigation by the Reserve Bank of India in the incident did not find any unethical or illegal acts or transactions committed by Reliance or its promoters.

Diversification

Over time, Dhirubhai diversified his business with the core specialisation being in petrochemicals and additional interests in telecommunications, information technology, energy, power, retail, textiles, infrastructure services, capital markets, and logistics. The company as a whole was described by the BBC as "a business empire with an estimated annual turnover of $12bn, and an 85,000-strong workforce".

The Jai Corp Story

All lights fall on Mukesh Ambani’s backroom boy Anand Jain who now leads a big infrastructure rollout from the front.BAIJU KALESH, In the Ambani versus Ambani drama, a man from the margins is now hogging the script. Anand Jain of Jai Corp Ltd has launched himself from the shadow-boxing between the two brothers to the brightly-lit corporate proscenium. Jain, Mukesh Ambani’s school friend from third standard and trusted financial advisor, has seen his fortune taking shape through the cut and thrust of the biggest corporate joust of the country. Jain’s company — Rs 350-crore Jai Corp — shot into limelight last week after it sold shares worth Rs 2,200 crore to a clutch of foreign financial investors. Jain’s family sold 12.6 per cent (2.9 crore shares) of its 87.6 per cent stake at Rs 1,035 a share. Jai Corp stock skyrocketed to astronomical levels of Rs 20,000 from Rs 9,000 in a fortnight, stunning many retail investors who had sold their shares two years ago for a measly Rs 60 a share. K. Balakrishnan, a retail investor, who sold his 31 shares for a profit of Rs 29 a share in 2005, regrets not holding on to them. “They would would have fetched Rs 6 lakh now,” he says, wondering what is driving the stock now. Balakrishnan will not wonder who Jain went to school with. Jain is not only Mukesh's trusted financial advisor but also his school friend. Behind his bond with Mukesh is a relationship of more than 25 years, which also saw Jain supporting Mukesh through the family business split. Jain is keen to unlock value in his galvanised plain and corrugated steel sheets.In a presentation to investors he hinted unlocking value in this steel business through a public offering or a private placement of shares. Reliance Industries chairman Mukesh Ambani’s close relationship with Jain helps him circumvent a non-compete clause he signed with his brother when they carved up their father’s business in June 2005.

Mukesh is bound by the agreement to stay away from businesses which Anil is in, for the next five years. However, Jai Corp is launching into many of those businesses with Mukesh’s support. The market capitalisation of Jai Corp shot up from Rs 339.76 crore in October last year to the stratospheric Rs 19,515.02 crore on Wednesday, 17 October. Just a year before, the market capitalisation was just Rs 96.18 crore in the same month when the company was still weaving yarn and making galvanised corrugated steel and jumbo bags used to pack cement and food grains. When Jai Corp moved to infrastructure projects, its market fortune also took a turn. The stock soared on the BSE to reach newhighs when the board announced a 1:1 bonus and a stock splitof 1:10. As Jai Corp diversified into real estate over the last two years, Jain found himself in the land of plenty. He became the chairman of two SEZs in Mumbai and also floated a real estate focused asset management company. Last year, he launched the country’s largest real estate investmentmanagement company — Urban Infrastructure Venture Capital (UIVCPL ) — with a fund that manages $1.1 billion (Rs 4,400 crore). UIVCPL is the Indian advisor to Urban Infrastructure Real Estate Fund, a Mauritius-based offshore fund for investing in India. Sources say he is one of the largest real estate owners in the state. {mospagebreal} Just as Jai Corp's stock made a vertical lift, Jain's designs also leapt up from the drawing board. He is among the high riders of an incipient infrastructure boom, and if he carries on with his ambitions andhis spot of luck also holds, he might get into the top corporate order. As real estate seems to be yielding surreal gains to him, he is seen to be pulling out all stops. From ports to airports to power, every sector that shines is his. The Mukesh Ambani spring board has flung him high. Jain has joined hands with his friend Mukesh to promote Special Economic Zones (SEZs) and develop ports in Navi Mumbai and Maharashtra’s Raigad district.

Jai Corp is building a power station, a port and an airport for Mukesh’s SEZ projects.Mukesh has acquired more than 50 per cent ownership in the Navi Mumbai SEZ. The remaining stake is owned by Nikhil Gandhi, who is the original promoter of the project, Jai Corpand City and Industrial Development Corporation. Jai Corp is also expanding the greenfield Rewas Port near Mumbai, which it jointly owns with Maharashtra Maritime Board, Amma Lines and Reliance Logistics. Sources say Jai Corp will bid for developing a large airport in Navi Mumbai, adjacent to the SEZ. Jai Corp also has plans to foray into power generation and its distribution and transmission to the SEZ, and will float three special purpose vehicles to undertake this business. It will also build a 700MW gas based power plant within the SEZ.People affected by the Mukesh Ambani-promoted MSEZ would be given 12.5 per cent of the developed land, a compensation at market rates for their land, assurance of employment after successful completion of training, and two years’ sustenance payment for landless labourers.Village infrastructure would also be upgraded by spending around Rs. 90 crore.

Mukesh trusts Jain so much that he has made him chairman of Reliance Haryana SEZ, a joint venture between RIL, which holds 90 per cent in it, and the Haryana government. Jain, a commerce graduate with a passion for the stockmarket and real estate business, has been a financial advisor and trouble-shooter to his friend, a role that has earned him the wrath of Mukesh’s younger brother Anil Ambani. During the fight with Mukesh to split the Reliance group, Anil had alleged that the rift with Mukesh was created by Jain and Manoj Modi, who now heads Reliance Retail. “My relationship with Mukesh is friendship without any expectations from him,’’ Jain recently told a close friend. Though Jain does not own a single share, he acts as a strategic advisor to RIL for all stockmarket and real estate transactions. RIL’s portfolio of investments was about $28 billion (Rs1.12 lakh crore), including the shares of RPL, Mukesh told shareholders at the last AGM.Though Jain operates from a small office at Nariman Point, he is now in the middle of the hottest corporate action. His company is developing an SEZ outside Mumbai which will house an International Financial Centre, an IT park, and a diamond bourse that would rival Antwerp’s. The IT park will bring in several IT companies into Maharashtra, which lost business in this space to Southern cities such as Bangalore, Chennai and Hyderabad. “We can even provide uplinking facilities for media entertainment companies,’’ says a company official who does not wish to be quoted. A neighbouring city will reduce traffic congestion in Mumbai. The company has even proposed the setting up of a hovercraft service along the city’s coastal line connecting it to Navi Mumbai. {mospagebreal} Sources say Jain, who is a master in solving complex problems, has turned the SEZ deal in Reliance’s favour wielding his negotiating skills with Nikhil Gandhi, the original promoter of Maha Mumbai SEZ. Gandhi initially approached the Tata Group to partner him to build the special economic zone. But when the diversified conglomerate took time to arrive at a decision, Jain spotted the opportunity, took the lead and clinched the deal for his friend Mukesh. Jain is also gifted with a skill to settle family disputes. Sources said he amicably settled the dispute in Arvind Poddar family that owns Balakrishna Industries. Jain may be known by the redoubtable company he keeps, but his eye-popping success is due also to his own business acumen. Jain is the man who knew his moment and did not miss his chance.His spectacular jump into the rapids of mainstream business will repeatedly test this very instinct of his.

No threat to Reliance Power IPO: ADAG

Reliance Power is awaiting the approval of market regulator SEBI, says a spokesperson for the group amid reports that the mega issue could be delayed. There is no change in the plan to take Reliance Power public, says the Anil Dhirubhai Ambani Group (ADAG), amid media reports that the blockbuster IPO could be delayed.

"There is a vicious campaign of disinformation underway by vested industrial interests to stall Reliance Power's IPO", says a spokesman for ADAG. "The campaign is motivated by frustration at continuing success and rising valuations of ADAG," he adds.

Reliance Power is awaiting the approval of the market regulator SEBI for the IPO, he says. The company plans to sell a 10.1% stake through the IPO, which is estimated to raise US$2.8bn, making it India's biggest IPO ever. However in the past few days, there have been reports and market rumours that the issue may get postponed amid opposition from several quarters. A financial newspaper reported on Oct. 20 that the Ministry of Corporate Affairs is likely to refer the complaints received on the Reliance Power IPO to SEBI.

Another business daily reports that certain shareholders of Reliance Energy Ltd., the parent of Reliance Power, are against the issue saying that it will erode their shareholder value. They also allege that the proposal to transfer all projects from Reliance Energy to Reliance Power has not been taken to the shareholders.

An association of investors of Reliance Energy claim they have been deprived of the entire power generation business prospects. By transferring the power generation business to Reliance Power, now the power generation profits will accrue to the new company, they add. Investors in Reliance Energy are feeling cheated, they say.

But a spokesperson for Reliance Energy has refuted the charge that there is any irregularity in the company having transferred these power generation projects to Reliance Power without the consent of the shareholders.

Up to 30% of the Reliance Power shares will be offered to retail clients, with a further 10% going to high net worth individuals. Institutional investors will be offered 60%, and may get the chance for more if retail demand is weak.

The issue will be managed by UBS, ABN AMRO, JPMorgan, Deutsche Bank, Enam Securities, ICICI Securities, JM Financial and Kotak Mahindra Capital, while Macquarie India and SBI Capital Markets are co-managers

Indiainfoline Link - http://indiainfoline.com/news/innernews.asp?storyId=49011&lmn=1

What is option?

An option contract is an agreement between two parties to buy/sell an asset (stock or futures contract as an example) at a fixed price and fixed date in the future. It is called an option because the buyer is not obliged to carry out the transaction. If, over the life of the contract, the asset value decreases, the buyer can simply elect not to exercise his/her right to buy/sell the asset.

There are two types of option contracts - Call options and Put options. A Call option gives the buyer the right to buy the underlying asset, while a Put option gives the buyer the right to sell the underlying asset.Stock options can be exercised any time before the expiry date. (Called "american options") Index options can only be exercised on the expiry date. (Called "European options"). European style options have CE/PE as suffix and American Style options hav CA/PA. At present only options on indices are European Style, and Stock options can be exercised at any time.

Strike Price:

There are 2 types of stock options : Call option and Put option. Put options give the holder the right to sell the asset for a specified price, called the strike price. Call options give the holder the right to purchase the asset for a specified price. When the holder of an option contract uses the rights conferred to him to buy or sell the underlying asset, it is known as to "Exercise" the option.

Premium:

Premium value, or sometimes known as the Extrinsic Value or Time Value, of an option is the part of the price that is determined by factors other than the price of the underlying stock. This is what you are paying the seller of the option for the risk that that person is undertaking for selling you the option contract. This "risk money" you are paying the seller is justified and determined by 4 main factors : Time to expiration, Interest Rates, Volatility and Dividends payable. One would need a pricing model such as the Black-Scholes Model to accurately calculate the premium value of a stock option.

The price of a stock option consists only of it's Premium Value when there is no built in value at the moment you bought it (hence no intrinsic value).

eg If u buy 3900 Nifty Call for current month expiry @ premium of 40 Rs then you have to pay whole amount in cash ie. 4000 Rs(if you buy 1 lot i.e. 100 quantity) + Brokerage + Service Tax etc.Now if market crosses 3900 & moves towards 4000 by end of expiry then your call wil appreciate in value & it wil become something like 80 or 100 Rs.That means you have profit of 100-40 = 60 Rs ie 6000 Rs.Now its upto you whether you wanna sell it or not.On the day of the expiry 6000 Rs will be credited to your account & that contract gets expire. The exactly opposite may happen in above example & you could have loss too.

REMEMBER OPTIONS ARE THE THE RIGHT & NOT OBLIGATIONS.

THIS IS THE MOST IMPORTANT DIFFERENCE BETWEEN FUTURE & OPTIONS.

More on Options:http://www.rediff.com/money/option.htm

Ambanifty - Sell or Buy or Hold ?

Mukesh Ambani - promoted Reliance Industries (RIL), which is India's most valuable firm, shot up to Rs 2277.50. This is an all-time high.

The mid-cap construction firm Reliance Industrial Infrastructure (RIIL) was locked at upper limit of 10% at Rs 1043.10, which is a record high for the counter.

Reliance Petroleum (RPL), which is wholly-owned subsidiary of RIL, soared 12.89% to Rs 156.75. The stock hit a intra-day high of Rs 158.80, all-time high for the counter

Anil Ambani - controlled gas trading firm Reliance Natural Resources (RNRL) surged 34% to Rs 76.10. The stock hit a intra-day high of Rs 79.20, an all-time high. Large cap financial services firm Reliance Capital (RCL) flared up 3.05% to Rs 1558. The stock hit a intra-day high of Rs 1574, which is a record high for the counter India's second largest power generation firm by sales Reliance Energy (REL) moved up 3.17% to Rs 1019.05. The stock hit a intra-day high of Rs 1033, an all-time high. India's second biggest listed telecom services provider by sales Reliance Communication jumped to Rs 580.50.

Between the line :

In percentage terms in last one month Reliance Industrial Infrastructure has gained by 115%, RNRL 66%, Reliance Capital 47% and Reliance Petroleum 43%. Now what to do?As per my view apart from RIL, all the Ambani's companies are overvalued. Anil's Reliance Capital is now fairly valued. RNRL, RPL, RIIL are overvalued.

Don't make any fresh buying apart in RIL & RCOM and keep holding your Reliance stocks with stoploss.

* Details from moneycontrol.com

Good Websites for Market Watch

LETS TRY TO UNDERSTAND THE MARKET AND BE AN INFORMED AND INTELLIGENT INVESTOR... :) "The only good is knowledge and the only evil is ignorance"

For Global Markets:

• http://new.quote.com/world/
• http://www.bloomberg.com/markets/stocks/wei.html

For Foreign Exchange Rates and Forex News:

• http://new.quote.com/forex/
• http://www.bloomberg.com/markets/currencies/fxc.html

For Crude Oil Prices:

• http://www.bloomberg.com/energy/
• http://www.nymex.com/index.aspx

For Current Rates like

• Policy rates ( Bank Rate , Repo rate , Reverse repo rate )
• Reserve ratios ( CRR , SLR )
• Lending/Deposit rates ( PLR , Savings bank rate, Deposit rate )
• Exchange rates and more..

Site -http://www.rbi.org.in/home.aspx

FOR INTELLIGENT INVESTOR -

Sites -

• http://www.watchoutinvestors.com/search_new.asp
• http://www.investorhelpline.in/

* Dalal Street (In Hindi - Dalāl means a broker or dealer) in downtown Mumbai, India is the location of the Bombay Stock Exchange (in the Phiroze Jeejeebhoy Towers, at the intersection of Dalāl Street, Bombay Samāchār Marg and Hammam Street) and many related financial firms and institutions.

Power Grid Corp IPO: Invest at cut-off

• Public Issue Start Date: 10 Sept, 2007
• Public Issue End Date: 13 Sept, 2007
• Issue Size: 57,39,32,895
• Shares Face Value: Rs.10
• Price Band: Rs.44 – Rs.52
• Market Lot: 125 shares
• Minimum Quantity: 125 shares
• Website : http://www.powergridindia.com/

Recommandations:

• SSKI India - Power Grid likely to give 20% upside
• First Global - Subscribe to Power Grid, reasonable valuation
• Moneycontrol Rating 5 star
• The Hindu Businessline - Invest at Cutoff
• Economic Times - 3.5 star rating
• Dalal street.com - Invest at Cutoff

Why to invest in stocks ?

Infosys -

In 14-year period from 1993 to 2007, the share issue price of Infosys has increased 3000-fold. An investment of Rs. 9,500 (100 shares at an issue price of Rs 95) in the initial public offering of Infosys in 1993 (Rs. 9,500 was approximately $300 according to the 1993 exchange rate) would now be worth Rs. 29,440,000 ($665,235 according to the 2007 exchange rate) after adjusting for stock splits and bonuses. This is excluding the dividends that the company has paid out.

*source - http://en.wikipedia.org/wiki/Infosys

Gujarat Industries Power Co. - Ready for power play

• Sector : Power
• CMP : Rs. 76
• 52 Weeks High : Rs. 78
• 52 Weeks Low : Rs. 53
• 3 Month Target Price : Rs. 100
• Risk : High

About the Company

Gujarat Industries Power Company (GIPCL) is having three power plants in Gujarat state with total installed capacity of 555 MW.The company achieved net sales of Rs.795.58 crores for FY 07 with other income of Rs.87.21 crore.

Between the Line

Share is a good bet at Rs.70-73, which can touch Rs.100 mark in the next 3 months, with absolutely no downward risk. Even dividend of 20% is quite heartening. One can buy this safely for steady gains.

Disclaimer : I am holding the above stock, so this may influence my recomandation.

Praj Industries - Buy and Hold

• Sector : Engineering/Capital Goods
• CMP : Rs. 215
• 52 Weeks High : Rs. 268
• 52 Weeks Low : Rs. 79
• My targets are -

1. Target 1- 222
2. Target 2- 236
3. Target 3- 253

• Risk : High

About the Company

The company is well placed to benefit from the robust demand outlook for ethanol equipment and technology, arising from the increasing popularity of ethanol blending programmes worldwide. Praj's technological expertise and execution skills, in combination with its increasing foothold in large markets such as the US, Brazil and Europe are positives for earnings. At the current market price, the stock trades at about 24 times its likely FY08 per share earnings. For the quarter ended June 2007, the company's revenues grew by about 72 per cent while net profits grew by about 90 per cent, based on sustainable earnings. Operating profit margins were flat at about 14 per cent, comparing poorly with FY07 margins of about 17 per cent. However, this appears attributable to the differing product-mix from quarter to quarter and holds scope for improvement.

Between the Line

Praj's earnings are sensitive to regulatory changes in the ethanol policy of countries such as the US, Brazil and EU. Any unprecedented increase in steel prices and global technological advances in biofuels could pose risks to my recommendation. Praj Ind. is on run after the issue of the bonus shares. As Praj Ind. is operating in different countries, the Rupee appreciation may also have an impact on the earning of the co..

Disclaimer : I am holding the above stock, so this may influence my recomandation.

Sub Prime woes - Its over or started

* Source: BusinessWeek

ICICI Bank - good pick at right price

• Sector : Banking
• CMP : Rs. 865
• 52 Weeks High : Rs. 1010
• 52 Weeks Low : Rs. 460
• 3 Months Target Price : Rs. 1000
• 6 Months Target Price : Rs. 1250
• Risk : Moderate

About the Company

ICICI Bank is the largest private sector bank and the second largest bank in the country in terms of assets. It is a pan-Indian player. The company has boosted its overseas operations in the last three years and has now presence in 17 countries either through subsidiaries or extension counters. Total branches excluding the network of recently merged Sangli Bank, stood at 710 branches, 45 extension counters and 3,271 ATMs. Of this, 63% of the branches are in metropolitan and the remaining in semi-urban/rural areas.

Between the Line

As I have posted in the my blog don't go for FPO (Link - http://rtyagis.blogspot.com/2007/06/icici-bank-hum-hain-na.html). Now start buying this banking stock from price 850 or less. It will give you around 40+% return in the coming year.

Mahindra & Mahindra - Best buy in Auto Segment

• Sector : Automobiles
• CMP : Rs. 677
• 52 Weeks High : Rs. 1001
• 52 Weeks Low : Rs. 495
• 3 Months Target Price : Rs. 850
• 6 Months Target Price : Rs. 950
• Risk : Moderate

About the Company

Mahindra & Mahindra Limited (M&M) is the flagship company of US $ 2.59 billion Mahindra Group, which has a significant presence in key sectors of the Indian economy. Mahindra & Mahindra is engaged in the manufacture of utility vehicles (UV), tractors, light commercial vehicles (LCV) and three-wheelers. Now it has started production of LOGAN the mid segment car. In FY06, automotive division contributed to 66% of volumes sales with tractors accounting for the rest. Through investment in its subsidiaries, it has interest in sectors like software, hotels, real estate and financial services. In FY06, M&M had a 44% market share in the domestic MUV segment and a 32% market share in the tractor segment.

Between the Line

At the above price M&M is very good buy and one of the best stock in Auto Segment. If the share went down to Rs. 650 on Monday than it's a blind buy.

Disclaimer: I am holding the above stock and this may influence my recommendations.

Omaxe IPO: Invest at cut-off

• Public Issue Start Date: 17 July, 2007
• Public Issue End Date: 20 July, 2007
• Issue Size: 1,77,96,520 shares
• Face Value: Rs.10
• Price Band: Rs.265 – Rs.310
• Market Lot: 20 shares
• Minimum Quantity: 20 shares
• Website : http://www.omaxe.com/

Recommandations:

• First Global - Omaxe likely to prove rewarding for investors
• SSKI India - Good valuation
• Edelweiss Securities says, "We have valued the company on NPV basis. NAV estimate is INR 400–405. This represents a 51%-31% upside over the IPO price of INR 265-310 respectively. We have discounted the cash flows at a WACC of 15% over a period of four years."
• Moneycontrol Rating 4 star
• The Hindu Businessline - Invest at Cutoff
• Econamic Times - 3 star rating