A layman guide to health insurance-india- Part II

Most health insurance companies are using the services of TPA (Third party administrators) for collection of documents and settlement of claims. For those purchasing health insurance policies are to be careful in some of the aspects listed below so that their claim is settled in time and without any dispute:Insured person should ensure that he intimate the insurer or the TPA about pre-authorization for cashless facility. One should not leave this to hospital even though it is listed. Of course it is the duty of the hospital to complete the process and forward the pre-authorization form to the insurer on insured person behalf.Insured person can get his claim settled only when the insured person is hospitalized for 24 hours or more. But this is not applicable to day care procedures like radiation, chemotherapy etc. as covered by the policy.Pre-existing diseases are not covered generally for first 2- 4 years. So check this while taking the policy. Also some exclusion will be there like dental, cataract etc. So one should read carefully before choosing a policy under health. He should prefer one with many advantages.We should read the fine prints of the policy to know about expenses that are not covered by the policy.Also we should check the limits and sub-limits under each category of expenses like room rent, operation charges, intensive unit care charges, % of co-payment charges to be paid by the insured.In case of reimbursement claims, we should inform insurer/TPA immediately or at least within seven days of hospitalization. The deadline for the submission of bills along with claim is normally 14 to 30 days.The insurer/TPA may demand original bills for reimbursement. But it is not necessary to give any original medical reports like pathological tests, x-rays, ECG etc. Copies can be given if asked.If we are not satisfied with services of insurance company, we can switch to other health insurance companies as health insurance portability has come into effect already.Some of the common grounds for rejection of claims area) Delay in intimationb) Delay in submission of original/copies of documents.c) Inadequate documentations.d) Claiming for pre-existing diseases during the cool off period of 2-4 years of start of the policy( only as per policy)f) Claim is for diseases which are excluded under exclusions.g) Fraudulent claims.So before choosing the policy, check the company which is issuing policy whether it is a good management or not. Also see the comparative advantages between health policies of different companies and take time to read the main items as mentioned above

.C.R. Venkata Ramani(AICWA)

Refer my articles on ramadvice dot wordpress dot com also

A layman’s guide to health insurance in India – Part I

Health insurance is a help for those who cannot afford to pay huge amount in one outgo. In a health insurance policy, the insured pays small amount called premium and in turn the insurer assures to take care of the medical expenses of the insured and his dependents. The premium will be high if medi-claim is taken for all individuals if insured is having a family of 4 members . Hence he can go for family floater policy.Family Floater Policies: Most health insurance plans give the flexibility of covering up to 4/5 members of the family under the same plan with a slightly higher premium than an individual health insurance policy. It gives the flexibility of choosing say 3 or 5 lakhs of cover for the entire family. If one member in the family is hospitalized and uses about Rs. 3 lakhs for his treatment, then the rest 2 lakhs can be availed by others. It is very unlikely that more than 1 or 2 members would require hospitalization in the same year. Hence the family floater serves the purpose whoever in the family falls ill. If health insurance is taken at younger age, the premium is less. There are two different type of health insurance. One is Regular health insurance and other one is critical illness insurance.Regular health insurance is related to petty health problems which are not critical and of short duration and less costly. Critical illness refers to the diseases which are mostly non-curable / critical or require huge money for treatment. Critical illness insurance insures diseases like cancer, paralytic stroke, major organ transplant, kidney failure etc. These diseases require long continued treatment. On the other hand, the regular health insurance is covering the expenses only on hospitalization of the insured within particular duration. In critical health insurance , the insured gets the amount in lump sum but it is not so in case of regular health insurance where billed amount only is paid though it may be cashless or reimbursement policy. It is better to consult proper insurance agent before choosing a policy and tell your requirements. If any one wants to obtain cashless claim i.e. no cash payment across the counter and insurance company pays directly to the hospital, then he should know about the list of network hospitals that offer medical service he needs. He should note some hospital nearby with telephone numbers in his diary or in some important place so that in case of emergency, he can go to that hospital and arrange admission of him/her or dependents insured. He can inform the hospital about the insurance and mostly they will arrange all formalities for cashless facility if they have tie up for this facility. Once this is done, he just needs to sign the bill at the time of discharge of the hospital. The insurance company will pay the amount to the hospital. The premium money under health insurance will not be returned at the end of the period of insurance as in the case of life insurances policies (ofcourse excluding whole life policy) but will get income tax exemption up to Rs. 15000 every year under sec.80D . For senior citizens 60 and above, additional exemption is there upto Rs.20000/-.Thus it protects a salary earner/bread winner of a family from falling into any financial crisis due to any medical emergency especially of his/her aged parents and also helps in tax saving. He can lead a peaceful life without thinking about any uncertainties as it covers the medical and hospitalization expenses of the insured and dependents. Normally health insurance is taken for one year and some insurers allow it for two years. Premium varies every year based on cost of hospitalization in general which is on increasing trend. Those who continue in one specific insurance company, he/she gets discounts for no claim. Also after 2 or 4 years, it may allow covering even pre-existing diseases also.Health insurance policy covers the following basic costs in case of hospitalization due to any accidents/ diseases that doesn’t form a part of the permanent exclusions of the policy.Room, boarding expenses as provided by the hospital/ nursing home.Nursing expensesSurgeon, anesthetist, medical practitioner, consultants, specialist feesOperation theatre charges, surgical appliance, medical and drugs, chemotherapy, radiotherapy and similar expenses.Normal exclusions on a health insurance plan vary marginally company to company. What one should pay special attention is whether pre-existing diseases or treatment for common but expensive treatments, such as cataract or hernia are covered in the policy or not.The stereotype expenses that are not covered by a general health policy of most of the insurance companies are: Any disease/injury during first 30 days of commencement of policy (except accidental injury) Permanent exclusions could comprise of the following illnesses: Vaccination, inoculation, change of life, cosmetic or aesthetic treatment, plastic surgery unless necessitated due to accident or as a part of any illness Dental treatment or surgery of any kind unless requiring hospitalization Cost of spectacles contact lenses and hearing aids Convalescence, general debility, “run-down” condition, sterility, venereal disease, Hospital / nursing home charges not forming part of any treatment Nuclear perils and war group of perils Naturopathy or non-allopathic treatment Any internal congenital illness Pregnancy and childbirth related diseases Expenses arising from HIV or AIDS and related diseases Use or misuse of liquor, intoxicating substances or drugs War, riots, strike, terrorism acts, nuclear weapon induced treatment.Pre-existing diseases: In most medi-claim policies Pre-existing diseases are defined as any disease that the insured had (whether he was aware of it or not) at any time prior to the commencement of the policy with the insurance company and it also includes any complications arising in the future from such pre-existing disease. Most insured are normally not aware about the inclusive definition of pre-exising diseases (about complications arising from the pre-existing disease). Since the most common pre-existing diseases in India are diabetes and high blood pressure (hyper tension) and these are responsible for a wide spectrum of serious diseases such as heart blockages, organ failure, etc. the insured are taken aback when the insurance companies deny payment of claim on grounds that these diseases arose from an pre-existing condition and hence will be classified as an pre-existing disease. So insured should take care of this definition and arrange to cover pre-existing diseases also especially for elders. Some health polices will cover it after a cooling off period of few years (normally 2 to 4 years). Some insurance companies have even stricter condition that coverage will be provided only if no advice, care or treatment is taken for the pre-existing condition during the cooling off period. So the person taking the policy has to study these and then take a decision for health policy.Some of the other terms used in Health Insurance policies:Hospitalization Cash Benefits: This benefit entitles the customer to cash benefits for every completed day of hospitalization, which helps him to take care of the increased financial burden incurred at the time of hospitalization, such as loss of earnings away from work and other expenses.Cashless facility: There is a network of hospitals tied up with each insurance company which accepts the insured’s medical identity card (issued by the insurance company) for providing cashless facility to the insured. Hence either part of expenses like 80% or entire expenses is covered by the policy and the individual doesn’t need to spend from his pocket.Pre-hospitalisation and Post-hospitalisation benefits: Some medi-claim policies provide for up to 60 to 90 days of pre-hospitalisation and post-hospitalisation benefits, i.e. the cost of medical tests, medicines, scans, etc. This is usually provided under maternity benefits and treatments which do not require hospitalisation.Ambulance Charges In most cases the ambulance charges are taken up by the policy with or without cash limits and the policy holder usually doesn’t have to bear the burden of the same.Health check up Some health insurance policies have a facility of free health check-up for the well being of the individual if there is no claim made for certain number of years.No-Claim Bonus: Some health insurance policies provide a no-claim bonus. If there has been no claim in the previous year, i.e. if the person covered has not availed any hospitalisation benefit, then a bonus is declared; either by reducing the premium or by increasing the sum assured by a certain percentage of the existing premium.Top up and the super top up plan in health insurance: A top-up policy is to provide reimbursement of extra-ordinary expenses arising from one single illness above a certain known insured limit for top up.(it is called deductible in insurance world). For e.g. one has taken a mediclaim policy for Rs.2 lakhs and a top up policy for 4 lakhs with deductible of Rs.2 lakh.He incurred medical expenses for single disease like angioplasty which is around Rs.4 lakhs. Under mediclaim policy, he will be given 2 lakhs and in top up, deducting the deductible amount of Rs.2 lakhs from 4 lakhs of total expenses, he will get additional 2 lakhs. Thus he will get full expenses due to top up. But one drawback in this top up is that if the expense of 4 lakhs incurred is 2 lakh each on two occasions (Rs.2 lakhs+2 lakhs) , then he will not get any amount under top up policy. In order to remove this problem, the insurance companies brought in another product called super top up policy which covers for all illnesses during the year put together and any eligible expenses incurred over and above the deductible amount is eligible for reimbursement. So the insured can combine all expenses put together in the covered insurance period and claim the balance amount above deductible amount. In the above case, if the policy is super top up one, then the insured will get full balance amount of medical expenses allowed under policy for the full covered year deducting deducible amount of Rs.2 lakhs and in the above case , it is 2 lakhs under super top-up policy. So super top up policy is the best one if any one thinks to take additional policy under normal mediclaim. Claims under these kind of policies are much lower and only a few people are likely to exhaust the deductible amount and hence the premiums are very reasonable and hence attractive.

C.R. Venkata Ramani(AICWA)

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Penalty on Pre-payment of Home loan on floating rates is removed for HFC; for Banks, wait!

The banks thrive on the margins between deposit rates on deposits accepted from customers and loan rates on loans given to the needy. Normally, the margin is 3 ot 4%.(NIM) From this margin, banks have to manage all their administrative and other expenses and also get some profit for the pain taken for these transactions. But nowadays, the competitive deposit rates accepted is around 10% and hence the banks can lend to public at an interest rate of more than 13%. Due to competitive atmosphere in lending business, sometimes banks get interest margin on loans 2% only and hence in order to jack up it to 3%, banks devised many new charges on customers . Prepayment penalty is one the chargeslevied by Indian banking system. This charges varies from bank to bank and it ranges from 1% to 3% of outstanding loan amount.Definition of pre-payment charges: It is a charge levied by a lender on the borrower who repays all or part of the principal of a loan before it actually becomes due. This charge compensates the lender for the loss of interest that bank would have earned , had the loan remained as per the original agreement till its complete repayment as per agreement.Why clients wants to repay earlier:The clients when they have surplus money want to clear the debt so that they can reduce the interest amount payable which is going up fast. Also due to increase in interest rate, the EMI is also going up and many clients are unable to pay the EMI. Though banks allow increased repayment period in order to keep EMI constant, Banks are in problem when the loans repayment period is already long i.e. more than 25/30 years. Refinancing of loans at lower rate and good service by other financial institutions encourages clients to think of pre-closing their loans with the existing banks. Banks justify this levy by following points:Breach of contract and hence penalty: Banks based on past trends of deposit determine how much to lend. Since deposits are received for various periods right from 15 days to 5 years or more i.e. short term and long term, banks are planning to lend the money received for short term and long term. If any mismatch is there between deposits and loans, then banks will be loser as either it has not fully utilized the deposits properly or it has to take loan from other banks/RBI to bridge the gap between deposits and loans which is costly. In lending, banks have three types now: 1.Fixed rate 2.Floating rate 3.Teaser rates. In Fixed rates and teaser rates, banks may lose if deposit rates increases. In floating rate, the rate can be revised upwards which safeguards the profitability of banks. But banks are charging penalty on pre-payment irrespective of any type of lending. Of course some banks are allowing prepayment of loans with loanee’s own earned money.Holding surplus funds due to pre-payment:If any loanee pre-pays the loan, then banks needed some time to find another needy for lending. For this time gap, banks levy the charge. Ofcourse, there are many avenues for keeping the surplus funds but it carries less interest rate.Not letting the clients to go to other banks: Penalty for pre-payment discourages clients to switch over to some other banks. This helps banks to retain customer base intact. Losing customer costs bank heavily by way of fees to agencies to procure business or loss on incentives spent for creating new customer base/retaining existing customers.To save costs: Nowadays, banks are depending on Direct selling agency(DSA)for lending business. They are paying fees ranging from 1% to 3% to DSA on the amount of loan lent to the clients procured by DSA. If the concerned clients prepay the loan in shorter period, then this cost of fees cannot be covered except by way of penalty.To insure safety of funds: Due to inflation and increase in EMI, there is chance of losing money as many clients fail to repay the loans. At least these type of charges on all loans will safeguard some % of losses.Increase in Repo rates/CRR: The concept of penalty on pre-payment came when RBI started increasing the Repo rate and Cash Reserve ratio. Repo rate is the rate at which the central bank lends money to bank. CRR is the % of cash to be kept in RBI based on deposits. Since repo rate is paid by banks to RBI to get funds from RBI when they are short of funds but promised clients to give loans and mismatch of deposits vs loans.What is the present position:The competition commission of India, based report of Director General (Investigations) has taken up the case with Govt/RBI/NHB against banks for misusing their dominant position in lending when clients in need of money and entering into anti-competitive agreements.The National Housing Bank(NHB), which is the housing finance regulator, in a circular asked all housing finance companies not to levy any pre-payment charges or penalty on floating loans if the loan is pre-closed by the customer through any funding source. But it is not fully agreed by Housing finance companies. NHB made a distinction of loans among fixed and variable and favoured exemption from payment of penalty only to floating rate loans. For fixed rate loans, it asked the banks to waive penalty if they pay from their own resources. If refinance method from other banks are attempted for fixed rate loans, then penalty can be levied. NHB has also asked housing finance companies to apply uniform interest rate whether it is old customers or new customers as risk profile is same in both group. Charging of higher interest from old customers against new customers puts them to a great disadvantage, besides being discriminatory. The practice also generally lacks in transparency and fairness and banks should desist from this.On 19.10.2011, NHB has issued directive to all housing finance companies for which it lends money not to levy penalty on pre-payment of home loan.NHB regulates 54 HFCs, including HDFC, LIC Housing Finance and Dewan Housing Finance.“Floating rate loans: According to NHB’s circular, HFCs can’t charge a prepayment penalty from customers whose loan is on floating rates even if money used to prepay the loan is borrowed from a bank or a non-banking finance company (NBFC).Fixed rate loans: Even customers on a fixed interest rate won’t be charged a penalty if they are prepaying from their own sources. However, if they borrow from a bank or NBFC, they may be subjected to a penalty, depending upon the HFC’s terms and conditions.Fixed-cum-floating rate loans: If customers have a fixed-cum-floating rate loan, the rules for fixed loans will apply till the time their loan is fixed and then the rules for floating loan will apply. In other words, if customers don’t want to pay a penalty,they will have to prepay from their own sources till the timetheir loan is on a fixed rate; thereafter, they may pay from any source of income for floating part and still not pay a penalty”.RBI has to take steps to cover banks for this step. To improve customer service in the banking industry, RBI has released 10 point action plan as a sort of recommendation in the Banking Ombudsman conference. One of the recommendations is that banks must stop enforcing pre-penalty clauses on customers seeking an early end to their indebtedness. “Banks must not recover pre-payment charges on floating rate loans. Floating rate loans pass on the interest rate risk from banks to customers. Banks only substitute interest rate risks with potential credit risks,” the release said. Banks may also offer long-term fixed rate housing loans to their customers and address their asset liability mismatch (ALM) issues by recourse to the Interest Rate Swaps (IRS) market. This recommendation of RBI will be transferred into directive if banks are not taking steps to correct their position in respect of penalty on pre-payment of loans.The Supreme Court will, in an appeal filed by the State Bank of India against a National Consumer Disputes Redressal Commission order, decide whether it is right for banks and housing finance companies to charge pre-payment fees on customers repaying loans ahead of their tenure.The Commission had, in a recent case ruled that prepayment clauses are restrictive trade practices, which restrict the consumers’ right to avail loans at a lesser rate of interest. It called upon the country’s largest bank to refund the Rs 40,000 it had collected as pre-payment charges from Usha Vaid, who had shifted to another bank. The forum said it appeared that this amount was charged as punishment to the consumer who sought transfer of the loan amount to another bank, giving a lower rate of interest.The Home loan customers are eagerly waiting for the verdict of Supreme court in the above case. RBI may like to act positively before verdict of Supreme court in order to keep its name as regulator. Already the leading Bank SBI has withdrawn pre-payment penalty on home loans on all floating rate home loans.C.R. Venkata Ramani(AICWA)Previously worked as Cost consultant with Dun&Bradstreet, Chennai on contract basis for working out profitability of one overseas bank

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Another blog

I request my followers to see my another blog www.childrenandteacher.blogspot.com and become my followers there wherein I have started giving good finance and political related articles. I also invite your suggestions and comments so that I can improve myself. From time to time I can give tips also about the market. Hope you will follow me.
thanks.

Why bank stocks fall in indian market? Is it justified?

Taken from www.shvoong.com ( good site of me):
In India, today i.e. 24.11.2010 around 2 pm, CBI arrested totally 8 persons , some from banks and LIC housing finance and some from Finance consultancy services in Mumbai. The media , without knowing the basic things, raised hue and cry that banking system is having some loopholes for bad debts etc. Indian stock market lost nearly 200 points on hearing this and casualty is bank stocks. But slowly as further news pour in, it appears that indian banking system is intact sound under the watchful eyes of Reserve bank of India ;only certain vested individuals in banks took some bribe money to process loans quickly taking the help of financial consultant companies as middle men. as usual the financial conultant companies takes a cut of 1% to 2% as their fees.Though some real estate companies name appeared in cbi report, it is only as references and not accused. No company employees are arrested by cbi and only details like sanction date of loans etc. were asked by cbi. so it appears to be isolated instance of corruption by officials of public sector banks. Since there are so many layers in verifying and sanctioning loans, there is little chance of any loan without proper security. ofcourse there may be few loans with insufficient security when top echleon interferes with procedure and it may be limited one for political or personal reasons but cases may be limited.

Thus it appears from the news report that
1.Only few individuals who are dishonest have taken bribe for arranging the loans at the earliest.They include some middle and top level managers . Use of brokers for arranging loans is done by companies in order to get the loans quickly. It is just like brokers in RTO office, Govt offices etc. as companies and individuals do not have time to waste their time and energy at the doors of babus. Since IT is not developed wantonly in these sectors to make officers to fear about delay and for answering delay, these things are happening in India. It is a routine one and it is a known fact and supreme court has already spoken sadly about this quoting that this can also be made as regular cost.
2. In LIC housing finance, leakage of information may have been done to some middlemen who may use it in stock market for purchase and sale of shares. Now lot of consultants are there to advise clients when to purchase or sell shares based on some inside information. May be this is the cause for that to get information. If LIC/LIC housing finance wants to purchase certain shares, these information may leak earlier to certain individuals so that some may corner those shares earlier in order to get benefit. This may be reason for giving money to obtain inside information.So it is only personalised matters and there may not be any problem with the loans and assets quality hypothecated with the banks. There may be some 1 or 2% of stray cases of insufficient assets for which banks already provide bad debt provision.

Save Congres party from doom

Adopted from shvoong.com (Sonia gandhi/Rahul gandhi save congress party)

In India, slowly Congress is losing its popularity due to improper guidance/ no guidance of high powered committee surrounding Mrs.Sonia Gandhi and Rahul Gandhi. It appears all are 'Yesman' than daringly and softly pointing out mistakes also to them so that corrective actions can be taken to come to power in India overall. Some of the suggestions are given below:
1. First Sonia and Rahul should try to show Congress as corrupt free party. For this, Congressmen in the state and centre should be advised to keep away from corruption . People should not be harrased for getting their services.
2. Party should be watch dog of Govt. Only Sound Congress party can form Govt. Hence watchdogs should be there to monitor the activities of Govt and give reports to Party state high command and central high command similtaneously so that Sonia and Rahul can get real feed back about activities of local govt and take suitable action.
3. Sonia and Rahul in consultation with BJP should stop caste based census which will harm their parties in long run as majority castes will build their own party and take this country to doomsday and Congress and BJP will not escape the bite of this Ghost. People should not be divided based on caste/ communities. There should be two divisions called Vegetarian and Non-vegetarian and also Poor and Rich. Only towards this goal, Congress and BJP should move. Otherwise Yedurappa cases wil happen where top ups can't do any thing and Party Leader will be challenged due to their caste support. So be careful.
4. Congress State leaders and Chief Ministers and ministers should be called once in three months for a meeting wherein progress of the state concerned should be checked in various sectors and critical study has to be made. Also all should be warned for corruptions and clearly tells them that party willo not shield anyone facing the charges and they have to come out from the charges after resigning from their posts immediately.
5. Central programmes should be advertised properly through national and regional newspapers and party appartus should also be geared to give wide publicity. But we find oflate only internal bikerings and fights are only seen in congress circles which slowly takes it to destruction. The programmes and policies of central govt should reach all people and state govt should not be allowed to take credit for them
6. Party leaders and chief ministers should be advised to take care only about usability of all the scchemes to poor and whether it is really reaching the deserved. Bureacrats should be allowed to take decisions timely and efficiently and they should be warned that if any corruption is there, they will be suspended and dismissed quickly. This will make ministers to devote more time to public. No file should be kept pending without any proper reason. This will speed up develepment.
7. No permanent foes or friends in indian politics. Now Congress though not involved directly with Spectrum 2 G scandal but due to coalition politics, it is feeling the heat. Opposition parties will take this weapon to score Congress in all future elections as the amount involved is huge. So Congress should think twice before taking any decision. It is better to comply with JPC.Now in Tamil nadu, AIDMK is commanding respect as compared to DMK among public. So it is better to leave DMK and join with AIDMK and agree for sharing of Tamil Nadu govt.
8. In AP, Jagan can be accommodated in Dy.CM post along with Rossaiah so that some peace will return and he can be assured future elevation after gaining experiance. Personal ego should not hamper party's growth. Every one should think that party is great than individuals.
These are some of the ideas for congress to improve its image. The same ideals can be followed by other parties also to prop up image.

stock tips 24.10.2010

Coal india IPO has dented some secondary market investments and indian govt owned financial institutions have sold indian shares in order to prop up Coal india IPO. So there is decline in NIFTY.

Investors get time till Oct 25 to withdraw CIL IPO bids

Stating that there were certain inadvertent errors that crept into its offer document, Coal India (CIL) today offered its investors time till October 25 to reconsider their decision to take part in its IPO.
"...It is clarified that on account of typographical errors in the company's standalone summary statements of profit and loss (restated), the amount shown under accretion in stock and other income for the quarter ended June 30, 2010 on pages...Of the Red Herring Prospectus were inadvertently interchanged with each other.
"...In view of the above, kindly note that the bidders including QIB bidders, if they so desire, may withdraw their bids. The request for withdrawal of such bids shall be received on or before 5:00 PM on October 25, 2010," said in a statement to the stock exchange which coinciding with the final day of public offer.
Market experts said that whenever there are any changes made in the prospectus of IPO bound companies, regulatory norms mandate them to make public announcements and give investor an option to withdraw bids.
"It is not the first time such a thing has happened. In such scenarios, generally investors have not been seen withdrawing their bids," a merchant banker said.
Among many such IPOs, VA Tech Wabag had given investors the option to withdraw their bids in its recent share sale as certain errors came to light in its offer documents.
"Generally speaking, we have not seen investors withdrawing their bids from the company due to this," the banker said.
Meanwhile, Coal India maintained that there has been no change in the total income of the company or the company's standalone summary statement of profit and loss in the offer document due to the error.

Many investors may think whether it is a plan to allow FII/mutual funds/LIC ti withdraw their applications in part before allotment thus misguiding the retail investors about total subscriptions before they subscribe on the closing day.But chance is given to retail investors also to withdraw but quantum of withdrawal by FII/mutual funds/LIC should be made public and retail investors should be allowed one more day for withdrawal as per the tradition in offer documents.



On seeing the downtrend in price of tata steel, I could understand the level of games that are played by FIs especially when the derivatives settlement approaches fast for Oct 10. Anyhow, still I recommend Tata steel in the portfolio of one's investment as it is the only stock that is available cheap. In this respect, the following research editions also enthused me.
My recommendation:
Don't sell Tata steel. Either buy at current price of Rs.617 or Hold. You will get good returns in another 6 months to 1 year. For other stocks, my old posts stand valid including visa steel, Jp associates etc.

Edelweiss: Target Rs.781/-
Raising consolidated EBITDA by ~7% in FY11 and ~10% in FY12
We are revising upwards Tata Steel Europe’s (Corus) EBITDA by 6.7% to USD
841 mn in FY11 and by 5.6% to USD 1.3 bn for FY12, primarily due to betterthan-
expected realisations in Europe. We increase our FY12 EBITDA/t for Corus
from USD 66/t earlier to USD 80/t. For the Indian operations, we raise our
estimated EBITDA to USD 2.3 bn (up 5.7%) and USD 2.4 bn (up 12.4%) for
FY11 and FY12, respectively. This is led by increase in steel prices ahead of
expectations and firm price outlook.
􀂃 2.9 mtpa brown-field expansion on track; to be completed by Dec-11
The 2.9 mtpa brown-field expansion will fully commission by December 2011,
with blast furnace and pellet plants likely to commission in June 2011. We expect
incremental volumes of 0.2 mtpa in FY12 and 2.4 mtpa in FY13 from this plant.
Dhamra port, with 27 mtpa capacity, has just commenced operations.
􀂃 Better visibility on raw material projects; significant long-term value
Tata Steel is executing projects in Mozambique for coking coal and Canada for
iron ore. These projects are gathering pace and are expected to be completed by
end CY11. The company could attain raw material integration of 15-25% through
these projects.
􀂃 Outlook and valuations: Positive stance; maintain ‘BUY’
We continue to believe that margins for non-integrated steel players would bottom
in Q2FY11 and expand thereafter. Steel prices have increased by ~USD 25
recently globally even as contract iron ore and coking coal prices have declined by
~USD 15/t, suggesting this play-out has already started. For Tata Steel
specifically, we see multiple triggers playing out, including Corus achieving
EBITDA/t of USD 80/t in FY12, sale of TCP plant by Q1FY12, ramp-up of Dhamra
port, the 2.9 mtpa expansion and international raw material projects completing
by end CY11. Potential surprises could be through additional sale of non-core
assets. We value international raw material projects at INR 23/share and also
considering increase in our estimates, raise our fair valuation from INR 623/share
to INR 781/share. We maintain ‘BUY/Sector Outperformer’ on the stock.

Another research report says price target: Rs.846/-
Though this is on the higher side, Rs. 700 in short term and Rs.800 on long term(1 or 2 years) appears to be reasonable.The report goes like this:

Firm Indian operations, Corus uncertain
 Corus to remain under pressure despite strong Q1FY11
Corus’ (TATA Steel UK) Q1FY11 results reinforced the operational
turnaround. However, we expect the next two quarters to be
challenging for the company due to: 1) pressure on utilisation and
2) higher raw material prices should squeeze margins. Despite this,
we believe Corus should be cash positive and EBITDA/t will stabilize
in the range of US$50-70/t from Q3FY11F up from US$30-35/t
expected in Q2FY11F.
 However domestic business to remain highly profitable
The company’s Indian operation’s profitability has surprised the street
both through higher realizations and lower costs. Although we expect
EBITDA/t to come down from Q1FY11 levels with the fall in steel
prices, we believe higher volumes will keep absolute profits strong.
Volumes have picked up in Q2FY11, after higher imports had
impacted sales in Q1FY11. We expect consensus earning upgrades
for the India business due to positive surprises in Q1FY11.
 Valuations attractive, already factoring uncertainty
We believe steel prices should start stabilizing after the recent
turbulence, as indicated by high scrap prices. The Indian business
remains strong with EBITDA/t of US$ 350-400/t despite the correction
in steel prices. Since there is consensus about strength of Indian
business, we believe the current stock price is ascribing significant
negative value to Corus. We estimate the value domestic business at
Rs753/share (at 10x FY12E EPS). Therefore, the negative value
ascribed to Corus is closer to Rs100/sh. This is unjustified, in our view,
given our expectation that Corus will be cash positive in Q2FY11,
which is typically the worst quarter for them. We value Corus at 5x
EV/EBITDA at EV of US$ 5bn and contributes Rs34 to our target price.
South East Asia business is also valued at 5x EV/EBITDA and
contribute Rs15/share. Rs44 comes from its stake in Riversdale
mining (RIV AU, not covered).

So don't sell Tata steel. Either BUY or HOld. Don't sell. This is the only share which has got potential in the NIFTY stocks.Tata Steel today said its sales increased by 14 per cent to 1.66 million tonnes in the July-September quarter of the current financial year over the year-ago period, mainly on account of rise in demand for its products.

Tata steel sales rose by 14% in second quarter

"Tata Steel completed the second quarter and the first half of the current financial year with a significant increase in its production and sales volume, as compared to the corresponding period of last year," the company said in a statement here.

"The second quarter of 2010-11 witnessed some best ever production and sales in various units of the steel company," it added.

The company had sold 1.46 million tonnes of steel in the second quarter of the last financial year.

For the half-year-ended September 30, Tata Steel said it sold 6 per cent more steel products at 3.06 million tonnes as against the sales of 2.87 million tonnes in the year-ago period.

"The second quarter of 2010-11 witnessed some best ever production and sales in various units of the steel company," it added.

During the quarter under review, Tata Steel saw its saleable steel production surging by 6 per cent to 1.61 million tonnes against 1.51 million tonnes last year. For the half year period, the company saw production in the segment growing by 5 per cent to 3.2 million tonnes, as compared to the output in the first six months of the last financial year.

Tata Steel's crude steel output for the second quarter of the current financial year surged 5 per cent to 1.72 million tonnes over the year-ago period. The company had produced 1.64 million tonnes of crude steel in July-September last financial year.

For first half of 2010-11, the crude steel production surged by 7 per cent to 3.35 million tonnes as against 3.14 million tonnes in the year-ago period.

The company said its hot metal production rose by 6 per cent in the second quarter to 1.89 mt. Tata Steel had a hot metal output of 1.79 mt of in the same period last year.

For the first half of the current financial year, Tata Steel saw production in the hot metal segment rising by 7 per cent to 3.72 million tonnes, as against 3.48 million tonnes in the corresponding

stock tips 21.10.2010

Tata steel has got clearance for chattisgarh plant from environment and forest of state and central govt. It is a good news for tata steel

Coal india IPO- whether FII , banks, Mutual funds will burn their fingers?

It is a good news for Govt of India as Coal india IPO is subscribed 12 times by QIP segment but response is poor in retail.

This is one news item in equity master:

Take the Coal India IPO for instance. Millions of investors are scrambling to get a slice of this IPO. It's not only because this IPO is the biggest in India so far. There are other factors too driving this enthusiasm. For starters, the US and Europe are still down in the dumps. Thus, foreign investors are putting money by the dozen in emerging markets in India. The perception then is that stockmarkets in India will continue to rise. As a result of which IPOs would also yield attractive returns. So strong is this mindset, that investors have begun treading on dangerous ground. They are borrowing in this bull market to invest in new issues.

In this regard, an article in Economic Times has quoted a trader - "I decided to take a Rs 9-crore loan for the Coal India IPO so that I can leverage my own fund of Rs 1 crore. This would increase my chances of getting more shares in the allotment 10 times and help me make a killing."

Surely, a 10% gain (assuming that he get entire allocation of Rs 10 crore) can double his net worth almost overnight but a 10% fall can also wipe out his entire net worth. And it is this downside that he is not paying any attention to. Indeed, this kind of speculation is what has led to the downfall of many investors in the past. And is bound to do so in the future. "

Tread carefull in IPOs . Better to go for known secondary market shares where PE multiples are less than 8 or so. This will safeguard your hard earned money. Refer my previous recommendations and go for sound investment as some institutions manned by inefficient people sells good shares and purchases dud shares thus bringing down the institution to dust.

free stock tips 20.10.2010

Buy Ashokleyland: Rs.73/- Target Rs.78/-
Expects good halfyearly results today.

Cement, steel,power and all infra structure stocks and also oil stocks have got good future.Cement companies results will be announced one by one within next 2 to 3 days.

Software stocks, bank stocks which are already overheated may not be purchased or better to sell.Telecom sectors are also not good. Airtel can be exception due to its hold in Africa.

Tata steel:Buy :

Good stock Rs.622-. short term Target(2 months) Rs.660/- Long term target: Rs.800/-(one year) It may move slowly up to long term target. PE ratio is only 8 and will reduce further due to increase in EPS.

The corus is also growing well and in addtion this, new port ( Dhamra port )value will be added soon so that the share will hit Rs.800 within ayear.
Steel value Rs.650 + port value Rs.150 = Rs.800. When the news of opening of port flashes, the tata steel price will jump for nearly Rs.100/-.
With good indian market, this stock stands to gain substantially soon.

Dhamra port- 50% equity by Tata steel will be operational in Nov 2010. This will increase the potent value of tata steel as all the port shares commanding premium and the Dhamra port is going to be one of the major ports in the country with 13 berths. Ships having 60 million tons capacity can anchor here. Situated between Haldia and Paradip, the port at Dhamra will be the deepest of India with a draught of 18 meters, which can accommodate super cape-size vessels up to 180,000 dead weight tons.

Buy reliance industries Rs.1045. short Target:Rs.1070


Buy JP Associates Rate: Rs.127 ST(shorttime target) Rs. 140
Cement price increased by Rs.25 per bag through out india by all cement companies.
When we recall the old news i.e. Jaiprakash Associates Limited announced sales results for the month and four months ended Aug. 2010. For the month, the company reported a 51% jump in sales at 1.085 million. The company had dispatched 719,000 tonnes cement in the same month last year. Cumulative sales of the company in April-August period of the current year stood at 620,000 tonnes, up 59% from the same period last year. So expect good results from JP associates and corner the shares now at this rate.
Also the interview with chairman, JP associate recently hints about good things to come in JP associate table. So don't lack behind to own good share which is having limited retail public holdings to the extent of 11% only ;rest is in the hands of institutions and promoters who will not sell it as JPAssociate is multi-business entity and growing company.

"Q: What about the current year? What kind of guidance can you hold out on the topline and if you could break it up between the three segments as well?
A: I can tell you that it is almost the second month of Q1 of FY11 and we all know how Indian economy has shown its resilience. With the grace of God and on our strong foundation—all the three revenue streams of the JP Ltd are on good track, there is good momentum. Our commissioned cement capacity as of March 2010 is 22 million tonne including the 2.2 million tonne capacity, which the group gets from its joint venture with SAIL, which has been commissioned ahead of schedule.
We are optimistic and we are seeing the type of production we are able to get and the type of sales we are able to realize in the market that before March 2011, we would be able to sell and produce almost 20 million tonne, up from 11 million tonne in year ending March 2010. The E&C business, on the strength of healthy order book and projects under advance implementation, is expected to contribute handsomely.
I have all the reason to believe that if all goes well for the economy, and GDP is able to sustain more than 7% rate, we are in for a very good year as far as FY11 is concerned. It’s logical that for cement, we will be able to produce 20 million tonne up from 11 million tonne—the turnover from cement itself will be more than Rs 9,000 crore and total turnover we hope to achieve in excess of Rs 16,000 crore for current financial year.
Q: If that is your guidance for FY11, Rs 16,000 crore on turnover, what kind of margin profile will you enjoy given your view on cement prices and E&C margins this year?
A: The EBITDA was almost 40% for year ended March ‘10 and we have been able to maintain healthy margin of 28-29%. I am reasonably sure that we will be able to maintain this level of margin because of the type of business we are in and the type of efficiency we are able to achieve consistently."

Buy IFCI Rs.70.70Target Rs.75
Very soon consultant report will come. IFCI may be one of the eligible candidate for bank status.

Coal India IPO appears to be priced high as per some experts.Price may be around Rs.150 to Rs.200 taking into account all constraints in mines industry. The price band decided now is 225-245 with 5% discount to retail investors. It may go to the way NTPC has gone.The government interferance, high manpower strength, high salary outgo, inferior coal quality, Difficult recovery from EB boards and other Govt sectors for coal bills outstanding, Mafia in Bihar belt all will add woes to Coal india and its investors.Also new mining policy may say to share 26% with local people for mining companies. So it is better to avoid this issue. AFter the issue is over, there will be scramble to sell the shares as most of the retailers took loan from banks,brokerage houses for initial subscription in order to earn some profit. The share price will go down from IPO price. So exercise caution as you may be enter into loss. Think twice before subscription.
The ongoing initial public offering (IPO) of Coal India (CIL), the country’s biggest ever, is unlikely to evince much interest from its 400,000-strong workforce, despite about 10 per cent of the 631.6 million shares on offer being reserved for the employees.Disinvestment Secretary Sumit Bose refrained from expressing disappointment at the possible lackluster response from the CIL workforce. “The employee response can be determined only after the issue closes, but in certain cases, there can be problems.".This is first day reaction. Only FII has shown interest in the issue who are not aware of the real situation in coal india affairs.

Sterlite indus: Hold
Supreme court has given permission to continue operation till Mid-Dec 2010 by this time, it will receive replies from state and other authorities for some questions raised. So temporary relief to sterlite.


Mahindra Satyam: Sell as suggested earlier.


DVR(Different voting right) share issue which is being preferred by some companies is an issue that is going against the minority shareholders. The promoters easily are getting the approval from AGM as they are in majority for the said issue.The DVR/QIP portion is issued at around 30% discount to PE companies. Here the purchasers will get limited voting right i.e.they may be having one voting right for ten shares held (vs) one voting right for one share. This helps the promoters to safeguard their hold in the management. Here the sufferers are small investors who will face the erosion of the intrinsic value of the share and DVR holders will get benefit. In order to safeguard the small investors, SEBI should intervene in these cases and issue directive that only in extreme cases , they should go to DVR/QIP after failing in all other avenues where small investors/minority shareholders are not affected. Investor protection forum also should take up this matter to SEBI. Though the funding will be interest free for the company and in the long run, the company will get benefit, in the initial stages,minority share holders gets the jolt. Right issue will be the alternative which will benefit the company when response is expected positively and will reduce loans of the companies. SEBI should allow DVR module only to weak companies which may not able to raise funds from banks or from rights.They can sell shares at discount and get funds. Ispat industries can be an example for this.


Cairn india:Hold/Sell: 340/-No fresh buy.
Only confusion is prevailing and there is inordinate delay on the part of ONGC/SEBI/Govt. Vedanta says that it will not increase open offer price.

free stock tips 19.10.2010

Buy Ashokleyland: Rs.73/- Target Rs.78/-
Expects good halfyearly results tomorrow.

Coal India IPO appears to be priced high as per some experts.Price may be around Rs.175 to Rs.200 taking into account all constraints in mines industry. The price band decided now is 225-245 with 5% discount to retail investors. It may go to the way NTPC has gone.The government interferance, high manpower strength, high salary outgo, inferior coal quality, Difficult recovery from EB boards and other Govt sectors for coal bills outstanding, Mafia in Bihar belt all will add woes to Coal india and its investors.Also new mining policy may say to share 26% with local people for mining companies. So it is better to avoid this issue. AFter the issue is over, there will be scramble to sell the shares as most of the retailers took loan from banks,brokerage houses for initial subscription in order to earn some profit. The share price will go down from IPO price. So exercise caution as you may be enter into loss. Think twice before subscription.
The ongoing initial public offering (IPO) of Coal India (CIL), the country’s biggest ever, is unlikely to evince much interest from its 400,000-strong workforce, despite about 10 per cent of the 631.6 million shares on offer being reserved for the employees.Disinvestment Secretary Sumit Bose refrained from expressing disappointment at the possible lackluster response from the CIL workforce. “The employee response can be determined only after the issue closes, but in certain cases, there can be problems.".This is first day reaction. Only FII has shown interest in the issue who are not aware of the real situation in coal india affairs. Pity them as in long run,they may lose some money in this issue.If they can wait for some time after issue, they can grab at cheaper rates.This is my personal opinion as I got some previous exposure in coal india internal affairs noticing nepotism, corruption etc.in large scale and sincere efficient officers are sidelined and kept in non-key positions. Some of the officers quit the job also due to this.

Sterlite indus: Hold
Supreme court has given permission to continue operation till Mid-Dec 2010 by this time, it will receive replies from state and other authorities for some questions raised. So temporary relief to sterlite.




Cement, steel,power all infra structure stocks have got good future. Software stocks, bank stocks which are already overheated may not be purchased or better to sell.Telecom sectors are also not good. Airtel can be exception due to its hold in Africa.

Buy JP Associates Rate: Rs.128 ST(shorttime target) Rs. 140
Cement price will be increased by Rs.25 per bag through out india by all cement companies.
When we recall the old news i.e. Jaiprakash Associates Limited announced sales results for the month and four months ended Aug. 2010. For the month, the company reported a 51% jump in sales at 1.085 million. The company had dispatched 719,000 tonnes cement in the same month last year. Cumulative sales of the company in April-August period of the current year stood at 620,000 tonnes, up 59% from the same period last year. So expect good results from JP associates and corner the shares now at this rate.
Also the interview with chairman, JP associate recently hints about good things to come in JP associate table. So don't lack behind to own good share which is having limited retail public holdings to the extent of 11% only ;rest is in the hands of institutions and promoters who will not sell it as JPAssociate is multi-business entity and growing company.

"Q: What about the current year? What kind of guidance can you hold out on the topline and if you could break it up between the three segments as well?
A: I can tell you that it is almost the second month of Q1 of FY11 and we all know how Indian economy has shown its resilience. With the grace of God and on our strong foundation—all the three revenue streams of the JP Ltd are on good track, there is good momentum. Our commissioned cement capacity as of March 2010 is 22 million tonne including the 2.2 million tonne capacity, which the group gets from its joint venture with SAIL, which has been commissioned ahead of schedule.
We are optimistic and we are seeing the type of production we are able to get and the type of sales we are able to realize in the market that before March 2011, we would be able to sell and produce almost 20 million tonne, up from 11 million tonne in year ending March 2010. The E&C business, on the strength of healthy order book and projects under advance implementation, is expected to contribute handsomely.
I have all the reason to believe that if all goes well for the economy, and GDP is able to sustain more than 7% rate, we are in for a very good year as far as FY11 is concerned. It’s logical that for cement, we will be able to produce 20 million tonne up from 11 million tonne—the turnover from cement itself will be more than Rs 9,000 crore and total turnover we hope to achieve in excess of Rs 16,000 crore for current financial year.
Q: If that is your guidance for FY11, Rs 16,000 crore on turnover, what kind of margin profile will you enjoy given your view on cement prices and E&C margins this year?
A: The EBITDA was almost 40% for year ended March ‘10 and we have been able to maintain healthy margin of 28-29%. I am reasonably sure that we will be able to maintain this level of margin because of the type of business we are in and the type of efficiency we are able to achieve consistently."



Buy IFCI Rs.72.60 Target Rs.75
Very soon consultant report will come. IFCI may be one of the eligible candidate for bank status.

Mahindra Satyam: Sell as suggested earlier.
Latest news is:
After sending a notice to Mahindra Satyam, market regulator US Securities and Exchange Commission (SEC) is going to penalise the IT company for the fund forgery. SEC is likely to throw penalty of up to USD 100 million on Mahindra Satyam, reports CNBC-TV18 quoting sources.


Tata steel:
Good stock Rs.647/-. short Target Rs.660/- Long term target: Rs.800/- It may move slowly up to long term target.

Buy reliance industries Rs.1045. short Target:Rs.1070

DVR(Different voting right) is an issue that is going against the minority shareholders. The promoters easily are getting the approval from AGM as they are in majority for the said issue.The DVR/QIP portion is issued at around 30% discount to PE companies. Here the purchasers will get limited voting right. Say they may be having one voting right for ten shares held vs one voting right for one share. This helps the promoters to safeguard their hold in the management. Here the sufferers are small investors who will face the erosion of the intrinsic value of the share. In order to safeguard the small investors, SEBI should intervene in this cases and issue directive that only in extreme cases , they should go to QIP after failing in all other avenues where small investors/minority shareholders are not affected. Investor protection forum also should take up this matter to SEBI.Though the funding will be interest free for the company and in the long run, the company will get benefit, in the initial stages,minority share holders gets the jolt. Right issue will be the alternative which will benefit the company. SEBI should allow this module only to weak companies which may not able to raise funds from banks or from rights.


Cairn india:Hold/Sell: 340/-No fresh buy.
Only confusion is prevailing and there is inordinate delay on the part of ONGC/SEBI/Govt. Vedanta says that it will not increase open offer price.

Free stock tips 18.10.2010

Coal India IPO appears to be priced slightly high as per some experts.Price may be around Rs.175 to Rs.200 taking into account all constraints in mines industry. The price band decided now is 225-245 with 5% discount to retail investors. It may go to the way NTPC has gone.The government interferance, high manpower strength, high salary outgo, inferior coal quality, Difficult recovery from EB boards and other Govt sectors for coal bills outstanding, Mafia in Bihar belt all will add woes to Coal india and its investors.Also new mining policy may say to share 26% with local people for mining companies. So it is better to avoid this issue. AFter the issue is over, there will be scramble to sell the shares as most of the retailers took loan from banks,brokerage houses. The share price will go down from IPO price. So exercise caution.



Cement, steel,power all infra structure stocks have got good future. Software stocks, bank stocks which are already overheated may not be purchased or better to sell.Telecom sectors are also not good. Airtel can be exception due to its hold in Africa.

Buy JP Associates Rate: Rs.128 ST(shorttime target) Rs. 140
Cement price will be increased by Rs.25 per bag through out india by all cement companies

Buy IFCI Rs.71 Target Rs.75
Very soon consultant report will come. IFCI may be one of the eligible candidate for bank status.

Mahindra Satyam: Sell as suggested earlier.
Latest news is:
After sending a notice to Mahindra Satyam, market regulator US Securities and Exchange Commission (SEC) is going to penalise the IT company for the fund forgery. SEC is likely to throw penalty of up to USD 100 million on Mahindra Satyam, reports CNBC-TV18 quoting sources.


Tata steel:
Good stock Rs.630/-. short Target Rs.660/- Long term target: Rs.800/- It may move slowly up to long term target.

Buy reliance industries Rs.1045. short Target:Rs.1070

QIP is an issue that is going against the minority shareholders. The promoters easily are getting the approval from AGM as they are in majority.The QIP portion is issued at discount to PE companies. In order to safeguard the small investors, SEBI should intervene in this cases and issue directive that only in extreme cases , they should go to QIP after failing in all other avenues where small investors/minority shareholders are not affected. Investor protection forum also should take up this matter to SEBI.


Cairn india:Hold/Sell: 340/-No fresh buy.
Only confusion is prevailing and there is inordinate delay on the part of ONGC/SEBI/Govt. Vedanta says that it will not increase open offer price.

NSE/BSE pre-market trading w.e.f. 18.10.2010

Introduction of call option in the pre-market open session:
Price discover is the difficult point in the existing trading system so far at the start of the day in stock market and buyers and sellers are not aware of what will be the fate of their buy and sell requests. So someone gets fat profit and someone get huge loss. In order to streamline this and to help the buyers and sellers about the likely price of the interested shares by matching the buy and sell shares in totality. This will give indicate price of the stock.
Market analysts feel that it is a mechanism that would help deal with volatility in early trades. The investor has an opportunity to put transactions in the terminal in the Trading window of 8 minutes where the investor can see his orders getting matched. The pre-market call auctions have been a mechanism of price discovery in many international markets like NY Stock exchange, NASDAQ, London Stock Exchange, Hong Kong.
For this, first 15 minutes are taken out from the normal trading. This procedure is coming into effect from 19.10.2010 and on 18.10.2010 it will be mock trade and will not have any effect. Now we will see how this will be worked out by exchanges:
SMCA (Secondary market Advisory committee) is the brain child behind this by following examples in the world market.
The following information will be given in the pre-open session.( from 9 am to 9.15am)
1.Indicative equilibrium price of the share.
2.The total buy and sell qty of shares
3.Indicative index
This is for both Nifty, BSE index shares only.For other stocks, normal trading will be from 9 am as usual.
This will be reviewed after 3 months.
Pre-open session starts from 9 am and ends at 9.15 am.
Out of 15 minutes, first 8 minutes are allotted for order placement, order cancellation and order modification. In the 7th or 8th minute, the order placement, modification and cancellation will be randomly closed and this is system driven. Price band of 20% will be applicable on the scripts.
Note:
The exchanges will discover an ‘Equilibrium price’ for the stocks and the ‘indicative index levels’ during these 7 minutes. While these indicative levels will continue to change through the course of the seven minutes, they will be reflective of the general direction of the market and investors can then accordingly place their bids or cancel their bids.
Limit orders and market orders are allowed in the 8 minutes pre-open session which will help to find the indicative price of the scripts. Full quantities of securities are to be given and disclosed qty in parts will not be allowed. After 8th minute, the trades will be executed at the single discovered price for every stock. The opening price for a stock will be the price at which the maximum amount of shares can be traded.
Next 4 minutes are for order matching and trade confirmation for the orders placed.
Last 3 minutes is for time for exchanges to shift from pre-market operation to regular market operation thus giving indicative price for shares in the regular market and thus enabling persons who want to place order after 9.15 am to know the price they are likely to get from their orders.
The equilibrium price shall be the price at which the maximum volume is executable. In case of more than one price meets the said criteria, the equilibrium price shall be the price at which there is minimum order imbalance quantity (unmatched qty). Further in case of more than one price has same minimum order imbalance qty, the equilibrium price will be the price closest to the previous day ending price.
price pur-qty pur-cum-qty sale-qty sale-cum-qty unmatched-qty volume traded
100 0 0 3000 8000 -8000 0
95 2000 2000 3000 5000 -3000 2000
90 3000 5000 1000 2000 3000 2000
85 1500 6500 1000 1000 5500 1000
80 2000 8500 0 0 8500 0
75 1000 9500 0 0 9500 0
The above is an example of first 8 minutes pre-market order position compiled finally. This will be done from first second onwards from 9 am when the stock market opens in order to find out price discovery.
You can notice that purchase qty is added cumulative from top to bottom whereas the sale qty is added cumulatively from top to bottom based on stock price quote by parties for the specified stock in the 8 minutes play.
Unmatched qty is arrived at being the difference between cum Pur qty and sale qty.
The volume traded is arrived at being the difference between buy qty and sell qty for the specified price.
As per the rules formed, the equilibrium price will be fixed based on large volume turnover price. In the above case, large turnover is 2000 but in two different prices. i.e. Rs.95 and Rs.90. Suppose volume tradable was 3000 under Rs.95, then that will be the equilibrium price.
In another case, if 4000 volume tradable under Rs.85 as compared to 3000 volume under 95, then equilibrium price will be Rs.85 only and not Rs.95.
In the above example, top turnover of 2000 comes under two price categories. Hence we have to look into previous closing price rate. The equilibrium price will be the closest price of previous day rate.
1. If the previous closing rate was Rs. 100, then Rs.95 will be taken as equilibrium price.
2.If the previous closing rate was Rs. 89, then Rs.90 will be taken as equilibrium price.
3.If the previous closing rate was midpoint of Rs.95 plus Rs.90, i.e. 92.50, then previous day closing rate will be taken as equilibrium price i.e. Rs.92.50.
After discovery of equilibrium price, after 8 minutes, order execution will take place in the following sequence:
1. Limit orders will be given priority over market orders. Eligible limit buy orders will be matched with eligible sell orders.
2.Residual limit orders will be matched with market orders.
3.Finally market orders are matched with market orders.
If the equilibrium price is not discovered, then entire orders will be shifted to normal order period after initial 15 minutes.
It is important to note that normal trade as per previous practice will be done after 9.15 am for equity derivatives.
It is during this time that the trades will be executed at the single discovered price for every stock. The opening price for a stock will be the price at which the maximum amount of shares can be traded.

Taken from ramadvice dot wordpress dot com for the benefit of google readers. See the said site for good finance articles.

Free stock tips 15.10.2010

Coal India IPO appears to be priced slightly high as per some experts.The price band decided is 225-245 with 5% discount to retail investors. It should not go to the way NTPC has gone.
The government interferance, high manpower strength, high salary outgo, inferior coal quality, Difficult recovery from EB boards and other Govt sectors for coal bills outstanding, Mafia in Bihar belt all will add woes to Coal india and its investors. So it is better to avoid this issue.



Cement, steel,power all infra structure stocks have got good future. Software stocks, bank stocks which are already overheated may not be purchased or better to sell.

Buy JP Associates Rate: Rs.133 ST(shorttime target) Rs. 140
Cement price will be increased by Rs.25 per bag through out india by all cement companies

Mahindra Satyam: Sell as suggested earlier.
Latest news is:
After sending a notice to Mahindra Satyam, market regulator US Securities and Exchange Commission (SEC) is going to penalise the IT company for the fund forgery. SEC is likely to throw penalty of up to USD 100 million on Mahindra Satyam, reports CNBC-TV18 quoting sources.



Tata steel:
Go slow after reaching Rs.655/-. short Target Rs.660/- Long term target: Rs.800/- It may move slowly up. Exercise caution.

Buy reliance industries Rs.1060. short Target:Rs.1070 Oil price increasing.



Avoid/sell Banks, real estate, software sectors for the time being as NIFTY
and stocks under these categories are heated up high already.


QIP is an issue that is going against the minority shareholders. The promoters easily are getting the approval from AGM as they are in majority.The QIP portion is issued at discount to PE companies. In order to safeguard the small investors, SEBI should intervene in this cases and issue directive that only in extreme cases , they should go to QIP after failing in all other avenues where small investors/minority shareholders are not affected. Investor protection forum also should take up this matter to SEBI.


Cairn india:Hold/Sell: 340/-No fresh buy.
Only confusion is prevailing and there is inordinate delay on the part of ONGC/SEBI/Govt. Vedanta says that it will not increase open offer price.

Free stock tips 14.10.2010

Tata steel:
Go slow after reaching Rs.655/-. There may be short term reaction on the opposite side due to yesterday boost. Exercise caution.

Go slow on reliance industries alsoafter reachng Rs.1080. Reason is same as above. Wait for correction now.

Buy EIH: (Rs.137/-) Target Rs.150 short term
Since take over guidelines will be issued around Oct 25th by SEBI this year, we can expect lot of activity by reliance and ITC in this stock.

Again I recommend visa steel at the present price of Rs.41. Target Rs.50 in short term. Long term : Rs.70


One of my reader who is a docter got some confusion about targets mentioned by me. I am quoting short term and long term targes which can be understood by time period mentioned now onwards. If no time period mentioned, then it is short term target , may be maximum of one month.


Metal and oil sectors appear to be good.Tata steel and reliance are yet to achieve their maximum stock quote of 52 weeks high as compared to other stocks and hence have still steam left and they are supported by good management and planned growth in future. Reliance price is depended on oil price increase/decrease on day to day basis now.

Avoid/sell Banks, real estate, software sectors for the time being as NIFTY
and stocks under these categories are heated up high already.

Go slow after reaching Rs.660/-. There may be short term reaction. Exercise caution.


Buy Tata steel:Rs.640/-Short term Target Rs.660/- Long term target: Rs.800/-(6 months to one year)



PE ratio is around 8 only. This will reduce further due to increase in steel price and reduction in raw material price. So good buy.

Another cost cutting measure taken by Tata steel for profit maximization:

Tata steel management started the exercise of checking viability of all overseas projects one by one in order to achieve optimum profitability. In this direction, Tata Steel Europe has decided to shut down Tata Steel Living Solutions, located at Shotton, North Wales which contributed only loss so far. The unit was established in 2003 and was making modular buildings for the construction industry. The move has put 180 jobs on the block.The operations at Living Solutions are said to be very small compared to Tata Steel Europe and shutting the business will not have any material effect on the company’s financial well being, on the other hand, it can look for buyers of the unit on sale and also reduction in regular pay out as salary.

Dhamra port- 50% equity by Tata steel:

BHUBANESWAR: Dhamra port will be operational soon according to Orissa transport minister Sanjib Sahoo .

Replying to a query by Congress member Bhujabal Majhi, the minister on Friday told the members that the developers had so far invested Rs 2700 crore of the estimated project cost of Rs 3239 crore and nearly 96% of the construction work was over by the end of the last month.(Aug 2010 position)

The port is being developed by Dhamra Port Company Limited, a joint venture of Tata Steel and Larsen & Toubro.

Tata Steel and Larsen & Toubro hold equal stakes in the Dhamra port project, which is being developed on a build, own, operate share and transfer (BOOST) basis.

Mr Sahoo informed that of the 384 displaced people 371 had received compensation and efforts were being made to settle dues of the others at the shortest possible time.

As regards employment generation, the minister said 2881 people were engaged in construction of the port project and the figure would increase once the port becomes operational.

“Dhamra port will be immensely beneficial to the investors in Orissa and its neigbours. It is going to be one of the major ports in the country with 13 berths. Ships having 60 million tons capacity can anchor here,” the minister said.

The construction work for the 62-km rail link from Dhamra to Bhadrak on the main Howrah-Chennai line is almost complete.

Situated between Haldia and Paradip, the port at Dhamra will be the deepest of India with a draught of 18 meters, which can accommodate super cape-size vessels up to 180,000 dead weight tons (DWT).

It is likely to be commissioned in Nov 2010. Looking into the valuation of ports like Mundra, we can guess about value addition to tata steel due to this. So it is a good buy now.





QIP is an issue that is going against the minority shareholders. The promoters easily are getting the approval from AGM as they are in majority.The QIP portion is issued at discount to PE companies. In order to safeguard the small investors, SEBI should intervene in this cases and issue directive that only in extreme cases , they should go to QIP after failing in all other avenues where small investors/minority shareholders are not affected. Investor protection forum also should take up this matter to SEBI.


Coal India IPO appears to be priced slightly high as per some experts.The price band decided is 225-245 with 5% discount to retail investors. It should not go to the way NTPC has gone.



Cairn india:Hold/Sell: 345/-No fresh buy.
Only confusion is prevailing and there is inordinate delay on the part of ONGC/SEBI/Govt. Vedanta says that it will not increase open offer price.

free stock tips 13.10.2010

Metal and oil sectors appear to be good. Banks, real estate, software sectors can be avoided for time being.
Buy Tata steel:Rs.640/- Target Rs.660/-
PE ratio is around 8 only. This will reduce further due to increase in steel price and reduction in raw material price. So good buy.

Another cost cutting measure taken by Tata steel for profit maximization:

Tata steel management started the exercise of checking viability of all overseas projects one by one in order to achieve optimum profitability. In this direction, Tata Steel Europe has decided to shut down Tata Steel Living Solutions, located at Shotton, North Wales which contributed only loss so far. The unit was established in 2003 and was making modular buildings for the construction industry. The move has put 180 jobs on the block.The operations at Living Solutions are said to be very small compared to Tata Steel Europe and shutting the business will not have any material effect on the company’s financial well being, on the other hand, it can look for buyers of the unit on sale and also reduction in regular pay out as salary.

Dhamra port- 50% equity by Tata steel:

BHUBANESWAR: Dhamra port will be operational soon according to Orissa transport minister Sanjib Sahoo .

Replying to a query by Congress member Bhujabal Majhi, the minister on Friday told the members that the developers had so far invested Rs 2700 crore of the estimated project cost of Rs 3239 crore and nearly 96% of the construction work was over by the end of the last month.(Aug 2010 position)

The port is being developed by Dhamra Port Company Limited, a joint venture of Tata Steel and Larsen & Toubro.

Tata Steel and Larsen & Toubro hold equal stakes in the Dhamra port project, which is being developed on a build, own, operate share and transfer (BOOST) basis.

Mr Sahoo informed that of the 384 displaced people 371 had received compensation and efforts were being made to settle dues of the others at the shortest possible time.

As regards employment generation, the minister said 2881 people were engaged in construction of the port project and the figure would increase once the port becomes operational.

“Dhamra port will be immensely beneficial to the investors in Orissa and its neigbours. It is going to be one of the major ports in the country with 13 berths. Ships having 60 million tons capacity can anchor here,” the minister said.

The construction work for the 62-km rail link from Dhamra to Bhadrak on the main Howrah-Chennai line is almost complete.

Situated between Haldia and Paradip, the port at Dhamra will be the deepest of India with a draught of 18 meters, which can accommodate super cape-size vessels up to 180,000 dead weight tons (DWT).

It is likely to be commissioned in Nov 2010. Looking into the valuation of ports like Mundra, we can guess about value addition to tata steel due to this. So it is a good buy now.





QIP is an issue that is going against the minority shareholders. The promoters easily are getting the approval from AGM as they are in majority.The QIP portion is issued at discount to PE companies. In order to safeguard the small investors, SEBI should intervene in this cases and issue directive that only in extreme cases , they should go to QIP after failing in all other avenues where small investors/minority shareholders are not affected. Investor protection forum also should take up this matter to SEBI.


Coal India IPO appears to be priced slightly high as per some experts.The price band decided is 225-245 with 5% discount to retail investors. It should not go to the way NTPC has gone.




Start buying cheap software stocks like TCS, Mahindra satyam
RBI is likely to intervene in currency and make it depreciate so as to benefit exporters like software firms, textiles




Cairn india:Hold/Sell: 345/-No fresh buy.
Only confusion is prevailing and there is inordinate delay on the part of ONGC/SEBI/Govt. Vedanta says that it will not increase open offer price.

Suzlon: Sell
Wind energy major Suzlon plans to raise up to Rs 5,000 crore from the secondary market and increase its borrowing limit to Rs 10,000 crore from the current Rs 7,000 crore.
A Suzlon notification to the stock exchanges today said its board had approved proposals for shareholders’ nod to increase its authorised share capital from Rs 445 crore to Rs 700 crore and to issue securities (like ADRs, GDRs, FCCBs, non-convertible debentures, convertible bonds, QIP, etc) of up to Rs 5,000 crore. The board also approved the increase of borrowing limits, other than temporary loans and working capital facilities, from Rs 7,000 crore to Rs 10,000 crore.
Suzlon may go for QIP route by offering share at discount. So better to distance from it now.
Suzlon had suspended its large-scale capital expansion plans due to sluggish conditions in the wind energy market and the global economic slowdown. Faced with liquidity problems, Suzlon also had to refinance its loans of close to Rs 10,000 crore with its creditors.
It also sold a 35 per cent stake in subsidiary Hansen Transmission for around $370 million in November last year to reduce its debts.

free stock tips 12.10.2010

QIP is an issue that is going against the minority shareholders. The promoters easily are getting the approval from AGM as they are in majority.The QIP portion is issued at discount to PE companies. In order to safeguard the small investors, SEBI should intervene in this cases and issue directive that only in extreme cases , they should go to QIP after failing in all other avenues where small investors/minority shareholders are not affected. Investor protection forum also should take up this matter to SEBI.


Buy JP associates in the present price band of Rs.132/-
Price increase and increased despatches will give good quarterly results.One more unit in Gujrat will boost its productivity and coverage of sales area due to increased infrastructure spending in india.Also It is going to invest Rs.600 crores in Maharashtra to increase cement output. So planned expansion will help this stock to gain just like ACC. So we can go in for this stock.


Start buying cheap software stocks like TCS, Mahindra satyam
RBI is likely to intervene in currency and make it depreciate so as to benefit exporters like software firms, textiles

Buy Tata steel:Rs.640/- Target Rs.660/-

Company declined about any proposal for QIP proposal and hence the gossip prevailed earlier which brought down the share proved to be false.QIP will be preferred when there is difficulty in raising the external loans but for Tata steel, there is no problem in this regard. This case may apply to Suzlon which is under financial stree.

PE ratio is around 8 only. This will reduce further due to increase in steel price and reduction in raw material price. So good buy.

Cairn india:Hold/Sell: 345/-No fresh buy.
Only confusion is prevailing and there is inordinate delay on the part of ONGC/SEBI/Govt. Vedanta says that it will not increase open offer price.

Suzlon: Sell
Wind energy major Suzlon plans to raise up to Rs 5,000 crore from the secondary market and increase its borrowing limit to Rs 10,000 crore from the current Rs 7,000 crore.
A Suzlon notification to the stock exchanges today said its board had approved proposals for shareholders’ nod to increase its authorised share capital from Rs 445 crore to Rs 700 crore and to issue securities (like ADRs, GDRs, FCCBs, non-convertible debentures, convertible bonds, QIP, etc) of up to Rs 5,000 crore. The board also approved the increase of borrowing limits, other than temporary loans and working capital facilities, from Rs 7,000 crore to Rs 10,000 crore.
Suzlon may go for QIP route by offering share at discount. So better to distance from it now.
Suzlon had suspended its large-scale capital expansion plans due to sluggish conditions in the wind energy market and the global economic slowdown. Faced with liquidity problems, Suzlon also had to refinance its loans of close to Rs 10,000 crore with its creditors.
It also sold a 35 per cent stake in subsidiary Hansen Transmission for around $370 million in November last year to reduce its debts.

Stock tips 11.10.2010

Buy JP associates in the present price band of Rs.132/-

Price increase and qty increase will give good quarterly results.One more unit in Gujrat will boost its productivity and coverage of sales area due to increased infrastructure spending in india.


Start buying cheap software stocks like TCS, Mahindra satyam
RBI is likely to intervene in currency and make it depreciate so as to benefit exporters like software firms, textiles etc.

Buy Tata steel:Rs.627/- Target Rs.650/-

Company declined about any proposal for QIP proposal and hence the gossip prevailed earlier which brought down the share proved to be false.
PE ratio is around 8 only. This will reduce further due to increase in steel price and reduction in raw material price. So good buy.

Cairn india:Hodl: 345/-
OPen offer may be increased as already pointed out by me earlier. ONGC wants to have it equal to amount payable to sesa goa so that it wants to exit with release from royalty payment in future. But vedanta is not agreeable for royalty payment. Thus still confusion prevails whether SEBI will agree for this deal where ONGC has not given green signal.

free stock tips 08/10/2010

Stocks meant for long term say more than a year


Tata Steel: Buys.630/- target Rs.700/-


Tata steel ( indian Division)- PE is only 8. Good stock to keep.It is the cheapest stock in NIFTY group.

S&P raises ratings on Tata Steel and UK arm news

07 October 2010

Standard & Poor's today said that it had revised its outlooks on India-based Tata Steel Ltd and the former Corus plc, now its UK subsidiary Tata Steel UK Ltd to stable from negative.
We revised the outlook as we believe the potential pressure on Tata Steel UK's liquidity has eased following the refinancing of a £3.67 billion bank loan. The refinancing also reduces the potential pressure on parent Tata Steel's liquidity," said Standard & Poor's credit analyst Mehul Sukkawala
Tata Steel's consolidated operating performance has improved over the past year, especially with a turnaround at Tata Steel UK. Tata Steel's consolidated EBITDA margin was about 17 per cent for the six months ended 30 June 2010, compared with negligible margins for the same period last year.

"Tata Steel's and Tata Steel UK's financial metrics have improved. We expect metrics to further improve in the fiscal year ending 31 March 2011. We, however, believe that Tata Steel's financial risk profile remains aggressive, and Tata Steel UK's highly leveraged," S&P said in a statement.

Tata Steel and Tata Steel UKhave adequate liquidity, it added. "The companies' liquidity positions have improved with the refinancing of debt at Tata Steel UK by a new bank loan and a revolver credit facility totaling £3.53 billion. The new bank loan lengthens the repayment schedule and will enable Tata Steel UK to significantly reduce its repayment obligations for the next four to five years. In addition, it carries lighter financial covenants, which Tata Steel UKcan easily meet, and shields the company from any potential downturn in the operating environment."


Business standard says:

Steel firms get back pricing power
Healthy demand, better realisations and benign input prices indicate good prospects.
The outlook for domestic steel manufacturers is improving on the back of strong demand in the country and companies hiking steel prices. Companies including JSW Steel, SAIL and Essar Steel have hiked steel prices in the range of Rs 1,000-1,500 per tonne (or 3-4 per cent) in the last one week, which analysts believe could rise further. In totality, domestic HRC (hot rolled coil) prices are up 13 per cent since July this year, at about Rs 38,700-39,200 ($880-890) per tonne. In the light of the healthy demand, better realisations and benign input prices, the prospects of steel manufacturers look good.

Tata steel: PE ratio is only 8.5(EPS 72 and price 640) for current year and for next year it is
8.
For SAIL , it is 12 and for next year 11.
For JSW steel, it is 13 and next year 11.

So steel stocks are good picks now as other index stocks PEs are more than 15 to 20.

Reliance: Buy 1040 Target Rs.1100
OIL on Boil.
oil continues to rise. Now $83.May head towards $100 soon due to global recovery of all sectors.

RIL's K-G gas play may get bigger with D4 block

At 100 tcf, partner Niko says reserves may be twice D6 block’s

The Krishna-Godavari (K-G) basin may prove to be a much bigger play for Reliance Industries Ltd (RIL). This follows the announcement that its D4 block could hold twice the reserves of the in-production D6 block to the north.
So reliance industries have got good future and with such low share price it is a pick for any long term investor.

Free stock tips 7.10.2010

Reliance: Buy 1050 Target Rs.1100
OIL on Boil.
oil continues to rise. Now $83.May head towards $100 soon due to global recovery of all sectors.

RIL's K-G gas play may get bigger with D4 block

At 100 tcf, partner Niko says reserves may be twice D6 block’s

The Krishna-Godavari (K-G) basin may prove to be a much bigger play for Reliance Industries Ltd (RIL). This follows the announcement that its D4 block could hold twice the reserves of the in-production D6 block to the north.
So reliance industries have got good future and with such low share price it is a pick for any long term investor.

Tata Steel: Buys.672/- target Rs.700/-

There will be uptrend only due to steel demand through out the world and china's inability to increase steel output will help Tata steel to capture the market. It will reach soon its previous height like other stocks and will not go down now.It will reach its peak level of Rs.800 soon



Both the above stocks are below their high levels and if anyone missed the rally can catch up with these two stocks still.


Visa steel is a silent stock which has got good energy . Price :Rs.40
Target Rs.60/- within 3 to 6 months. Low value stock. If international accounting standard report has to be done soon, then this stock will be having not less than Rs.75/- in value. So get into this stock now.Don't feel sorry later.