Finance Friday: India News Digest

Finance Friday is our Weekly News digest that brings you snippets of Buzzing stories in field of Finance & Stock Markets.

India pushed down the ladder as the Favorite Investment Destination

Yes, despite all the FDI Investment news floating around and the whole world tagging India as a Foreign Investment Heaven, Indian has slipped to number 3 position from 2 last year as the ‘Top Foreign Investment Decisions’ , in a survey of 241 multinational businesses by the United Nations Conference on Trade and Development.

1. (1) China

2. (3) United States

3. (2) India

4. (5) Brazil

5. (4) Russia

6. (12) Britain

7. (7) Germany

8. (9) Australia

9. (8) Indonesia

10. (10) Canada

** Figure in brackets is the ranking in the previous survey last year. Source: (Reteurs)

The irony here is the country who has piped India for the second spot. Who you ask?
It is the United States(US). Did I catch some eyeballs here? But then, that’s what the survey tells.

Putting things into perspective, it is surprising that the US of A still coping with the financial bloodbath for a year or so, has still managed to draw huge foreign investments. More so, when the economic conditions in the US are a complete mess.

I could not get the details of which sectors drew the major investments, but given the general stats of the break-up of foreign investments, infrastructure and finance takes a good chunk

And we all know about the Infrastructure sector status of the USA, don’t we. Probably the troubled Financial Sector drew some investment. After all, we saw more than 2 dozen banks bankrupt and sold out right: D

Another sector that could have drawn some foreign investment might be the Automobile Sector for reasons much similar to the Banking and Finance Sector.

Given my hypothesis of the reasons why the US was touted as 2^nd best could have had to do with the troubled economic conditions and consequently the opportunity created for foreign players.

This got me thinking,

‘Is Foreign Investment A Good Enough Parameter To Measure A Country’s Potential’

What are your thoughts on this?

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Religare Business Leaders Fund:: New Fund Offer Initiative or only New packaging of any other Mutual Fund

I received this as a mail in my official inbox. Even before I started wondering if SPAM has any limits, the picture caught my attention.

A Business Leaders Fund sounds new and fresh. Religare has infact got the near perfect advertising going. A fund that will outperform irrespective of the market conditions beat that. The Entry load removed also adds to the already glossy advertisement.

But, then it all seems too good to be true, isn’t it?

Figure that, the fund is betting on the consistent growth and increasing profits of the biggest and best businesses that we have around. There are definitely a few which have been performing consistently but then, what is Religare doing different in their fund.

Aren’t all the other Mutual Funds about having the stocks of the business leaders in the market? Irrespective of the Fund, the best organizations always form a major chunk of the portfolio.

For eg:: Reliance Industries, SBI, Larsen & Toubro etc.

Now, with their business leader’s fund, I am not sure what Religare is offering. To me it all looks like, ‘the old wine in a new bottle’.

What do you think of the fancy names that the Mutual Fund Houses come up with?

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Finance Jargon Buster : Short Selling

“If everyone is losing money in the southbound Stock markets, there is someone who should be making money”

Short Selling: Short selling (also known as shorting or going short) is the practice of selling assets, usually securities even before owning them.

Essentially this means betting that a security will decrease in value and using this as an opportunity to make money. This is an addition to the old adage of ‘Buy low and Sell High’. What Short Selling allows you to do is to ‘Sell High and Buy Low’

Img Credit(Wikipedia)

The only catch to this form of trading is that they have to be carried out on pre-decided timeframe. For Intraday trades i.e. same day trading all the short positions need to be squared off by the end of that day’s market. Similar options exist in the Futures and Options Segment too.

I guess its clear now as to who rakes in the profit even when the markets are southbound. Yes, it is not the average Joe with a ‘Buy When The markets are down’, it is the Short Seller, who exercises the mantra of ‘Sell Stocks before the Storm Kicks In’.

Short Sell is a great counter strategy when the markets are bearish. With the markets in a continuous bear phase the stock prices keep following a downward pattern.

So, a short seller places ‘Sell’ orders on a stock which he/she thinks is going to go down further. Let’s say he places a ‘Sell’ order on Stock A trading at 100 per share.

Now, the markets keep going down and the Stock A goes down by 20% and is trading at 80 per share. Now, our short seller goes and buys these 100 shares back at 80 per share.

The Math’s Works Out to be:

Sell price: 100*100 = 10000 (What he gets)

Buy Price: 100*80=8000 (What he pays)

Profit: 1900~ (The Transaction charges taken into account)

So, there you have it. When the average investor is selling all his hard earned investment fearing the markets to go down further, the short seller is doing the same. But he is making profit out of it too.

And that’s why they say; even in a Bear market someone is having a Bull Market

Cool!!! Why not give it a try. Stop, only if it was that easy. Going short or Selling Short requires considerable level of technical analysis and certain amount of risk.

So, before you take the plunge, make sure you have the right gear for it. Sound Knowledge and an equally sound hear