A very interesting question hit my inbox last weekend when market was near 5100. The question is really very interesting and so I thought I will share it with all my readers. The Question was

Why I sound sceptical on Indian market for last few months. What about the Indian growth story?

I am sure this may be the question of many blog readers.

I was believer of Indian growth story but not recently for few reasons.

In May June India had one big concern. It was inflation. Every country had its other problem but Inflation was global problem because of rising commodity prices and so was in India.

India Government and RBI tried controlling the inflation by tightening the interest rate and liquidity and sacrificing growth. These steps lead to multiple problems now.

1. Growth slowed down

We had forecast of 8% GDP growth and now it has come down to under 7% and so this means market will have negative sentiments. RBI statements like they are ready to sacrifice growth for inflation were not comforting because inflation at that time was not driven by liquidity but was driven by commodity prices.

2. USD not comforting

Steps that are taken to control inflation at the cost of growth mean Indian market would see an outflow of money which has taken USD rates roughly from 44ish to 52ish levels in no time. Roughly 20% increase in USD rates.

Let us take some numbers to see how this is actually making situation worst for India. From may till now oil has fallen by 20% from 110ish to 90ish but the appreciation of dollar by 20% means that the benefit of oil cooling in the world market has no benefit for India. Similar things also apply to other commodities and this means India has no benefit whatsoever to the world’s cooling commodities scenario now.

3. High Interest Rate

Currently inflation is where it was and we have added issues of less growth, less foreign inflows and high interest rates. So according to me our government failed to take right steps in May June time frame that has actually compounded lot of problems.

We have high inflation and still may need to lower interest rates to get the growth back on track. Work on methods for more inflows of foreign money. So I am not very bullish on market as investor but more favourable for trading.

Final Thoughts

If Indian government can show us steps they are taking on current issues especially USD inflows that will give some sort of hope.

What are your thoughts about the current Indian scenario? Share your views in comments below.

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Yesterday all day on CNBC TV18 I saw one news being broadcasted almost all day (Apart from India Australia Wordcup match) – JPMorgan overweight on Unitech. I could not resist myself in getting my views on such crap research. In my book about Chart Pattern I have made it very clear on how you should be handling such news, i.e. when some fund house gives a buy call on any stock.

First the headline JPMorgan upgrades Unitech to overweight; target Rs 60.

I don’t buy the theory that JPMorgan is ready to do service for the Indian retail investor by making public it’s financial research about Unitech. My concerns are

1. How suddenly the land valuation becomes higher when everything related to interest is going down?
2. Suddenly JPMorgan’s take on the pending receivables is positive. Unitech from an over debt situation gets into a position of 3000 crores receivables.
3. Double PAT with no solid reasoning as to how will this be achieved.

And many more.

The only reason I see for such a crappy report is they (or some of their big clients) have a large holding in the stock which they want to offload. See how the increase in volumes for the shares yesterday and you know who could be the potential sellers.

Make sure you are not trapped with such crappy news. If you have read my book you should know how to play this to your gains. The idea is when the volume starts declining make sure you short the stock in the spike. I hope this helps all my follow investors.

Charts by Interactive Broker’s Trader Workstation

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I am sure you have heard and read a lot about Budget 2011 and so I am not going to keep this very very short. Three best things which can really benefits an equity market common man are

1. One more year before New Direct Tax Code Hits Badly to Mutual Fund Investors
2. Tax exemption slab raised from 1,60,000 to 1,80,000
3. Infrastructure Tax saving bond investment extended for one more year

What is the best thing you liked from Budget 2011?

It is almost impossible to satisfy billions of people’s expectations with one single budget and so let us see the positive outcome.

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3. Infosys

As per recent regulatory developments, from January 1, 2011, KYC (Know Your Client) is mandatory for investors wanting to transact in Mutual Funds, regardless of the transaction amount. This means you will not be able to process any fresh MF purchases post January 1, 2011, unless you are MF KYC compliant as per CDSL Ventures Limited (CVL) norms.

So you can always ask your broker’s to get you forms and submit them for your KYC but as there are no mutual funds fees they may not be very helpful at times and so it is better you also know how you can get your KYC done yourself. The process is really very simple.

1. Get the Form

The KYC application form is available at the investor service centres of the Fund and CAMS or at any designated ‘Points of Service’ (POS) of CDSL Ventures Ltd. or can be downloaded from your broker, Advisor or AMC. I have uploaded them here for you to download. (KYC Form Individual / KYC Form-Non-Individual).

2. Documents

Documents required to be submitted along with the KYC application form are:

1. A recent passport size photograph
2. PAN card copy
3. Address proof (Recent bank statement will work but if you have get your bank statement in email you need to visit your bank branch to get an original one.)

Once you have the documents ready submit at CAMS Online office in your city. You can find the address of your CAMS Office here or here or here. Make sure you carry the originals along with a xerox copy of the documents because at times they want to check with the originals.

3. Verification

After verification of the KYC application form and accompanying documents, investors will receive a letter certifying their KYC compliance. They normally give you the letter in few hours to a max of 24 hours and there is no charge for this verification.

You can verify your KYC status online here. The day you submit your form your status should be processing and once it is processed your status should become VERIFIED.

Actually KYC need not be done at your broker’s end but some online system does not accept order if they don’t have the data in their own system and so it is better to get that done as well. Once you have the letter you can send that letter’s copy to your broker to update. For ShareKhan you have to Fax the verification letter to 022-24982626 (Details here).

I hope this helps my fellow investors. Share your feedback in comments below.

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If you subscribed to my blog before Saturday (Or Friday depending on your time zone) I sent an email asking your views on Indian Union Budget and I got variety of response. So here is a composition of yours and other fellow reader’s views. If you do not see your response in the list below this means your views were same or similar to some other reader who was quick enough to give views quicker. I have my own views as well in italics below each of them

Brij Kumar Singh

Nothing new in this budget. I can sum up” A budget of the Babus, by the Babus and for the Babus”. It is a govt in the name of AAM AADMI for the politicians & Babus and by them.
We talk a lot about common man but let me have one thing in this budget for the common man.

I don’t agree with you on this and I think Tax Rebate of increasing the slab upto 5 lacs is good for the common man. This may be steps towards New Direct Tax Code.

Santosh Patil

Short term :- Rise in food & other inflation
Long term :- Promotion to agriculture by Finance minister will increase the agriculture output ultimately will increase the purchasing power of the masses & economy will grow as per set targets.

Priya Agarwal

Its Ok types.
As our FM is claiming to beat China Economy its obvious to increase the duties and all.
It would give a surge to corporates……

Priyanka Singh

hi 2 all i m priyanka singh doing MBA in finance& HR as we get surprises every year about the budget what i think people starts to learn some home management tactics so that they use only limited glossry items and avoid wastage thus when the demand for expensive products become less from customers side automatically company have to think abut reducing the prise of there products to finish there stocks as there demand from the side of customers become low…and people start using bicycles again to go anywhere thus there health is also maintain n some savings on petrol will be possible there may b possibilty of growing market of battery bikes n scooty as the rate of petrol grows…and as the budget gives us an huge benifit of reducing the prises of childrens toys n games items we start giving gifts of toys n games in very occations to one another…….

Nice idea to kill the demand but I don’t think this will work because demand is something which is always growing for us.

Narayanan Nampoothiri

As a retired employee I had hoped that the tax exemption limit would be raised a little higher. The rising of upper limit of the first slab from three lakhs to five lakhs will not help marginal tax payers like me who will be still in the tax net. The reintroduction of the Infra structure bonds is a good idea and I am of opinion that exemption limit should be raised further even if corresponding reduction is made for exemptions under 80c etc as this is the prime area where investments in large scale is a must.

Moinak Kunda

it is certainly an inflationary budget. today’s growth potential will be eaten up in the near future.

Pankaj Shrimal

Our budget is not good because if u r incresing petrol’s prices then everything will be costly

Abdul Ofoor A

thanks 4 d mail. i think it is a good budget. Because, the national income level will increase without hurting the people directly.. the hike in petrol and diesel will also prevent the usage of these.

Nice and contrasting views of Abdul Ofoor A and Pankaj Shrimal on same things.

Have more views to express? Leave them in comments.

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Commodities

With wide expectation from the market to become one of the prime importer of rice, sugar and edible oil in this year, everyone is keenly watching the global commodity market and the price movements, which could determine supply and price movement in the coming months.

An analysis of the global commodity price in the last few months indicates that the price movement was mixed and clueless but showing a positive bias. Of all the commodities, sugar is drawing the most attention, has India geared up to import more than 5 million tonnes of sugar this year. This gives the distinction of India becoming the largest importer of sugar in the global market.

In the price side movement, global price of sugar is indeed trading at the lower end after touching 50.84 cents in September. This rate is of course, trading at double rate when compared to last year. Globally, Jan – Sept sugar price was at 37.91 cent per kg, which is almost double the rate of 28.21 cent per kg inn 2008. Brazil is the largest producer of sugar in the world and the whole world market is keenly watching the sugar production report from there.

The next commodity, which is drawing much greater attention, is rice because of poor monsoon in the recent months. India has already started import of rice from Thailand. The rate of rice is also at the lower end when compared to the last price. The other commodity is edible oil. The commodity market is expecting Indian to import almost around 10 million tonnes this year. As the price is hovering around $668 per tonne, it is expected not to hurt the government expenditure program.

Power

Power as such is not traded as a commodity and is the most essential ingredient to provide the most critical infrastructure for all other sectors to work. The Power generation in India has constantly grown to 150,323 mw as on June, 2009. But this is not even comparable in any standard with per capita consumption of world average of 2,300 Kwh.

A World Energy Council report has indicated that 44% of Indian household does not have electricity connection at all and nearly 90% of rural habitations rely on forest woods for primary energy.

The prime force of energy generation in India is through thermal generation including gas which accounts for 70% of total generation. Nuclear energy constitutes only 2.4% and 26% is through hydel power. India is highly dependent and relying on fossil fuels for power generation and it has to concentrate in the coming years to focus on non-conventional method. The government has signed the nuclear deal in 2008 with USA to increase it production of energy through nuclear reactors, which are the most cleanest form of energy. However, the impediment in this sector is the high cost involved in erection and maintenance of the installation of nuclear reactors and availability of nuclear fuel. In this front, the most important development achieved is the co-operation being extended by almost all major nuclear fuel supply group of countries.

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Fidelity India has come up with new equity fund called Fidelity India Value Fund. Lets do a review and analysis and get into finer details of the New Fund Offer.

The new fund offer (NFO) open for subscription from November 16 to December 15, 2009. The face value of the NFO will be Rs 10 per unit and offers growth option and dividend option. The dividend Option offers dividend payout and dividend re-investment. The minimum application amount is Rs 5000 per application. For additional purchase minimum application amount is Rs 1000. Entry Load – Nil, Exit load – 1% For redemption within 1 year.

Fidelity as a fund house is always my favorite fund house with good returns and Nitin Bajaj who will be the fund manager of Fidelity India Value Fund currently manages Fidelity India special situations fund and I have seen good track record of Fidelity India special situations fund.

The objective of this fund is to invest in undervalued stocks and will invest at least 80 percent of the assets in equities and the rest in exchange-traded funds, debt and money market instruments.

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1. Yardley’s Asia unit bought by Wipro:

Wipro Consumer Care & Lighting has signed an agreement with the Lornamead group of UK to purchase Yardley’s business in Asia, Middle East and some African markets for $45.5 million. This transaction is expected to be completed by the end of December 2009. The Lornamead group is founded by the Indian origin Jatanias and they will hold the Yardleys business in Europe and America.

It is stated by Mr. Vineet Agarwal, President of Wipro Consumer care & Lighting as “This acquisition fits into our strategy of increasing sales and brand presence in the Middle East”.

Incidentally, this is the second largest diversification at Wipro after purchasing Unza, for about $246 million. These moves are indicating that Wipro is making its diversification in the fast moving consumer goods and reducing its latent dependence on the growth of IT industry.

2. GVK bought 12% stake in Bengaluru airport:

GVK Airport Developers Pvt Ltd, a subsidiary of GVK Power and Infrastructure Ltd, a BSE listed company has acquired a 12% stake in the Bengaluru airport from Zurich Airport for an amount of Rs.484.60 Crores.  It is further stated the two companies will look into development of other airports as and when opportunities arise across the country. With this acquisition, the GVK group company becomes the largest private player in the field of developers of airport.  The other stake holders in the Bengaluru airport include Zurich airport holding 5%, Karnataka Government 13%, AAI 13%, L& T 17% and Siemens AG 40%.

With the Indian government initiatives taken right from the start of the decade under the public private partnership, the growth and competition in building infrastructures has gone up. The Bengaluru Airport has started its first phase of operation in May 2008 and in the second phase, currently runway and a new terminal is being constructed.

Mr. GV Krishna Reddy, CMD, GVKPIL, said “The acquisition in BIAL and the strategic alliance with Zurich Airport heralds a new era in the GVK Airports business and will provide the impetus to grow into new markets and territories.”

3. Sudha Murthy to support to Narayanamurthy in VC

Recently Mr. Narayanamurthy, Chief mentor and Chairman of Infosys, offloaded 0.13% of his stake in the company to rise about Rs.174 Crores for setting up a Venture Capital fund to assist and fund new start ups and to encourage entrepreneurship among youths. Now, his wife Ms. Sudha N Murthy has sold 22% of her stake in the company to rise Rs.430 Crores to support Naryanamurthy’s venture capital fund.

The VC fund christened as ‘Catamaran’ will encourage youths to become entrepreneurs by helping to convert their brilliant business ideas and paving a platform to see it growing by leaps and bounds. The fund has decided to help ideas in the healthcare, technology and retail with funding the seed capital. The fund is in the process of appointing professionals to run it. It is further mentioned that they are not planning to raise any further capital for the fund.

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In its latest review on the economy, the RBI has indicated that it intends to tighten the monetary policy. This view is reflected in the bank credit off-take. For almost in 12 years, credit growth has dropped to single digit, at 9.66% on a year on year basis for the first time against a growth rate of 10.75% in the last fiscal as per available data. To protect and to maintain their books, banks had parked more than Rs.133,925 Crores with RBI through reverse repo window which is normally used to suck out the excess money from the system.

This will have a far reaching consequence on consumer demand. The expansion plans of companies will also get affected because of this. With no demand for working capital from companies, which indicates lack of credit demand from manufacturing sector, forms the major drawer of credit off take. With the assumptions that interest rate is to go up, it is being reported that companies are tapping the other section of financial market such as issuing corporate bonds and going for initial public offering.

This particular source of raising capital is the cheaper route for companies than the borrowings from banks and this almost accounts for 70% of the long term fund requirements for Indian companies. The main drawer of credit off take, the oil & gas and fertilizer companies had indeed shown a lower credit demand so far. This is because of the government idea to defer the payment of subsidy on fuel prices. The other main reason for the lackluster demand of credit off take is attributed to the availability of foreign funds through credit default swap which is hovering around the pre-Lehman rates.

The sluggish credit off market in the first half of the year so far will have a bearing on the banking industry on the whole and will fall short to meet the RBI’s revised target of 18% of credit off take as against 20% estimated in the month of April, in this financial year. To maintain a sustained recovery of the economy it is important to have a low interest rate regime for some more time. Also, the credit off take requirement from manufacturing sector will not improve unless any major project is undertaken or the global recovery is sustained for few more quarters.

The banks are as reluctant as ever before to lend much to the real estate, gem & jewellery, textiles, leathers, NBFC’s and etc., as these are the sectors got affected much in the recent financial turmoil. But at the same time, these are the sectors which are the main driver of the economy and as well as generators of large employment. So, with the indication from the RBI that it is going to tighten the monetary policy to fight against rising inflation which is undoubtedly a supply-demand driven indicator is going to have bearing on the credit off take of major banks and will have affect the growth of the banking industry. But nonetheless, the banks had produced a decent second quarter results.

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Last Thursday, government announced its intention to put the disinvestment reform train back on track to unlock values of unlisted public sector units. This very reform process of UPA-II has been put on the back burner last time because of strict opposition from the Left parties, who are not in the government presently. This strategic sale is one of the largest ever plan in the disinvestment arena to unlock the value of public sector units for investors, especially retail.

By divesting and making listing will also improve the corporate governance as it increases the pressure on the employees to scrutiny by investors. Listing is proving to be a major beneficial for the companies as it gets the responsibility to be answerable to the new board after getting listed.

The government has decided to unlock value in more than 100 unlisted public sector units. By this, the government is expected to garner about Rs.250 billion annually through this process and it has instructed other listed public sector companies to come with FPO (follow on Public Offer). It has been advised to the public sector units to maintain a minimum of 10% of its holding by the public. This policy structure is the brain child of Dr. Manmohan Singh, when he was the then Finance Minister way back in 1990’s.

The government wants to divest in companies which are running profitably for the past three years with a positive net worth and no accumulated loss. A minimum of 10% of the stake of these companies will be issued in the IPO. On this announcement by the government, the Prime Minister’s EAC chairman, Mr. Rangarajan had welcomed this move as a positive step in the right direction to support capital expenditure at a time when the financial market is in a tight spot. By deploying this proceedings in the right projects currently under review by the government will be a major booster for the economy and will create asset and employment.

Through this stake sale, the government is expecting to reduce the current huge fiscal deficit which is not seen in for many generations to get reduced to an extent and relieves itself from further market borrowing. The huge fiscal deficit of almost over 10% to the GDP is putting strain on the government balance sheet. By getting such huge cash through stake sale the government can maintain its major financial measures announced in the budget.

Case study of recent listing: National Hydro Power Corporation Ltd., (NHPC)

Mr. SK Garg, the Chairman & Managing Director, of NHPC Ltd, has lauded the efforts of the government in diluting the companies share in the market which has changed the public perception on the company. It has instilled fresh enthusiasm on the employees to perform better has they are now answerable to the new board of Directors and shareholders. This has improved corporate governance. Stake holders like bankers and suppliers are taking a much improved interest in the company after listing, as it make the company to work more efficiently under public view.

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RBI announced its much awaited monetary policy couple of days back. It was almost in line with the market pundits expectation that the RBI would not increase the rate and as such, RBI has left all the key rates unchanged. It left the Repo rate and Reverse Repo rate at 4.75% and 3.25% respectively. The RBI kept the Cash Reserve Ratio, the cash banks to hold with Central Bank at its previous level of 5%. The only change the RBI made was it increased the SLR to 25% from 24%.

The RBI has indicated that it is keenly watching the inflation and it has revised it target of inflation to 6.5% from 5% earlier at the end of March 2010. This has given room for the market to predict that the RBI would no sooner than later will raise interest rates. The raise in SLR is construed as a challenge to the real estate sector. The RBI in its monetary policy review has indicated its concern over rising property prices. This set in to increase the provisioning requirement for advances by banks to the commercial sector to 1% from earlier 0.4%. This is surely going to hit realty companies that are looking to hike their borrowings from the banks. On one hand the hike in provisioning and on the other, increase in SLR is surely going to make the banks to increase the interest rates on loans to realty sector. This is a surely a worse news for the realty sector, while it is slowly coming out of the woods.

The other main concern for the RBI which was clearly reflected in its policy review is inflation which is set to rise because of poor monsoons in the recent months. The wholesale price index (WPI) started to rise because of rise in food prices. But the normal indicator for price rise tracked by India and by other countries through consumer price index is no mood to get down. In the CPI – consumer price index, front in which food has got higher weightage, the Indian consumer prices are considerably higher than in many other countries.

The favorable fact highlighted in the monetary policy by RBI is the global economic outlook. According to RBI the global economy has considerably improved since July 2009 and the same is visible in India too. Accordingly, it has referred that the present concern across all governments has shifted from managing the crisis to maintaining the growth. In this front the RBI has reiterated its concern that if the inflation continues its northwards movements, it has to raise the interest rate accordingly in the future. This had its chilling effect in the market, which tail – spinned after the monetary policy. The broader share market has fallen more than 2% percent at the end of the day. The overall global market is also in a consolidation phase and this also had it effects in the Indian market. After yesterday’s correction in the Indian market, it looks like we are going to witness a consolidation phase for some more time before a fresh rally begun.

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The current results season has indeed produced a spectacular picture about the growth in industrial activities and services. Be it IT, Manufacturing, Pharma, Banking or other sectors which has declared their results so far, are able to maintain their growth or even exceed considerably compared with previous quarter and YoY. Today major public sector banks had declared their second quarter results. The overall results of the banking sector depicts that the economy in general is maintaining its growth momentum.

Public sector bank, Canara Bank has declared its September ended half-yearly result with a profit growth of 72% at Rs.910.52 Crores as against a net profit of Rs.529.43 Crores in same half-yearly period of the last fiscal. Total income rose to Rs.5, 602.10 Crores for the first half of this fiscal as against Rs.4447.97 Crores during the same period last fiscal. The CAR has increased to 14.46% from 13.21% in the last fiscal. Its gross NPA has decreased to 1.16% from 1.29% from the corresponding Apr-June quarter. With the broader market trend, today the share price of Canara Bank also closed down at 363.60, down by 4% from previous close.

Another Public sector lender, Oriental bank of Commerce today released his second quarter ended September 30, 2009 result and reported a 14.31 per cent growth in net profit at Rs.270.80 Crores as against a net profit of Rs.236.89 Crores in the September quarter of last fiscal. The bank reported a total income of Rs.2800.90 Crores during the July-September quarter end of current fiscal, as against Rs.2361.00 Crores, a rise of 19% in the corresponding period a year-ago. The bank was able to maintain its trend in reducing the gross NPA to .66%. Further, Chairman and MD of the bank, Mr. T.Y. Prabhu has said that the bank has sought a capital infusion of around Rs.1000 Crores from the government has it expects a robust lending calendar and  to meet its growth plan for the next two financial years. The bank counter closed higher at Rs.266.00 with a gain of 2% from previous close.

Public sector lender Union Bank of India declared its September quarter ended result for the current fiscal and reported a net profit of Rs.505.10 Crores a growth of 40% compared to the same period last fiscal. Total income of the bank is at Rs.3760.90 Crores as against Rs.3704.00 Crores during Apr-Jun quarter of this fiscal. Gross NPA of the bank was reported at Rs.222.93 Crores as against Rs.116.20 Crores in the corresponding period of last fiscal, a raise of 92%. This has dragged the counter by almost 6% in today’s trading and the counter closed at Rs.250.05 as against the previous close of Rs.266.

Public sector Dena Bank reported a net profit growth of 21% for the September, 2009 ended quarter with a net profit at Rs.124.64 Crores as against Rs.102.83 Crores in the corresponding quarter of last fiscal. The bank has reported a raise of 19% in its total income of Rs.1088.03 Crores for the second quarter ended September, 2009, as against Rs.913.84 Crores, reported in the same period of last fiscal. The bank has to provide for a gross NPA of Rs.371.60 Crores. With the broader market trend, the bank counter closed at Rs.69.10, down by 8.3%.

Numbers credit IndiaEarnings.com

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The Economic Advisory Council to the Prime Minister in its recently published assessment of the Indian economy has stated that the economy is to grow by 6.5% in the current fiscal, 2009-2010. This projection by the EAC is more optimistic than Reserve Bank of India’s prediction of 6% and also by the IMF’s prediction of 6.4%. This prediction is largely based on the robust and vigorous industrial growth achieved in the second half of this fiscal.

According to Economic Advisory Council to the Prime Minister’s report, this recovery in the economic growth is unlikely to get affected in the coming quarters as the stimulus package provided by the central government during last year global financial crisis which is providing the cushion to the growth are going to be continued. Also with the benign monetary policy maintained by the RBI and continuance of the stimulus package, will definitely accelerate the economic growth in the coming quarters. This will create a good investment opportunity for the foreign funds to capture the rise in economy growth by investing in the market.

The EAC has observed that the government may consider early next year to partially withdrawing the stimulus package which has put strain in its fiscal deficit. Or the easy monetary policy being maintained by the RBI may get changed if the inflation edges past 6% which will put the RBI in a bind to increase the interest rate to cap the inflation. Overall, the EAC is indeed optimistic in the growth of the economy in the coming quarters.

The Economic Advisory Council has attributed the huge fiscal deficit in the current fiscal, 2009 – 10 because of the additional expenditure being incurred by the central government in the form of subsidies, pay revision, loan waiver. But the EAC is confident that the fiscal deficit for 2010-11 may be brought down by 1.5% from the current level, if the government maintains its expenditure on various schemes at the current levels. The current level of 10.9% of fiscal deficit is by all means way above the normal limit and EAC is advising to take up necessary corrective measures to bring down the huge fiscal deficit.

The other booster for the economy is expected from the export sector. The EAC is expecting that the third & fourth quarters of 2009 – 10 will improve dramatically because of favorable export figures from non-oil, non-gem and jewellery exports. On the import front, the EAC expects a marginal dip in the current fiscal. This is because of lesser demand for capital goods, industrial raw materials and crude oil.

The major drag on the economy front is going to come from the negative growth in farm sector. Because of deficient monsoon, the farm sector is expected to post negative growth for the first time in the last seven years at (-)2% as against a growth of 1.6% in the last financial year. Except from the expected farm sectors negative growth, the overall economy is poised to witness a good recovery and also going to sustain its growth trajectory in the coming quarters.

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You may be aware that Reliance Industries Ltd in the meeting held on october 7th 2009, they announced they are giving a Bonus of 1:1 and also a dividend of of Rs. 13.

Now what does all this mean.

Bonus Shares

Bonus shares are gifts from the company, where it issues free additional shares to its shareholders. So, if you own 10 shares of Reliance Industries Ltd, you get another 10 shares at no extra cost, taking your aggregate to 20.

Dividend

Dividend is something where company pays out small amount to the shareholders. So again if you own 10 shares of Reliance Industries Ltd you would get Rs 130 as a dividend.

Its more of a confidence boosters of long term shareholders of Reliance Industries Limited.

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This is Guest post contributed by Rose Jensen, who writes about the online colleges. She welcomes your feedback at Rose.Jensen28 @ yahoo.com

The energy situation in India saw some significant announcements recently. The country is expecting to raise its natural gas price by 44 percent to curb the losses suffered by Oil & Natural Gas Corp., India’s biggest energy producer, according to The Wall Street Journal. The price will be raised from about 88 rupees per million British thermal unit to about 127 rupees per mmBtu to make up for the revenue losses caused by selling the gas at below its actual cost. That means consumers of natural gas, from individuals to businesses, should expect to pay more for their gas soon if the proposition passes. The petroleum industry hopes that the price hike will stabilize ONGC and Oil India, the nation’s second-largest state-run energy explorer.

Both companies sell fuel at prices controlled by the government in an effort to control inflation rates. In fact, 77 percent of the gas sold in India is sold under government-mandated prices. However, this precautionary practice damaged the company’s finances, as the fuel was sold at a much lower price than it cost to obtain and process it. As a result, ONGC may have already lost up to 30 billion rupees this year alone, according to the finance site Bloomberg.com. The company produced about 60 percent of India’s gas output in the last year, and sells about 56 million cubic meters of gas a day. India’s demand for natural gas increased by 35.5 percent since last year, making it easy to fathom that selling the precious energy source at below cost was costing ONGC and Oil India a significant amount of money.

Interestingly, ONGC sharesrecently increased 3.3 percent, the most since August when shares leapt up 5 percent. Most stock analysts recommend holding rather than selling at this point.

Smaller company Oil India Ltd. is also experiencing a boom in the energy business. It recently announced that it is considering investing about 245 billion rupees with its partners to develop a natural gas field in Iran, Bloomberg.com reported. Oil India is currently negotiating a contract for the costly investment, aware that it must get a service contract with a fixed rate of return for the investment to be profitable. It will be working as part of a three-partner joint venture, alongside ONGC Videsh Ltd, which handles ONGC’s overseas investments, and Indian Oil Corp. The field, located off of the Farsi offshore block in the eastern portion of the Persian Gulf, was named the “Farzad-B gas field” and can yield up to 21.68 trillion cubic feet of gas, out of which 12.8 trillion cubic feet can be processed.

Energy concerns continue to dominate the political and financial spheres. A weak monsoon season has rural and weather-dependent industries, like hydropower, concerned, which is reflected in its sagging shares. ONGC and Oil India, although largely unaffected by seasonal changes, have also felt the sting of an uncertain market, although things are looking up now. Both companies saw a rise in shares within the last month.

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