Investment Valuation in India

India is in a rising interest rate environment. We have already seen the RBI raising interest rates five times since March 2010. Last week, in its policy review, the central bank left rates unchanged, merely reducing the SLR to 24% from 25%. However, this is certainly not the end of the story. With the inflation showing no signs of easing in the medium term, raising interest rates is one of the most important tools in the hands of the government/central bank. Rising interest rates are generally not taken well by the investors at large. Firstly because it directly hurts the pockets of the individuals. The interest rates are increased to suck money out of the system and to curb the inflation. As rates increase, banks pass on the increase in rates to its customers and consequently home loans become more expensive. People having loans have less disposable income as their monthly payments increase. Let's see how this impacts the businesses. Companies need funds to operate and ...

Nothing is going good for the economy (whether India or the world). The markets are down and no one knows where it is heading. But there is one common view. The markets have bottomed out and there is little downside from here. However, no one knows when is it going to revive. The levels of 21000 seems fantasy at this point. Analysts are jobless and are considered a liability to the erstwhile employers who used to flaunt a research division not more than 4 months ago. But it is said that if there is anything that comes for free in India, it is advise. So here I am, giving free advise. I know I wont be paid foir it anyways ;-) Seven ways to tackle the bear run Stick to stocks of large companies Look for debt free companies Search for businesses that are insulated (well, relatively) from the slowdown Look for companies that largely depend on domestic revenues Search for value stocks (generally cash-rich companies) Have an investment horizon for at least 2-3 years In case of mid-cap stocks...

Economic Analysis No person can work and live in isolation. External forces are constantly influencing an individual's actions and affecting him. Similarly, no industry or company can exist in isolation. It may have splendid managers and a tremendous product. However, its sales and its costs are affected by factors, some of which are beyond its control - the world economy, price inflation, taxes and a host of others. It is important, therefore, to have an appreciation of the politicoeconomic factors that affect an industry and a company. A stable political environment is necessary for steady, balanced growth. It is imperative for investment managers and analysts to carry out an industry analysis from time to time in order to be aware of the polito-economic environment and their effects on the investments. Let us analyse a few important factors in Economis Analysis or rather an Industrt Analysis. Foreign Exchange Reserves A country needs foreign exchange reserves to meet its commitm...