Financial Markets

Financial Markets — No Comments
17
Feb 12

MCX IPO

MCX also known as Multi Commodity Exchange of India which is the largest commodity exchange of India is all set to bring the initial public offering. This initial public offering is expected to attract large number of investors because of superior fundamentals and also future growth prospectus of commodity market. Credit rating agency CRISIL has assigned a grade of 5/5 to the IPO which indicates good returns for investment.

MCX provides online trading facility to people just like NSE however MCX provides it for commodity trading like silver, copper, gold, crude and so on. The difference between NSE and MCX is that NSE provides online trading facility for stocks while MCX provides for commodity trading.

Multi Commodity Exchange Ltd initial public offer is for around 6.4 million shares, the face value of each share is 10 rupees; MCX IPO will open on 22^nd February and close on 24^th February. The market lot is 6 shares and the price band for this is between 860 to 1032 rupees. The excepted listing date of this issue is on or after 10^th March. Morgan Stanley, Citigroup and India’s Edelweiss Capital are the book runners for this issue.

Financial Markets — No Comments
30
Jan 12

What is Shareholding Pattern

Shareholding Pattern is the word which you hear many times if you are one of those who actively trade and invest in stock market. However not many people know what exactly does shareholding pattern means, well shareholding pattern is used in the context of companies equity. It shows how much amount of shares is hold by specific set of investors. In equity markets there are many types of investors like retail, high net worth individuals, promoters, foreign institutional investors and so on.

In simple words shareholding pattern shows the number of shares which are held by various category of investors. Companies equity comprises 100 percent out of this certain percentage is hold by promoters and rest by outside parties like retail, FII and so on. Shareholding pattern shows exact percentage and amount of shares hold by various people in the market and therefore it can be of great help because before investing into any stock you would like to see whether promoter and big players are increasing or decreasing their stake in the company and therefore it helps in better investment decisions.

Financial Markets — No Comments
21
Jan 12

Top Investment Banks

Investment bank is different from normal bank because they provide multiple services like mergers and acquisitions, managing IPO of various companies, underwriting facilities and so on. Investment banks were considered to be very good and supreme as compared to commercial banks but in the year 2008 with the collapse of Lehman brother’s, a bank which was more than 100 year old. The outlook of the world towards investment banks changed completely and people thought that many investment banks will meet the same fate, however majority of the investment banks have survived that crisis. Given below are some of the top investment banks which are there in the world -

JP Morgan
Morgan Stanley
Bank of America Merrill Lynch
Goldman Sachs
UBS
CLSA
Barclays Capital
Citigroup
Credit Suisse
Deutsche Bank
Blackstone Group
Investec Bank

Apart from above there are many other investment banks which are operating and striving to achieve top position and be among the above group of banks.

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6
Jan 12

CAGR Meaning

CAGR is the term which is often used in finance; it is the acronym for Compound Annual Growth Rate. It represents the growth which an investment has given over a period of time and not for single year. The formula for calculating CAGR is – (Current value of investment/Beginning value of investment) ^1/N– 1, where n is Number of years.

Hence when one is talking about CAGR, it should not be confused with normal rate of return because compound annual growth rate is for many years while normal rate of return is usually for 1 year. Therefore it may be possible that an investment for the year has given negative return still its CAGR is positive because of past years superior returns and thus one should be careful while seeing the compound annual growth rate and should not make his or her investment decision only on the basis of CAGR as it can be misleading some times.

Financial Markets — No Comments
22
Dec 11

Where to Invest in 2012

Investing money is not an easy task and especially in these volatile times, as one witnessed during the year 2011 which was marked by extreme volatility throughout the year across all the asset class. So now the question is where to invest money in the year 2012 so that one can earn good returns, well before answering that question I would like to divide the asset classes and then proceed to answer. There are basically 4 asset classes -

Equity Market – Equity investment if possible should be avoided in the first half of 2012 as European crisis is still not resolved and as we saw in the year 2008 all efforts of saving companies by America were futile and Lehman brothers ultimately collapsed, though this time the magnitude of crisis is much higher because now there is risk of default by nations as a whole and that is the reason one should keep his or her exposure to equity markets at low levels. Ideal investment should be in the range of 10 to 15 percent of your total wealth and once this problem gets eliminated you can become aggressive and increase it to 35 to 40 percent.
Fixed Income Bonds or deposits – At this point of time considering the risk reward ratio this option seems to be the best one as there is no risk involved and return are adequate. In the first half of 2012 one should invest between 50 to 60 percent of his wealth into this asset class. Though this percentage appears on higher side but as discussed above one can always shift into risky assets like equities once the environment become investor friendly.
Gold and Silver – This is the tricky one because in the past 2 years they are the best performing asset class and that is the reason why many investors are willing to invest into gold and silver, but if world goes into recession than it is not necessary that precious metals would be unaffected by it as they have been in the past 2 years. So the idea is to stay away from precious metals because majority of people have gold and silver in physical form and there is no point in increasing your exposure at these high prices and wait for a correction and then d buy rather than buying and then repenting about it.
Real Estate – The main culprit of recession in the year 2008 was real estate, and now many people are thinking of investing into real estate which is not a bad idea because every asset class has up and down cycles and investors who are investing with a horizon of 5 years can look into investing around 10 to 15 percent in real estate in the year 2012 and can except good returns from it.

Apart from above investments which would be around 90 percent of your wealth you should always keep 10 of your wealth in cash because cash though do not give returns but it is very handy in times of need and should be kept at all times.

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