Sensex ends up 300pts, Reliance gains 4%

Updated at 1550 hrs: The Sensex opened with a huge negative gap of 292 points at 14,064, and dropped to a low of 14,033. The Sensex zoomed to 14,682 in closing deals - an intra-day swing of 649 points. The Sensex finally closed with a gain of 301 points (2.10%) at 14,657.

All the sectoral indices, except Auto and FMCG, closed with gains. Market breadth was bullish - out of over 2,730 scrips traded, over 1,545 logged gains.

SBI gained over 6% at Rs 1,500. Reliance moved up over 4% to Rs 2,300. HDFC added 5.5% at Rs 2,402. Infosys was up over 3% at Rs 1,640.

Jaiprakash, Reliance Infra, BHEL, Wipro, Tata Steel and NTPC also finished with gains.

RCom dropped nearly 13% to Rs 437. Tata Power declined nearly 4% to Rs 1,116. Maruti, HUL, ACC and Tata Motors also declined.

RCom was the most active counter with a turnover of Rs 631 crore followed by RNRL (Rs 375 crore), Reliance Capital (Rs 348 crore), Reliance (Rs 297 crore) and L&T (Rs 187 crore).

Nifty ends above 4400; Power, CG, O&G, banks stks zoom

It was a strong session for markets on the back of huge buying in capital goods, power, oil & gas, banking, metal, realty and technology stocks. Nifty clawed back above 4400 and Sensex above 14500 levels in today's trade. Markets opened weak in morning trade due to negative global cues and disappointing results from major telcom and realty players but strong buying in heavyweights shrugged off both those negative news in second half of session and both indices regained that entire loss.

The Sensex closed with a gain of 300.94 points or 2.10% at 14,656.69. It touched an intraday high of 14,682.33 and low of 14,032.87, swung more than 600 points in a day. Nifty closed at 4413.55, up 80.6 points or 1.86%, which hit a high/low of 4422.95 and 4235.70, respectively.

Amongst frontliners, Jaiprakash Associates rose 8.67%, PNB 7.07%, Suzlon Energy 7.04%, SBI 6.05%, HDFC 5.51%, Siemens 5.02%, Reliance Infra 4.71% and BHEL 4.61%. However, Reliance Comm lost 12.65%, Tata Power -3.76%, Maruti Suzuki -2.50%, Tata Motors -2.04%, HUL -1.90% and ACC -1.33%.

On the weekly basis, Sensex gained 2.8% and Nifty up 2.5%. BSE Metal Index shot up by 6.2% followed by Oil & Gas Index with 5.8% and IT up 5%. Amongst heavyweights, Suzlon rose 13%, Tata Power 10%, HDFC 8.5% while Reliance Communication lost 13%.

Reliance Communication fell over 13% on the back of disappointing quarterly results. Macquarie in their report says among the worst quarterly results have seen in the Indian telecom sector. They downgraded Reliance Comm to neutral with target price of Rs 475, reports CNBC-TV18.

Capital Goods Index outperformed other indices, jumped by 3.84% or 448.20 points at 12,132. Kalpataru Power, Crompton Greaves, Siemens, Punj Lloyd, BHEL and ABB have gained 4-6.4%.

Power stocks charged up fully. Suzlon Energy, GMR Infra, Reliance Infra, NTPC, Power Grid Corp and Reliance Power shot up 2.75%-7%. Power Index rose 87.48 points or 3.4% at 2,661.75.

Oil & Gas Inded ended with a gain of 317.39 points or 3.26% at 10,046.87. Oil stocks like Essar Oil, Reliance Ind, RNRL, IOC, GAIL, Reliance Petro, BPCL and HPCL surged 2-6%.

Bankex jumped up by due to buying in Bank of Baroda, PNB, Canara Bank, Federal Bank, Bank of India, SBI and Kotak Mahindra, which rose 6-8%. Bankex shot up by 212.24 points or 3.26% at 6,728.65.

IT Index moved up 110.49 points or 2.99% at 3,800.06. Technology stocks like Rolta, Wipro, Mphasis, I-Flex Solution, Infosys, HCL Tech and Satyam shot up 2.85-4%.

Metal stocks also ended in green, which includes JSW Steel, Jindal Saw, Ispat Industries, Tata Steel, Sesa Goa, Welspun Guj, SAIL and Jindal Steel. Index gained 337.70 points or 2.62% at 13,250.31.

Realty Index was up 120.19 points or 2.37% at 5,199.20, as buying is seen in Omaxe, Parsvnath, Anant Raj Ind, Peninsula Land, Unitech and DLF, which gained 2-5%.

Pharma stocks like Opto Circuits, Pfizer, Dr Reddys Labs, Sun Pharma, Aurobindo Pharma and Ranbaxy Labs were up. Healthcare Index rose 0.69% at 4,190.84.

UCO Bank Q1 net profit up at Rs 133.4 cr

UCO Bank has announced its first quarter results. The company's Q1 standalone net profit was up at Rs 133.4 crore versus Rs 132.9 crore.

Its standalone NII was down at Rs 408.4 crore versus Rs 415.7 crore.

Shipping Corp Q1 net profit up at Rs 279.6 cr

Shipping Corporation of India has announced its first quarter results. The company's Q1 standalone net sales were at Rs 1,061.9 crore versus Rs 885.9 crore.

Its standalone net profit was up at Rs 279.6 crore versus Rs 206.1 crore.

Indian ADRs: MTNL gains 6.9%, Dr Reddy's Lab up 1.8%

US markets pull off modest gains on better than expected economic reports and crude cools further to 123 dollars. Better than expected reports of durables, new home sales and consumer sentiment eased concerns of economic slowdown.

The Dow closed up 21 points at 11,370 while the Nasdaq ended 30 points up at 2,310. S&P 500 ended higher by 5.22 points at 1257.76.

For the third consecutive week, crude falling 1.8% to 123.30 dollars per barrel.

EQUITY

Stock Market Fundamentals

What are the basics of financial instruments?
Let us understand the two fundamental types of investments, namely bonds and stocks with an example. Eg. Imagine you want to start your own grocery store. You will need a capital amount to get started. You acquire the requisite funds from a friend and write down a receipt of this loan ' I owe you Rs 1, 00,000 and will repay you the principal loan amount plus 5% interest'. Your friend has just bought a bond (IOU) by lending money to your company.

Thus a bond is a means of investing money by lending money to others. When you invest in bonds, the bond you buy will show the amount of money being borrowed (face value), the interest rate (coupon rate or yield) that the borrower has to pay, the interest payments (coupon payments), and the deadline for paying the money back (maturity dates).

There are several Pro's and Con's to investing in bonds
Pro's
Ø Bonds give higher interest rates compared to short-term investments.
Ø Bonds are less risky when compared to stocks.

Con's
Ø Selling bonds before they're due, may result in a loss, known as a discount.
Ø If the issuer of the bond declares bankruptcy, you may lose your money. Hence you must critically evaluate the credibility of the issuer of the bond, ensuring that he has the capability to repay the bond amount.

Now, let us continue with the same example. To accrue more capital for your new grocery store, you sell half your company to your brother for Rs 50,000. You put this transaction in writing 'my new company will issue 100 shares of stock. My brother will buy 50 shares for Rs 50,000.' Thus, your brother has just bought 50% of the shares of stock of your company.

Thus, to explain stocks:
Stocks, also known as Equities, are shares in a company. It is the certificate of ownership of a corporation. In simple terms, when you invest in a company's stock or buy its shares, you own part of a company. Thus, as a stockholder, you share a portion of the profit the company may make, as well as a portion of the loss a company may take. As the company keeps doing better, your stocks will increase in value and yield higher dividends.
Dividend: A sum of money, determined by a company's directors, paid to shareholders of a corporation out of its earnings.

How to Identify the Best Stocks to Invest In

Everyone, who are investing in stocks; are crazy about how to indentify the best stocks to invest in? They are trying every trick to ensure greater profit and reduce the loss. But even then there are people who are getting bankrupt and there are some who are making fortunes at the stock exchange. Why is that? There is no magic in this and stock investment is not about luck. To identify the best stocks to invest, you need to have information and you also need to know how to analyze that information and of course how to use them. Only then you can make profitable investments at the stock market. Here we have discussed a few factors that are instrumental in judging the potential of the company and its stock.

Sales Revenue - Sales revenue is a crucial parameter to judge the financial health of a company. Sales revenue is the amount of money that a company makes in a financial year. Sales revenue also includes some portion of the cost and loss as well.

Earnings - Earnings of the company or the net income of the company shows if the business is making profit or loss. It shows the present financial condition of the company as well as helps to predict the future of the company as well. If a company is posting profit year after year, it is quite obvious that the company has a good future ahead.

Debt - Debt is the financial liability to any company. If a company is running with debt, then major share of its earnings will go to pay up the debts and obviously, the net profit will decrease. So it is always better to invest in stocks that have lower debt level.

Liquidity - Liquidity of a company reveals the cash holding position of the company. It is quite natural that a company with better liquidity is more likely to expand its business and grow in the near future. So it is important to look at the liquidity of the company as well.

Valuation: Valuation is the worth of the company. Most widely used and easiest way to find out about the valuation is the P/E Ratio. According to the experts, it is always better to invest in stocks that have a P/E ratio between 5 and 50.

These are just some of the points that you need to consider for choosing the best stocks to invest in. There are so many other factors that also need to be considered for better stock picks, such as the overall market trend, direction of the market, the prevailing trend in the sector in which you are likely to invest and so on.

Looking at Online Stock Trading

While trading online stocks you always must consider the risks involved with trading stocks. If your a beginner you will need to get a feel for using the internet and trading your stocks. You need to learn to walk before you can run, the simplest way I learned to trade stocks was to read about it and do some simulated stock games found around the internet.

Never use money you are not willing to risk, when you finally feel comfortable with online trading you will have to keep this in mind. You must realize the value of waiting it out, if a stock is going down should you pull yourself out of it? Not necessarily, sometimes you will need to wait out the storm to reach a calm safe zone. Play around with stocks a bit, learn if it's for you or not. If you are the type of person who cannot risk money to make money, maybe you might have better luck investing your money somewhere that is safer.

There is much money to be made online trading stocks, millionaires and billionaires have been made and struck down in a single breath from the stock market. Even when you feel everything is going well it could all of a sudden backfire and you could be left out in the cold. I personally invest in many different stocks, I am the kind of person who doesn't put all the eggs in one basket. I have learned from experience that doing this will leave a cold feeling in your heart towards trading stocks. So I went out and learned, sure I lost a few dollars here and there but I have been coming out of it for sometime now. I waited out the storms and stood my ground. I now make a pretty penny with online trading, but I had to find a comfortable spot to trade in.

If your new, like I once was your going to find many ups and downs. This is your learning period. Take in as much as you can while your in this learning mode. Don't go crazy and think your going to make millions if you only invest in this "one stock" forget the hype and play it safe until you find a comfortable place to hang your hat.

What Stock Should I Buy

Often, one of the first questions an investor asks is "What stock should I buy?" This question can involve a great deal of time and analysis. In many cases, the average investor will want to find out what the company does; review its financial statements; see if it pays a dividend, as well as how long that dividend has been paid and whether or not it will continue to be paid; discover whether the company's earnings are rising or falling; analyze its products; and so on. In other words, the investor does a great deal of fundamental research to find out if that stock is the one to purchase.

This analysis answers the question of what to buy. However, it says nothing of when to buy. The best stocks have periods when they perform worse than the market, just as the weakest stocks have times when they perform better than the market. If no one is going to buy the so-called best stocks, then they are not going to rise. On the other hand, if a large number of investors buy a fundamentally weak stock, then it is headed higher.

At DWA we use point and figure charts to determine when to buy stocks. By charting stocks with this method, we see the movement that determines whether supply or demand is in control of the stock. If it is supply, then the probability is high for that stock to decline. The odds favor a rise in the price if demand is winning the battle. You will also want to keep in mind that there are no dis-interested investors. Back in the 1920s, there was no Securities and Exchange Commission to regulate companies and when and what they reported. Rumors were rampant, and it was not surprising to see wealthy and knowledgeable investors pool their money to trade. These pools gave them a huge advantage over the individual investors.

Today the Internet creates stock movement. There are chat rooms everywhere and practically anyone can offer ideas. Remember that the person who is wildly promoting or recommending a particular stock more than likely already owns it. You will also want to keep in mind that the investor who is badmouthing a stock has probably just sold that stock or has sold it short, hoping to buy it back at a lower price.

In this environment, you need something that will help you sort through the morass of opinions out there to determine whether demand or supply is in control. We recommend using technical analysis, preferably the point and figure methodology. Let the fundamental analyst help determine what you buy. But let the technical analyst determine when you buy that particular stock. When the market is topping, typically the news stories are all good, and that is not when you want to buy.