SEBI's fund to protect investors is operational now

SEBI's fund to protect investors is operational now.

After the delay of almost two years, market regulator SEBI has operationalised the fund to protect and spread awareness among investors, including giving help to investor associations in legal matters against listed entities.

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"There shall be a fund to be called the Investor Protection and Education Fund," regulations notified in official gazette stated here.

The fund has been set up with retrospective effect from July 23, 2007. SEBI had, by way of an executive order, created the fund on July 23, 2007 by crediting an initial corpus of Rs 10 crore out of the SEBI General Fund.

"The fund shall be utilised for the purpose of protection of investors and promotion of investor education and awareness," SEBI regulations said.

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According to the regulations, the fund can be used for aiding investor associations recognised by the SEBI to undertake legal proceedings in the interest of investors in securities, which are listed or proposed to be listed.

However, such an aid must not exceed 75 per cent of total expenditure on legal proceedings. Also such aid must not be considered for more than one legal proceeding in a particular matter.

Rules for making your investment profitable in BSE | NSE

Indian stocks markets (BSE and NSE) are known through out the world for their enormous volatility and still no one can predict where the market will go in a week's time , However these rules(50 in number) are compiled by me after following the market for last 4 years, if followed correctly the investment can become very profitable both for NSE and BSE.

50 rules which a market beginners must follow in order to make their investment profitable are as follows : 

1. An attempt at making a quick buck usually leads to losing much of that buck.

2. If stocks in general don’t seem cheap, stand aside.

3. Buy and hold doesn’t always work.

4. Never throw good money after bad investments (don’t buy more of a loser).

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5. Cut your losers, and let your winners ride.

6. If the investment sounds too good to be true, it is.

7. Don’t fight “the tape” (the trend).

8. Don’t fight the Fed (interest rates).

9. Most stocks that fall under $5 rarely see $10 again.

10. The best hot tip: there is no such thing as a hot tip.

11. Don’t fall in love with your stock; it won’t fall in love with you.

12. Don’t have more than 3% at risk in any one position.

13. The trend is your friend until the end.

14. Trading options often leads to a quick trip to the poorhouse.

15. Bear-market rallies are often violent; giving the illusion the bull is back.

16. Low-priced stocks don’t double any faster than high-priced ones.

17. Valuations don’t matter in the short run.

18. When a stock hits a new high, it’s not time to sell. Something is going right.

19. Have a rose garden portfolio (don’t trim your roses while your weeds fester).

20. It takes courage to be a pig (don’t settle for taking 10% profits).

21. Not selling a stock for a gain, simply because you’re afraid of the taxes, is a bad idea.

22. Avoid limited upside, unlimited downside investments.

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23. When all you’re left with is hope, get out.

24. Don’t keep losing money just to “prove you are right.” Nobody cares.

25. Forecasts are useless.

26. Have patience and stick with your discipline.

27. When it’s time to act, don’t hesitate.

28. Expert investors care about risk, novice investors shop for returns.

29. Don’t lose money.

30. You can learn more from your bad moves than your good.

31. A rising tide raises all ships, and vice versa, so assess the tide, not the ships.

32. Stocks fall more than you think and rise higher than you can possibly imagine.

33. Very few people have had great success short selling, even in bear markets.

34. You can’t know everything about everything.

35. Since you can’t know everything, seek out specialists who know their areas.

36. If a company’s sales are shrinking, the business isn’t growing anymore.

37. Real estate cycles are not the same as stock market cycles.

38. Investing in what’s popular never ends up making you any money.

39. Know your investment edge, and don’t stray too far from it.

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40. Bear markets begin in good times. Bull markets begin in bad times.

41. Buy value - stocks that are priced less than their underlying assets are worth.

42. Neglected sectors often turn out to offer good values.

43. There’s usually only one reason corporate insiders buy stock.

44. Don’t miss a good one by being too concerned with the exact price you pay.

45. Avoid popular stocks, fad industries and new ventures.

46. Buy shares in businesses you understand.

47. Try to buy a stock when it has few friends.

48. Be patient: don’t be rattled by fluctuations.

49. Mutual funds underperform the averages over the long run. Buy index funds instead.

50. If you don’t understand the investment, don’t invest.

That’s a lot of rules. Reasonably intuitive, yet millions of investors break these simple rules every day. I’d like to leave you with one more rule of investing, which I’m seeing among investors trying to get back to where they were…

posted under - 50 rules, 50 Rules for investing, investing rules, stock investments, investing in BSE, investing in shares, indian stock markets, invest in NSE

Tips for curbing effects of Inflation on daily life

Rising inflation has started affecting every individual here are few proven tips for minimizing the effect of inflation on your hard earned money:


How to open your free account for online share trading

Rework Your Household Budget:
In the times of rising prices, you need to spend your monthly household budget smartly. To maintain your lifestyle, you should limit the household expenses to 70 per cent of your monthly take-home income. "If it is exceeding the limit, you need to judiciously cut down on the unnecessary expense items," says Ramesh Dalal, V-P, Bajaj Capital Financial Planning Group. For example, you should buy the seasonal fruits and vegetables and avoid the non-seasonal ones, as they are expensive. Control the use of electricity and telephone and try to reduce the expenses on wardrobe, partying, gifts etc. by a certain percentage. You may also think of enhancing your earning capacity by changing to a better-paying job or doing some part-time work.

Insulate Your Long-Term Goals Against Inflation:
Do not let inflation affect your long-term mandatory goals like house purchase, education and marriage of your children and regular income for the retirement years."With the help of a qualified financial planner, incorporate the inflation factor in your long-term goals and invest the required amount regularly towards meeting those goals," says Dalal. For example, if you want to make provision of Rs 10 lakh for your 6-year-old daughter's higher education when she is 18, incorporating an inflation figure of 6 per cent p.a. will give you a figure of Rs 20 lakh at that point of time. Therefore, you should start an investment plan from now, which will help you accumulate Rs 20 lakh after 12 years.

Complete Online Share trading guide - for beginners and experienced

Review Your Financial Goals :
In the current scenario of staggering prices, there is a need to review your financial plans and investments as the expenses and corpus required to achieve financial goals may increase. So, you need to balance your portfolio so that it can generate better inflation-adjusted returns.

Diversify Your Portfolio:
Inflation impacts different sectors in different ways. "Due to current inflationary trends, one needs to have a well thought-out sector spread in his investment portfolio. While investing in companies, one should look at how they are being impacted by the rising input and borrowing costs," informs Ashish Kapur, CEO, Invest Shoppe India Ltd. For example, manufacturing companies or heavy industries, though their stocks, will be available at tempting valuations. However, chances are high that they will further fall in short term, owing to negative sentiment. Hence, investments should be made in large cap companies having economies of scale and their ability to handle input and borrowing costs.

Inflation Updates

Stay Invested in Equities:
For long-term investment goals like child education, retirement etc, equity can generate handsome inflation-adjusted returns. Therefore, In spite of the current volatile situation in the equity market, it is advisable to stay invested as this is a cyclical event and in the long run the markets are bound to rise. Hence, to achieve such goals one should be able to take a calculated risk. "Consider this bearish trend as a good entry point in garnering blue chip stocks," says Kapur.

Complete Online share trading guide

Invest your Money wisely :
Don't keep on accumulating your money in the savings bank A/c. Keep only 2-3 times of your monthly household expenses in the liquid form and invest the balance amount regularly in a well-diversified portfolio of equity, short-term debt, real estate, commodities and gold. It will increase your cash inflows and help you reduce the burden of rising prices.


Check The Real Return On Investment Portfolio:
Inflation eats into your net worth by reducing the real return on your investment portfolio. Real returns are inflation adjusted returns. For example, if you have a bank FD, which earns returns at 8 per cent p.a., and inflation is 8 per cent, then the real return on this investment is zero. Therefore, you should review your existing portfolio as well as make fresh investments to check whether your absolute returns are beating the rate of inflation by a good margin or not. Equity, commodities, gold and real estate are good investment options to generate a positive real rate of return. For short-term requirements, you can consider investing in the short-term funds or floater funds. It is generally seen that a high inflationary trend is followed by an upward revision in the interest rates. Hike in the interest rates will adversely affect your long-term debt portfolio. Therefore, during inflationary periods, it is wise to invest in short-term funds and wait to reap high returns.

Complete Online share trading guide

Add the Shimmer of Gold to Your Portfolio:
Historically gold has proved to be the perfect hedge against inflation. After adding gold in your portfolio, the risk remaining the same, the overall inflation-adjusted returns of portfolio can be enhanced. High inflation, in fact, puts an upward pressure on the interest rates, which in turn create uncertainty in the capital markets. During such times of crisis, gold as an investment avenue is a good bet. Investment in gold can be made in the form of bullion, coins, jewellery and Gold Funds Exchange Traded Gold Funds, among others.

Avoid Investments In Illiquid Assets:
Illiquid assets with low returns restrict the performance of a portfolio. So, try to exit from such investments and redeploy the amount in asset classes that generate better inflation-adjusted returns. For example, bank fixed deposits, post office recurring deposits, etc.

Inflation Updates

Caution for Investors before investing in BSE

Caution to the Investors for investing in the equity shares of Bombay Stock Exchange Limited :
Attention of the investors is invited to the Securities Contracts (Regulation) (Manner of Increasing and Maintaining Public Shareholding in Recognised Stock Exchanges) Regulations, 2006, (Regulations), notified by Securities and Exchange Board of India (SEBI) on 13th November, 2006.Chapter III of the said Regulations inter-alia stipulates the shareholding restrictions and eligibility criteria for holding equity shares in the recognized Stock Exchange as under:Shareholding and transferability restrictions8. (1) No person shall, directly or indirectly, acquire or hold more than five per cent in the paid up equity capital of a recognised stock exchange at any time after commencement of these regulations:Provided that any person holding equity shares in a recognised stock exchange in excess of the limits specified in this regulation at the commencement of these regulations shall reduce his holding to ensure compliance with this regulation within the time specified in sub-section (8) of section 4B of the Act or the time extended under the proviso thereto.Eligibility criteria for persons acquiring or holding more than one per cent equity shares in a recognised stock exchange9. (1) No person shall, either individually or together with persons acting in concert with him, acquire and/or hold more than one per cent of the paid up equity capital of a recognised stock exchange after commencement of these regulations, unless he is a fit and proper person and has taken prior approval of the Board for doing so. (2) For the purpose of sub-regulation (1), a person shall be deemed to be a fit and proper person if -
such person has a general reputation and record of fairness and integrity, including but not limited to -
financial integrity;
good reputation and character; and
honesty.
such person has not incurred any of the following disqualifications -
the person or any of its whole time directors or managing partners has been convicted by a Court for any offence involving moral turpitude or any economic offence, or any offence against the securities laws;
an order for winding up has been passed against the person;
the person or any of its whole time directors or managing partners has been declared insolvent and has not been discharged;
an order, restraining, prohibiting or debarring the person, or any of its whole time directors or managing partners from dealing in securities in the capital market or from accessing the capital market has been passed by the Board or any other regulatory authority and a period of three years from the date of the expiry of the period specified in the order has not elapsed;
any other order against the person or any of its whole time directors or managing partners which has a bearing on the capital market, has been passed by the Board or any other regulatory authority and a period of three years from the date of the order has not elapsed;
the person has been found to be of unsound mind by a Court of competent jurisdiction and the finding is in force; and
the person is financially not sound. (3) If any question arises as to whether a person is a fit and proper person, the Board's decision on such question shall be final.
Attention of the Investors is also invited to the term "Associate" in relation to a shareholder having trading rights in a recognised stock exchange and Public as defined in the aforesaid Regulations.2 (1) (b) "associate in relation to a shareholder having trading rights in a recognised stock exchange means a person -
who directly or indirectly, by himself or in combination with other persons, exercises control over such shareholder or holds substantial shares entitling not less than fifteen per cent of the voting rights in such shareholder being a body corporate; or
over whom such shareholder, directly or indirectly, by itself or in combination with other persons, exercises control; or
whose director or partner is also a director or a partner of such shareholder , being a body corporate or a partnership firm, as the case may be; or
who is a holding company or subsidiary company of such shareholder or acompany under the same management as such shareholder; or
who is a relative of the shareholder being a natural person under Schedule IA of the Companies Act, 1956 (1 of 1956); or
who is a sub-broker of the shareholder in that stock exchange; or
who acts in accordance with instructions of such shareholder in the exercise of voting rights and other rights in the recognised stock exchange, directly or indirectly.
2 (h) "public" includes any member or section of the public but does not include any share holder of the recognised stock exchange having trading rights therein or any associate of such shareholder;Under the BSE (Corporatisation and Demutualisation) Scheme, 2005 the Exchange has to ensure that "Public" other than shareholders having trading rights continuously hold at least 51% of equity shares of the Exchange.Attention of the Investors is further invited to the term "Persons Acting in Concert" as defined under Securities & Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 19972 (e) "person acting in concert" comprises,-
persons who, for a common objective or purpose of substantial acquisition of shares or voting rights or gaining control over the target company, pursuant to an agreement or understanding (formal or informal), directly or indirectly co-operate by acquiring or agreeing to acquire shares or voting rights in the target company or control over the target company,
without prejudice to the generality of this definition, the following persons will be deemed to be persons acting in concert with other persons in the same category, unless the contrary is established :
a company, its holding company, or subsidiary or such company or company under the same management either individually or together with each other;
a company with any of its directors, or any person entrusted with the management of the funds of the company;
directors of companies referred to in sub-clause (i) of clause (2) and their associates;
mutual fund with sponsor or trustee or asset management company;
foreign institutional investors with sub-account(s);
merchant bankers with their client(s) as acquirer;
portfolio managers with their client(s) as acquirer;
venture capital funds with sponsors;
banks with financial advisers, stock brokers of the acquirer, or any company which is a holding company, subsidiary or relative of the acquirer :Provided that sub-clause (ix) shall not apply to a bank whose sole relationship with the acquirer or with any company, which is a holding company or a subsidiary of the acquirer or with a relative of the acquirer, is by way of providing normal commercial banking services or such activities in connection with the offer such as confirming availability of funds, handling acceptances and other registration work;
any investment company with any person who has an interest as director, fund manager, trustee, or as a shareholder having not less than 2 per cent of the paid-up capital of that company or with any other investment company in which such person or his associate holds not less than 2 per cent of the paid-up capital of the latter company.Note: For the purposes of this clause "associate" means,-
any relative of that person within the meaning of section 6 of the Companies Act, 1956 (1 of 1956); and
family trusts and Hindu undivided families;In view of the aforesaid provisions, any person desirous of acquiring the shares of Bombay Stock Exchange Limited (BSE) should adhere to the following conditions:

That under the Regulations, there are restrictions on holding (either directly or indirectly) more than 5% of the paid up capital of the BSE;
That under the Regulations there are restrictions on holding (either individually or together with persons acting in concert with him) more than 1% in the paid up equity capital of BSE without complying with "fit and proper" criteria.

In order to comply with the aforesaid provisions as stipulated by SEBI, any investors before acquiring any equity shares of BSE, are hereby advised to disclose/declare in the prescribed format given hereunder to the Exchange whether he or they have become an "Associate" in relation to a shareholder having trading rights and also the names of the individuals/entities that may be construed as "persons acting in concert" as defined under Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

SEBI to educate investors - creates a INR 10 cr fund

The Securities and Exchange Board of India (SEBI) has created an Investor Protection and Education Fund with an initial corpus of Rs 10 crore and has invited public comments on the draft regulations that will govern the fund. The initial corpus has been created out of the SEBi General Fund.

The fund shall be used for the purpose of education programs through print and electronic media, organising seminars and symposia and conducting R&D. The fund will also be used for projects for investor education and protection including research activities and for financing such projects and co-ordinating with investors' associations registered with SEBI.

"Funds shall be utilised by the (SEBI)The Securities and Exchange Board of India (SEBI) has created an Investor Protection and Education Fund with an initial corpus of Rs 10 crore and has invited public comments on the draft regulations that will govern the fundi) board for the specified objective on the recommendation of a committee constituted in accordance with the proposed regulations," says the release.

Further, the term of office of the chairperson and members would be one year. The committee, which would also include representatives of investor associations, intermediaries and stock exchanges, would meet once in every quarter of a financial year.
so investors have a nice time and get educated.

March 2008 Market Highlights | Advise for Investor's "hold on investment for longer time"

17-3-2008:

Indian stock markets closed a whopping 900 pts down on 17th march 2008 due to growing global uncertainity and weakening US dollar against EURO due to which oil prices touched new record high of $111/barrel and the trend is further growing to continue.

However our blog prediction for market crash(made on 15th march) owing to uncertainity in global markets was yet again proved right : THANKS TO OUR MARKET ANALYSTS! and the future looks sceptical too so the suggestion to investor's is to hold on their money till the global uncertainity ends.

It has been highlighted many times that indian market is governed by US market and is more in hand of US economy then Indian investors. so advice for the investors is to follow the trends in the US stock markets NASDAQ, New York Stock Exchange(NYSE) and other major stock exchanges like Dow Jones etc.

Details for 17/3/2008:

Across the board sell-off, on account of weak global cues, saw indices closing over 6 per cent lower. Mid-caps and small-cap stocks were the worst hit. Indian benchmarks grossly underperformed its peers globally. Bombay Stock Exchange’s Sensex closed at day’s low of 14,740.12, down over 900 points or 6.47 per cent.

National Stock Exchange’s Nifty ended at 4,484.55 down 5.50 per cent, worst close for the benchmark after September 6, 2007. It touched a low of 4482.10. BSE Mid-cap Index ended at 6,583.45, down 478.22 points or 7.26 per cent and BSE Smallcap Index fell to 7,515.98 down 563.52 points or 6.97 per cent.

ICICI Bank (down 15.06%) was the worst hit. Jaiprakash Associates (down 12.7%), HDFC (11.28%), Hindalco Industries (9.39%), Reliance Energy (8.68%), Tata Steel (8.54%), Grasim Industries (8.15%) and DLF (7.96%) were the other index losers. Across BSE, 2395 declines outnumbered 289 advances.

hence the golden word is "DON'T PANIC" hold on with your investment.

New Forum: How to distinguish between a good IPO and bad IPO

Looking at the present trend of stock exchange a lot of companies are going public. but how new investor would distinguish between a good IPO or a bad IPO.
Investing in a weak company can never be fruitful and there is every possibility of the investors being duped off and loose there hard earned money.
One way of distinguish between a good IPO(Initial public offering) and a bad IPO is to get a thorough knowledge of the company which is coming up with it's offering.
It can be done by analysing the last five years (minimum) balancesheets of the company, It's employee strength and the growth trends. The most important point to check is the annual profit of the company.

If you have any other point do leave a comment so that every investor can know about it and their hard earned mony should not be lost!!

So do make this post a lively post by leaving your expert comments.