Jul 29, 2011

Parag Parikh speaks on NDTV Profit: Feb 2011

Parag Parikh is a person who is the real Warren Buffett of India. (Rakesh Junjhunwala is not. Yes, he himself said he is a trader. Warren Buffett does not trade. Not just that Rakesh Junjhunwala is said to be Warren Buffett of India mainly because he has amassed largest wealth by investing in stocks in India than any other individual. In our view, apart from that, he does not qualify to be said to be Warren Buffett of India. Because the Warren Buffet legacy is not only figures but principles that he follows. In our opinion Parag Parikh, whenever he talks, reflects the principles, style and attitude of a real Warren Buffet approach follower. In other words, if you disagree with Mr.Parikh, you are likely disagree with Mr.Buffett.
We request all to repeatedly watch/hear Mr.Parag Parikh and search his videos on youtube.com and hear him and digest him.

Read earlier article on Mr.Parag Parikh's book-

Jul 28, 2011

New Take Over Code and other Announcements by SEBI

Following is the excerpts of the new regulatory announcements by SEBI on Today 28th July 2011:
  • Open Offer: The open offer trigger of 15% has been increased to 25% while the mandatory requirement of open offer for remaining 26% has been set out instead of earlier 20%. It is notable that the take over committee formed under C Achuthan has proposed 100% open offer size. While the trigger level is in line with that of panel's proposal.
  • The provision of non-compete fee has been completely scrapped. And all shareholders will be given exit opportunity at same price.
  • The mutual fund companies can charge Rs.100 to existing investor on every new investment, while it can charge Rs.150 to a completely new mutual fund investor. This charge will be applicable for investment over Rs.10,000 only.
  • According to changes in mutual fund advertising code, from now on mutual funds will not write CAGR return in advertisements, rather will write that how much a particular sum of rupees invested in so and so scheme turned out to be so and so rupees in so and so years.

Jul 7, 2011

Declined participation of Retail Investors in Indian stock markets

           The share of retail investors in the market cap of 2486 actively traded stocks on BSE has declined to a 5-year low. This figure was around 19% in March-2006, which is now 15.86% in March 2011.
Not surprisingly, this share started falling after the Indian Stock market crash of 2008. Which even surprisingly not increased during and after the two year rise of Indian Stocks Markets, when Sensex risen to 21000 levels from 8000 level lows. This is surprising as generally retail investors un-missing fully ride the when it is rising.
            Vetting this fact, according to a report the cash segment turn over on BSE and NSE has also declined to more than 2 year low.
           On the mutual fund side, the number of folios (investor accounts) has gone down to 3 crore 80 lacs in March 2011, from above 4 crore in March 2009. However, the sorry situation with mutual fund investment scenario has been blamed (rightly) by the industry to SEBI’s rules which cut hard on entry and exit loads, invariably reducing the distributors/agents interest in recommending and selling mf product/schemes. In our view, this is good for small investors. But isn’t it at the risk of retail investors only? In our view, if the Sebi and government seriously want to increase the participation of retail investors and that too through mutual fund route, then it must reinstate the entry and exit load which will in turn give mutual fund companies to offer their agents more incentive to sell mutual fund schemes. Perhaps the govt

Jul 5, 2011

Indian Sugar Sector de-control developments

After almost 1 year Since July 2010, yesterday, Agriculture Minister Sharad Pawar Said that the Central Governmet is expected to hold a meeting in next 10 days to discuss a meeting regarding decontrolling Sugar Sector from the country.
If partial or full decontrol happens it will be interesting to see what impact it could make on the efficiency and profitability of the Sugar mills, as the govt has criticized that some mill owners has so long tried to keep the prices ‘controlled’ by the govt, while most big industrial in this houses have had expressed that govt is doing ill to sector by not decontrolling the sector.
It is notable that as Sugar is one of the basic and most essential commodities so far that the central govt has to keep the prices administered rather that determined by market forces. However the 2nd phase of liberalization as we like to call it, started with getting rid of ‘administered’ prices in

Jul 4, 2011


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Jul 3, 2011

Finance Ministry for 100% FDI in Proprietary Trading in India

Despite conflicting views with RBI, the Finance Ministry has decided to go with his wits and allow 100% FDI in proprietary trading industry of capital market.
Proprietary trading is trading in stocks, derivatives, commodities and such other financial instruments on a company’s own account with own funds. Such firm doesn’t use his clients’ or other money. This trading activity is obviously aimed at making profit out of such trading on own money of the firm.
Presently banks do proprietary trading through saperate subsidiary company, and they have a cap on such exposure as well. While a big number of foreign banks' profits contain huge share of contribution from such proprietary trading; as sources from big two accounting firms tell us.
The main reasons for RBI’s  dislike towards foreign firms’ proprietary trading are,
  • The 2007-2008 USA financial crisis had many firms doing heavy proprietary trading, which were then went under and all over.
  •  The overly rise in