Gold falls 20% in last month!!
Posted on August 21, 2008
Filed Under Global happenings affecting Indian Economy, Gold Investments, Market News & Discussions | Leave a Comment
Gold was about $973 per ounce ( that is Rs:14,700 per 10 grams) on 21st July 2008 and currently it is $793 per ounce!! That is Rs: 12,032/- per 10 grams! So a fall of about Rs:2,700 in just one month!! That is about 20% down in just a month! See the graph to realise the way price fluctuated… According to Reuters, India’s gold imports in July fell nearly 56 percent from a year ago as higher prices led to a drop in retail sales, a top industry official said on Monday. Harmesh Arora, vice president of the Bombay Bullion Association said “If prices come down to about 11,000 rupees (per 10 grams), we may do better than last August,”. And they are almost at that leveks now. Also the festive season is nearing and its hard to think that buyers will wait anymore to prices to fall. You have seen a lot of surge in the global gold prices in the last 6 to 8 months but the picture is drastically changing now. I remember the last August when I bought gold jewellery, it was about INR 10,000 per 10 grams. Then it travelled to above INR 14,000 around May-June 2008 and now it has started coming drastically down. Gold has shown such cycles of fluctuations from about 600 years but the fluctuations this year are more complex to understand as it is coupled with high inflation, globally shaken equity markets, US recession, or rather stagflation. India plays a very important role in controlling the gold prices globally because India is the largest consumer of gold. India accounts for about 24% of total gold demand all over the world. As I said earlier the festive season triggers the gold buyers in India so we may look out for the rise in demand from India, which may result in rise in global gold prices. Posted on August 9, 2008 Posted on August 4, 2008 IT companies are doing bad…oops..thats not true! A better sentence would have been IT stock prices have come down drastically. The rise of rupee was reason for that and now this is an old news. Currently the exchange rate of dollar/rupee is around rupees 42, increased from 39 - which is actually good for IT companies. A must read article about this:Rupee Vs. Dollar..things are changing now! So there is no reason we should not believe in IT companies successfully expanding their business. Persistant Systems - a software company having development centers at Pune, Nagpur, Hyderabad, Goa and Bangalore is going for an IPO of 4,974,836 equity shares of Rs 10 each for cash at a price to be decided through a 100% book building process. Persistent is a strong IT firm with great clients like Microsoft from ages. They are also opting for pre-placement IPO . For further details please go through : Persistant Systems to tap capital markets: Posted on July 25, 2008 One more option has been added by the Mutual Fund Houses to the huge pool of types of funds, and this will add to the confusion while selecting the funds. We already have funds based on various sectors - real estate, infrastructure, energy, FMCG, technology…bla bla.. and one more has been added now - OIL! We have seen the oil price rise and oil has got importance more than the celebrities these days. Oil price has doubled in the last 2 years and hence now its in the eyes of investors. India’s first Oil based Mutual Fund will be launched by the Fund House Benchmark Mutual Fund and it has filed an offer document with the SEBI for the same. The fund called as Oil Benchmark Exchange Traded Scheme (Oil BeES) will be open ended fund and it will be similar to the existing thematic funds/sectoral funds and it will based on the global oil prices. The minimum amount of investment will be Rs:10,000/- and the fund will invest 90% in equity and remaining 10% will be in debt and money market instruments - so it will be an agressive fund. This doesn’t mean that it will give high returns, aggression is associated with high risk. As this will have indian investors, the fund will have benchmark crude oil price in rupee terms. This fund will turn out to be an ETF after its intial offer period - the fund will charge 2.25% as entry load during its initial offer period. Before investing please consider the degree of diversification you are adding to your portfolio and actually is an oil based mutual fund necessary for you. Also the most important part remains to analyze the relationship of oil prices with the NAV of this fund..more on this in next post…. Related Post: (not auto generated) The Price of Oil- affecting factors and it’s future Posted on July 9, 2008 Posted on July 1, 2008
You may be having an impression that to own a business you must start it. Well, not exactly, you can even buy an already built business isn’t it? Yes you can and that’s where we have an option called franchise business. A franchise business can be explained from two perspectives, one from the franchiser -the one who sells the business and other from the franchisee -the one who buys the business. Well here don’t take the literal meaning of buying the business, because exactly its’ not the acquisition or buying shares of the business. By buying the business I mean buying the name, fame and brand of the business. Let’s look at it with an example.
Suppose there is a company called “XYZ Systems Ltd.” and consider it has a product “productxyz” and it wants to expand its business throughout the world (or simply to any place whether it doesn’t have any business till date.) It can expand the business through franchises. It declares that it has started giving out franchises. Those who buy franchise are required to pay some amount as fee (remember you are buying the name and brand value) to the XYZ Systems Ltd. and also in some cases a yearly fee and also in some cases a percentage of profit you earn after launching the business in your city. These fees are decided by the company itself. Suppose XYZ Systems Ltd decides that the joining fee should be $1 million, the yearly fee should be $20,000 and the percentage from profit should be 10%. Now suppose you find that the product of that company productxyz will have a lot of customers in your city then you buy the franchise. Here, now the company XYZ Systems Ltd. became the franchiser and you became the franchisee. Franchisee needs to pay all the fees prescribed and needs to abide by the rules defined by the franchiser. After buying the franchise you can sell the product under the name of XYZ Systems Ltd. If suppose you buy and make a profit of say $40,000 in 1st year then at the end of year you need to pay a total of:- Franchise buying: $1,000,000 This is for joining and the first year, Franchise Annual Fee: $20,000 Generally the franchiser demands some amount of experience in handling business and financial stability to make sure that you are financial strong enough to sustain the failure in business. They guide you for some initial period to a great extent and you are like a part of them. Here there is a win-win situation for both because the franchiser is getting huge amounts in fee’s and a percentage of profit margin without doing anything besides training and helping the new franchisee’s and on the other hand the franchisee is making money by selling the product of franchiser under the franchiser’s rich brand value! XYZ Systems Ltd is very famous and people will come to your shop to get the productxyz. The success of franchisee depends largely upon the skills of the franchisee. For some people who want to own business in a very short time this is a very nice option as you don’t have to start from scratch. I hope this post makes you understand what the franchise business is, your questions are welcome through comments. Related Posts: (not autogenerated) Franchise Business in India:To know why India is good and which sectors in India are good for franchise business. 
Financial Term Of The Day- Joint Stock Company.
Filed Under Series - Financial Term Of The Day! | 2 Comments
Joint Stock Company: An organization that falls between the definitions of a partnership and corporation. This type of company issues stock and allows for secondary market trading; however, stockholders are liable for company debts. This is a type of company that has access to the liquidity and financial reserves of stock markets, but also has the restrictions of a partnership.
Software firm-Persistant Systems going for an IPO
Filed Under IPO news & discussion, Market News & Discussions | 2 Comments
India’s first Oil based Mutual Fund will be launched soon…
Filed Under Global happenings affecting Indian Economy, Market News & Discussions, Mutual Funds | Leave a Comment
Financial Term Of The Day-”Funding Gap”
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Funding Gap: The amount of money needed to fund the ongoing operations or future development of a business or project that is not currently provided by cash, equity or debt. Funding gaps can be covered by investment from venture capital or angel investors, equity sales, or through debt offerings and bank loans. Funding gaps are also more likely at the early stages because a company won’t know what its full operating expenses will be until it reaches a more mature stage and, at first, there aren’t likely to be any meaningful revenues coming in.
What is a franchise business?
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Franchise Annual Fee: $20,000
10% of profit: $4,000
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Total: $1,024,000
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If for 2nd year suppose you made profit of $50,000 then you need to pay
10% of profit: $5,000
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Total: $25,000
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Financial Term Of The Day-”CAPEX”
Posted on June 17, 2008
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CAPEX (Capital Expenditure):
Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment. This type of outlay is made by companies to maintain or increase the scope of their operations. These expenditures can include everything from repairing a roof to building a brand new factory. The amount of capital expenditures a company is likely to have depends on the industry it occupies. Some of the most capital intensive industries include oil, telecom and utilities.
HDFC Bank - still a good buy…
Posted on June 15, 2008
Filed Under Investment Guide, Market News & Discussions | Leave a Comment
HDFC Bank has seen a great dip in recent week and is trading close to 1140 down about 200 rupees that is 15% in last 10 days or so. This is nice time to buy it. While many think that it will be foolish to buy as the stock is falling continously from past 3 weeks, well, we need to realise the potential of the stock to strike back. The stock market has shown a negative sentiment in last 2-3 weeks and many big-B’s are in red. If the stock market shows more disappointment, just because of market sentiment HDFC Bank may even go futher down and may touch 1000 in next 2 weeks may be. As a result the current strategy to be on a bit safer side will be to buy only 60-70% of the capacity you want allocate to HDFC Bank. For E.g: you can buy HDFCBank of Rs: 1 lakh then buy only of 60-70K above level of 1100, not more than that.
Averaging out is another perspective altogether and you will see an article on how and when to average out your previous high buy’s. As for now, in this case, if you want to average out your previous buying then wait, it may go down more. But if you havn’t bought it till now, its time to buy - with yout own risk as the market sentiment isn’t strong as it should be for heavy buying.
HDFCBank - A good buy now…
Posted on May 28, 2008
Filed Under Investment Guide, Market News & Discussions, Todays Market | Leave a Comment
HDFCBank is one of the widely spread banks with second largest market capitalization in India, followed by ICICI Bank. I am tracking the stock from the past 3 months and observing closely frompast 2 weeks. Right now, in the past 3 days it has fallen about 8% which is seeking the bottom if you look the price fluctuation from past 3 months. The dip of Jan-Feb period can be explained by various global reasons and overall bearish sentiment in the equity market, many many stocks fell about 10-15% during that period. But the current fall from the past 3 days which I am talking about is unexplainable and I find this a temporary short term fall. This is time to buy HDFCBank. Buying at levels of 1340 with stoploss at 1310 will be a good. Book some profits at around 1400. I recommend holding period of 1-2 week after you buy. And above all, HDFCBank is fundamentally strong. It’s worth to have it in one’s portfolio.
Financial Term Of The Day-”Profit Margin”
Posted on May 24, 2008
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Profit Margin: A ratio of profitability calculated as net income divided by revenues, or net profits divided by sales. It measures how much out of every dollar of sales a company actually keeps in earnings.
Profit margin is very useful when comparing companies in similar industries. A higher profit margin indicates a more profitable company that has better control over its costs compared to its competitors.
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