Don't enter in IT: Bagga

2008-04-24 18:22:11 Source : CNBC-TV18

Ajay Bagga of Lotus Asset Management is of the view that one should not enter in IT space.

Bagga told CNBC-TV18, "If you look at the regional IT stocks yesterday, Acer numbers also in Taiwan were very strong. We have seen even the US techs really giving out good numbers. But on the India story, which is largely the offshoring story, there is a lot of hope that offshoring will pickup, we have seen the NASSCOM statements. We are not that convinced. We think it is better to stay on the sidelines and not enter IT. At least give it two more quarters and get some more visibility. Right now the managements are giving a hockey stick with weak near quarters and going up in the last two quarters, a lot of it contingent on a US recovery, which we are not very convinced about. We think the real economy has to really reflect all the bad news that is going through."

Buy Reliance Industries, target of Rs 3344: Angel

2008-04-24 16:17:45 Source : moneycontrol.com

Angel Broking has maintained its buy rating on Reliance Industries with a target Price of Rs 3344 in its April 22, 2008 research report. "RIL reported a good performance for 4QFY2008 surpassing our expectations with Refining once again driving growth. Net Sales jumped 35.8% yoy to Rs 37,286 crore (Rs 27,448 crore) backed by higher sales from the Refining and Oil and Gas segments."

"We believe that the Exploration and Production initiative to bear fruits from 2HFY2009 onwards and is expected to be the future growth driver. RIL stock is available at 18.7x FY2010E FDEPS of Rs 139.1. We remain positive on the growth prospects of RIL and maintain a Buy on the stock with a Target Price of Rs 3344," says Angel's research report.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

$25-an-hour Jobs

By Mary Lorenz, CareerBuilder.com writer

If you get paid a salary, you probably don't give much thought to what you make on an hourly basis. Either the thought is too depressing ("That's all I make per hour?"), produces too much guilt ("That's how much the company spends every time I take a 'little' break to watch YouTube videos?"), or simply doesn't occur to you. That said, $25 an hour may not sound like much, until you realize that the median household salary is $46,326 according to the 2005 U.S. Census Bureau, and that breaks down to about $22.27 per hour for a 40-hour work week.


So who's making more than the average American at $25 an hour?


1. Market analyst -- $27.18/hour
Market analysts work in government agencies, consulting firms, financial institutions or marketing research firms, where they research and predict the sales potential of a particular product or service. A bachelor's degree is the minimum requirement for many jobs; however, a master's degree in a field such as business administration, marketing, statistics or communications will provide more opportunities.
Average annual salary: $56,541*


2. Chemist -- $25.16/hour
Chemists search for and use knowledge about chemicals to discover and develop new and improved products, processes to save energy and reduce pollution, and advances in fields like medicine and agriculture. A bachelor's degree in chemistry or a related discipline is the minimum educational requirement; however, many research jobs require a master's degree or doctorate.
Average annual salary: $52,333


3. Civil engineer -- $25.29/hour
Civil engineers plan, design and oversee engineering for building projects like airports, bridges, buildings and irrigation systems. They often need a degree in civil engineering or certification as a registered civil engineer.
Average annual salary: $52,605

4. Social worker -- $25.06/hour
Social workers work for places like community centers, hospitals and penal institutions, where they develop programs to help individuals and groups enhance their personal relationships and social development. Social workers receive accreditation through a four-year college degree program in social work and on-the-job experience.
Average annual salary: $52,119


5. Human resources generalist -- $26.90/hour
Human resources generalists work to improve working conditions within an establishment by identifying, evaluating and resolving problems in employee relations and work performance. A combination of directly related training and experience is typically required for carrying out the responsibilities for this job.
Average annual salary: $55,959


6. Architect -- $26.41/hour
Architects apply their knowledge of design to plan and supervise the construction of building projects according to their clients' needs and financial resources. Architects need a degree from an approved school of architecture.
Average annual salary: $55,060


7. Speech pathologist -- $25.05/hour
Speech pathologists specialize in the diagnosis and treatment of speech and language disorders and study the science of human communication. Practice requires a four-year degree in the field of health sciences.
Average annual salary: $52,105


8. Budget analyst -- $26.71/hour
Budget analysts review financial plans and help institutions prepare budgets, improve efficiency and lower costs. Budget analysts typically have at least a bachelor's degree in accounting, finance, business, public administration, economics, statistics, political science or sociology.
Average annual salary: $55,579


9. Detective -- $27.02/hour
Detectives carry out investigations to prevent crimes or solve criminal cases. Detectives are appointed based on their eligibility under civil service regulations, their performance in competitive written exams and their previous education and experience.
Average annual salary: $56,197


10. Physical therapist -- $25.68/hour
Physical therapists plan and administer medically prescribed treatment for patients suffering from injuries or certain diseases to restore function, relieve pain and prevent disability. A combination of training and experience is typically required to practice, as well as compliance with state licensing requirements.
Average annual salary: $53,410

Sensex drops 650 points; banks, IT lead decline

31 Mar 2008, 1416 hrs IST,INDIATIMES NEWS NETWORK
MUMBAI: Weak global cues, concerns about the health of the US economy and rise in domestic inflation, saw traders book profits. With frontline shares of technology and banks leading declines, the benchmarks lost nearly 4 per cent halfway through the session.

At 1:15 pm, the Sensex was down 646 points or 3.95 per cent at 15,725.06. The index touched a low of 15,685.34.

ICICI Bank (up 7.09%), HDFC Bank (6.96%), Infosys Technologies (6.84%), Tata Consultancy Services (6.34%) and HDFC (6.26%) were the biggest index losers.

Cipla, up 1.36 per cent and Ranbaxy Laboratories, up 0.2 per cent, were the only Sensex gainers.

The Nifty was down 171 points or 3.47 per cent at 4770.75, making a low of 4750.30.

The guidelines instituted by ICAI on Forex Exchange Derivatives are likely to rake up the issue of forex related skeletons in the corporate cupboards. Though guidelines have been issued earlier, they were recommendatory in nature form 1st April, 2009 and compulsory form 1st April, 2011. At a meeting held between 27-29 March, the council of the institute has made it mandatory for corporates to provide for all losses in their forex derivative transactions and to mark to market their outstanding transactions in all accounting periods ending 31st March, 2008 or after.

On Friday, data showed inflation rose 6.68 per cent in the year to March 15, higher than the previous week’s 5.92 per cent and market expectations of 6 per cent. This level is significantly higher than the RBI’s comfort level of 5 per cent, and only worsens the case for an interest rate cut anytime soon.

Meanwhile, stocks fell in Europe and Asia, led by banks and telecommunications companies, as concern deepened that losses in the credit markets will hurt economic and profit growth.

Ancient Croc Discovered

RIO DE JANEIRO, Brazil (AP) — Pointy-nosed crocodiles may have joined sharks as the dominant predators in the world's oceans some 62 million years ago, according to Brazilian scientists who on Wednesday unveiled one of the most complete skeletons found yet of the prehistoric animals.

Scientists called it a new species, "Guarinisuchus munizi," and said it sheds new light on the evolutionary history of modern crocodiles.

The fossil includes a skull, jaw bone and vertebrae, making it one of the most complete examples of marine crocodylomorphs collected so far in South America, said Alexander Kellner of the National Museum of the Federal University of Rio de Janeiro. He and other scientists unveiled fossils and a model of the 10-foot-long crocodile at the museum.

"It's a very rare find and it gives rise to several new theories," said Kellner, who co-authored an article on the find that was published Tuesday in Proceedings of The Royal Society B, a London-based peer-reviewed journal.

Guarinisuchus appears to be closely related to marine crocodylomorphs found in Africa, which supports the hypothesis that the group originated in Africa and migrated to South America before spreading into the waters off the North American coast, Kellner said.

The find also suggests that marine crocodylomorphs replaced marine lizards during the early Paleocene era, about 65 million years ago — the same time marine lizards became extinct. They believe it's a new species based on anatomical differences in the skull that are unique to this creature.

Philip Currie, a paleontology professor at the University of Alberta, Canada who was not involved with the discovery, said it was an important find.

"There are a lot of unknowns with this group in terms of evolution. Clearly the discovery of a specimen as nice as this one will help sort things out," Currie said in telephone interview.

The bones were found in the northeastern state of Pernambuco. Scientists named the species Guarinisuchus after the Tupi Indian word "Guarani," which means warrior and "munizi," in honor of Brazilian paleontologist Deraldo da Costa Barros Muniz, who has discovered many dinosaur fossils off Brazil's northeastern coast. Muniz didn't participate in this find.

Scientists have discovered a wealth of crocodile ancestors around Brazil in recent years.

In January, they announced the discovery of an 80 million-year-old land-bound reptile described as a possible link between prehistoric and modern-day crocodiles.

Two years ago, paleontologists from the Federal University of Rio de Janeiro announced the discovery of a 70-million-year-old crocodile fossil that they called Uberabasuchus Terrificus, or "Terrible Crocodile of Uberaba."

— Michael Astor, The Associated Press, 27th March 2008

Arbitrage Funds - Smart way to improve your returns

ource : moneycontrol.com

Investing money for short-term, say up to 1-11/2 years has generally been an issue. As it is the interest rates / returns are quite low. On top of this, there could be taxation issues, which will further reduce the effective returns.

Equity/equity funds may not be a prudent option for short-term. Therefore, we need to consider mainly the interest-based investment options.

What do we usually do?
Since it is quite convenient, very often the money keeps lying in the Savings A/c itself (also, maybe it is psychologically satisfying to see a big balance in one’s account). But don’t forget - this earns you just 3.5% p.a. interest and that too taxable. Hence, it is not good to keep too much money in the Savings A/c.

The next common thing to do is to make a Fixed Deposit (FD). This may earn you 6-9% interest depending on the tenure. But this too is taxable (if you are in the highest tax bracket, even a 9% FD will fetch you just 6.3% post-tax returns). So, given the fact that there are better alternatives, this too may not be a very intelligent choice.

What are the Alternatives?
Certain debt MFs offer an attractive alternative to Bank FDs. In case you are sure about your investment horizon, you can opt to invest in Fixed Maturity Plans. Else, if you want quick liquidity, liquid plus/floating rate funds could be considered.

Why FMPs are more lucrative than Bank FDs?
The pre-tax returns from these funds will be more or less in line with the returns from the Bank FDs. However, it is the difference in tax treatment on interest from bank FDs and returns from MFs, which enables MFs to give much better post-tax returns.

Interest from Bank FDs is fully taxable as per one’s slab rate. As against this, returns from Debt MFs will be taxed as either Dividend (@14.1625%) or Capital Gains (LT – @11.33% and ST – as per one’s slab rate).

Let’s assume that both FD and MFs give 8% returns. Then if you are in the 30% tax bracket, your post-tax return from Bank FD will be 5.60%. But, if you invest in MFs, you will earn either 7.01% (dividend if period is less than 1 year) or 7.09% (LTCG if period is more than 1 year).

Besides this, there is lot of convenience with MFs. MFs will deduct this Dividend Distribution Tax and pay you the net amount. You don't have to do anything. But in case of interest earning you will have to show it in your returns and pay tax, including advance tax. Also banks will deduct TDS on interest income. So at the year-end you will also have to get the TDS certificate from them.

How Arbitrage Funds fit in?Before we see how arbitrage funds can be useful, let’s first understand the concept of such funds.

Though, arbitrage funds invest in equity and derivatives such as futures & options, they are essentially debt funds. This is because when they invest in equity, they also take an exactly opposite position in futures. The objective is to capitalize on the difference in the prices in the cash market and the futures market (and hence the term arbitrage) rather than making money on equity or derivatives.

For example, say they buy Infosys shares @ Rs.1800/share in cash market on Aug 1. At the same time, they will sell Infosys shares in the futures market, which would be quoting for say about Rs.1815 (the difference in financial parlance is called the ‘cost of carry’).

Let’s say the price of Infosys on the expiry date of the futures contract (last Thursday of the month) is Rs.1900. Thus, the fund will make a profit of Rs.100 in the cash market [Rs.1900 – Rs.1800] and loss of Rs.85 [Rs.1815 – Rs.1900] in the futures market. (On the expiry date the cash and future prices are same). The net gain is Rs.15.

Or suppose the price of Infosys drops to Rs.1700. Thus, the fund will make a loss of Rs.100 in the cash market [Rs.1700 – Rs.1800] and profit of Rs.115 [Rs.1815 – Rs.1700] in the futures market. Again, the net gain is Rs.15

This way, the market movement does not affect them. They earn Rs.15, whatever may be the final price, which in this case works out to about 10% p.a. assured returns (@Rs.15 on Rs.1800 in one month).

In nutshell, arbitrage funds will yield returns more or less in line with liquid funds / floating rate funds or FMPs; and, more importantly, with practically very little risk.

For example, in last 6-12 months’ arbitrage funds have given about 9.25% p.a. average returns, while floating rate funds have given around 7.5% returns, liquid plus funds around 7.9% returns and FMPs around 8.5% returns.

Now, the key point – for tax purposes arbitrage funds are treated as equity funds. Hence, they enjoy lower tax vis-à-vis debt funds (see table below).

Particulars Arbitrage Funds Debt Funds

Dividend Distribution Tax Nil 14.16%

Long Term Capital Gains Tax Nil 11.33%

Short Term Capital Gains Tax 11.33% As per slab

Securities Transaction Tax 0.25% Nil

Thus they could give even better post-tax returns than debt MFs.
If the period is less than 1 year, both Debt Funds and Arbitrage Funds will give almost the same returns. At 8% pre-tax returns, the post-tax return works out to about 7%. But, if the period were 1 year, then post-tax yield would be 7.09% in debt funds and 7.73% in arbitrage funds.
Are Arbitrage Funds OK to invest in?There are no major risks associated with arbitrage funds unlike market-risk in equity funds or interest-rate risk in normal debt funds.

However, there could some minor risks. There may not be any arbitrage opportunities available, especially in bearish markets. In such cases, the arbitrage funds will work like liquid funds. Or on the expiry, the rates in cash and futures markets may not match exactly. This could marginally affect the returns. Or there could be some problems in executing the deals due to low liquidity.
Apart from this, one must keep certain points in mind:

Arbitrage funds usually have an exit load for investment period less than 3 months. So make sure that you won’t need this money for at least 3 months.

The returns are linked to expiry of contracts (which happens on the last Thursday of the month). So you need to be a bit careful about your redemption dates.

Concluding, therefore, one can say that arbitrage funds can be a good alternative to invest our short-term money, where we can earn high post-tax returns – with reasonable degree of safety and surety.

- Sanjay Matai

The author is an investment advisor and can be reached at sanjay.matai@moneycontrol.com.

Seven ways to survive a Stock Market Correction!

Source : moneycontrol.com

Global markets all have corrected lately. Irrespective of which market you are investing in, you would have been affected by the recent volatility. You could be an investor in America, India, China, Korea or anywhere else in the world- your situation would be pretty much the same. Many of you who are new investors might have entered panic mode, where you are unable to relax and have lots of stress and depression. I understand how it must be for somebody who just started investing in either stocks or mutual funds two months ago to see a notional loss of 30% or more now.

I remember the first time several years ago when I witnessed a stock market correction, my portfolio was down by over 50% and I too had entered panic mode. But thankfully after reading books on investing and listening to more experienced investors, I decided not to panic and hold my quality stocks. I am a much happier person today thanks to that decision.

Here are seven simple ways to survive a stock market correction as an investor:

1. Stop Listening To Analysts

Most analysts in the media instead of providing you with a solution will just confuse you. Somebody will say everything is doomed while others will say things are great in the long term. Forget listening to analysts- most of them won’t be of any help. The reason people listen to analysts is because they are looking for peace and hope. Trust me you will get none of that by listening to somebody else. Peace and hope are all within you.

2. Stop Staring At Your Portfolio Every Thirty Minutes

Another mistake people make is that they get up every morning and wait for the markets to open. Once markets open they start staring at their stock prices. A fall makes you feel worse and small rise makes you feel a little better. This won’t help either. Instead keep track of the fundamentals of your company every time the results are out. If your company is profitable and growing - be happy. If it isn’t, find out if you need to exit. The stock price will catch up in the near future if business is growing. Do you stare at your money kept in a bank FD everyday? Most probably not. Use the same principle when you invest in stocks or mutual funds.

3. Be Patient

Many of you might not have a lot of cash to buy cheap now; however please be patient with whatever you have bought. Even the youngest billionaire on Earth today is 23 years old. It took him 23 years to be a billionaire and he didn’t do it in few days or weeks. The youngest billionaire probably in history is 23-year-old Mark Zuckerberg - the founder of the social networking site-Facebook.

4. Speak To Actual Investors With Experience

Instead of interacting with analysts or your broker, speak with people who are actual investors and who have been in the market for longer periods of time than you. They will tell you how they have survived various stock market corrections and what has made them richer. Read and learn more about people who have actually created wealth and sustained it over a long period of time.

5. Stop Following Crazy Tips

Please for heaven’s sake stop following ‘hot’ tips which promise to make you a millionaire in a matter of months. Maybe the ‘hot’ tip is only meant for billionaires who would end up as millionaires in case they do follow the tip. If it seems to good to be true, it is probably just a scam, which hopes to take money away from retail investors and put them in the hands of greedy manipulators. Similarly stop following rumours about how fundamentally strong companies are going to be shut down and go bankrupt in the next few months. Use your own head and trust yourself.

6. Understand Market Cycles

Every asset class has a cycle. Stock markets, mutual funds, real estate all move in cycles. Please realize that nothing can keep going up forever in a single direction. There will be phases when prices will come down and again move up. If you go back into history you will see several instances when stock prices came down, however over a period of time quality companies always reward investors. Understand market cycles, and don’t become a slave to them.

7. Follow The Guru

Today the richest man on earth, Warren Buffett, is an investor who has created wealth because he has stayed away from what everybody else is doing and has simply invested in quality companies for the long term. He invested in Gillette, for the simple reason that he believed that men won’t stop shaving. It makes sense to follow, as I call him, “The Guru” and think long term and remember people who create wealth do things that others don’t.

I’m sure if you follow the simple techniques above you will be a much happier and a calmer investor. Investing is about controlling your emotions and being disciplined about what you do.

Happy Wealth Creation!

Yogesh Chabria

The author is an investor and bestselling author. His latest book Invest The Happionaire Way should hit bookshops near you within a few months. You can connect with him by visiting his blog at www.blog.happionaire.com and don’t forget to subscribe to his free newsletter. You can write to him at yogesh.chabria@moneycontrol.com