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We all know about P/E Ratio, but what is this PEG Ratio and what does it mean? The PEG ratio or Price/Earnings to Growth ratio is one of the most popular valuation ratio calculated for determining the relative trade-off between the price of a stock, the earnings per share (EPS), and the company's expected growth rate. This was popularized by Peter Lynch , who wrote "The P/E ratio of any company that's fairly priced will equal its growth rate", i.e., a fairly valued company will have its PEG equal to 1. Basic formula: PEG = (P/E) / (projected growth in earnings). For example, a stock with a P/E of 30 and projected earnings growth next year of 15% would have a PEG of 30 / 15 = 2. A lower ratio is 'better' (cheaper) and a higher ratio is 'worse' (expensive). What does PEG tell us? PEG, which is derived from P/E ratio, is generally higher for a company with a higher growth rate. Using just the P/E ratio would make high-growth companies overvalued relative

Deciding to invest in a small business can be a wise financial decision if your research is done carefully and thoroughly. Smart and savvy financial advice for any investment is to never invest more than you can afford to lose. Use discretionary funds in order to minimize your risk and maximize your potential for return. Any investment is a risk, but there are ways to ensure that you are making a wise investment. If you do intend on investing larger sums of money, it can be more profitable to invest small amounts with several companies. If a few of the investments do turn out to be losses, they can be offset by a few highly successful investments. No matter what investment strategy you end up taking, it is important to remember not to invest more than you can afford to lose. Professional venture capitalists will tell you there are no magic formulas for deciding where or how to invest your money, but there are basic elements that are important to consider first. Investigate how long a p

Many people are hesitant to invest, even when the market would be in their favor, because they see investment as a dangerous, “high risk” gamble, rather than as an opportunity to grow their wealth.Granted, there is some inherent risk in investing, but it isn’t as wild as some think it is, and more importantly it is a risk that can be managed, if handled correctly. Diversify Your Holdings To the lay investor, diversification is an earful, and probably sounds technically intimidating, but diversification is actually one of the simpler, and most effective, ways to minimize investment risk. Simply put, diversification is not putting all your eggs in one basket. That is to say that you shouldn’t over-invest in one stock or fund, because, while it may be exciting when it is performing well, if the value drops, it will be devastating. Conversely, if you divide your risk across several stocks, you will get multiplied benefits when they are all performing well, and won’t be crushed if one of

We all know mutual funds, but what are inverse mutual funds all about? They are a special type of funds in which the value goes up when the stock market comes down. They are nothing but "short funds" or funds having short positions of the index or stocks. By investing in this fund investors/traders can take advantage of fall in the markets. The main objective of the inverse mutual fund is to provide investors with an alternative during market-decline and in the case where they cannot short sell the index. This type of fund is generally linked to the market index such as the S&P 500 or any other benchmark index. The value of such funds change similar to the traditional funds, on a daily basis, say if the index declines by 1 percent in a day, the fund value increases by 1 percent for that day. In what other ways these funds differ from the traditional funds? While a traditional mutual fund purchases shares of index or stocks, which is income generating in the form dividends

A stock split is sometimes confused with bonus shares, however it is different from bonus shares. So, what is the difference between these two and which one is better for the investors? To start with some basics - all publicly-traded companies have a set number of shares that are outstanding on the stock market. These shares are nothing but sub division of capital. So if a company's capital is 100 m divided into 10m shares of 10 each, then this 10 is called the face value of the share. Stock Split: A stock split is usually done by companies if their share price increase to levels that are either too high or are beyond the price levels of similar companies in their sector. The move is generally seen to improve the liquidity of scrip since more investors participate due to the smaller ticket size. A stock split is done to increase the number of shares that are outstanding by issuing more shares to current shareholders. For example, in a 2-for-1 stock split: Two shares for  one share.

The buzz word in the investing world is now - GOLD. Nowadays, there are many ways to invest in gold, other than buying physical gold and they are Gold ETFs and Gold Funds. There is a lot of confusion among retail investors about understanding and investing these products and we are quite sure this article would clarify things better. To make things clear, both Gold ETFs and Gold Funds are mutual fund products — only the mode of purchase differs. The Gold Funds are fund of funds, which invest in their own fund house ETFs, for e.g., HDFC Gold Fund invests in HDFC Gold ETF. Similar funds have been launched by Reliance mutual fund, Quantum mutual fund and Kotak mutual fund. Investors can get details of these funds from their respective websites. Gold ETFs: ETFs are exchange traded funds launched by leading mutual funds which are traded in stock exchanges like Nse and Bse. You need a Dmat account and a trading account with your stock broker, to buy and sell these ETFs. Charges involved are

With the emergence of smart phones, mobile applications have completely transformed how we live our lives. Applications make activities that we were once only able to perform in a stationary environment into something that we can do anywhere, anytime. Of the millions of activities, like banking, shopping, and more, that have now been made mobile, even stock trading is now made that much easier thanks to mobile apps. Here are some of the best ones out there: 1. Bloomberg Bloomberg, the media and financial services behemoth, has always been a one-stop shop for information about the markets. Now, Bloomberg is available on a nifty app, so that you can have real-time stock information, market news, and more right in the palm of your hand. 2. E*Trade Mobile Pro If you use E*Trade to buy stocks, then its mobile app is especially helpful, since you can use it to buy and sell stocks, transfer money from any financial institution, and monitor the markets with comprehensive charts and live stock

Goldman Sachs is a leading global investment banking, securities and investment management firm that provides a wide range of services worldwide to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals. With effect from 14th July 2011, Benchmark Asset Management Company Private Limited (BAMC) and Benchmark Trustee Company Private Limited (BTC) are a part of the Goldman Sachs group. Subsequent to this acquisition, all the schemes of Benchmark Mutual Fund will be renamed. Benchmark Mutual Fund has 13 schemes in operation currently. The popular ETFs of Benchmark Fund - Gold Bees and Nifty Bees would be renamed as GS Gold Bees and GS Nifty Bees . Hence investors need not worry too much since change in the name of the schemes will not result in any change in the basic characteristics and fundamental attributes of the schemes. The name changes of other schemes are available here . Also during trading hours o

The buzz word now in Gold Market is E-Gold from National Spot Exchange. What's this E-Gold all about and how is this different from Gold ETFs, which are already traded in National Stock Exchange? E-Gold is offered by National Spot Exchange Limited(NSEL) which enables you to buy gold in electronic form, and hold it in a Demat account. Features of E-Gold: 1. You can buy and hold minimum of 1 gram of E-Gold in electronic form. 2. The commission and the transaction charges would be about 0.5%,same as you buy any other ETF from NSE. 3. E-Gold can be converted it into physical gold, which is known as re-materialization and there are charges for this re-materialization. The minimum quantity for converting into physical gold is fixed as 8 grams. 4.Rematerialization facility is currently available in 15 major cities and hence if you want to convert it to physical gold, check with your broker. 5. VAT: When you rematerialize you will have to pay some rematerialization charges (which will be

Investing your money can be a great way to ensure your financial future. With the right investment choices, you can be sure to have money for emergencies, to put towards the education of your children, and to have available when the time comes for you to retire. There is a key word in the preceding phrase however- “right”. If you make the wrong investment choices, you may just end up where you started or worse than that.Most people who invest wisely by making the right decisions with their money, follow the same basic investment pattern, although they may define it by another name. The following are simple but valuable investing rules, which have withstood the test of time and by following these, one can be successful in their investing venture. Allocation: First of all, make sure that the money you choose to invest is indeed earmarked for the purpose. Do not put up money that you cannot afford to lose,in case the market takes a downturn and remains in a bear market for a longer time

S&P 500 and Dow Jones Industrial Average(DJIA ) indices are two of the world's most followed indices and are considered as the barometers of us markets. These indices have displayed historic resilience in holistically capturing the movements of the US markets. NSE is introducing rupee denominated future contracts on S&P 500 and DJIA indices. This is the first time in the world that futures contracts on S&P 500 index are being introduced and listed on an exchange outside USA. S&P 500 is a free-float capitalization-weighted index 500 leading companies of the us economy and widely regarded as the best single gauge of the us equities market. Dow Jones Industrial Average (DJIA) is a price weighted index having 30 large and liquid blue chip stocks traded on U.S. exchanges. Contract Details: The contract size for the S&P 500 is 250 units and DJIA is 25 units, which approximately works out to 2.5 lakhs per contract. There are four quarterly expiry contracts in the

6 Simple Tips for Better Money Management While Investing Investing is always scary, especially for beginners. Investing during a global recession can be downright terrifying. That’s why using common sense is more important than ever. In this article, we will share 6 easy tips for better money management for investors. Many of these hints are also recommended by CNN, Fortune, and Money. 1.Invest on a schedule. Sticking to a schedule is good advice for many of life’s pursuits. Every month, put the same amount into a mutual fund. You will be able to keep track of your money better. Plus, this allows you to pick up more shares while they are cheap and fewer when they are expensive. 2.Take multiple investments. Your mother probably told you not to put all your eggs in one basket, and she was right. Diversification cuts back your risk. Of course, you can never totally get rid of risk, but mixing up your portfolio helps. Please don’t invest solely in company stock. If the company takes a div

L&T Finance Holdings has come out with an IPO of via issue of equity shares of Rs. 10 each priced between Rs. 51 to Rs. 59 per share. The company is promoted by Larsen & Toubro Ltd , one of the leading bluechip companies in India, with wide range of interests in engineering, construction, electrical and electronics manufacturing and services, information technology and financial services. L&T Finance Holdings has a strong retail reach with more than 800 points-of-presence spread across 23 states. The company is a subsidiary of L&T Limited, which holds 95% and it is the holding company for the following three businesses conducted via wholly-owned subsidiaries: 1. L&T Finance – retail and corporate finance lending. 2. L&T Infra – infrastructure financing. 3. L&T Investment Management with a mutual fund business. Details of the issue: Issue Size: Rs. 1,245.00 Crore. Issue Open: Jul 27, 2011 - Jul 29, 2011. Issue Price: Rs. 51 - Rs. 59 Per Equity Share. Market L

How to make money from stock market? You would find the answer once you understand and remove the myths about stock market investing. Like most different companies or industries, the stock market too has its share of legends and myths. These myths are responsible for some people maintaining a safe distance from the markets. By doing so they are losing the chance to get involved with shares and experience the industry. Here we try to dispel several of the myths about stock market investing. Shares are dangerous : While shares tend to be risky if active trading is done, but if investing is done over the long-term they perform well. So if you‘re in the market for the long haul, don’t worry about short-term ups and downs. In addition keep away from purchasing shares on borrowed funds. Don’t take loans for investment and invest only the amount that is available to you. Stock market is gambling : This myth is potentially the most damaging one. It is the cause of a lot of investors keeping a

This is an update of the earlier article on Historical Sensex Returns , which gives complete details about Sensex's yearly returns. In this article we analyze the monthly and yearly returns of the Sensex in the last 10 years. As we can seen from the table below, except for the year 2008 and earlier couple of years, the returns from the index have been well over 15% and the returns were as high as 73%. Also one can see after the fall of over 50% in the year 2008, the following year's returns were about 81%. As we can note from the above table, the average returns for the past 10 years is around 18.3%. Hence if an investor is investing in an index fund or ETFs like Nifty Bees  , over a longer time frame of 5-7 years, the returns are spectacular. The important point to note here is that, though the index has almost regained its previous peak of 21000 in 2008,  many of the individual stocks are still languishing around 2008 levels. This again emphasis the fact the investing in dive

The National Stock Exchange (NSE) will launch interest rate futures on the 91-day treasury bills from July 4. So, what is this interest rate futures is all about? Interest rate futures (IRF) is a standardised interest rate derivative contract traded on a stock exchange to buy or sell an interest bearing instrument at a specified future date, at a price determined at the time of the contract. Why are they issued? These Money market instruments are issued to finance the short term requirements of the Government of India and they are issued at a discount to face value (Rs 100). The return is the difference between the par value and issue price There are different types of T-bills based on the maturity period like 91 days, 182 days and 364 days. Such instruments are very helpful for banks and mutual funds to hedge their exposure. How are they quoted? Quote Price = 100 minus futures discount yield. E.g. For a futures discount yield of 7% p.a, the quote price would be 100 – 7 = Rs 93.00.

In continuation of earlier article about the basics of Exchange Traded Funds (ETFs) and pros and cons of investing in ETFs , let us look at the list of ETFs available in India. With regard to Equity ETFs, there are a few Index funds, couple of banking sector funds and an international index like Hangseng Bees. Similarly in the Commodity ETFs,there are a quite a number of Gold ETFs, which has attracted a large number of investors, of late. Interestingly there aren't any Silver ETFs and one can expect such an ETF soon. The following is the list of ETFs available in India and traded in National Stock Exchange of India . The list shows the Fund house, name of the scheme and the NSE symbol. Equity ETFs: Benchmark Mutual Fund: Banking Index Benchmark Exchange Traded Scheme - Bankbees . Hang Seng Benchmark Exchange Traded Scheme Hangsangbees. Infrastructure Benchmark Exchange Traded Scheme -Infrabees. Nifty Benchmark Exchange Traded Scheme- Niftybees. Nifty Junior Benchmark Exchange Trad

In this second part of the series about Exchange Traded Funds (ETFs), we look at the advantages and disadvantages of ETFs. As we have seen earlier in Part 1  , ETFs trade like shares while providing the diversification of managed funds. Though they are similar to mutual funds, they differ in their diversification like index, commodities and different sectors. Their performance closely tracks the investment returns of the shares making up the index or the commodity they are invested into. Benefits of investing in ETFs: 1. ETFs are passively managed, have low distribution costs and minimal administrative charges. Hence most ETFs have lower expense ratios than conventional Mutual Funds. 2. Not dependent on the fund manager, the ETF just tracks the index. 3. Like an index fund, they are very transparent. 4.Convenient to buy and sell as it can be bought/sold on the stock exchange at any time of the day when the market is open. 5.One can short sell an ETF or buy even purchase one unit, which

Currently, Inflation is the buzz word and let us take a look how inflation affects stocks markets and stock prices. To put it in simple words, Inflation is - your money loses purchasing power and as a result you buy less with the money you have than before. When the inflation rates start to rise, investors get very nervous anticipating the potentially negative consequences. Many industries wait for the response of the Central Bankers or the Reserve Bank of India (RBI)  for their measures combating inflation. One of the measures is to increase interest rates, which the RBI is currently doing in its monetary policy. However, the rising prices and the higher interest rates don't lead to positive effects on the investment portfolios of investors. When the interest rates are increased it becomes more expensive for the companies to borrow money and their borrowing costs is increased, and expansion plans are slowed down. Since the revenues and earnings of companies tend to rise at the sa

An exchange-traded fund (ETF) is an investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks,commodities and bonds. Most ETFs track an index, such as the S&P 500 or NIFTY. They first came into existence in the USA in 1993. It took several years for them to attract public interest. Over the last few years more than $120 billion is invested in about 230 ETFs. About 60% of trading volumes on the American Stock Exchange are from ETFs. The most popular ETFs are QQQs (Cubes) based on the Nasdaq-100 Index, SPDRs (Spiders) based on the S&P 500 Index, iSHARES based on MSCI Indices and TRAHK (Tracks) based on the Hang Seng Index. In India , Nifty Bees is the first index fund which tracks the S&P CNX Nifty. Let us take a look at  different types of ETFs. Index ETFs : Most ETFs are index funds that hold securities and attempt to replicate the performance of a stock market index. An index fund seeks to track the performance of an index by holding

When it comes to investing in stock markets, an investor is exposed to two kinds of risks - systematic risk and unsystematic risk. Systematic risk is due to macroeconomic movements and it affects the whole market, while unsystematic risks are company specific risks. When we buy a stock of a single company we are exposed to both systematic risks (market risk) and unsystematic risks( company risk. But when we buy a diversified mutual fund or a portfolio we are exposed only to systematic risks and there is no unsystematic risks due to proper diversification by the mutual funds. Let us take a look at some of the major advantages of mutual fund over stocks : A mutual fund gives diversification : If you have only 1,000 to 5,000 to invest, the money will not buy many shares of a single stock, and it will certainly not buy many different stocks. By putting your money in only two or three stocks, you are exposed to the possibility that one of them will plummet in price, wiping out much of your

Jubilant Foodworks is flying all around the place and hit an all-time-high of Rs.807, recently. The company came out with an IPO at Rs.145 in 2010, later listed around Rs.200 and it is currently trading at Rs.800. What's buzzing around ? Is it just the momentum or is there any extra flavor to this stock? The company, known for its popular brand Dominos Pizza , has more than 50% single store cities. In 4QFY11 it entered new cities such as Patna, Bhubaneswar etc. These regions present huge opportunity for penetration-led growth, success of the product in these cities would be a key factor to watch out for in FY2012E. Currently 65% of sales are contributed by top seven cities and 50% of stores are located in Maharashtra, New Delhi and Karnataka. The company currently trades at more than 50 x 2012E Eps of Rs.15 , which is on the higher side.The company's business model is good and there is huge growth opportunities for the company driven by changing demographic and socio-economic

Paypal has issued new regulations for its users in India. Here’s what PayPal sent out in its latest email to users in India. As part of our ongoing effort to comply with the requirements set out in the notification of the Reserve Bank of India (“RBI Guidelines”) that apply to all online payment gateways, all PayPal users in India will be required to add the following to their PayPal account in order to continue to receive export-related payments and withdraw money: 1.A purpose code related to the majority of commercial activities for export-related payments 2.A PAN or Permanent Account Number 3.A bank account in India (if not previously added) The PAN and Bank account details are for individual users and the Purpose code is for commercial activities. More views and reactions are expected from these new regulations.

The country's premier commodity exchange Multi Commodity Exchange of India Ltd (MCX) has launched 1 gram gold contract namely Gold Petal futures contract, which is primarily launched targeting small traders. Already there are many such contracts developed by MCX like Gold (1 Kg), Gold Mini (100 grams) and Gold Guinea (8 grams). The trading unit of the gold contract is 1 gram and the initial margin required to trade will be 4%, which would be around Rs.100, based on current market price of Rs.2100. The delivery of contract is possible in dematerialised or physical form, but the minimum quantity has to 8 gm.The physical delivery is available in multiples of eight gram coins with London Bullion Manufacturers Association (LBMA) certified 999 purity. The delivery centers are G4 Securitas at Mumbai, and other major cities. There are many Gold ETFs like Gold Bees by Benchmark funds and many other ETFs by various fund houses like Reliance, HDFC available. Small investors can take the r

The country's premier stock exchange NSE (National Stock Exchange), has launched a new website in the interest of small investors to spread awareness and benefits of buying gold exchange traded funds (ETFs).In 2007, there was only one Asset Management Company (AMC), Benchmark Fund offering Gold ETF,(Gold Bees) in the market. As on date, there are more than 10 AMCs offering Gold ETFs and investing in them is getting more and more popular and easier. Gold ETF is gold in an electronic form and it is just like buying shares of any company through a broker. Through Gold ETFs, one can even buy just one gram or half a gram of gold at a time. Gold prices had risen more than 20 per cent compounded annual growth rate (CAGR) since April 2007. While 10 gm of gold cost Rs. 9,357 in April 2007, it is now priced at over Rs 20,000. To know more about Gold ETFs, you can read it here at Gold ETFs and Nse's website NseGold .

Crude Oil has shot past 100$ barrel mark and currently trading above that for quite sometime now. So where is crude oil heading towards? Crude oil prices are influenced by various factors but demand and supply remain the most crucial among them. Inventory data provides a useful snapshot of supply and demand balance. Globally, crude oil traders take cue from the U.S. weekly surveys hence monitoring this data is of significant prominence. Also, crude oil is an international commodity so international crude data is important to follow. With US being the biggest consumer of crude oil in the world, one can draw some conclusions from its inventory levels, which impact the crude oil price movement. For the week ended 18 March 2011. U.S. crude inventories rose 2.13 Mn bbls (W-o-W, as against market expectations 1.6 Mn bbls) and 1.5 mn bbls (Y-o-Y) to 352.8 Mn bbls, as imports rose. As we can see Crude oil inventories are at historically high levels. Despite high inventories in US, crude oil p

Reliance Mutual Fund is launching Reliance Gold Savings Fund which intends to invest in units of Reliance ETF. We know about many Gold ETFs and what is this Reliance Gold Savings Fund all about? This is a fund which invests in already existing Reliance Gold ETF to the extent of at least 95% of the corpus size, and becomes a fund of funds which is first in its kind in India. The Fund allows the investors to invest in Gold the through physical mode and thus makes it convenient for investors who do not have a broking account or a demat account . The fund seeks to make the investment in gold in a more convenient manner by allowing investment through systematic investment and transfer plans.The fund focuses on providing the returns as provided by Reliance ETF, which invests 99.5% of its portfolio in bullion. NFO Features: Open Ended Fund of Funds. Issue open:14 February, 2011 -28 February, 2011. NFO Offer Price: Rs.10 per unit. Minimum Application Amount : Rs.5,000. Entry Load: Nil. Exit

Do Technical Analysis and Charting Work? Can Technical Analysis and Charting make me money? Is there any Secret Formula for Success in Trading? These are the questions which are always on every trader's mind. There are many documented success stories of individuals who win big year after year, using technical trading methods exclusively.There's Ed Seykota, who multiplied his clients’ accounts by 2500 times(250,000%) in about ten years and Michael Marcus, who parlayed a $30,000 initial stake into $80 million. Another famous trader, Larry Williams, who won a national trading competition in 1987 by multiplying $10,000 into over $1,000,000 in one year. He subsequently wrote a book titled, How I Turned $10,000 Into $1 Million in One Year. Is there any Secret Formula to make such money? Did these gentlemen discover the secret to riches? Not according to them. Each of these traders said they use technical methods, almost exclusively. If you read their interviews, you will find that e

The Sensex didn't perform as well in 2010 as it did in 2009. In 2009 the Sensex returns was 77% and in 2010 it was just about 18%. But some of the individual sectors performed better than the benchmark index. The top sectoral perpformances came from the consumer durables with a spectacular 64% return, followed by the auto sector and the healthcare sector which posted an impressive 33% returns each.The biggest loser was the realty sector,down about 25% and the power sector fell by 7%. So, going forward, what is the outlook for equity markets and other investing opportunities in 2011? One of the most important things to look at for 2011 is where to invest. Should one choose Stocks, Bank FDs or Commodities like precious metals? Equities: There is no doubt markets are fairly valued on FY11 Sensex EPS numbers and Investors entering at current levels have not big upside left. But for a longer time horizon , there is for scope for making gains, based on FY12 numbers. The Sensex EPS esti