THE WEEK THAT WAS… 14.5.2012 – 18.5.2012
From April 2011, this last one year, taking the difference between high and low, the Sensex has lost around 4000 points. This last week, the market has fallen around 600 points. The issue of Greece exiting the euro, Spain and Italy’s increased cost of borrowing, domestic rate of inflation, poor results of domestic companies and [...]
DAILY REPORT 9.2.2012
It has happened again!! The market in the last hour has covered all losses and the Sensex has advanced 123 points. At one time it was running 40 points negative. Maybe it has reacted to the global positive mood. SENSEX 17831 (+123.43) In international capital markets, DJIA, Nasdaq, FTSE, DAX and the STOXX 50 [...]
Volatility Smile
In the world of finance, it has been empirically observed that at-the-money options generally have lower implied volatilities as compared to either in-the-money or out-of-the-money.
Ramky Enviro Engineers – IPO News
The latest buzz created in the primary market in India is by the Ramky Enviro Engineers Ltd (REEL) with its plan to raise a whopping 125 million dollars through the IPO issue in the Indian markets.
Stocks to watch
TECHNICAL ANALYSIS OF STOCKS 3.3.2012
This week we focus on 2 stocks. One is from the banking sector and one is from the auto sector. The question is, is it the right time to enter these stocks?
TECHNICAL ANALYSIS OF SELECTED STOCKS 26.2.2012
STATE BANK OF INDIA (SBI) After the announcement that SBI has a large amount of NPAs in its balance sheet that needs to be provided for and also that SBI has asked the government for capital infusion, the stock was hammered in the market and the price of the stock fell below Rs.1600 levels. It [...]
CLASSROOM
ENTERPRISE VALUE (EV)
It is useful once in a while to revisit some financial concepts and clarify their usefulness. I am prompted by ET Wealth Plus dated December 5, 2011 to talk about EV.
STRATEGIC FINANCIAL MANAGEMENT 3
ALCAR APPROACH To VALUE BASED MANAGEMENT This is an approach to value-based management which is based on discounted cash flow analysis. In this framework, the emphasis is not on annual performance but on valuing expected performance. The implied value measure is akin to valuing the firm based on its future cash flows and is the [...]
INDIA VIX
IMPLIED VOLATILITY (INDIA VIX) 16.6.2011
I have already explained the concept of implied volatility in an earlier post. It is a forward looking concept and as it is expresses the expected movement of the underlying in the next 30 days. In this case the underlying is NIFTY and the implied volatility is India VIX. The relationship between the two is [...]
IMPLIED VOLATILITY AND MARKET SENTIMENT
Implied Volatility (IV) is the measure of volatility that is obtained from the Black and Scholes option pricing model. As we all know, the option price is a function of the spot price S, the strike price K, time to expiry t, volatility and the rate of interest r. If we plug in all these [...]
TRADING STRATEGIES
LEVERAGED TRADING
Leverage in a layman’s language is ‘borrowed money’. Individuals, corporates borrow money to increase their return on investment. In the stock market, leverage is the ability to trade a large position (i.e. buying large quantity in bulk) with only a small amount of trading capital. Most amateur traders trade using cash, meaning that if they [...]
FIXED MATURITY PLAN (FMP)
In the debt segment, there are quite a few assets that are available to an investor. These are fixed deposits (FD) in banks, fixed deposits with corporates, NCDs of corporates, government securities, NCDs of public sector enterprises etc. To the retail investor, the alternative of debt mutual funds is also there. Now, there are the [...]
