Nifty and Sensex View + News Update

Nifty trades in a down channel and now trades very close to 200DEMA-4897. After 13 months of sustaining above this important average now Nifty looks set to break the average and confirm its bear market. From here Nifty looks to reach near 4000-3800 levels by October 2010 and it is not advisable to average losses still yet.

Sensex is near trendline support and trades at 12Week low. It has tested 200DEMA at 16373 and below that major weakness is expected. Sensex trades below all other important averages and until move past 17500 is not seen more weakness would follow.

Moody’s said SBI’s rating would come under ‘some pressure’ if the government-owned bank’s bottom line did not improve. This was attributed mainly to higher provisioning and increase in staff cost. http://www.business-standard.com/india/news/moody%5Cs-says-sbi-rating-may-come-under-pressure/395370/ 

TURNING BAD Gross NPA (Rs crore)
Banks	Mar ’09	Dec ’09	Mar ’10	Chg	Chg (%)
SBI	15,714	18,861	19,535	3,821.00	24.32
BoI	2,471	4,187	4,883	2,412.00	97.61
IOB	1,923	3,218	3,611	1,688.00	87.74
Union Bank	1,923	2,092	2,671	748.00	38.87
PNB	2,507	3,156	3,214	708.00	28.22
IDBI Bank	1,436	2,317	2,129	694.00	48.32
BoB	1,843	2,260	2,401	558.00	30.27
Canara Bank	2,168	2,619	2,590	422.00	19.48
Axis Bank	898	1,174	1,318	420.00	46.81
Syndicate Bank	1,595	2,018	2,007	412.00	25.86
Top 10 banks on the basis of net change in Gross NPA for the period between Mar ‘10 and Mar ‘09 Compiled by BS Research Bureau                                               Source: Capitaline

http://www.moneycontrol.com/news/cnbc-tv18-comments/lt-plans-to-sell-satyam-stake-unhappytech-mah_458572.html L&T plans to sell Satyam stake, unhappy with Tech Mah
Steel firms prepare to ease prices on market signals, flat steel producers are looking to roll over and even cut prices from June. Producers indicated that the inventory levels at Shanghai were high at about 1.7 million tonnes, which could have added to the sentiment. Chinese domestic HRC dropped sharply by about $29 a tonne. , Bhushan Steel said, the company would drop prices by Rs 2,500-3,000 from June. The levels of $800 a tonne for hot rolled coil (HRC) never got absorbed in the market. http://www.business-standard.com/india/news/steel-firms-prepare-to-ease-pricesmarket-signals/395355/
Reliance Industries has shut crude oil and gas production from its Krishna Godavari basin MA fields in the Bay of Bengal as a precautionary measure to avoid damage from the tropical cyclone 'Laila'. MA fields was producing around 32,000-33,000 barrels of oil per day and 8 million standard cubic meters per day of gas. "This has stopped since yesterday. The shutdown will be for a minimum 48 hours," the source said. KG-D6's current gas production of around 63 mmscmd included 8 mmscmd from MA fields, and with the fields being shut, the output would come down. MA fields was producing around 32,000-33,000 barrels of oil per day and 8 million standard cubic meters per day of gas. "This has stopped since yesterday. The shutdown will be for a minimum 48 hours,"

LONDON (Reuters) - Hedge funds have reacted angrily to Germany's controversial decision to ban some naked short-selling and said the move could push investors to bet against other securities instead or move to other markets. Germany's move aims to curb the activities of speculators -- particularly hedge funds -- who are blamed by some politicians for exacerbating the financial crisis.http://in.reuters.com/article/businessNews/idINIndia-48632420100519

http://in.reuters.com/article/businessNews/idINIndia-48608220100519  BERLIN (Reuters) - Germany declared war on speculators on Wednesday, wrongfooting European partners who said they were not consulted about an overnight ban on naked short sales of a range of assets that rattled markets. Chancellor Angela Merkel told German lawmakers EU leaders had to ensure markets could not "extort" the state any more and the bloc would introduce its own financial transaction tax or levy if the Group of 20 nations failed to reach a deal in June.

A DEADLY BEARISH BIG PICTURE

A DEADLY BEARISH BIG PICTURE

Flat correction on monthly chart

Target sensex 10000 and nifty 3000

www.wealthsolution.blogspot.com Adinath Investments

After completing five wave impulse patterns, index drops in wave A. It then rallies in wave B to the previous high.finally, the market drops one last time in wave C to the previous wave A low

The same picture is in the monthly chart of the sensex and nifty from 2002 to 2008, 5 wave impulse patterns and now we are in flat correction as per my preferable view.

Sensex monthly wave counts from 2002 is as below

Wave 1(up) 2828 to 6250
Wave 2(down) 6250 to 4227
Wave 3(up) 4227 to 12671
Wave 4(down) 12671 to 8799
Wave 5(up) 8799 to 21206

Now a-b-c flat correction calculation

Wave A (down) 21206 to 7697
Wave B (up) 7697 to 18047(78.6% retracements from low)
Wave C (down) 18047 to 9911(78.6% retracements of wave b)

Nse nifty monthly wave counts from 2002 is as below

Wave 1(up) 920 to 2015
Wave 2(down) 2015 to 1292
Wave 3(up) 1292 to 3775
Wave 4(down) 3775 to 2595
Wave 5(up) 2595 to 6357

Now a-b-c flat correction calculation

Wave A (down) 6357 to 2252
Wave B (up) 2252 to 5400(78.6% retracements from low)
Wave c (down) 5400 to 2914(78.6% retracements from low)

Down trend may continue till end of 2010 or first quarter of 2011.

If you wants to invest for long term call me and ask name of 5 mutual fund schemes for SIP investments in this down trend of the market. call on 09879586722

Are we going to have subprimein india --Builders in trouble! Rs 25,000-crore debt payment looms

     Next

Raghavendra Kamath in Mumbai

Real estate developers, who need to pay around Rs 25,000 crore (Rs 250 billion) on debt instalments in the current financial year, could face an uphill task. For, equity issuances remain uncertain and cash flows have dwindled.

According to Reserve Bank of India estimates, developers have piled up debt of Rs 75,000 crore (Rs 750 billion). Public sector banks restructured debt worth Rs 10,000 crore (Rs 100 billion) in 2009 and allowed them a roll over.

By March 2011, developers need to repay this amount. An additional Rs 15,000 crore (Rs 150 billion) will be due this year, says a recent report by Kim Eng Securities. What has made matters worse for developers is that the Reserve Bank of India has already ruled out fresh restructuring for them.

Equity route risky

The equity route, earlier a hot favourite of property developers to repay debt and fund projects, is turning out to be tough. After developers such as Omaxe could not raise fresh equity, Delhi-based Parsvnath had to cut its Qualified Institutional Placement size by half, due to poor investor response. Sobha Developers had to reduce the amount expected from a QIP after it failed to raise funds in its first attempt last June.

Click NEXT to read on. . .

Image: Builders in trouble! Rs 25,000-crore debt payment looms

http://business.rediff.com/slide-show/2010/may/19/slide-show-1-builders-in-trouble-as-rs-25000-crore-debt-payment-looms.htm

Bloomberg :: CLSA `Massively Underweight' Australia, Says India's Outlook is Attractive

CLSA `Massively Underweight' Australia, Says India's Outlook is Attractive 
Australian equities will be the biggest losers in the Asia-Pacific region this year as a slowing Chinese economy cuts demand for commodities, according to CLSA Asia Pacific Markets.

“We are massively underweight Australia,” Christopher Wood, the second-ranked Asia strategist in Institutional Investor magazine’s annual poll, said in an interview yesterday in Shanghai. “Australia is perceived as an economy that is geared to China on the commodity side.”

Australia’s benchmark S&P/ASX 200 Index fell 1.5 percent today after rallying 20 percent in the past 12 months as Chinese expansion fueled demand for the nation’s exports, including copper and iron ore. BHP Billiton Ltd., the world’s largest mining company, has risen 13 percent in that time and Rio Tinto Group, the third-biggest, gained 32 percent. Both are based in Melbourne.

The S&P/ASX 200 has fallen 11 percent since reaching an 18- month high on April 15. Losses accelerated after the government said it will impose a 40 percent levy on the profits of raw- materials producers including BHP and Rio Tinto as part of the broadest overhaul of its tax system since World War II. The stock index had risen 11 percent between Feb. 9 and April 15 after posting a 7.5 percent retreat to start the year.

China, Australia’s biggest export market and purchaser of iron ore, began unwinding stimulus measures this year to avert asset bubbles. China International Capital Co. cut its estimate for China’s economic growth this year on May 10 to 9.5 percent from 10.5 percent, citing property tightening measures and overseas “uncertainties.”

Mortgage Rates

The Chinese government raised mortgage rates and down payments in April to curb property price gains, while the central bank this month ordered banks to set aside more deposits as reserves for a third time in 2010.

“The impact of tightening is starting to affect other markets such as commodities,” said Hong Kong-based Wood, who is CLSA’s chief equity strategist.

Copper and aluminum for three-month delivery have slumped about 10 percent in London this month, while zinc has lost 16 percent and nickel dropped about 18 percent.

The S&P/ASX 200’s valuation has increased to 14.4 times estimated 2010 profit at its companies, trailing only Japan as the highest among Asia-Pacific developed nations with more than $1 trillion in stock-market value, Bloomberg data show.

Indian equities have the most attractive outlook in Asia this year, Wood said. Annual growth may accelerate to 9 percent over the next five years, allowing the nation to overtake China as the world’s fastest growing major economy, if the government maintains its pledge to rebuild infrastructure, he said.

Debt Fund

India said last week it’s planning to set up a 500 billion rupee ($11 billion) debt fund to build ports, roads and bridges needed to drive economic growth. The nation doubled its target for infrastructure spending to $1 trillion in the five years starting 2012 to narrow the gap with China.

The economy, Asia’s largest after Japan and China, probably expanded as much as 7.5 percent in the fiscal year ended March 31, and may grow 8 percent in the current year, Reserve Bank of India Governor Duvvuri Subbarao said April 27. The International Monetary Fund estimates India will expand 8.8 percent this year and 8.4 percent next year, more than it projected in January.

“India will grow faster than China over the next five years if infrastructure development happens,” Wood said.

Surprise: MIPs raked in big bucks since August

“Sebi killed the mutual fund,” fund houses would have us believe, off the record.

Can’t grudge them that. 

After all, since August 1, 2010, when the no-entry-load regime took effect, equity mutual funds have seen an outflow of Rs 7,970 crore, with monthly redemptions far exceeding inflows on seven out of nine occasions.

“No commissions on offer, so agents are not selling,” goes the industry refrain.

But if this was indeed true, how come the monthly income plans (MIPs) offered by the same mutual funds have been selling like hot cakes?

As on July 31, 2009, the assets under management of 41 MIPs stood at Rs 4,832 crore.

That’s up a whopping Rs 12,425 crore from Rs 17,257 crore on April 30, 2010, the last time the numbers were declared. Take out the Rs 425 crore or so generated as returns and MIPs have still seen an inflow of around Rs 12,000 crore since the MF industry went no-load.

MIPs are hybrid investment products that invest the bulk of their assets (75-95%) in debt and money market instruments and the balance in equities.

The debt investments ensure stability and consistency, while the equity portion boosts the returns.

These funds are suited for conservative investors who are looking 

for slightly better returns than bank fixed deposits or pure debt fund offerings. The name MIP, though, is a misnomer because these plans do not guarantee a monthly income and it is merely a hangover from the days of the assured-return schemes offered by the erstwhile Unit Trust of India.

“The returns last year have been good in these hybrid products, aided by equity markets’ surge. This back-view mirror approach has prompted many of the retail investors and HNIs to go for MIPs,” said Surajit Misra, executive vice president & national head - mutual funds, Bajaj Capital.

“MIPs have seen favour with investors as they offer a little more than normal debt or fixed income products because of addition of equity component, which may give higher returns in favorable market conditions. At the same time, lower equity exposure prevents capital erosion in uncertain times” said Satyabrata Mohanty, head - mixed asset investment, Birla Sunlife Mutual Fund.

With equities at the upper end of valuations and future short-term 

performance uncertain, investors have lately been cautious in investing in pure equity schemes.

“Investors are wary of investing in pure equity products because of extreme choppiness in the markets after they ran up too fast. The MIPs offer capital protection in terms of investing in short-term debt instruments, which give 6-7% kind of annual returns,” said Ritesh Jain, head - fixed income, Canara Robecco.

MIPs have given an average return of 11% over the last one year, as on May 14, 2010. During the same period, fixed deposits (FDs) have given a return of around 7-8% before tax. The post-tax return on FDs would thus be even lesser.

In case of MIPs, the long-term capital gain (for any holding of one year or more) is taxed at the rate of 10% without indexation or 20% with indexation, whichever is higher. Indexation allows the investor to take inflation into account while calculating his cost of purchase. This ensures that the post-tax return of MIPs is around 8%, whereas the post-tax return of an FD for an investor in the 30% tax bracket would be around 5-5.5%.

Going forward, experts believe that with the equity markets remaining volatile and interest rates rising, the returns on MIPs may reduce to more normal historical levels of around 8%.

“The rising interest rates would affect the debt investment returns. The best part for these MIPs seems to be over and the inflows may slow down in next 2-3 months. Investors with horizons of 2-3 years can expect to receive 8-10% returns hereon,” said Misra. 

The key takeaway, however, is that mutual funds have been able to push MIPs even without entry loads. So, when the time is right, they may be able to push equity funds, too.

Source: http://www.dnaindia.com/money/report_surprise-mips-raked-in-big-bucks-since-august_1385214

What`s CTC in your salary slip?

Many of us, who are salaried, may be wondering what CTC in their salary statement implies.

CTC stands for Cost to company, which may be interpreted as the total cost incurred by an organization, towards their employee, which may include salary, incentives, perks, statutory contributions, training et cetera.

CTC is invariably a gimmick of the company and its Human Resources department, to pose an impression, that they are offering a large salary, but in reality they thrust all human resources expenses on the salary.

To understand the above, let us assume, your annual salary is Rs 4 Lacs, which implies, you are getting around Rs 33,000 per month. But actually you would get half of this, as all the money goes towards deductions for facilities. The company would claim that it's offering good facilities; as a matter of fact, however, the employee is paying for those facilities. So, you may be paying for facilities, which you may not require also.

The salary structure varies from company to company. For instance some companies also include gratuity in CTC, which is a bonus one gets on retirement upon completing 5 years in a company. 

It may be noted that take home salary, is different from CTC, and is lesser than it, due to deductions like tax liability and contribution to provident fund.

Contribution to Provident Fund (PF) – This is done by employer and employee as well. The contribution made by employer is a part of CTC, as it is the cost borne by the company to employ you, and is usually 12% of the basic salary. Also, there is employee's contribution to PF, which is invariably 12 % of the basic salary, deducted from monthly salary and deposited into PF account.

Tax

The company where you are employed computes tax, which is deducted every month from the CTC. This comprises of income tax and professional tax.

Let's understand this more deeply by taking the case of one Mr. Amit Oberoi, who recently joined a private limited company, as a marketing manager. His salary slip is as below:-

Particulars	Rs (per annum)
Basic	500,000
HRA	60,000
Conveyance Allowance	15,000
Entertainment Allowance	10,000
Overtime Allowance	10,000
Medical Reimbursement	15,000
Gross Salary	610,000
Provident Fund	60,000
Annual CTC	680,000
Monthly CTC	56,667

  Table (A)

  Now let us try to figure out, what will be the take home for Amit.

Particulars	Taxable Amt (Rs)
Basic	500,000
HRA	60,000
Conveyance Allowance	5,400
Entertainment Allowance	10,000
Overtime Allowance	10,000
Medical Reimbursement	0
Gross Taxable Salary	585,400
Tax	52,612
Net Annual Salary	532,788
Net Monthly Salary	44,399

  Table (B)

Basic salary is fully taxable u/s 17 of IT Act, which in case of Amit is totally taxable. Housing Rent Allowance in case of Amit Oberoi is fully taxable, as he is living in his own house. Conveyance allowance of Rs 9,600 is exempted from tax, hence Rs 5,400 is taxable in this case. Entertainment Allowance is fully taxable, unless bills are presented to the extent that such expenses were used for office expenditure. However, in this case it is taxable. Overtime allowance is fully taxable. Medical reimbursements, if substantiated with bills, are exempt to a limit of Rs 15,000 annually. In this case we can assume that Amit presented the bills and got exemption.

The gross taxable salary thus works out to be Rs 585,400.

The following table presents new tax slabs announced by our finance minister, Pranab Mukherjee, for Financial year 2010-11, during Budget 2010:-

Income Range	Tax rates for 2010-11	Tax rates for 2009-10
Less than Rs 1,60,000	Nil	Nil
Rs 1,60,001 – Rs 3,00,000	10%	10%
Rs 3,00,001 – Rs 5,00,000	10%	20%
Rs 5,00,001 – Rs 8,00,000	20%	30%
Above Rs 8,00,000	30%	30%

  Table (C)

Based on the above, the tax calculation for Rs 585,400 works out to be Rs 52,612.

The net annual salary thus works out to be Rs 532,788, while net monthly salary works out to be Rs 44,399, as given in Table (B).

So Amit Oberoi`s monthly take home would be:

Net monthly salary being Rs 44,399Less: contribution to provident fund being Rs 5,000Less:  Professional tax being Rs 200

The monthly take home salary of Amit thus works out to be Rs 39,199.

So as against CTC of Rs 56,667, Amit Oberoi`s take home salary is just Rs 39,199.

So while applying for a job, one should first analyze the break up of CTC offered by the HR, before accepting the job offer.