Stock Shastra

The Supreme Court has cancelled 122 telecom licenses granted to telecom companies after 2008 under A. Raja’s tenure. These licenses were issued during an irregular sale of spectrum using ‘First-Come-First-Served’ basis. As directed by Supreme Court, the verdict will be implemented after four months from now. During this time the government will have to decide new norms to re-issue licenses to interested players. Due to these cancellations, a total of 55 Mhz of 2G spectrum (4.4 Mhz per circle) has been freed.

So, what is the impact of this on the different parties involved?

The volatility in steel prices is well known. And this volatility leads to highly volatile margins of steel companies. However, Tata Steel has a distinctive edge in this respect. The captive sourcing of its raw material protects it from this volatility and this coupled with its high efficiency has helped it enjoy higher margins.

However, the high debt due to the Corus acquisition, high dependence on European operations and fluctuating macro-economic factors are reasons of high concerns for the company. Considering this, should you invest in this company?

As Finance Minister Pranab Mukherjee is all set to present his second full budget on February 26, there are some key concerns like rising fiscal deficit and withdrawal of stimulus measures, lingering in every investors mind. Here I have tried to analyse these concerns by looking at possible scenarios.
The stimulus packages have worked and as a result economy has again started registering positive growth. But the bad news is that, the government is under pressure to begin fiscal consolidation as India’s fiscal deficit has reached dangerous proportions on the back of the stimulus measures and due to rising government expenditure. The Prime Ministers Economic Advisory Council (PMEAC) has already warned the Govt that it can’t continue with unsustainable fiscal deficits recorded in the last two years and will have to start fiscal consolidation in the coming fiscal year (2010-11) to ensure fiscal sustainability, contain interest payments, to avoid upward pressure [...]

An important feature of the development of stock market in India in the last 15 years has been the growing participation of Institutional Investors. Institutional investors comprise both foreign institutional investors and the domestic institutions like (mutual funds, insurance companies etc). In India, these institutional investors manage large amount of funds which constitutes a significant share of the entire market capitalization. The role of these investors especially FIIs (also known as foreign portfolio investors) in Indian stock market has been a matter of debate. FII investments seem to have influenced the Indian stock market to a considerable extent. Looking at the direction of the funds flow from these investors, we can explain the market movement.
Why are FIIs important?
Attracting foreign capital appears to be the main reason for opening up of the stock markets for FIIs. In order to attract portfolio investments, it has been advocated to develop stock markets. The [...]

Investors look at several parameters like EPS, earning growth rate, ROIC, Debt-to-profit, P-E ratios and many more of a company to find a good buy. These parameters are no doubt will get us to the best companies available at a point of time. But there are some other important parameters which can enhance our return when looked properly. Stock’s Beta is one such parameter, which is easy to calculate and easy to apply while selecting stocks.
Volatility and Risk:
When we analyse stock prices, we can notice two types of volatility. The first type can be attributed to the company-related factors such as delay in projects, concern about growth potential, competition from within and outside the country, Industry structure and changes in the management and financing patterns. Risks generated due to these factors are usually industry-specific and called ‘unsystematic risk’. According to Portfolio theory the overall unsystematic risk can be reduced by [...]