Investor Protection Measures

Investor’s Rights Investor’s Obligations The right to get The best price Proof of price/brokerage charged Your money/shares on time Shares through auction where delivery is not received Square up amount where delivery not received in auction Statement of Accounts from trading member The obligation to Sign a proper Member-Constituent Agreement Possess a valid contract or purchase/sale note Deliver securities with valid documents and proper signatures The right for redressal against Fraudulent price Unfair brokerage Delays in receipt of money or shares Investor unfriendly companies The obligation to ensure To make payment on time To deliver shares on time To send securities for transfer to the company on time Forwarding all the papers received from the company under objections to the broker on time In the modern world, stock markets have evolved as important drivers of national economy. Fair and clear-cut rules and regulations are enforced by governing bodies to ensure safety of all participants connected to the market. All stock exchanges have their own rules and regulations. Governing bodies take special care to protect interests of investors as this class is most widely dispersed, and generally more vulnerable to being taken for a ride. Additionally it is the investor class that infuses the capital into the market and hence bears higher risks than other participants.  In India, SEBI is the principal regulatory authority for all secondary and primary market related activity. Other regulatory bodies and laws governing secondary market intermediaries are Securities and Contract Regulations Act 1956, Securities and Contracts Regulations Rules 1957; the Indian Stamp Act 1961 and the Bombay Stamp Act; the Central Excise Department; the Income tax; and the Reserve Bank of India.  Various steps initiated by the Stock Exchanges for Investor protection are as follows : Protection Measures on BSE Trade Guarantee Fund BSE has formulated a scheme to guarantee settlement of transactions of members, which form part of the settlement system. For this, BSE has constituted a Trade Guarantee Fund with the following objectives : To guarantee settlement of transactions of members of the Exchange inter-se which form part of the Stock Exchange settlement system, so as to ensure timely completion of settlements of contracts and thereby protect the interest of investors and the members of the Exchange. To inculcate confidence in the minds of secondary market operators generally and global Foreign Institutional Investors particularly, to attract larger number of domestic and international players in the capital market. To protect the interest of investors. The Scheme has come into force with effect from May 12, 1997. And the Defaulters’ Committee manages it, which is a Standing Committee constituted by the Exchange, the constitution of which is approved by SEBI. The declaration of a member, who is unable to meet his settlement dues, as a defaulter is a pre-condition for invoking the provisions of this Scheme.  Surveillance BSE has set up a separate Surveillance Department to keep a close watch on price movement of securities, detect market manipulations like price rigging, etc., monitor abnormal prices and volumes which are not consistent with normal trading pattern and monitor the member-brokers' position to ensure that defaults do not occur. It not only monitors the exposure of the members on a daily basis but also scrutinizes the prices and volumes of the securities on a daily basis.  The large variation in the prices as well as the volumes of the securities is scrutinized and appropriate actions are taken. The securities, which reach new high or new low and companies, which have high turnover, are watched. Also the prices and volumes in the newly listed securities are monitored. In case certain abnormalities are noticed, then circuit filters are reduced to make it difficult for the price manipulators to increase or push down the prices of security within a short period of time. The Exchange imposes special margin in the securities where it is suspected that there is an attempt to ramp up the prices by creating artificial volumes. In cases where the abnormal movements continue despite the aforesaid measures, trading in the security is suspended.  Detailed investigations are conducted in cases where price manipulation is suspected and disciplinary action is taken against the members concerned, if warranted. Where any security has been suspended for more than three days after obtaining necessary permission from SEBI, a detailed investigation report is prepared and sent to SEBI for further investigation/action, if any.  'Z' Group To protect investors from fraudulent companies listed on BSE has created a new group of securities known as ‘Z’ group category. The 'Z' group was introduced in the month of July 1999 and covers the list of companies, which fail to comply with listing requirements and also fail to resolve investor complaints.  Investors' or Customers Protection Fund (IPF)  In accordance with the guidelines issued by the Ministry of Finance, Government of India, BSE has set up an Investor Protection Fund (IPF) to meet the claims of investors against defaulter members. Further, as per the recent SEBI decision, auction proceeds in certain cases, where price manipulation / rigging was involved, have been impounded and transferred to the Investor Protection Fund.  Redressal of Investor Grievances The grievances of investors against listed companies or members are redressed by the Exchange. The Exchange also assists in arbitration process both between members & investors and member’s inter-se.  Investors’ grievances against companies BSE forwards the investors’ complaints against the companies to the concerned companies and a copy of the letter sent to the company is also forwarded to the complainant. He is advised to intimate the Exchange if his complaint is not resolved within 45 days. If a company fails to redress the complaint within 45 days, a reminder is sent. If a company still fails to respond to a large number of complaints pending against it, then a consolidated list of complaints is sent to it to resolve the same within 30 days. Inspite of the above efforts, if the complaints are not resolved, the company officials are asked to appear before the Investors’ Grievance Redressal Committee (IGRC) appointed by the Governing Board of the Exchange to resolve all the investors grievances. This Committee consists of five members including a retired judge of Mumbai High Court. The company officials are impressed by the committee members to resolve all the pending grievances immediately.  Inspite of these efforts, if the complaints are not resolved then a show cause notice is issued by the Exchange and then the matter is placed before the Governing Board of the Exchange for necessary action against the company.  Investors’ grievances against member-brokers of the Exchange BSE handles complaints of investors against members and vice-versa. It forwards the complaints of investors to the concerned members to settle within 7 days from the receipt of the letter. In case no reply is received from a member, a reminder is sent and the member is informed that if he does not reply/resolve the complaint immediately, a fine of Rs.500/- is levied on him. He is also directed to settle the matter expeditiously. In order to resolve the complaints expeditiously the matter is placed before the IGRC wherein both the investors and members present their case. After hearing both the parties, the Committee gives a decision, which is binding on both the parties. In case a member fails to implement the decision of the IGRC, then the matter is referred to the Executive Director for taking disciplinary action against the member which includes referring the matter to the Disciplinary Action Committee.  Resolution of complaints through arbitration With a view to ensuring speedy and effective resolution of claims, differences and disputes between non-members and members and members inter-se, the Exchange has laid down a set of procedures for arbitration thereof. These procedures are duly embodied in the Rules, Bye-laws and Regulations of the Exchange, which have been duly approved by the Government of India/SEBI, under the Securities Contracts (Regulation) Act, 1956.  Under the Rules, Bye-laws and Regulations of the Exchange, an in-house arbitration machinery has been provided to decide on: dispute between members inter-se; and Dispute between non-members (clients/investors) and members of the Exchange. All contracts of sale and purchase of securities entered into on the trading platform of the Exchange are subject to Mumbai jurisdiction and any disputes arising in respect of such contracts are necessarily required to be submitted for arbitration.  However, complaints from non-members (clients/investors) against members and complaints of member’s inter-se are in the first case generally investigated by the BSE. For the purpose of investigation, documentary proof like contract notes, bills, statement of accounts and relevant documentary proof are called for from the parties. If required personal meetings of parties are arranged, to resolve complicated issues. As a last resort, where there are claims and counter-claims and the matter cannot be easily resolved by the intervention of the Exchange officials, the parties are advised to file an arbitration reference. The Exchange has amended the Bye-laws relating to arbitration between members with effect from 29th August, 1998 after getting the approval from SEBI.  At present members of the Exchange as well as outsiders act as arbitrators in the disputes and claims filed by the non-members against members of the Exchange and vice-versa. The Exchange has since appointed a panel of 24 outside arbitrators consisting of retired Judges, Chartered Accountants and other persons from the financial field in addition to 16 members of the Exchange. This is pursuant to instructions from SEBI to reconstitute the Arbitration Committee comprising of 40% of the members of the Exchange and 60% outsiders, i.e., those who are not members of the Exchange.  BSE has recently amended Bye-laws relating to Client v/s. Member arbitration in conjunction with Arbitration and Conciliation Act, 1996, passed by the Government of India. Under the new amended bye-laws there is a panel of three arbitrators, one appointed by the applicant, one by the respondent and the third by the Exchange. In case the value of the disputed claim is less than Rs 0.1 million, then only one arbitrator is appointed and if the value is greater than Rs 0.1 million, then there are three arbitrators for the case. Under the new amended bye-law after getting the arbitration award, the aggrieved party can appeal to the arbitration tribunal for any typographical/computational error, if any occurred in the award within fifteen days from the receipt of the award.  In the amended Bye-law which provides for an appeal whereby the aggrieved party within fifteen days of the receipt of the award can file to the arbitration tribunal for re-hearing the whole case. On receipt of the appeal, the Exchange appoints an appeal bench consisting of five arbitrators who re-hear the case and then give the decision. The judgment of the appeal bench is by a majority decision and binding on both the parties. The final award of the bench is enforceable as if it were the decree of the Court. Bye-laws of the Exchange provide that all arbitration references be closed normally, within a period of four months.  Protection measures on NSE Settlement Guarantee Fund In order to guarantee settlement, it has set up a Settlement Guarantee Fund contributed by the clearing members of the Corporation. As counter-party to settlement obligations, NSE guarantees financial settlement. As a result, though there have been a few defaults by member firms, the Clearing Corporation has stepped in to complete settlement and avoided market disruption.  Short deliveries and un-rectified bad deliveries are automatically auctioned by NSCCL so that settlement is completed within a well-defined time frame.  Investor Grievances Cell The Investor Grievances Cell (IGC) attends to various problems faced by investors in dealing with the two integral parts of the Capital Markets, Trading Members and Companies whose securities are traded on the Exchange. The investors can report their complaints/ grievances to the IGC through e-mails or through Complaint forms. All valid complaints are assigned a unique complaint no. and are entered into a database for easy follow up and necessary action. Most complaints are resolved within a period of 45 days. On exhausting all means, if the matter remains unresolved, it is referred to Arbitration.  Arbitration Arbitration is an alternative dispute resolution mechanism provided by the NSE for resolving disputes between the trading members and between trading members & constituents (i.e. clients of trading members), in respect of trades done on the Exchange. This process of resolving a dispute is comparatively faster than other means of redressal.  The facility of arbitration on the Exchange can be availed by: Investors who have dealt on the Exchange through its trading members and who possess a valid contract note issued by the trading member of the Exchange. Investors who have dealt on the Exchange through registered sub-brokers of the trading members of NSE and who possess valid sale/purchase note issued by the registered sub-broker. The Exchange provides a list of eligible persons approved by SEBI for each of the Regional Arbitration centers. The persons who form part of the list of Arbitrators are persons who possess an expertise in their respective fields including banking, finance, legal (judges) and capital market areas (brokers).  The appointment of an Arbitrator is linked to the claim amount. If the claim amount is Rs 2.5 millions or less, then a Sole Arbitrator is appointed and if the claim amount is more than Rs 2.5 millions, then a panel of three arbitrators is appointed.  The comprehensive approach to risk management taken by BSE and NSE encompassing the quality of clearing/trading members, tight monitoring mechanism, strict margining, efficient settlement systems have made the Secondary market in India comparable to any of the markets worldwide.  Links http://investor.sebi.gov.in/ http://www.nseindia.com/content/assist/asst_invcentre.htm http://www.bseindia.com/invdesk/invrights.asp

Settlement

Once you have bought or sold shares, the transaction is complete only when you have got the shares you purchased, or received money for the shares you sold. This is called settlement in stock market parlance. The stock exchanges have a complex mechanism in place to ensure that every trade is properly matched, and shares are received or delivered properly. In case of a shortfall of securities, an auction is resorted to close out the difference. 

The mechanism through which all parties to a transaction get their receivables i.e. either funds or shares is known as ‘clearing and settlement’ or simply ‘settlement’. 

Settlement agents

On each of the exchanges, thousands of orders get matched with each other during the course of a trading cycle. Even though for each trade there is a buyer broker and a seller broker, they never interact with each other for the settlement of that trade. Their interaction is only with the settlement agency of their exchange. 
When an investor enters into a transaction with a broker, either the shares or funds have to be delivered to the broker. In turn, the broker delivers these to the settlement agent on ‘pay-in day’ (explained in the next section). Having made sure that it has received shares and funds from all brokers, it processes the deliveries and earmarks the shares for delivery to the buyer broker. So on the pay-out day (explained in the next section) it is able to deliver shares to the respective buyer broker and funds to the respective seller broker. 
For trades on BSE, the settlement agent is called as ‘Clearing House (CH)’ while on NSE it is ‘National Securities Clearing Corporation Ltd. (NSCCL)’ 

Clearing House – Settlement Agent of the BSE
The clearing and settlement operations of the BSE is managed by a company called BOI Share Holding, which is a subsidiary of Bank of India and BSE and is known as ClearingHouse. All settlements for securities are through the ClearingHouse on a delivery versus payment (DVP) basis. 

National Securities Clearing Corporation – Settlement Agent of NSE 
The clearing and settlement operations of the NSE are managed by its wholly owned subsidiary, the National Securities Clearing Corporation Limited, also known as Clearing Corporation. 

Common settlement processes on both exchanges

The broker directly carries out settlements of physical securities with the ClearingHouse/ Clearing Corporation.

CH/NSCCL instructs designated clearing banks to do funds settlement.

The CH/NSCCL interfaces with the depository on one hand and the clearing banks on the other to provide DVP settlement for depository enabled trades.

Settlement Cycle on the BSE

The settlement cycle on the BSE is Trade plus two days, or T+2, as per a Sebi directive implementing this new cycle from April 1, 2003. Under rolling settlement, trades done on one day are settled after a certain number of days. So, T+2 will mean that the final settlement of transactions done on the Trade day, will be settled by exchange of money and securities on the second business day (excluding Saturday, Sundays, Bank and Exchange Trading Holidays). 

Pay-in and Pay-out for 'A', 'B1', 'B2', ‘T’, ‘S’, ‘TS’, 'C', "F", "G" & 'Z' group of securities
Settlement is done on a T+2 basis. The pay-in/pay-out process will be settled on the T+2 day. 

Summary of the Settlement Cycle

Day	Activity
T	Trading on BOLT and daily downloading of statements showing details of transactions and margins at the end of each trading day. Downloading of provisional securities and funds obligation statements by member-brokers. 6A/7A* entry by the member-brokers/ confirmation by the custodians.
T+1	Confirmation of 6A/7A data by the Custodians upto 11:00 a.m. Downloading of final securities and funds obligation statements by members.
T+2	Pay-in of funds and securities by 11:00 a.m. and pay-out of funds and securities by 1:30 p.m. The member-brokers are required to submit the pay-in instructions for funds and securities to banks and depositories respectively by 10: 30 a.m.
T+3	Auction on BOLT at 11.00 a.m.
T+4	Auction pay-in and pay-out of funds and securities by 12:00 noon and 1:30 p.m. respectively.

Source : www.bseindia.com 

NSE Settlement Cycle

The NSE too follows a rolling settlement cycle of T+2. 

The stock exchange sends to NSCCL the details of trades at the end of the trading day. The clearing corporation determines the total obligations of each member and transfers the data to clearing members (CM). All the trades done during a particular trading session are clubbed together and settled. NSCCL then determines the net obligations of members in terms of deliveries of securities and funds, and the settlement is completed when the funds and securities are paid out. 
On the securities pay-in day, members bring in securities to NSCCL whereas on the pay out day, securities are delivered to members. If there is a shortfall in securities, then an auction is conducted to meet it. 

This table makes the process clearer :

	Activity	Day
Trading	Rolling Settlement Trading	T
Clearing	Custodial Confirmation	T+1 working days
	Delivery Generation	T+1 working day
Settlement	Securities and Funds pay in	T+2 working day
	Securities and Funds pay out	T+2 working day
	Valuation Debit	T+2 working day
Post Settlement	Auction	T+3 working day
	Bad Delivery Reporting	T+4 working day
	Auction settlement	T+5 working day
	Rectified bad delivery pay-in and pay-out	T+6 working day
	Re-bad delivery reporting and pickup	T+8 working day
	Close out of re-bad delivery and funds pay-in & pay-out	T+9 working days

Source : www.nseindia.com

Types Of Market Transactions

You will find it easier to transact in the stock market once you attain a basic understanding of market mechanics. Before a share is purchased or sold, the investor must instruct his broker about the order. This means clearly specifying how the order is to be placed. Sending proper instructions to your broker – either by phone or online- is the first step to avoid hassles later on. 

Basically, two types of share transaction exist -buy orders and sell orders. Technically sell orders can be further classified as either selling long or selling short. 

Buy Orders
Buy orders are placed when you anticipates a rise in prices. The investor enters a buy order when he finds the price appropriate, after deciding the number of shares he wants to purchase and ensuring that he has the requisite funds to take delivery, if needed. 

Sell Orders
When you wish to sell shares of a company you own at present, either because the investment target has been met or you expect a decline in price, you place a sell order with your broker. 

Various types of orders that you can put through to exchanges are as follows:

Price Limit Orders
An investor can have his order executed either at the best prevailing price on the exchange or at a pre-determined price. 

Market Order
A market order is one you place to sell shares at the prevailing price, when your order is entered in the system. They are executed as fast as possible at the best prevailing price on the exchange. It means that your order quantity will be executed the moment it reaches the exchange provided the required quantity is available. This order type is accepted by both the exchanges i.e. BSE and NSE. 

The obvious advantage of a market order is the speed with which it is executed. The disadvantage is that the investor does not know the exact execution price until after the execution. This advantage is potentially most troublesome when dealing in either very inactive or very volatile securities. 

Limit orders
Limit type orders refer to a buy or sell order with a price limit. Limit orders overcome the disadvantage of the market order, namely not knowing in advance the price at which the transaction will take place. It means that if the order gets executed, them it will be within the limit specified or at a better rate than that. This order type is accepted by both the exchanges i.e. BSE and NSE. 

When using a limit order, the investor specifies in advance the limit price at which he wants the transaction to be carried out. It is always understood that the price limitation includes an "or better" instruction. In the case of a limit order to buy, the investor specifies the maximum price he will pay for the share; the order can be carried out only at the limit price or lower. In the case of a limit order to sell, the investor specifies the minimum price he will accept for the share; the order can be carried out only at the limit price or higher. 

Use of Market and Limit order

When do you use a limit order? To safeguard against extreme volatility, you can put a limit on the price at which you want your order to be executed. Generally, limit orders are placed "away from the market." This means that the limit price is somewhat removed from the prevailing price (generally, above the prevailing price in the case of a limit order to sell, and below the prevailing price in the case of a limit order to buy). 

Obviously, the investor believes his limit price will be executed during the trading day. That, however, is also the chief disadvantage of a limit order. It may never be executed at all. If the limit price is set very close to the prevailing price, there is little advantage over the market order. Moreover, if the limit is considerably removed from the market, the price may never reach the limit – even because of a fractional difference. Also because limit orders are filled on a first come first basis, it is possible that so many of them are in ahead of the investor’s limit at a given price that his order will never be executed. Thus, selecting a proper limit price is a delicate exercise. 

On the other hand a market order is filled at the best possible price as soon as an investor places the order and it will not be even possible to cancel the order. However, a limit order may be cancelled or modified at any time prior to execution. 

Various types of specific orders

So far orders have been classified by type of transaction (buy or sell) and by price (market or limit). Now differences stemming from the time limit placed on the order will be examined. Orders can be for either a day or until canceled. 

Day Order or End of Day Order
A day order is one that remains active only for the normal trading time on that day. Unless otherwise requested by the investor, all orders are treated as day orders only. Market orders are almost day orders because they do not specify a particular price. One key rationale for the day order is that market conditions might change overnight, and thus a seemingly good investment decision one day might seem considerably less desirable the following day. 

Special Types of Orders

Stop Loss Order
A stop loss order allows investor to place an order which gets activated only when the last traded price of the share is reached or crosses a predefined threshold price also called as trigger price. It means that if investor feels that any particular share will be worth buy or sell only after it crosses some threshold rate then this type of order gets activated. For example, a buy order at Rs 100 with a stop loss of Rs 90, will mean that if the share falls to Rs 90, the shares will be sold, limiting the loss to Rs 10. 

Several possible dangers are inherent when using this type of order. First, if the stop is placed too close to the market, the investor might have his position closed out because of a minor price fluctuation, even though his idea will prove correct in the long run. On the order hand, if the stop is too far away from the market, the stop order serves no purpose. 

Further classification of this type of orders can be defined depending upon the price limit of orders, i.e. the price on which the order should execute, as explained under: 

Stop Loss Market Order
A stop loss market order is a special type of limit order. A stop loss market order to sell is treated as a market order when the stop price or a price below is "touched" (reached); a stop market order to buy is treated as a market order when the stop price or a price above it is reached. Thus, stop market order to sell is set at a price below the current market price, and a stop order to buy is set at a price above the current market price. 

The possible inherent danger associated with this type of order is that because they become market orders after the proper price level has been reached, the actual transaction could take place some distance away from the price the investor had in mind when he placed the order. The reason may be prior queuing up of other orders or order quantity not being available. 

Stop Loss Limit Order
The stop loss limit order overcomes the uncertainty associated with the stop loss market order, of not knowing what price the order will be executed at. The stop limit order gives the investor the advantage of specifying the limit price: the maximum price on which the buy order should filled or minimum price on which the sell order should filled. Therefore, a stop limit order to buy is activated as soon as the stop price or higher is reached, and then an attempt is made to buy at the limit price or lower. Conversely, a stop limit order to sell is activated as soon as the stop price or lower is reached, and then an attempt is made to sell at the limit price or higher. 

The danger is that, in a volatile market, the order may not get executed because the difference between the execution limit and the stop price may be too low. However, if things work out as planned, the stop limit order to sell will be very effective. 

Disclosed Quantity (DQ) order
The system provides a facility for entering orders with quantity conditions: DQ order allows you to disclose only a part of the order quantity to the market. 

Price Bands
Also known as circuit filters or circuit breakers, price bands set the upper and lower limit within which a stock can fluctuate on any given day. A price band for the day is a function of previous trading day’s closing. 
Currently the both BSE and NSE has fixed price bands for different securities within which they can move within a day. 
Price bands are supposed to prevent extreme price movements, reducing the scope of price manipulation. Price bands do slow things down and make it that much harder for operators wanting to quickly manipulate prices in huge leaps. When there is general euphoria or panic in the market that seems fundamentally unwarranted, price bands give wary investors the benefit of a cooling period. 
Operators with access to large funds, shares and time at their disposal, however can manipulate the price bands to their advantage by blocking exit/entry of other investors from a particular counter by placing huge orders. For example when a stock touches the lower circuit in a sharp downtrend, ordinary buyers would wait for the next trading session believing that the stock will be available at a still lower price. As a result, investors wanting to sell the stock won’t find buyers at the lower circuit price but would have to offload at a much lower price due to the volume-led manipulation executed by operator. The operator would thus be able to batter the stock down by a large gap created by his own sell orders. 
Much larger volume of the battered stock would then be accumulated by the same operator at a much lower price as panic-stricken ordinary investors would happily exit the stock.

Stock Exchanges in India – BSE and NSE

There are two national stock exchanges in the country, the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Most large brokers hold membership cards in both exchanges, offering investors a choice of placing their trades on either bourse. 

Bombay Stock Exchange (BSE)

The BSE is the oldest stock exchange in the country, established in 1875. It was structured as a membership based firm, an Association of Persons. It is now a demutualised and corporatised entity, falling in line with Sebi's guidelines on demutualization of stock exchanges. The purpose is to separate ownership and management to prevent any conflicts of interest. 

The BSE is managed by a Board of Directors, comprising professionals, trading member representatives and has a managing director too. The Board formulates larger policy issues and exercises overall control. The managing director takes care of daily operations. The exchange is present in 417 cities in India. 

Types of Members	Numbers
Individuals	180
Indian companies	719
Foreign Institutional Investors	22

Source : www.bseindia.com, as of Feb’07

Business Transacted on the BSE
There were 7639 scrips that are listed on the BSE. Not all are actively traded, with the number of scrips traded in Feb’07 at 2602. The average cash segment daily turnover on the BSE was Rs 4,675 crore in Feb’07 and the market capitalization of scrips listed on the BSE was Rs 34.9 lakh crore. The derivatives segment turnover in the month of Feb’07 was Rs 13,189 crore in Feb’07. 

These statistics keep changing, to get an update on the latest statistics, go to www.bseindia.com. This link in particular may give you current information : http://www.bseindia.com/about/st_key/volumeofturnoverbusiness_tran.asp. 

BSE Indices
The BSE maintains several stock indices that are popular among investors. The following are some of the closely watched indices. 

BSE Sensitive Index (BSE-30)

BSE National Index (BSE-100) or BSE 100

BSE-200 and the Dollex

BSE-500

Apart from these, there are a host of other indices which focus on certain sections of stocks like small cap and mid-cap stocks. Then there are various other indices that are focused on sectors. These indices are updated on a real time basis in market hours. 
The most popular index is the BSE Sensitive Index, the Sensex. 

BSE Sensitive Index (Sensex)

Coverage :  Originally, it comprised 30 companies from both the "specified" i.e., ‘A’ group and the "non-specified" i.e., ‘B1 & B2’ groups. However, at present all the securities included in the Sensitive Index are specified group shares. These shares are selected on the basis of their liquidity, depth, and floating-stock-adjusted depth, as well as on the basis of industry representation.

Method of compilation :  The compilation of the index values is based on the 'weighted aggregates' method. In this method, the number of equity shares outstanding for that stock weights the price of a component share in the index. This way, each security will influence the index in proportion to its relative importance in the market. When the price of a share is multiplied by the number of its equity shares outstanding, the result is the current market value for that particular security. The index on a day is calculated as the percentage of the aggregate market value of the equity shares of all the companies in the sample on that day to the average market value of the same companies during the base period for that index. This method of compilation has the advantage that it has the necessary flexibility to adjust for price changes caused by various corporate actions. The methodology is the same as that employed in many popular indices such as the Standard & Poor’s 500, Dow Jones Index, Hang Seng Index, NYSE Composite Index and FT-SE 100 Index.

It is a wealth-measuring index where the prices are weighted by market capitalization. Initially, the index was computed on full market capitalization but since April 2003, it has moved to a free float market capitalization method. In such an index the base period values are adjusted for subsequent rights and new issue of equity. This adjustment prevents a distorted picture and gives an idea of wealth created for investors over a period.

Base year :  The financial year 1978-79 was chosen as the base year. Considerations for the choice were the price stability during that year and proximity to the period of introduction of the index. One of the important aspects of maintaining continuity with the base year is to update the base year average. The base year value adjustment ensures that the rights issue and new capital of the index securities do not destroy the value of the index.

On-line computation of the index :  During market hours, the BSE’s computers automatically use the prices of the index securities at which trades are executed to calculate the Sensex in a process of continuous updation.

Reconstitution of the BSE Sensitive index :  Reconstitution is being carried out whenever required because some stocks might have lost their liquidity or investors may have found some new industry specific fancy. Base change calculation: The changes are in effect proportional adjustments in the base year average market value to offset price changes in market values upon which the index is based.

National Stock Exchange of India Limited (NSE)

The NSE was set up in 1992 by leading financial institutions (IDBI, LIC, UTI, ICICI, SBI and others) and was the first one to offer screen based trading all over India. Though the impetus for its establishment came from policy makers in the country, it has been set up as a public limited company. 
NSE is different from most other stock exchanges in India where membership on an exchange also meant ownership of the exchange. At the NSE, the ownership and management of the exchange are completely separate. 

Governing body

A board of directors manages the exchange. The board delegates decisions relating to market operations to an executive committee, which includes representatives from the exchange’s trading members, the public and the management.

Besides, the exchange operates various committees to advise it on areas such as good market practices, settlement procedures, risk containment systems etc. Industry professionals, trading members and exchange staff man these committees. The day-to-day management of the exchange is delegated to the managing director who is supported by a team of professional staff.

Membership
There are 789 members (as of Feb 28 ’07) who can trade on both the capital market and derivatives segments. There are 150 members who can trade only on the capital market segment. There are 47 members who can trade on the capital market, wholesale debt market (WDM) and derivatives’ segments. There are 9 members who can trade on WDM and capital market segments, and 7 who can trade only on WDM. In all, there are 1002 members. 

Number of listed companies

On the capital market segment, 1,462 companies are available for trading.

On the wholesale debt market segment, 3,216 securities are available for trading. Capital market operations data

The turnover on the NSE has increased from Rs 1,805 crore in 1994-95 to Rs 15.69 lakh crore in 2005-06.

The average daily traded volume has increased from Rs 17 crore during 1994-95 to Rs 6,253 crore during 2005-06.

The total market capitalization has increased from Rs 363,350 crore as of end March 1995 to Rs 28.13 lakh crore as of end March 2006.

Number of shares traded has increased from 0.007 billion in November 1994 to 8.57 billion in March'06.

The average daily turnover in the derivatives segment was Rs 37,000 crore in Feb’07.

Classification of Listed Securities
On NSE, securities for account period settlement are classified as ‘EQ’ segment or ‘Normal’ segment. For book entry i.e. rolling settlement, the securities are traded in two separate segments known as ‘AE Segment’ and ‘BE Segment’. In case of AE segment, dematerialised securities are traded only in market lots, whereas in BE segment these can be traded in multiples of one share. 

NSE Indices
The popular indices of NSE are : 

S&P CNX NIFTY

S&P CNX DEFTY

S&P CNX 500

S&P CNX NIFTY JUNIOR

CNX MIDCAP

CNX Industry Indices

CNX Segment Indices

Method of Computation of Indices

S&P CNX Nifty S&P CNX Nifty comprises 50 stocks and is a market capitalization weighted index. Stocks are selected based on their market capitalization and liquidity. An important criteria of S&P CNX Nifty is that the impact cost (cost of executing the entire set of S&P CNX Nifty securities) is low, making it an optimal index for derivatives trading. The S&P CNX Nifty represents about 58% the total market capitalization of the stocks listed on the Indian bourses as of Dec 29, 2006. The Impact cost (explained in latter part of the article) of S&P for a portfolio of Rs 5 million is 0.08 per cent.

S&P CNX Defty  Defty is a dollar denominated index based on the S&P CNX Nifty. Computations are done using the S&P CNX Nifty index calculated on the NEAT trading system of NSE and USD Rupee exchange rate that is based on the real time polled data feed

CNX Nifty Junior CNX Nifty Junior comprises 50 stocks and is a market capitalization weighted Index. The next rung of liquid securities after the Nifty are included in the Junior Index. The Impact cost for CNX Junior Portfolio size of Rs 2.50 million is 0.14% per cent. The CNX Nifty Junior represents about 10% per cent of total market capitalization of all equity shares as on Sep 29’06.

S&P CNX 500 Equity Index  The S&P CNX 500 Equity Index comprises 500 stocks and is market capitalization weighted. Stocks are selected based on their market capitalization, industry representation, trading interest and financial performance. However, the overriding need has been to ensure that the industry weightings in the index dynamically reflect the industry weightings in the market. The S&P CNX~500 Equity Index currently contains 72 industry groups (S&P CNX Industry Indices) representing over 90 per cent of total market capitalization and about 86% per cent of total turnover making it an optimal market benchmark.

S&P CNX Industry Indices  The S&P CNX industry indices serve as a standard for comparison of the stock market performance of individual companies vis-a-vis their respective peer groups and also enable fund managers to benchmark NAV performance vs. specific industries.

CNX Mid Cap  CNX Midcap is computed using market capitalisation weighted method, wherein the level of the index reflects the total market value of all the stocks in the index relative to a particular base period. The method also takes into account constituent changes in the index and importantly corporate actions such as stock splits, rights, etc without affecting the index value.  The constituents and the criteria for the selection judge the effectiveness of the index. Selection of the index set is based on the following criteria : All the stocks, which constitute more than 5% market capitalization of the universe (after sorting the securities in descending order of market capitalization), shall be excluded in order to reduce the skewness in the weightages of the stocks in the universe. After step (a), the weightages of the remaining stocks in the universe is determined again. After step (b), the cumulative weightage is calculated. After step (c) companies which form part of the cumulative percentage in ascending order unto first 75 per cent (i.e. upto to 74.99 per cent) of the revised universe shall be ignored. After, step (d), all the constituents of S&P CNX Nifty shall be ignored. From the universe of companies remaining after step (e) i.e. 75th percent and above, first 100 companies in terms of highest market capitalization, shall constitute the CNX Midcap Index subject to fulfillment of the criteria mentioned below.

CNX Segment Indices  The reform process in India has resulted in business restructuring and consolidation of the Indian corporate sector. With a view to providing investors with a better perspective of the stock market performance of the various segments of the Indian corporate sector, NSE has constructed various segment Indices such as the CNX MNC (Multinational Corporations) Index, CNX PSE (Public Sector Enterprises) Index and the CNX IBG (Indian Business Groups) Index. These indices aid investors in their asset allocation and segmental exposure decisions.

CNX Customized Indices Customized indices can be used for tracking the performance of the clients portfolio of stocks vis-a-vis objectively defined benchmarks or for benchmarking funds’ NAV performance to customized indices.

Method of Computation of Indices 
The CNX Indices are computed using a market capitalization weighted method wherein the level of the Index reflects the total market value of all the stocks in the index relative to a particular base period. The method also takes into account constituent changes in the index and importantly corporate actions such as stock splits, rights, etc without affecting the index value. 

Index Maintenance
The Index Maintenance Sub-committee of NSE ensures that the guidelines for index maintenance are adhered to, for example: -

Monitoring and completing divisor adjustments in a timely manner on account of corporate actions like share changes, stock splits, mergers/amalgamations, etc

Monitoring and updating the indices database dynamically

Index Review according to laid down criteria

Adjustments for corporate actions are carried out in a timely manner to ensure that the value of the index is not affected by the corporate action, and remains comparable over a period of time. Each index has a replacement pool comprising companies that meet all criteria for candidacy to that index. All replacements of companies in the index take place from this pool. The replacement pool is monitored continuously and at all times includes only those companies that meet the selection criteria. 

S&P CNX Nifty
It is the most popular index, which represents about 58% of the total market capitalization of NSE. 
The salient features of the S&P CNX Nifty are :

Companies eligible for inclusion in Nifty must have a six monthly average market capitalisation of Rs.500 crore or more during the last six months.

Companies eligible for inclusion in S&P CNX Nifty should have at least 12% floating stock. For this purpose, floating stock shall mean stocks which are not held by the promoters and associated entities (where identifiable) of such companies.

Liquidity; all selected stocks should be below a certain impact cost, which is defined in the next paragraph. The security should have traded at an average impact cost of 0.75% or less during the last six months for 90% of the observations (instead of the earlier criteria of 1.5% or less during the last one year for 85% of the observations).

Impact Cost Definition – The cost of executing a transaction in a security in proportion to the weight of its market capitalization against the index market capitalization at any point of time. 

Impact Cost Calculation - This is the percentage mark up suffered while buying or selling the desired quantity of a security compared to its ideal price 
(best buy + best sell) / 2, e.g. 
Bids and Offer at a particular time 

Buy (Qty.)	Buy (Price)	Sell (Qty.)	Sell (Price)
1000	98	1000	99
2000	97	1500	100
1000	96	1000	101

To Buy 1500 Shares IDEAL PRICE = (99 + 98)/2 = 98.5
ACTUAL BUY PRICE = (1000 X 99 + 500 X 100)/1500 = 99.33
(FOR 1500 SHARES) IMPACT COST = (99.33 - 98.5)/98.5 X 100 = 0.84%

Base Date and Value
The base period selected for S&P CNX Nifty index is the close of prices on November 3, 1995, which marks the completion of one year of operations of NSE’s Capital Market Segment. The base value of the index has been set at 1,000 and a base capital of Rs. 2.06 trillion.

Oil Stuck at $60, May Fall to Mid-$40s: Technical Analysis

Crude oil prices may fall to the mid- $40s, after failing to sustain a move above $60 a barrel last week, according to Citi FX technical analysts.

Oil’s rally stalled at a six-month high of $60.08 a barrel on May 12, after rising 79 percent from a low of $33.55 three months earlier. It also failed to break $60 in a 4.8 percent rally yesterday.

“Crude faltered at the psychological $60 level, and momentum has turned down, suggesting the danger of a shorter- term correction,” said Tom Fitzpatrick, chief technical analyst at Citi FX, part of Citigroup Capital Markets in New York, in a report co-written with London-based analyst Shyam Devani.

Oil has “good support” at $54.50 to $55 a barrel, in line with the futures contract’s high of $54.66 a barrel on March 26. Further support lies at $50 to $50.50 a barrel, a range that encompasses crude’s highs in December and January.

Oil for June delivery rose $2.69 to settle at $59.03 a barrel yesterday on the New York Mercantile Exchange. It dropped 3.9 percent last week, the first decline since the week ended April 17. The June contract expires at the close of floor trading today. The more-active July contract increased by $2.59, or 4.5 percent, yesterday to $59.59 a barrel.

Technical analysts use historical chart patterns to predict potential future price movements.

Markets trade record volumes of Rs 157,891 crore

After a “forced holiday” yesterday due to two circuit breakers, traders rushed back to the market today. The result: Record combined volumes in the market.

Markets reported their highest turnover of 157,891 crore. In the cash segment, the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) recorded turnovers of Rs 40, 122 crore and Rs 11,781 crore, respectively. In the futures and options (F&O) segment, the NSE recorded the highest-ever turnover of Rs 105,986 crore.

The previous highest turnover was Rs 149,505 crore on October 17, 2007. This was reached immediately after the then Securities and Exchange Board of India Chairman M Damodaran issued guidelines for phasing out participatory notes (P-notes).

The BSE Sensitive Index, or Sensex, opened at 14, 757.82 points, but slipped immediately. In the afternoon session, there was a sharp movement and the index hit the day’s high of 14.930.54.

Market participants said there was initial buying from traders and institutional investors who had to do short covering because of margin calls after yesterday’s sharp spurt in share prices.

In the afternoon, institutional players, especially insurance companies, stepped in to do some profit booking. This led to a sharp fall. The Sensex closed flat at 14,302.03, up 17.82 points, or 0.12 per cent. The CNX Nifty closed down marginally at 4.70 points, or 0.11 per cent, at 4,407.82.

“Short covering and buying by FIIs propelled the markets in the afternoon. The markets remained flat as most retail investors were booking profits with every rise,” said V K Sharma, head (research), Anagram Stock Broking.

According to provisional data from the BSE, FIIs bought shares worth Rs 4,792 crore. Domestic institutional investors sold shares worth Rs 1,964 crore.

The US market rallied yesterday on better-than-expected results from home improvement retailer Lowe’s which reinforced hopes that the recession is easing. The Dow Jones closed up by 2.9 per cent. S&P and Nasdaq closed higher by 3 and 3.1 per cent, respectively.

The Asian market responded well to the global cues. The Hang Seng and Nikkei rallied 3 per cent. The Strait Times surged 4 per cent.

In India, the realty index rose 12.80 per cent. That means that in the last two days, the realty index has risen a whopping 36.25 per cent. Both Bankex and consumer durables index were up 6 per cent.

However, the information technology index lost 10.10 per cent because of the rupee appreciation. A strong rupee will adversely impact the IT companies’ rupee revenue. Most IT companies have already hedged their dollar receivables.

DLF rose 19.5 per cent today. It has risen 45.40 per cent in the last two days. Reliance Communications and SBI rose 12.9 per cent and 12.7 per cent, respectively.

“Considering the first two days of trading, the sentiment in Indian markets looks decoupled from the global markets. So, amid volatility, markets will be driven by domestic sentiments. Going forward, FIIs will increase their investments as compared with what they have done so far on an average basis,” said Anil Ladha, head (capital markets), ICICI Securities

Punj Lloyd: Tough times ahead

These are trying times for Punj Lloyd, which has unfortunately taken a hit of around Rs 400 crore because of a dispute with one of its customers. But what’s more disappointing about the company’s loss of Rs 256 crore in the March 2009 quarter is the rather small increase in the order book. The engineering firm, which caters to hydrocarbons and civil construction sectors, ended 2008-09 with orders worth close to Rs 21,000 crore, up about 6 per cent from last year..

What’s more is that the environment remains somewhat difficult and therefore it’s possible that not all projects will be executed on time. Industry watchers say about a fifth of these may be delayed, in which case there could be some pressure on the company’s cash flows. Besides, since the company does have a sizeable exposure to the oil and gas sector, it may be a while before business starts picking up. More than half the orders that the company currently has are related to the oil and gas space.

Meanwhile, analysts are disappointed with the company’s operating profit margin in the March quarter, even after adjusting for the provision of around Rs 200 crore on account of a dispute that the company’s subsidiary, Simon Carves, had with a customer. Analysts say the opm, which works out to about 4.5 per cent, has been helped by changes in accounting policies as also some reversals of foreign exchange losses.

Punj Lloyd has also piled up a fairly large amount of debt, estimated at Rs 3,500 crore, and interest costs could continue to pinch. Analysts are pencilling in a very small growth in revenues over the Rs 11,912 crore posted last year as well as in net profits in the current year. Since January, the stock has risen 5 per cent compared with 42 per cent rise of the Nifty — a huge underperformer. At the current price of Rs 161, analysts see little upside.

Essar Oil's Q4 net at Rs 660 crore

The Ruias-promoted Essar Oil posted a net profit of Rs 660 crore for the fourth quarter ended March 31, 2009, against a net loss of Rs 8 crore during the same quarter in 2008.

The company’s profit surged after its refinery at Vadinar in Jamnagar began operating at full capacity from May 2008.

“We commissioned our refinery last May. This helped our sales. Also, oil prices were high, which helped in boosting the profit,” said Naresh Nayyar, CEO, Essar Oil.

Total income during the quarter increased by Rs 6,832 crore from Rs 49 crore in the corresponding period last year.

For the fiscal year comprising 11 months, the company reported a standalone net loss of Rs 514 crore, as compared with a net loss of Rs 41 crore in the year 2008.

The gross refining margin for the quarter stood at $10.92 per barrel. The crude processed during the quarter was 3.31 million tonnes, the company said.

The company has decided to seek its shareholders’ approval for issue of further equity shares and/or convertible debentures by way of private placement in domestic or international market up to $2 billion.

Meanwhile, Essar Exploration & Production-India Director and CEO S R Agrawal said that Essar Oil’s investment may go up to $70 million in exploration and production (E&P) this year if a long-pending Production Sharing Contract (PSC) with the government for the Ratna and R-Series fields is concluded early.

“Our E&P capex for FY10 is $50 million if (signing of contract for) Ratna happens. For our CBM block in Raniganj, it is $20 million,” Agrawal told reporters here.

The company said that its Raniganj coal bed methane (CBM) block has been estimated to have high prospects of recoverable gas reserves.

L&T Oman gets Rs 518-cr orders

Larsen & Toubro (Oman) LLC, Muscat, has bagged three orders totalling Rs 518.20 crore. The company is a subsidiary of L&T International FZE.

Two orders amounting to Rs 413.50 crore are for power transmission and distribution and the third of Rs 104.70 crore is an infrastructure project in the Sultanate of Oman.

The first T&D order is a Rs 207.40 crore EPC (engineering, procurement and construction) contract from the Rural Areas Electricity Company SAOC, Oman, for 33/11 kV substations and 33 kV distribution network at Al Duqm area in Al Wusta Region. The project is scheduled for completion in 18 months.

The second order for Rs 206.10 crore from the Oman Electricity Transmission Company is for building a 132/33 kV grid station at Wadi Sa’a in the Buraimi Governorate of the Sultanate of Oman. This includes construction of a 220 kV interconnection transmission line between the Mahadah grid station and Seh Al Makarim grid station. The order is slated for completion in 15 months.

The infrastructure project from the Oman Tourism Development Company, SAOC, is for infrastructure and landscaping work for the Second Asian Beach Games in Muscat, where the company is already executing the main package.

L&T, GE Hitachi to build nuclear reactors in India

Engineering and construction major Larsen & Toubro (L&T) has signed a memorandum of understanding (MoU) with the US-based GE Hitachi Nuclear Energy, one of the largest nuclear power plant vendors in the world, for the construction of nuclear power plants in India.

Under the agreement, L&T and GE Hitachi will co-operate to set up Boiling Water Reactor (BWR) and Advanced Boiling Water Reactor (ABWR) nuclear power plants in India. The partners hope to utilise their capabilities for complete construction of such plants, including supply of reactor equipment and systems, valves, electrical and instrumentation products for ABWR plants to be set up in India, L&T announced today.

Sources said, with this agreement, L&T is sure to bag a major share of the nuclear power plant construction business in India for the next 25 years. The company has already signed agreements with three of the five global major reactor makers, Atomstroyexport (ASE), which is a part of Rosatom of Russia, Toshiba Westinghouse of the US and Atomic Energy of Canada (AEC).

They said the MoU with GE Hitachi is significant, as the Indian government has already committed itself to source about 10,000 Mw of advanced nuclear reactors from GE Hitachi and Westinghouse.

India’s civil nuclear power programme became a reality following India’s entry into the Nuclear Suppliers Group (NSG) after a three-decade ban. It offers an opportunity worth $60 billion for the global nuclear industry, as India plans to add about 60,000 Mw capacity from atomic power by 2032.

BWR, which uses ordinary water as coolant, is the second-most common type of electricity-generating nuclear reactor after the pressurised water reactor (PWR), a technology in which India has capabilities. ABWRs are advanced versions with about 1,350 Mw and more electrical output. L&T has experience in equipment manufacture, construction, project maintenance and other support services for PWR programmes in India, starting with implementation of the Tarapur reactor in 1974. It also plays a major role in construction, piping and erection services for the first two Russian technology nuclear reactors coming up at Kudankulam in Tamil Nadu.

Sensex creates history; two upper circuits in one day

Markets have stopped trading for the day as the benchmarks hit another upper circuit Monday as soon as the trade resumed after 2 hour

break. Investors are euphoric after the United Progressive Alliance emerged victorious in the 2009 general elections.

Bombay Stock Exchange’s Sensex was locked at 14272.62 up 2099.21 points or 17.24 per cent. National Stock Exchange’s Nifty was locked at 4308.05, up 636.40 points or 17.33 per cent. According to media reports turnover including cash and F&O was less than Rs 1000 crore.

Marketmen are upbeat given the fact that there will be no interference by the Left Parties and other regional parties in day-to-day functioning of the government and less number of allies will lead to a stable government which will run its course of five years.

The new government which is likely to be sworn in by Friday is expected to come-out with full budget within 45 days of resuming office, according to media reports.

Reforms in the banking sector, divestment of public sector undertakings, infrastructure, retail sector and insurance sector is likely to top the priority list.

Sensex had opened 10.73 per cent or 1305.97 points higher at 13479.39 points to 12011.10. National Stock Exchange’s Nifty was locked at 4203.30, higher by 14.48 per cent or 531.65 points.

Market experts views:

“Markets had previously worried that gains by leftist and smaller regional parties would weigh on the reform agenda and lead to a further blow-out in the already large fiscal deficit. In previous elections, both BJP- and Congress-led alliances had been unable to push through reforms, held down by allies with their own agendas. The government's rural jobs program and strong private sector investment have highlighted the positive effects of economic reform and liberalisation, and voters' shunning of smaller parties imply a desire for greater action on the reform front,” said a Moody’s Economy.com report

The report added, “Despite the strong endorsement from voters, the government is likely to have a tough job pushing through some much-needed reforms. Political constraints mean a scrapping of fuel subsidies are unlikely, nor reforms to outdated labour laws that constrain hiring and create high firing costs. Returning to the path of fiscal consolidation will also be challenging if the global recession becomes protracted, while the financial crisis will mean any steps to liberalise capital flows and foreign investment will be cautious.”

Madhabi Puri Buch, MD & CEO, ICICI Securities said, “The mood of the moment is clearly upbeat. The largest and most complex election process on the planet is complete. The impact of the results on the markets is clearly positive - both in the short term and long term. In the secondary markets and the primary markets.”

“It is almost as though investors had pressed the pause button on major decisions on account of uncertainty. With the clear mandate to the new government and the strong expectation of stability for the next five years, the play button will be on. If global cues continue to be positive, the play could even become a fast forward,” Buch added.

Dinesh Thakkar, CMD, Angel Broking said, “The election results have come as a positive surprise and are expected to go down well with the markets considering that markets like continuity of government policies, mindsets and ideologies. The UPA’s 250+ tally has managed to beat the most optimistic political analyst on the street and this ‘thumping’ victory has set the stage for the Congress led UPA to come back to power. Further, the possibility that the UPA could form the government without the Left will further soothe investors’ nerves. The markets are expected to rally as fresh money from FIIs and those waiting on the sidelines on account of the political uncertainty, makes its way into Indian stockmarkets. Investors must remain ‘long’ on India to take advantage of the long-term wealth creation opportunities that Indian stockmarkets have to offer.”

Parliamentary Election results 2009

Elections 2009 and Indian Stock Market

Elections and Indian Stock Market

You can expect to mark up your stock portfolio soon after the new government takes charge next month, since in all probability, there will
be a buying spree after the uncertainty surrounding the poll process ends.
That has been the market's trend after each of the 3 Lok Sabha elections — in 1996, 1998 ,1999

Data on BSE Sensex and the NSE Nifty show that within four to six weeks of the final results in those three general elections, the indices touched a new temporary peak and gained 8-13.5 per cent.

In fact, the gains were as high as 25 per cent if one considers the rise in the indices from the first day of the poll till the short-term peak is reached


Even in 1996 and 1998, when no party got a clear mandate and the governments were multi-party coalitions, the market rallied as investors were relieved of poll-related uncertainties.

But 2004 elections was different for many reasons

The NDA coalition recommended the early dissolution of Lok Sabha and on the advice from Atal Bihari Vajpayee, Dr A P J Abdul Kalam, then President of India, dissolved the Lok Sabha on February 6, 2004.

In December 2003, Indian stock markets were on a roll. Between November 20, 2003 (Close: 1522) and January 9, 2004 (1972) the Nifty gained 29.6%. Only two sessions witnessed a fall of more than 1% during this period.


After this dream run, a corrective decline started. The BJP lost the elections in May 2004 and the Indian stock markets witnessed heavy across the board selling between May 7, 2004 and May 17, 2004. The Nifty had lost 25% in just 7 trading sessions.

Also the news of left coming into Government made the matters worse and sensex tumbled,
But once the clear picture of government arrived ,every one was happy seeing Manmohan Singh at helm and Chidambaram sitting on top of Exchequer and by july 2004 market staged the come back



Now let us see how we can view 2009 Elections

2009 is quite different from 2004,Unlike in 2004 ,nobody expect UPA/NDA to get a run away success,so the water is already murky and indian stock market has accounted for this uncertainity already

POSITIVE FOR MARKET 2009:

Sensex trading at 9x to the expected 2009 earnings.
Falling commodity price will ease input cost of the industries.
Government policies to boost the economy.
Inflation at record low.
Lower crude price.
As interest rate in developed economy is record low, indian market could attract investment.


NEGATIVES FOR MARKET 2009:
Stability and ability of the government cannot be judged at this point.
Fiscal deficit is high at 5% of the GDP will affect indianstockmarket .
Indo –Pak ,pak -thaliban conflict (indirectly jihadis could hit India to divert attention and built pressure on pak)

Best thing to do is a Smart operators return only when there are signs of consolidation in the market




On some specific tips

IF samajwadi party holds key for next goverment ,no need to tell which groups stocks you shoud buy :)

If infact congress end up on top and didn't dump its UPA alley in tamil Nadu,dont forget the rising sun

If BJP wins ,and they follow what they say in Election Manifesto,you can see a lot of activity in Domestic IT space.

If Left comes into picture ,then power equipment manufacturers is going to take a hit on account of Revoking of Nuclear Deal( very remote chance though)


P.S: Author surely feels only time socialism prevails in Indian is during election,see how voters are spoiled cash, color TV and what not ..,cant blame common man if he wants elections every year

IEA Cuts Oil-Demand Outlook as Recession Lingers

The International Energy Agency cut its oil-demand forecast for a ninth consecutive month, predicting consumption this year will fall the most since 1981 as the recession lingers.

The Paris-based adviser to 28 nations cut its global oil demand estimate “slightly” to 83.2 million barrels a day this year, down 3 percent from 2008, it said today in its monthly report. That is 230,000 barrels a day lower than it forecast last month. The revision comes a day after OPEC reduced its 2009 forecast, predicting oil demand of 84.03 million barrels a day.

“Demand continues to look very, very weak,” David Fyfe, head of the IEA’s oil industry and markets division, said in a phone interview from Paris. “Although there has been a lot of talk about the green shoots of economic recovery, we think it is still a little bit early to be flagging any start of a full blown recovery.”

Oil prices have climbed 34 percent this year, trading above $60 in New York this week for the first time in six months on increasing optimism about an economic recovery and record production cuts by the Organization of Petroleum Exporting Countries. Still, U.S. crude stockpiles remain near the highest since 1990 as the recession saps fuel demand. OPEC crude production is beginning to rise as higher prices encourage members to pump more than their quotas.

‘Very Weak’

Demand is weakest in the world’s most developed nations, where consumption will drop by 5.1 percent this year, the IEA said. The IEA cited “very weak” demand data in April for the U.S., and to a lesser extent, Europe.

Crude inventories in the industrial economies of the Organization for Economic Cooperation and Development are at their highest since 1993, according to Fyfe. Stockpiles were equivalent to 62 days of consumption as of the first quarter of the year, according to the IEA.

Iran’s OPEC governor Mohammad Ali Khatibi earlier this week said stock levels representing 52 days of consumption were a “healthy level.”

“The forward demand-cover level is very high,” Fyfe said. “The market structure is still supportive of a degree of stock- building. It is to do with oil for which there is scant demand at the moment.”

‘Sustained Weakness’

The energy adviser said it expects consumption in developing economies to contract for the first time since 1994 as China and Russia “continue to exhibit sustained weakness.” Demand in these economies will average 38.1 million barrels a day this year, a decline of 0.4 percent, or 140,000 barrels a day compared with 2008.

The IEA demand estimate is based on a forecast that global GDP will shrink 1.4 percent in 2009 and the world economy won’t start to markedly recover until 2010 at the earliest, it said. Should the world economy see “strong” economic recovery this year, the IEA’s oil demand could be “too pessimistic,” according to the group.

“If we get an economic bounce in the second half of the year, demand could be stronger than we are showing,” Fyfe said.

Non-OPEC supply will fall by 300,000 barrels a day this year, a second annual decline, to about 50.3 barrels a day. The IEA increased its forecast 50,000 barrels a day compared with last month because of “stable” supply from the North Sea and higher-than-expected Russian output.

Supply from OPEC rose for the first time in eight months in April as members backtracked on production cuts, according to the IEA.

Review Production

OPEC will meet May 28 in Vienna to review production quotas. It agreed in March to keep supply unchanged as members continue to implement reductions agreed last year, totaling 4.2 million barrels a day, to stem plunging prices.

The 11 OPEC nations bound by production quotas pumped 25.8 million barrels of crude oil a day last month, the IEA said, compared with their official Jan. 1 limit of 24.845 million a day. That means the group collectively completed 78 percent of its promised reduction, compared with 83 percent in March, the IEA said.

The IEA’s estimate is in line with OPEC’s own figure. The producer group said yesterday the 11 members implemented 77 percent of planned output cuts in April, down from 82 percent for March. Production rose to 25.8 million barrels a day, the group said, citing secondary sources.

Compliance

“There is a little bit of leakage vis-à-vis targets from Iran and a little bit from Angola,” said Fyfe. “Analysts are saying that with prices moving higher and cohesion fraying at the edges, it might be harder” for the group to reduce production again.

As global consumption weakens, OPEC needs to provide less oil to balance supply and demand. All 12 OPEC members, including Iraq, will need to supply about 27.9 million barrels of crude a day this year, the IEA report showed. That’s a reduction of 300,000 barrels a day from last month’s assessment.

Those same 12 OPEC members pumped 28.2 million barrels a day in April, 270,000 barrels a day more than the previous month, according to the IEA. Crude output in Saudi Arabia, OPEC’s biggest producer, was 7.95 million barrels a day in April, unchanged from March, the IEA said.

10 Investment Basics

Start early
Investing is easy once you know how. That’s why starting early gives you an extra edge, to learn from mistakes and experiment with various investment techniques and asset classes. As you grow older, you can take limited risks with equities and would prefer to invest in debt too.

Also, every year that you postpone investing towards retirement, the annual savings you need to make to reach your financial goal will keep on rising. For instance, to get Rs 10 lakh at the end of 20 years, if you start now you will need to invest Rs 13,879 annually but if you start 10 years later, the annual investment will shoot up to Rs 56,984.

Know yourself
Invest in shares or mutual funds based on your needs and after doing proper homework. Don't buy something because your neighbour believes he has a winner on hand, or your broker is issuing a big buy report on a stock.

Carefully choose securities that fit your profile. It is important to relate the risk perceived in a given security not only to returns, but also to your attitude towards risk. It is important to understand your emotions towards money and comfort levels with risk. For instance, what would be your reaction if your stock investments plummet by 35 per cent in a month? How would that affect your medium term or long term plans?

The risk/return trade-off
There is no harm in assuming a big risk in the quest for higher long term returns, and your profile does not preclude taking of such risks. Equities promise higher long term returns but the period taken to realize these returns too can be uncertain. As far as debt mutual funds are concerned, they are more stable tenure but returns are much lower. As an investor, you should be able to judge whether the perceived risk is worth taking in order to get the expected return and whether a higher return is possible for the same level of risk (or a lower risk is possible for the same level of return). Smart investing will involve choices, compromises and trade-offs. And you have to decide the combination of factors that suit you best.

Don't overpay for growth
Seek out shares that are capable of delivering sustainable earnings growth but don’t fall into the trap of overpaying for growth. Even the best growth stock may not deliver dream returns if your purchase price was too high to begin with. Warren Buffet, one of the most successful investors in the world, said back in 1983: "For the investor, a too high purchase price for the stock of an excellent company can undo the effects of a subsequent decade of favourable business developments." So growth riding on the back of a reasonable purchase price may be a good motto to stick with.

The reinvestment risk
If it suits your plan, choose a fund that reinvests your dividends or interest. That won't leave you exposed to the risk of reinvesting the amount at equivalent or higher returns for the same level of risk. Such alternatives are more than often not easily available. The reinvestment risk is implicitly defined for a debt instrument. Yield-to-maturity, which is the actual yield on a bond if held to maturity, may be a familiar term to those who invest in fixed income. But few know that this YTM assumes that each interest cheque received by the investor is reinvested at the coupon rate. In reality, however, most investors are probably spending this interest on fullfiling current needs. So even if investors are getting a coupon of 18 per cent on a semi-annual debt instrument, their YTM is much lower.

Beware of the law of averages
The average, or mean, acts like a powerful magnet that pulls stock prices down sharply, often causing returns to deterioriate after they exceed historical norms by substantial margins. Stocks display runaway tendencies by appreciating sharply. Subsequently, prices may plateau causing disappointment. In such a situation, investors may profit from selling out earlier than originally planned. And if the fundamental story is still intact, you could even buy back your shares at a lower price. So stay tuned to any short-term movements in the stock market that affect your stocks. However, if your goals are long term, don't get into the trading mode, where you compromise on the big picture for short-term gains. It is important that you still think long term. As Benjamin Graham, author of the investment classic The Intelligent Investor wrote: "In the short term, the stock market is a voting machine-reflecting a voter registration test that requires only money, not intelligence or emotional stability-but in the long run the market is a weighing machine.

A trend may not be your best friend
The psychology of the stock market is not only based on how investors judge future events, but also on how they react to the immediate past. There is a tendency among common investors to buy shares of those companies or sectors that have performed well very recently. It is critical that you assess where you are in the cycle during any bull run. That's because what may seem to be an everlasting phenomenon eventually turns out to be illusory. It will be replaced by another, equally compelling one. And as an investor, you are left with shares bought at the peak of a cycle.
Like Burton Malkiel, the author of A Random Walk Down Wall Street has to say: "It is not hard, really, to make money in the market… What is hard to avoid is the alluring temptation to throw your money away on short, get-rich-quick speculative binges."

Time marches on
Time can dramatically enhance the value of your starting capital through the magic of compounding. At 10 per cent annually, the annual incremental capital accumulation on a Rs 10,000 investment is Rs 1,000 in the first year, is over Rs 2,300 by the 10th year, and just under Rs 10,000 by the 25th year. After 25 years, the total value of the initial Rs 10,000 is Rs 108,000, a ten-fold increase in value. Give your investment all the benefit of time that you can afford. Choosing an investment plan that automatically reinvests your dividends and interest is also a way to benefit from the power of compounding.

Evaluate your future
A lot of investing is about how you see your future, financially speaking. We all make certain assumptions while estimating our future needs, and how we intend to meet those needs. But circumstances can change. Hence it is important that you review your portfolio at least once a year. Also try to evaluate the performance of your investments against the level of risk you are assuming for achieving the returns you want. And when necessary re-balance your portfolio to stay on track with your long term financial goals.

How much risk can you take?

Risk and returns are inversely correlated, barring rare occasions. Hence, knowing your appetite for risk is essential as your returns profile emerges from your risk profile. Your investments should be guided by the risk profile. A totally risk averse person is very conservative, does not want to losea penny regardless of how little his or her money earns. The compulsive risk taker is at the other end of the spectrum, willing to risk a huge amount of money on a risky bet, hoping to reap a windfall in the process.

Risk tolerance can also be measured by volatility. How much of volatility in an individual’s portfolio is acceptable. Apart from an individual's psychological makeup, various other factors also play a crucial role in determining one's comfort level with risk. Evaluate yourself against the following parameters :

Current income or net worth
If a significant portion of your current and future financial needs can be met by income from non-portfolio sources –like a job or maybe even an inheritance- you can take more risk with your investments. Likewise, higher your current net worth greater is the investing flexibility. In such cases, a portfolio may be geared to achieve capital appreciation through greater risk. When current income is insufficient, investors would want the portfolio to be focused towards generating income and preserving capital, rather than generate capital gains.

Age group
Age is a key factor in influencing comfort with risk, given a current income level or net worth. An investor's risk tolerance is expected to increase with income and wealth, but after a point, diminish with age. Check the life cycle investment approach, which uses age as a starting point for determining risk tolerance.

Time horizon
If your investing time frame is longer, you can choose a potentially more rewarding, even if riskier and less liquid investment. That can give you better capital appreciation. If you have a shorter time frame, you are better off with less risk investments, since losses are difficult to recover in a short period of time. For instance, a 30-year old investor has more time to recover from initial portfolio losses than an investor who is 58-years old and is nearing retirement. Hence, as the time horizon shrinks, more importance is attached to how the investments yield returns in the short term than in the longer run.

Occupation profile
Your occupation can also shape your risk appetite. A person who is more in his or her occupation, will be emboldened to take more risks without fearing for the future. The converse will be true for someone who is not very secure about his or her future. The nature of the profession too may have a role to play. A businessman for example may feel more comfortable with a higher degree of risk, since his main profession itself involves risk. A salaried employee may on the other hand be accustomed to a smaller degree of risk. There may be a contradiction visible here, that a businessman whose future is not very secure may be willing to take more risk too. This is a fact of life, whatever the occupation profile may be each individual’s psyche will determine his world view of things and in turn, his ability to manage risk.

Your Age And Your Investment Plan -- A lifecycle guide to investing

Age plays a key role in determining your investment profile. Hence, constructing a portfolio that suits your age is essential. By mapping your age and your background, you can establish a portfolio that comprises of different asset classes, in differing proportion. For example, if you are five years away from retirement, with no major savings for a post-retirement life, then you would build a portfolio comprising fixed income instruments. Similarly, a 24-year old would focus on parking investments in riskier investments like equities, since time is on his side. 

We have constructed profiles based on your age and some assumptions. Then we have constructed a break-up of investments that can be used as a guide. You may wish to fine-tune this to meet your own requirements. 

While reading through these profiles, please note that these are typical attributes and are not absolute. Again, your risk profile changes depending on how you perceive yourself too. A senior citizen with no dependents, but with lots of savings, may find it perfectly okay to take on more risk. Similarly, a young person but with many dependents and lots of financial liabilities may be more conservative than other people his age. 

We have assumed that tax liabilities have been provided for, and the suggested investment break-up is for the net funds available. Broadly, you can classify investments in to cash and bullion, fixed income instruments, equities and mutual funds. Cash and bullion are taken as one, as both are equally liquid and widely used as a means of savings. Savings would also include funds in your bank savings accounts 

Apart from pure equities and fixed income instruments, mutual funds are popular investment vehicles. We have classified mutual funds separately since the risk of investing in funds is relatively lower. Moreover, balanced funds juggle between debt and equity making an all-inclusive classification difficult. 

Age : 22-30 years 

Profile : 
You are single or are married but with no kids. Dependents are not an issue at this stage and your focus is on creating a sizeable corpus of investments for the future. Incomes typically grow at a fast rate annually. The ability to take risk is high and losses in the short term are acceptable. You can invest in equities with a time frame of about 5-6 years which protects you from short-term fluctuations. 

Category	%
Cash and bullion	10
Fixed income instruments	30
Equity shares	40
Mutual funds-equity growth	20

Age : 31-45 years 

Profile : 
You are now married and your family size has expanded, with two kids. Your parents are now dependent on you for emotional and some financial support. The focus is on consolidating your investments, making them more secure. The ability to take risk is there but to a limited extent. Limiting losses is a priority. Building on a corpus of funds for children’s education becomes a priority now. 

Category	%
Cash and bullion	10
Fixed income instruments	40
Equity shares	30
Mutual funds-equity growth	20

Age : 45-60 years 

Profile : 
This is the age when retirement blues set in. Children's college and higher education make demands on your funds. You must also ensure that your retirement plans are in place, if you have not done it already. Hence, risk taking ability as a whole diminishes considerably. 

Category	%
Cash and bullion	10
Fixed income instruments	50
Equity shares	20
Mutual funds-equity growth	20

Age : Beyond 60 

Profile : 
You are taking life easy, some introspection, spending time with the family and maybe doing some part time work. Or like some workhorses, you are still engaged as a full time consultant with your ex-employer. The ability to take shocks is extremely limited and you should lower your exposure to equities. Your prime criterion should be to have a higher proportion of fixed income investments and stay liquid to meet any medical emergencies. 

Category	%
Cash and bullion	10
Fixed income instruments	70
Equity shares	10
Mutual funds-equity growth	10

Basics of Getting Started with Stock Market Investment

Set Your Objectives

The starting point for achieving financial independence begins with a financial plan. Determine your current financial position, available resources and immediate fund requirements. Then set your long term financial goals: keep in mind your risk-taking ability, current lifestyle, occupational profile and family background. The number of dependents and their own financial status –a working spouse gives you a greater degree of financial freedom- should also be considered.

A financial plan helps an investor to lay out realistic goals and then work towards them over a period of time. Since each individual has a unique setup, this section only makes broad recommendations that should apply to everyone before embarking upon an investment programme.

Estimate short term needs

Many investors plunge into the stock market without assessing their short term fund needs. Faced with a crunch, they end up selling shares much earlier or book losses at the smallest sign of trouble. That clashes with the fact that the holding period in equities is crucial to meet the targeted return. By estimating short term needs and preparing for them, the painful decision of selling shares before time can be avoided.

Create an emergency fund

Emergencies happen when least expected, forcing you to alter your investment plan. Therefore, having a cash reserve to help meet situations like a medical emergency or a layoff, ensure that your fund requirements are met without affecting the investment plan. A cash reserve (money market funds, which can be easily converted into cash should do) of at least six months worth of living expenses or a medical or disability insurance is a must.

Repay debt

Increase your net worth by repaying debt. Start by repaying the most expensive debt – usually credit card debts and unsecured personal loans are the most expensive. Keep some amount of debt, especially if you get a tax benefit, like on housing loans. If the return on investment is greater than the amount of interest paid on debt, invest. But if the risk-adjusted return is still less than the amount of interest being paid on the loan, you are obviously better off clearing the loan.

Set priorities in a chronological order

Classify your own priorities and that of your family members based on their time of occurrence. For instance, paying a lump sum donation for getting admission to school is a more immediate need, than providing for higher education. College education is still years away compared to school. Thus, school education can be provided for by investing in fixed income instruments like short term bonds or fixed maturity plans of mutual funds. For college education, a mix of equity and debt, with more in equity, can be taken to combat inflation and the higher risk is spread across a number of years.

Practice Asset Allocation

No investment plan is complete without an asset allocation. Different types of assets exist; the most common ones are cash and bullion, the most liquid asset class. Then, there are fixed income instruments, like bonds and fixed deposits, which are less risky, but yield lower returns compared to equities, and are less liquid too. Mutual funds come next, their risk profile depends on the type of fund –equity or debt or balanced and the investment philosophy. Sector-focused funds, for example, will be less riskier compared to diversified funds. Equities are the most aggressive investment option, with high returns and commensurate risk too.

Since there are various levels of risk associated with various assets, it makes sense to identify your own risk-return profile and then build an asset allocation strategy. There is no ideal asset allocation, a one size fits all plan. You have to make a plan that suits you best, allocating weights to various asset classes and then designing an investment plan accordingly.

After designing an asset plan, it is imperative to monitor it to ensure that changes in asset prices have not skewed your allocation. A sharp rise in equities, for example, may increase your exposure to equities, much more than you may want. So, selling down equities and increasing exposure to debt would be the right thing to do.

Indian stocks second best performers among BRIC in April

Following a sharp recovery in the equity markets, Indian stocks have emerged as the second best performers as compared to their peers in three other BRIC nations -- Brazil, Russia and China, giving close to 20% return in April.

According to an analysis of MSCI Barra indices, a measure of returns from various stock markets across the world for foreign investors, Indian stocks have given the second highest return after Russia among the four BRIC countries during last month.

Indian stocks have provided a return of nearly 19.54% in April, while China and Brazilian markets have given 10.87% and 18.89% respectively.

However, Russian equities have managed to outperform the Indian stocks in the month as it provided investors with a positive return of over 21%, as per the analysis of performances of Morgan Stanley Composite Indices (MSCI) for various nations.

The 30-share benchmark index of Indian stocks, Sensex, gained close to 1,700 points in the month of April to settle at 11,403.25 points on April 29.

Indian stocks have even outperformed the MSCI Barra's emerging market index, which includes all the developing world markets, giving returns to foreign investors to the tune of 16.28% in the month.

DLF to hive off wind power business

The country's largest real estate developer, DLF, today said it will hive off wind power business, one of its non-core businesses, to a wholly-owned subsidiary.

"The board of directors of the company at its meeting held on April 30, 2009, inter alia, has approved to transfer company's wind power business, as a going concern on slump basis, to a wholly-owned subsidiary," DLF said in a filing to the Bombay Stock Exchange.

DLF would seek shareholders' nod for the same, it added.

While declaring its financial results, regarding exiting from non-core assets, DLF yesterday said: "Wind Power has met with a good response from strategic partners wherein the due diligence of the assets is currently underway."

Besides, the company was contemplating making an exit from long gestation projects such as hotels. It had already withdrew from large township projects at Bidadi and Dankuni.

DLF reported 93 per cent plunge in consolidated net profit for the fourth quarter of 2008-09 at Rs 159.05 crore. Its profit stood at Rs 2,176.82 crore in the year-ago period.

For the whole of 2008-09, DLF's net profit decreased by 41 per cent at Rs 4,629 crore compared with Rs 7,812 crore in the previous fiscal.

Siemens net up at Rs225 cr, bags Rs1380 cr order from Adani

Engineering major Siemens Ltd, which today announced to secure an order worth Rs1380 crore from Adani Power, has posted a net profit of Rs225.5 crore for the quarter ended March 31, 2009, as against just Rs1.7 crore net profit booked last year for the corresponding period.
Sales for the quarter grew by 11 per cent to Rs2368.2 crore, compared to Rs2142.4 crore for the corresponding period in the previous year.

“We have achieved profitable growth in tough market conditions. Our focus on operational excellence and internal measures such as cost optimization and process rationalization supported the results. We also continued with our investment programs to support our growth,” said Dr Armin Bruck, managing director, Siemens.

The sales and profit figures are strictly not comparable to corresponding quarter of last year as the substantial completion of certain large projects has resulted in significant savings in estimated costs and consequential recognition of additional revenue and profits, said a Siemens press release.

In a market weighed down by deferred investments plans, the company booked new orders worth Rs 1859.4 crore for the quarter, 21 per cent less than the orders in the corresponding period of the previous year, said Siemens.

For the half-year period ended March 31 2009, new orders registered a drop of 10 per cent and stood at Rs3839.1 crore as compared to Rs4254.2 crore in the corresponding period last year.

For the half-year ended March 31, 2009, net profit for Siemens increased by 179 per cent to Rs556.1 crore as compared to Rs198.7 crore in the corresponding period of the previous year.For the half-year period, sales remained steady at Rs 3997.1 crore as compared to Rs4056.8 crore in the corresponding period last year.

Today Adani Power, part of Adani Group, awarded Siemens a contract to install a 500-kilovolt High-Voltage Direct Current (HVDC) transmission system of 2500 MW capacity to transmit electricity from over a distance of approximately 1000 kilometers from Mundra power plant in Gujarat to Mohindergarh in Haryana. The Rs1380 crore project will be executed together by Siemens AG, the German parent of Siemens India and the Indian arm. The first phase of the project is scheduled to be commissioned in February, 2011 and the second phase in July, 2011, said Siemens officials.

The project is to evacuate power from Adani Power's 4620 MW thermal power plant at Mundra in Gujarat.

Siemens scope of work for the project will include the turnkey execution of complete HVDC terminal stations at Mundra in Gujarat and Mohindergarh, Haryana, associated electrode stations and a repeater station mid way. The major scope of delivery covers 500 kV converter transformers, thyristor valves, filter equipments, switchgears and other mechanical auxiliaries. In addition Siemens will also undertake marine and inland transportation, civil works, installation and commissioning of the entire HVDC transmission system, said the officials.

APL is also developing a 1980 MW coal based thermal power project at Tiroda near Gondia in Maharashtra through its subsidiary, Adani Power Maharashtra Ltd. (APML). Additionally, APL is planning to develop two thermal power stations at Dahej and Kawai totaling to about 3,300 MW, said company officials at a press meet in Mumbai, today.

March exports slump by a third, outlook bleak

India's exports declined by a third in March to $11.5 billion, its sixth straight fall, and analysts said the global economic slump would further hurt overseas sales by Indian firms in the months ahead.

Imports fell by 34 percent to $15.56 billion in March from a year earlier due to a slowdown in Asia's third largest economy and moderate global crude prices , narrowing the trade deficit to $4 billion in March from $6.32 billion a year ago.

"The impact of global economic crisis on India is going to be higher in 2009/10 compared to (the) previous year," said N.R. Bhanumurthy, an economist at the Institute of Economic Growth.

"After achieving a robust growth for four consecutive years, India's export growth started showing negative trend since October 2008 and is expected to continue for the rest of the year due to recessionary situation in most industrialised nations," he said.

India's exports stood at $168.7 billion in the fiscal year to March, up a paltry 3.4 percent from 2007/08, while imports grew 14.3 percent to $287.8 billion in 2008/09, official data showed on Friday.

Exports, which account for nearly 16 percent of India's gross domestic product, were a notch below a downwardly revised 2008/09 fiscal year target of $170 billion.

The trade deficit widened 34 percent to $119 billion in 2008/09, from $88.5 billion in the previous year.

Last month, the International Monetary Fund slashed global growth forecasts and said emerging markets were dealing with a sharp drop in capital flows and a collapse in global trade.

While growth is expected to pick up in emerging nations, including China and India, a recovery to previous healthy levels will depend on a pick-up in advanced economies, the IMF said.

The United States and Europe, which consume about 35 percent of India's exports, are yet to show signs of recovery and this has dampened prospects for an early recovery in factory output and exports from jewellery to textiles.

NO IMMEDIATE REBOUND SEEN

Since October, India's central bank has cut its key lending rate by 425 basis points while the government has increased incentives for exporters to make their products competitive.

But government officials and economists say these steps would not help in an immediate rebound in exports.

"I don't think exports are going to pick up unless advanced global economies recover. Imports are also going to take a hit. A recovery can be expected not before the second half of 2009/10," said D.K. Joshi, principal economist at ratings agency Crisil.

Last month, Trade Secretary G.K. Pillai said exports were likely to extend their decline until September, and then stage a mild recovery.

Non-oil imports, a key measure of domestic economic activity, fell 18.9 percent in March from the year ago period, signalling that factory output was still sluggish.

IEG's Bhanumurthy said the swine flu outbreak that started in North America was expected to dampen global business through decline in movement of goods and labour.

"For India, this could affect both services and tourism sectors, and hence could delay the upturn in the growth of industrial output."

Tata Motors to launch Jaguar, Land Rover in India

Tata group company, Jaguar Land Rover, on Friday said it will launch its premium saloon cars and utility vehicles in the Indian market later this year.

Jaguar Land Rover has reached an agreement with Tata Motors to be an exclusive importer of these premium saloon cars and utility vehicles, the British company said in a release.

"It is an important strategic move for Jaguar Land Rover and will enable us to realise our competitive potential in this significant market," Jaguar Land Rover's CEO, David Smith, said.

Tata Motors has created a new division called Premier Car Division to handle the distribution of Jaguar and Land Rover.

The first showroom for the British brands would be in Mumbai. Tata Motors has appointed Rohit Suri to handle the premier car division.

"This is a natural move for both businesses and will allow Jaguar and Land Rover to establish a strong and deserved presence in India," Tata Motors' Managing Director, Ravi Kant, said.

The Tata group bought these premier brands last year for $2.3 billion.

DLF Q4 net plunges 93% to Rs 159 cr

The country's largest realty firm DLF on Friday said its net profit has plunged by 92.69 per cent to Rs 159.05 crore for the quarter ended March 31, 2009.

The company's profit stood at Rs 2,176.82 crore in the year-ago period.

Net sales dipped by 73.94 per cent at Rs 1,122.32 crore for the fourth quarter of 2008-09 fiscal as against Rs 4,306.54 crore in the corresponding period of the previous fiscal, DLF said today in a filing on the National Stock Exchange.

On standalone basis, DLF's net profit dipped sharply by 95.32 per cent at Rs 29.86 crore for the quarter ended March 31, 2009 compared to Rs 638.55 crore in the year-ago period.

Net sales fell by 96.56 per cent to Rs 55.53 crore for the fourth quarter of 2008-09 fiscal against Rs 1,613.32 crore in the corresponding period of the previous fiscal.

Maruti sales jump 15% in April

The country's largest passenger car manufacturer Maruti Suzuki India Ltd on Friday reported 15 per cent growth in its sales, at 71,748 units sold in April as compared to 62,336 units in the corresponding period previous year.

"This is the fourth consecutive month of sales crossing the 70,000 units mark," a company statement said. The figures include 6,891 units exported.

Maruti Suzuki's volume in the domestic A2 segment (Alto, Wagon-R, Zen, Swift, A-Star) grew by nine percent while in the A3 segment comprising of SX4 and D'Zire, the sales volume grew by 69 per cent during the month as compared to sales in April 2008.

However, sales for Maruti's 800 model dipped 47 per cent to 2,345 units sold in April this year as against 4,458.

The eye-catcher has been the multi-utility vehicle (MUV) sales of the company - Gypsy and Grand Vitara - recording a whopping 1,231 per cent growth. About 905 units of MUV were sold this April as compared to 68 in April last year.

Total domestic sales surged nine per cent with 64,857 units of sale as against 59,539 units in the same period a year before.

Chrysler files for bankruptcy

Chrysler LLC filed for bankruptcy on Thursday after talks to restructure its debt with lenders broke down.

Despite intense negotiations over the past few weeks, Chrysler failed to gain the full support from its lenders to avoid the first-ever bankruptcy filing by a major U.S. automaker.

At the same time, Chrysler as expected entered into an alliance with Italian automaker Fiat SpA where it sold a stake starting at 20 percent and in which Fiat can become the majority owner once the government loans are repaid.

The Chapter 11 filing, in U.S. Bankruptcy Court in Manhattan, will send shock waves through the entire industry -- including Chrysler's rivals, suppliers, dealers and the hundreds of thousands who rely on the industry for their livelihoods.

As part of the filing, the U.S. government will provide up to $3.5 billion in debtor-in-possession (DIP) financing and up to $4.5 billion in exit financing. Obama said he hopes the entire bankruptcy process will take only 30 to 60 days.

The bankruptcy signals that Obama is prepared to play hardball with holdout lenders rather than knuckle under to their demands and will likely set the tone for similar discussions with bondholders of General Motors Corp -- which is now on the clock to restructure its operations by the end of May.

While Obama voiced his support for Chrysler and the deal with Fiat, he was pointed in his criticism of the investors who did not agree to this deal.

"I don't stand with them. I stand with Chrysler's employees and their families and communities," the president said. "I don't stand with those who held out when everybody else is making sacrifices. That's why I'm supporting Chrysler's plans to use our bankruptcy laws to clear away its remaining obligations."

This is not the first major government action with Chrysler. In 1980, U.S. President Jimmy Carter signed a bill providing Chrysler with more than $1 billion in loan guarantees.

Once again, the state of Michigan -- and in particular the Detroit area -- will be disproportionately hurt by the auto industry's woes.

"The industry's current crisis, with the potential for bankruptcy or consolidation, represents a fundamental shift in the state's economic base, rather than a simple cyclical downturn," Moody's said in a recent report.

"Bankruptcy is what they have been headed for in the past several months," said Mirko Mikelic, portfolio manager at Fifth Third Bank. "The biggest concern now is that the different stakeholders will be able to make the tough decisions they need to make."

Chrysler Chief Executive Robert Nardelli will leave the automaker following the emergence from bankruptcy. The U.S. government will place six members on the new company's board and Fiat will appoint three.

Investors reacted positively to the news as the broader market was marginally higher. GM shares were up 6.6 percent and Ford Motor Co was up 7.7 percent in afternoon trading on the New York Stock Exchange.



FIAT: A DONE DEAL

The bankruptcy filing did not preclude the Fiat deal.

Chrysler has been seeking a rescue deal from the Italian automaker while also trying to finalize its debt agreement.

The debt restructuring talks have been spearheaded by the Obama administration's autos task force and former investment banker Steve Rattner.

In a bid to win over three fund firms that had spurned an offer to accept $2 billion in cash in exchange for writing off all of Chrysler's $6.9 billion in secured debt, U.S. officials sweetened the terms by throwing in another $250 million, people familiar with those discussions said.

Chrysler, majority-owned by Cerberus Capital Group, has been among the car industry's laggards, but its plight reflects a slump in demand facing an industry whose $2.6 trillion annual revenue is equivalent to the GDP of France and which employs more than 9 million people.



HISTORY-MAKING

The bankruptcy marks a key moment for the automaker and for the struggling American manufacturing sector.

In 1925, Walter P. Chrysler established Chrysler Corp. Three years later, the company laid the cornerstone for the Chrysler Building, briefly the world's tallest building and still an unmistakable part of the Manhattan skyline.

On Wednesday, Obama said concessions by Chrysler's unions and its major bank lenders had made him more hopeful than a month ago that the struggling automaker could be made viable.

The automaker has won cost-cutting concessions from its unions in the United States and Canada and was on the brink of closing its deal with Fiat on Wednesday, a person involved in those negotiations told Reuters.

Putting the two car producers together should give the combined group annual sales of some 4.16 million vehicles, making it equal with Hyundai and behind Toyota, General Motors, Volkswagen and Ford