Direct Tax Code provisions

Friends, 

  The Direct Tax Code which has been tabled in parliament after revision is OK from the angle of stock market participants. It levies no tax on long term gains in equities. Also it has provided for clubbing with income only 50% of the short term gain. So, in a way, the markets will attract a lot of money for this simple reason of tax saving. The other welcome feature is that insurance policies with premium at up to 5% of the risk cover will be given exemption to the extent of Rs 50K in a separate pocket. There will be no tax on maturity and withdrawal too. It may therefore be expected that this provision will make people go for ULIPs in a big way and the companies will be offering suitable plans to cater to this requirement. This is wonderful provision as it will ensure more financial security for the masses in case of misfortune striking and also will divert savings into right channels for expansion of economy through stock exchange route. 

  The corporates have been given some relief by keeping the rate of tax at 30% which is lower than the present level and which is low by what it is in other countries. Our markets are reflecting what happens in world's other leading markets but have displayed strength all through the past month by not overly reacting. Today Nifty has opened at over 5500 mark and may close the day with gains retained. The auto-sales have maintained in high-gear. But you not go in for investing in auto stocks as the stocks seem to have achieved full price potential and may show weakness in next six months as the auto sales would not as robust as they have been recent past due to higher interest rates.

Hari Om, 

Krsna Khandelwal 

BIRDINFO Stock Rx - A prescription for stock market

Stock Advice post Jun 2010 Quarter

UNITECH @83 (190810) : You may accumulate this on declines for medium term. 949:116/62:74/5

GAMMONIND @200 (190810) : You may buy this for medium/long term. 993:275/150:18/14

PANTALOOR @468 (300810) : You sell this on surges.  857:497:278:16/18

BALLARPUR @35 (310810) : You may buy this for medium/long term. 1193:41/20:7/- 

Reduce STT to attract investors from all over the world

Friends, 

  The August Series has expired without any fireworks. The behavior of the market has matured in the past several month and it is on par with a fully developed markets. Since both sides are played by participants with a view to taking even a minuscule profit due to low brokerage rates but the STT is still a spoiler. I do not say it should be removed but it should be far more less than it is now. If this remains high, there would be shifting of business in private and unreported deals ie 'dabba trading'. With one such step, I am sure, the volumes will surge and will attract investors from all over the world.

  If the systemic risk in financial world is to be checked, it should have a transaction tax at a minimal level (say .001 %) on all transactions in financial sphere. This should include all transactions through banks with customers, even including between banks and with central bank. This should be collectible/payable by all the organised entities like stock exchanges, banks, NBFCs, MFs and the like. It should also be payable in both cases ie where there is receipt of money or payament of money. This would make the transactions undertaken with only a purpose and would also capture data of financial movements across the board by every individual and other entities. It may however be the choice of govt to keep the proceeds of such tax in a seperate pool or merge with gross revenue receipt. Better idea would be pool it for meeting any emergent requirement should there be any threat to survival of system.

  I digressed from looking at what is in store in the market placed. As I see, the market may move up with a sudden jerk because the bears have not yet been punished fully. The correction would happen and is due but it can come only when bears have shed there positions in favour of bulls. The bear camp is in fact the best support to the bulls. With bears dropping support, the professional bulls go on leave. So you may still invest on days of declines. As a measure of safety keep an eye on world markets and if there is any big move down anywhere in the world, you have to hedge with promptness or sell off. The close of Nifty at 5478 is just the right point.

Hari Om, 

Krsna Khandelwal 

BIRDINFO Stock Rx - A prescription for stock market

Our market high on rating scale

Friends,
  Our markets only have shown positive movements while world's other markets are languishing. In fact, of the meaningfully big and organised market places, our market is now quite high on rating scale. The indications available in F and O sphere tell us that there may be some correction without a warning or with false signal of up move. The put-call ratio is at a high point of 1.72. It may have happened because there is an attempt to take the market high for an exit. This is done by buying in cash market and hedging it through index option or stock option purchase. At a proper time when the balance has become favourable the exit will be made in rush, trapping the ordinary traders who have been skimming at leisure. 
  The China is facing political unrest, under the surface if not openly. This has been mentioned by none other than Chinese premier himself who has called for democratising the governance and supervision to some extent. US markets have been down for three days in a row. The yield on 10 year govt paper has crossed 8 % mark. The moot question is whether the Nifty will be past 6000 in twelve months or not. If not than investing in govt paper would be wiser move because there you are sure to get 8 % in a year. So, in simple terms we should have at least half of investible funds in bonds and debentures. This will enable us to get it back in to equities upon correction and also do away with big drop in value of portfolio should there be any big downward move.
Hari Om,
Krsna Khandelwal
BIRDINFO Stock Rx - A prescription for stock market

Vedanta to acquire Cairn India

Friends, 

  Vedanta group has finalized a deal to acquire interest in Cairn India. This scrip now loses sheen as Vedanta in seat to run the company would not go down well with investors. Corporate governance will be concern for those who stick with Cairn shares. Cairn operations generate cash and the treatment to cash received through ordinary operations may not be in a way that would be comforting for the shareholders. Besides, further issue of capital, bidding for blocks etc may be undertaken in a way not exactly with due transparency. So it is time to be out of this stock for time being even without waiting for the open offer.

Hari Om, 

Krsna Khandelwal 

BIRDINFO Stock Rx - A prescription for stock market

15 Shares consolidating in August

Company Name	Sector	Volume	Last Price
EngineersInd	Engineering	191453	326.85
Kingfisher Air	Services	532184	53.55
Chambal Fert	Chemicals	137443	67.1
DeccanChronicle	Media	103650	135.55
ITC	Tobacco	277863	156.85
Bombay Rayon	Manufacturing	176050	269.7
IDBI Bank	Banking & Finance	199834	121.2
Indiabulls	Banking & Finance	103204	160.75
Idea Cellular	Telecommunication	443531	71.95
Hotel Leela	Services	123222	49.5
Larsen	Engineering	113313	1,830.00
Balrampur Chini	Food & Beverages	125529	84.8
Dabur India	Cons Non-durables	101374	202.4
Essar Oil	Oil & Gas	122556	131.9
Bharti Airtel	Telecommunication	439378	315.45

Happy Independence Day to All

Freedom in the Mind.

Faith in the words..

Pride in our Souls...

Salute INDIA on 64th Independence Day

BIRDINFO Stock Rx - A prescription for stock market

Stock Advice post Jun 2010 Quarter

TATASTEEL @ 521 (120810) : You buy this for long term.   1183:739/407:777/293

COMMINSIND @658 (120810) : You may accumulate this for long term.   989:664/286:57/34

SBIN @2776 (120810) : You may sell this on surges and wait till next result. 1050:2795/1670:1668/1170

TATAPOWER @ 1326 (120810) : You may sell this and buy back on correction.   878:1517/1190:103/10 

BOSCHLTD @5810 (110810) : You may buy this for long term.  923:6400/3746:101/60

BHARTIARTL @ 320 (110810) : You should accumulate it for long term.  1047:485/252:274/392

MOTHERSUMI @ 168 (100810) : You may sell it now and wait till next result.  917:184/71:27/11

NAGARCONST @ 166 (100810) : You may sell this for now and wait till the next result.  914:198/119:20/19

ROLTA @ 175 (100810) : You may buy this for medium/long term.  1157:210/141:11/10

TATAMOTORS @ 966 (100810) : You may buy it for only medium term ie when opportune book profits also.  1250:967/393:141/0

IVRCLINFRA @ 171 (100810) : you sell this for now.  773:-/144:12/16

BRITANNIA @ 912 (090810) : You may sell this on surges.  810:2376/1505:11/8

GITANJALI @ 225 (090810) : You may sell this on surges.  1135:230/91:1/0

GMRINFRA @ 58 (090810) : You ignore this for time being.  641:145/50:0/1

RELCAPITAL @769 (090810) : You sell this on surges.  910:976/611:0/40 
ELECTCAST @ 53 (090810) : You may buy this on dips and sell on surges.  4977:56/33:12/15