Tuesday, June 23, 2015

Stocks to Invest: SBI

The ‘SBI (State Bank of INDIA) group’ which consists of many subsidiaries and joint ventures both from banking and non banking sectors is the largest loan provider for people and business in India. According to the SBI’s website the bank has 4713 branches in India, operates 21,000 ATMs and has 180 offices in 34 countries as on June 30th 2011. Logically, the bank holds high amount of Current Account Savings Account deposits which carries lower interest liability. This has helped the bank to give loans at the most competitive rates in India.
With many subsidiaries and a variety of financial services such as insurance, mutual funds, merchant banking, credit cards, factoring, stock broking, pension fund management etc and with spreading business in every nook and corner of India, it would be hard to beat this bank in terms of revenues. Also Government of India’s has holding of approximately 60% in the bank. SBI always stands in an advantageous position with the government being its main promoter.

Friday, June 19, 2015

Support & Resistence

Support is the price level at which demand is thought to be strong enough to prevent the price from declining further. The logic is that, when the price declines, there will be more demand for the particular share. By the time the price reaches a particular level, it is believed that demand will overcome supply and prevent the price from falling below support.
Resistance is just the opposite of ‘support’. A Resistance is the price level at which selling is thought to be strong enough to prevent the price from rising further. The logic behind the theory is that , as the price advances , sellers become more inclined to sell and buyers become less inclined to buy. By the time the price reaches a particular level it is believed that supply will overcome demand and prevent the price from rising above resistance.

Monday, June 15, 2015

Bonus Share

Bonus shares are additional shares given to the shareholders without any additional cost, based upon the number of shares that a shareholder owns. These are company's accumulated earnings which are not given out in the form of dividends, but are converted into free shares. The basic principle behind bonus shares is that the total number of shares increases with a constant ratio of number of shares held to the number of shares outstanding. For instance, if Investor A holds 200 shares of a company and a company declares 4:1 bonus, that is for every one share, he gets 4 shares for free. That is total 800 shares for free and his total holding will increase to 1000 shares.

Companies issue bonus shares to encourage retail participation and increase their equity base. When price per share of a company is high, it becomes difficult for new investors to buy shares of that particular company. Increase in the number of shares reduces the price per share. But the overall capital remains the same even if bonus shares are declared.

Wednesday, June 10, 2015

Chart Analysis

  • Chart analysis is the technique of using patterns formed on a chart to get an idea about the price movement of a share.
  • There are two types of chart patterns: reversal and continuation.
  • A continuation pattern suggests that the prior trend will continue upon completion of the pattern.
  • A reversal pattern suggests that the prior trend will reverse upon completion of the pattern.

Monday, June 8, 2015


A rule stating that in order to find the number of years required to double your money at a given interest rate, you divide the compound return into 72. The result is the approximate number of years that it will take for your investment to double.
For example, if you want to know how long it will take to double your money at 12% interest, divide 12 into 72 and you get six years.

Friday, June 5, 2015

How to Avoid Claim Rejection of Term Insurance Plan

1) Provide correct details in the health declaration as hiding past history of diseases and essential health related information could lead to claim rejection.
2) Stop agent from filling wrong details or better still fill the form yourself.
3) Don't opt for the single premium plan even though a discount is offered as thanks to the uncertainties of life you may or may not need to pay the premium for the whole term. The premium doesn't increase each year.
4) Inform the nominee you have appointed about the term policy you have purchased.
5) Don't fall for mis selling offers of insurance agents that you will get back the entire amount you have invested, so the cost is zero. The money will be back upon death and the inflation cost as well as opportunity cost of money should be looked at from 15-20 years perspective.

Monday, June 1, 2015

Stocks to Invest : L&T Ltd

The company is well poised to capitalise on the upcoming business opportunities, particularly in the infrastructure, power and defence sectors, which are likely to benefit from the government's thrust.

The management expects about Rs 150000 crore of orders in the next couple of quarters to come for bidding. These include orders from airports, metros, dedicated freight corridors, urban infrastructure, power generation, including nuclear power plants, T&D, etc. 

Larsen & Tourbo
Target Price: 2123