We provide funds to the government in the form of taxes and government in turn provides financial support to the companies being under stringent influence of unwanted activities in the market.What is the use of provide monetary support to the companies from citizen's money and in tern protecting jobs and comman man interest.It seems like during the end of the government period this is a political turn being given to thuis aspect.This is like protecting government interests in the form of protecting the unwanted the fallout of aa company involving many people.Satyam offered as a mjor outsourcing company during the past few years and during the period of UPA government this is the only sector being given the most important source of funds in order in order to raise outsourcing business in India.
Now a fallout can deepen the current aspect of a dramatic global downturn to more fierce unwanted unemployment for plenty of citizens relying on this s3ector for bread and butter.This can be a political turn in order to artificially settle the situation.
Monday, January 12, 2009
Sunday, January 11, 2009
Is the current scam of Satyam computers symbolic of SEBI's laxity in terms of rules governing capital markets scenario in India?
Satyam computers have definitely laid a very impression of insecurity in state of foreign investors mindset.Apart from insecured aspect the auditing of this company was undertaken by some foreign company.Adding the aspect of foreing company involvement in this auditing scam lightens the argument againt the meak policies being undertaken by the SEBI.The situation was the outside the legal framework of our country.Are the global exposures forming our regulatory systems more vulnerable?Are these global money inflows making things more worse?
Even because of our stringent policies towards every sector,the escape by any company in terms of a scam was like a slap on our face.
Are these issues of insecurity among our country people over the flows of money forming a cloud of unhealthy pratices?
The future midcaps and small caps position can be the most hurt by these vulnerability faed shareholders of satyam.We are still not able to form a framework governing our country's rigidity in terms of progress without any fallouts.
This is the high time where the political and global issues need to be intergrated well with our citizens perspective.If this cant be the possibility then we can face another downstream may be in some sectors or politcally.
Even because of our stringent policies towards every sector,the escape by any company in terms of a scam was like a slap on our face.
Are these issues of insecurity among our country people over the flows of money forming a cloud of unhealthy pratices?
The future midcaps and small caps position can be the most hurt by these vulnerability faed shareholders of satyam.We are still not able to form a framework governing our country's rigidity in terms of progress without any fallouts.
This is the high time where the political and global issues need to be intergrated well with our citizens perspective.If this cant be the possibility then we can face another downstream may be in some sectors or politcally.
Thursday, January 1, 2009
The global economic downturn has now taken geo-political impact.The political upsurgency brought about in south east asian countries due to security tensions are creating more hazardous impact on the economically depressed economies.Diplomatic war of words have urged an unwanted situation for a war.In order to protect our economic position ,we require a strong motivation to improve all our basics well.But due to certain global political factors we are forgetting our main goal of economic sustainability.The sub prime crisis resulting in certain downsizing of other economic conditions have made our exchanges more vulnurable . Th e confidence among investors is already so low.With more political tensions intruding into the figure can make things even more unwanted.So the dire need of the hour is to settle all political and start working for our economy as a whole.From this we shouldn't ignore the security concerns for our country people rather we should form form a collective policy which should govern the rights and benefits for our people.
Friday, December 5, 2008
what does P/E ratio tells us about the stock?
Is it significant enough?
P/E leading ration defines price of a stock with respect to its expected earnings.So high P/E ratio is always a very good indicator for a buy position of the stock.
But signifance level of the P/E ratio can always be doubted but we can always mix number of stratergies to derive at final estimations different from other similar traders ruling this world of trading.Its a theoritical concept whose application can be doubted .
I m just explaining the concepts of some crucial terms that works in financial markets.
THERE IS STRICTLY NO INDICATION TO FOLLOW THESE ACTIVITIES.NO RESPONSIBILITIES AGAINST ANYONE.Everthing is theoritical concepts based on some practical facts in lay man language.
Is it significant enough?
P/E leading ration defines price of a stock with respect to its expected earnings.So high P/E ratio is always a very good indicator for a buy position of the stock.
But signifance level of the P/E ratio can always be doubted but we can always mix number of stratergies to derive at final estimations different from other similar traders ruling this world of trading.Its a theoritical concept whose application can be doubted .
I m just explaining the concepts of some crucial terms that works in financial markets.
THERE IS STRICTLY NO INDICATION TO FOLLOW THESE ACTIVITIES.NO RESPONSIBILITIES AGAINST ANYONE.Everthing is theoritical concepts based on some practical facts in lay man language.
Are options traded inthe market offer as a free lunch to the customers??
Because we dont have to pay for the losses for the stock and if this situation arises we just incurr a loss of our premium, and when we earn capital gains we are eligible for the profits derived fro the deal.
CERTAINLY NOT because call option pricing is based on the volatility ,exercise price,returns on stock ,underlying assets,strike price.So after taking every factor into pricing stock options takes away all the free lunches and even if any arbitrage oppurtunity available those are taken up by the market scavengers(techincal analysts.)
Options can be very useful for hedging one's position unwanted fall in underlying assest prices.
Is there a way to predict exchange market returns in future?(conceptual idea)
Our stocks are always correlated to our main market index .But how much effect of stock market index can be applied to the stocks is the main query.If this information is available then it will be free lunch for everyone living in this world and will never face money crisis because of so many free lunches available in this world.But this is not the case .In a market if everyone knows a particular model then it is useless to work on that model because oppurtunities must already be exhausted and no more money could be earned(rather lost).
So a simple model can explain returns on market index by a stock that is forming relationship btw stock and the index.like if an index move by a 1 unit our stock moves by 0.5 unit.this is the degree of responisiveness of our stock whereas if market goes up our stock goes up as well.
so in turn we formed a relationship which is with the flow of market index and ouur stocks move by 50% in value.(assumption).
Now we know that if stock selling at some particular index then we can make out the price of our stocks.But the main point here is to identify the bullish or bearish state of markets .If we dont know that then its not possible to make profits anyways.
So still our positioned is hedged (safe)only half way . now with the help of some technical analysis explained below we can make out bullish and bearish phase. and hence to some extent our investments are more secured.
There are lots of models for regressing the index variables with stock variables like CAPM,APT,FAMA FRENCH,ETC.
now regressing some part of market returns and calculating the risk assoiated to that factor invstments we can make out some proportions of our future earnings on our investments.
Our stocks are always correlated to our main market index .But how much effect of stock market index can be applied to the stocks is the main query.If this information is available then it will be free lunch for everyone living in this world and will never face money crisis because of so many free lunches available in this world.But this is not the case .In a market if everyone knows a particular model then it is useless to work on that model because oppurtunities must already be exhausted and no more money could be earned(rather lost).
So a simple model can explain returns on market index by a stock that is forming relationship btw stock and the index.like if an index move by a 1 unit our stock moves by 0.5 unit.this is the degree of responisiveness of our stock whereas if market goes up our stock goes up as well.
so in turn we formed a relationship which is with the flow of market index and ouur stocks move by 50% in value.(assumption).
Now we know that if stock selling at some particular index then we can make out the price of our stocks.But the main point here is to identify the bullish or bearish state of markets .If we dont know that then its not possible to make profits anyways.
So still our positioned is hedged (safe)only half way . now with the help of some technical analysis explained below we can make out bullish and bearish phase. and hence to some extent our investments are more secured.
There are lots of models for regressing the index variables with stock variables like CAPM,APT,FAMA FRENCH,ETC.
now regressing some part of market returns and calculating the risk assoiated to that factor invstments we can make out some proportions of our future earnings on our investments.
Sunday, November 23, 2008
how are trading techniques defined in financial markets?
There are two aspects of trading techniques being followed at the financial market index namely technical and fundamental trading.
Technical trading techniques derive profits on the basis of historical data of price movement of stocks and commodities whereas fundamental aspect focuses more on the forecast of the future earning capabilties of the market.
How do technical analyst derive their outcomes?
Technical analyst are sometimes referred to as Chartist because their main function is to look at charts and graphs of the historical trend in price movements and make an inference about the price movements in the future.So on the basis of their analysis they derive on a particular set of outcomes.
Basics of technical trading techniques-:
Their are two key terms used in the technical trading defined as support and resistance.
Normally resistance and support are defined as the price above which price cannot go and below which price cannot fall respecively.These are basically market psychology terms . For example:if we buy a share say at price $100 and and the market falls to price to $95 then basic human stratergy is to pray for the price to come at $100 and get out of this bad deal forever.Similarly this indivual view can be generalized to a group of people trading in the market.So as soon as the price of stock again approaches $100 people start selling in huge amounts and hence price starts falling again and declares a bearish phase of the market.Same can be generalised for the support case where the market declares a bullish phase.So basically on the basis of market psychological factor these support and resistance levels are formed.The graph shown defines the bullish and the bearish stage respectively with time to time changing support and resistance levels.
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