Oh wow ... Another 500 point rise --- oooo boy, the lovely days are back here again or are they? Hmmmm... Well, the oil has declined by $16 in the last 3 sessions, when I had checked in the morning - so this seems to be more of a relief rally more than any fundamental factor which may be driving the Sensex north. There are too many worrying factors on the horizon, most notably political uncertainty, inflation worries and a worldwide economic slowdown.
By the way, IMF has revised both inflation and growth forecasts. Read the piece here for more on this!
Showing posts with label Sensex. Show all posts
Showing posts with label Sensex. Show all posts
Friday, July 18, 2008
Thursday, June 26, 2008
Back from Exile!
Long time, no blogging! Hmmm – as always, my ever handy excuse for not writing remains my poor net connection. Add to that the stricter IT policies in our office and frequent power cuts that have made blogging from cyber cafes a real pain in the neck for yours truly!
--- Sigh --- Such is life and its adversities! To top it all, I am virtually without work here and the HR has taken it upon themselves to keep me tied to my seat, thus restricting my physical movements and mental flights of imagination.
But worry not, you dear readers, I am here – your saviour, host and dost! I shall try my best to save you from the fickle nature of life and keep boredom at bay! But please have patience with me and do suggest a few topics on which I can research and write about!
In the meanwhile, take a look at some of the following sites to track the stock quotes -- with the Sensex at the 14k levels, it is a good time to build your portfolio with a 2-3 year investment horizon. Apart from the regular sites (like the NSE and the BSE sites), you can check out the MoneyControl and the MyIris sites. The sites of brokerage firms like India Infoline, Motilal Oswal, Karvy and Kotak also offer streaming quotes and live stock news. If equity is not your cup of tea, then check these sites for the latest info on debt and bonds.
Phew ... That’s a lot of sites for the time being; yet the list is far from over. So, I’ll be looking to update you on interesting sites as and when I chance upon something worth sharing! ‘Til then, please stay tuned to this space!
--- Sigh --- Such is life and its adversities! To top it all, I am virtually without work here and the HR has taken it upon themselves to keep me tied to my seat, thus restricting my physical movements and mental flights of imagination.
But worry not, you dear readers, I am here – your saviour, host and dost! I shall try my best to save you from the fickle nature of life and keep boredom at bay! But please have patience with me and do suggest a few topics on which I can research and write about!
In the meanwhile, take a look at some of the following sites to track the stock quotes -- with the Sensex at the 14k levels, it is a good time to build your portfolio with a 2-3 year investment horizon. Apart from the regular sites (like the NSE and the BSE sites), you can check out the MoneyControl and the MyIris sites. The sites of brokerage firms like India Infoline, Motilal Oswal, Karvy and Kotak also offer streaming quotes and live stock news. If equity is not your cup of tea, then check these sites for the latest info on debt and bonds.
Phew ... That’s a lot of sites for the time being; yet the list is far from over. So, I’ll be looking to update you on interesting sites as and when I chance upon something worth sharing! ‘Til then, please stay tuned to this space!
Friday, February 8, 2008
Financial Derivatives -- Identifying the lesser of the two devils..
Hello Readers!! I'm back and hey, the markets have not been too good off late! Good is the last word on your minds for the time being, right?? Heart breaking is more like it! Okay, okay, so I'm being over dramatic but the bitter truth is that events of the last 6 months have left most investors reeling from the awe with which the Sensex rose and then the shock and mouth-gaping horror at the fall it registered.. Now isn't that precisely the reason why I call this space "The SenseXXXational Ride" .. It's a gut-wrenching ride and not for the faint hearted, let me mind you!
Investors entering the market around August 2007 were gingery because the Sensex had crossed the 15,000 mark, the skeptics were crying foul warning anyone who cared to listen that a correction was imminent but with the FIIs pouring in funds like never before, India's growth story was shining brighter than ever. Then came a big blow --- the SEBI banned, or shall I say, limited the investments made by Participatory Notes (PNs). This sent the markets crashing but heck, was anyone using any common sense? No ways dear readers, the markets again resumed their upward climb and then came the final big blow, a below-the-belt blow -- Fears of the U.S. economy going into a recession sent the Sensex on a downfall .. A never ending nadir, it seemed!
Now why this big intro?? Well, these last 6 months can be distinctly divided into 2 phases -- The rise which was then followed by the fall!! Long-term investors and investors owning stocks need not worry, the markets will rediscover the Midas touch, albeit a bit later than what we estimated. It's the investors dealing in futures who were emboldened by the meteoric rise of the Sensex. The lure of doubling the money in a short time was ample to hook -- and suck -- both new and experienced investors into this black hole which not only drained their investments but also saddled them with huge losses!!
Now, those of you who cocked a nose at us simple investors dealing in ONLY shares, where are you people now?? Investing in futtures is risky, so why not hedge or atleast protect your downside? Atleast buy a put option on the futures -- if the markets fall, atleast your loss is defined or limited, to say.
I believe trading in options is safer than dealing in futures. I mean, if you have to dine with the Devil, then why not ensure that you got something to help you digest the food as well? Ok, that sounds like a shit Simili.. I will try to compose a better one next time!! :D
Even options are not without risk; however, I would assume that you will be more cautious after the recent experience with the markets! So, suppose, with the markets poised at the current levels, you expect the markets to rise, i.e, you are bullish on the markets making an up move.. So ideally, one should buy a Call option on Nifty futures (lot size 50) expiring in February, i.e. the current month. This basically gives you an option to buy 50 nifty futures at a predetermined price; but does anything come for free? Ha ha, no readers! You got to pay a small premium, say Rs. 150 for one Nifty future for a strike price of Rs. 5300/- .. So, the maximum loss you can suffer is the premium that you paid for the call option, i.e., Rs. 150 x 50 = Rs. 7500 .. Theoretically, I've assumed that the call option has an ending value of 0, i.e., at the time of expiry. However, in the real market, you will be able to get some value for the call option; hence, your maximum loss is capped at Rs. 7500/- .. The breakeven Nifty level for an investor is Rs. 5450 (strike price Rs. 5300 + the call premium Rs. 150) .. So as long as the Nifty stays above Rs. 5450, your call option will be in the money ..
Gosh I'm tired after writing this post; I hope to come out with a follow-up on this article and more complex derivative strategies in my next post! Hope you enjoy this post!
Investors entering the market around August 2007 were gingery because the Sensex had crossed the 15,000 mark, the skeptics were crying foul warning anyone who cared to listen that a correction was imminent but with the FIIs pouring in funds like never before, India's growth story was shining brighter than ever. Then came a big blow --- the SEBI banned, or shall I say, limited the investments made by Participatory Notes (PNs). This sent the markets crashing but heck, was anyone using any common sense? No ways dear readers, the markets again resumed their upward climb and then came the final big blow, a below-the-belt blow -- Fears of the U.S. economy going into a recession sent the Sensex on a downfall .. A never ending nadir, it seemed!
Now why this big intro?? Well, these last 6 months can be distinctly divided into 2 phases -- The rise which was then followed by the fall!! Long-term investors and investors owning stocks need not worry, the markets will rediscover the Midas touch, albeit a bit later than what we estimated. It's the investors dealing in futures who were emboldened by the meteoric rise of the Sensex. The lure of doubling the money in a short time was ample to hook -- and suck -- both new and experienced investors into this black hole which not only drained their investments but also saddled them with huge losses!!
Now, those of you who cocked a nose at us simple investors dealing in ONLY shares, where are you people now?? Investing in futtures is risky, so why not hedge or atleast protect your downside? Atleast buy a put option on the futures -- if the markets fall, atleast your loss is defined or limited, to say.
I believe trading in options is safer than dealing in futures. I mean, if you have to dine with the Devil, then why not ensure that you got something to help you digest the food as well? Ok, that sounds like a shit Simili.. I will try to compose a better one next time!! :D
Even options are not without risk; however, I would assume that you will be more cautious after the recent experience with the markets! So, suppose, with the markets poised at the current levels, you expect the markets to rise, i.e, you are bullish on the markets making an up move.. So ideally, one should buy a Call option on Nifty futures (lot size 50) expiring in February, i.e. the current month. This basically gives you an option to buy 50 nifty futures at a predetermined price; but does anything come for free? Ha ha, no readers! You got to pay a small premium, say Rs. 150 for one Nifty future for a strike price of Rs. 5300/- .. So, the maximum loss you can suffer is the premium that you paid for the call option, i.e., Rs. 150 x 50 = Rs. 7500 .. Theoretically, I've assumed that the call option has an ending value of 0, i.e., at the time of expiry. However, in the real market, you will be able to get some value for the call option; hence, your maximum loss is capped at Rs. 7500/- .. The breakeven Nifty level for an investor is Rs. 5450 (strike price Rs. 5300 + the call premium Rs. 150) .. So as long as the Nifty stays above Rs. 5450, your call option will be in the money ..
Gosh I'm tired after writing this post; I hope to come out with a follow-up on this article and more complex derivative strategies in my next post! Hope you enjoy this post!
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