INTELLECTUAL TRADING

Banking sector has been an investor's favorite over the years and rightly so. Due to India's huge population base, credit off-take has been surging over the past decade. Deposit growth has increased due to rise in disposable incomes over the years. The Indian Banking system consists of 26 public sector banks, 25 private sector banks, 43 foreign banks, 56 regional banks, 1,589 urban co-operative banks and 93,550 rural co-operative banks. With such stiff competition, it becomes difficult for an investor to separate high quality banks from the rest. What are the factors does he need to look at while assessing banks? We go through some of the most critical parameters while evaluating a Banking stock: Net Interest Margin (NIM):  The main business for a bank is lending to customers and accepting deposits from customers. A bank charges interest for lending money and pay out an Interest to the customer to keep its deposits in the bank. This difference between the interest it ea

The company's board approved share buyback at a price not exceeding Rs 90 per share in November 2016. This was after the company's market price fell sharply from Rs 96 in October to Rs 60 in November. The company bought back 34.05 million equity shares for Rs 272 crore. The promoters' stake in the company increased to 50.92% from 47.50% earlier. The company closed the share buyback offer on 10 April 2017. The stock started to rally after the buyback closed. On 12 April, the stock closed with gains of 8% at 98.65. Open Interest on 12 April was 2.53 crore shares in the futures segment. The stock came out of the F&O ban period on 13 April as the total open interest (futures and options) dropped below the market-wide position limit on 12 April. Market-wide position limit (MWPL) is expressed in number of shares. It is the lowest of the two -  a. 30 times average daily turnover or  b. 20% of the free float equity.  The exchange publishes MWPL for each stock ever

As many as 53 companies split their shares in the past one year. Do you know why? Simple. Markets were on a bull run. And that's the best time for companies to lure retail investors to their shares. Companies experiment with various gimmicks when markets are strong and rising. All sins are forgiven when stocks are going up. The objective of a stock split is to create liquidity, marketability, and make the shares appear 'cheap' to the retail investor. Splitting during a bull market makes it easy to achieve this objective. So, of the 53 companies that split their shares in past one year, only ten generated negative returns. Forty-three are up. But this is only for the current year. And the past one year was extraordinary for the markets. But does historical data suggest the same? So to get a truer picture, we dig deeper into the data... We calculated the one-month and six-month returns after 280 companies (with a market capitalisation of Rs 500 crore and above) sp

That's the question most investors need to ask themselves. The  price-to-earnings (PE) ratio  has become one of the most commonly used tools in finance. It's the simplest valuation metric to gauge how expensive or cheap a stock is. The general idea is that stocks with low PEs are better than stocks with a high PEs. But therein lies the trouble... The PE ratio is not necessarily always the truth and other  valuation metrics  could be more useful in different scenarios. Allow us to explain... PEs in Different Industries For companies operating in  cyclical industries  - where earnings peak and then fall and then scale another peak - PEs will always look most attractive during economic boom. This is a trap. Investors must consider the PE for the entire cycle rather than just one year's earnings. On the other hand, companies operating in growth industries command better valuations than their cyclical counterparts. That's why it's important to always

If you wondered if the current market has become overheated, here is a series of parameters that will help you make sense of the market. some important parameters  which will help you get an idea of market valuations.  We have used the S&P BSE Sensex as the market  indicator. The aggregate picture suggests that while the  market has gone up significantly, it is still away from its  historical highs across various parameters.  Does it mean that you rush and buy stocks? No.  Combine these indicators with thorough research on  companies before you take the buy call ARE WE IN A BUBBLE ZONE?  The current situation does not tick off most of the indicators  mentioned above, so we can safely say we’re not  there just yet. Let’s look at it in terms of valuations:  In June 2000, the Sensex P/E was close to 30x. In  December 2007, it was close to 27x. Those were market  peaks. Today it trades at 23x (as of March 16, 2017), so  we are not yet in the bubble