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Friday, January 30, 2009

Guidelines for execution of block deals on the stock exchanges

1. SEBI had issued a circular (reference no. SEBI/MRD/SE/Cir-7/2004) on January 14, 2004 on disclosures of details of “bulk” deals with a view to impart greater transparency to the market on such transactions executed on the stock exchanges. In terms of paragraph 1.1 of that circular, a “bulk” deal constituted of “all transactions in a scrip (on an exchange) where total quantity of shares bought/sold is more than 0.5% of the number of equity shares of the company listed on the exchange”. Thus the quantitative limit of 0.5% could be reached through one or more transactions executed during the day in the normal market segment


2. There is however a felt need of the market to execute large trades through a single transaction easily without putting either the buyer or the seller in a disadvantageous position. In order to facilitate execution of such large trades, the stock exchanges are being permitted to provide a separate trading window. A trade, with a minimum quantity of 5,00,000 shares or minimum value of Rs.5 crore executed through a single transaction on this separate window of the stock exchange will constitute a “block deal” as distinguished from “bulk” deal defined earlier.


3. A “block” deal will be subject to the following conditions :


a. The said trading window may be kept open for a limited period of 35 minutes from the beginning of trading hours i.e. the trading window shall remain open from 9.55 am to 10.30 am.


b. The orders may be placed in this window at a price not exceeding +1% from the ruling market price/previous day closing price, as applicable.


c. An order may be placed for a minimum quantity of 5,00,000 shares or minimum value of Rs.5 crore.


d. Every trade executed in this window must result in delivery and shall not be squared off or reversed.


e. The stock exchanges shall disseminate the information on block deals such as the name of the scrip, name of the client, quantity of shares bought/sold, traded price, etc to the general public on the same day, after the market hours.


f. There is no change in regard to the disclosure of trade details of ”bulk deals” as specified in the earlier SEBI circular reference no. SEBI/MRD/SE/Cir -7/2004 dated January 14, 2004, and such disclosures shall be continued to be made by the stock exchanges to the general public on the same day after the market hours.


4. The stock exchanges shall ensure that all appropriate trading and settlement practices as well as surveillance and risk containment measures, etc., as presently applicable to the normal trading segment are made applicable and implemented in respect of the proposed special window also.

5. The stock exchanges are advised to


a. make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision immediately.


b. bring the provisions of this circular to the notice of the member brokers/clearing members of the Exchange and also to disseminate the same on the website.


c. communicate to SEBI, the status of the implementation of the provisions of this circular in the Monthly Development Report for the month of September 2005.


6. This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

ZIMBABWE CURRENCY AND 231 MILLION PERCENT INFLATION.....!!

           Bunch of Banana's for 50 CR (1 Million = 10 Lakhs)

100 Lakh Cr (1 Trillion = 1 Lakh Cr)

10,000 Cr (1 Billion = 100 Cr)
SEVEN LAKHS FIFTY THOUSAND

From 1000 Cr to 10,000 CR (1 Million = 10 Lakhs)

50 CR (1 Million = 10 Lakhs)

10 CR (1 Million = 10 Lakhs)

5000 CR (1 Billion = 100 Cr)

ON 18th April 1980 Zimbabwe was born from British colony of Rhodesia & Rhodesian Dollar was replaced by Zimbabwe Dollar at PAR.

In 2004, Zimbabwe’s inflation was 624 %
In February 2007, the central bank of Zimbabwe declared inflation "illegal", outlawing any raise in prices on certain commodities between March 1 and June 30, 2007. Officials arrested executives of some Zimbabwean companies for increasing prices on their products. Such measures, frequently tried during other episodes of hyperinflation, have always failed.  In March 2007, inflation surged to a new high of 1,730%, and in June the government released a figure of 7,638%. The predictions for the annual inflation ranged from 3,000% (according to the IMF) to 8,000%. In fact, inflation that month rose to 11,000% from an earlier estimate of 9,000%. U.S. ambassador Christopher Dell predicted it would reach 1.5 million percent by December 2007, although in the event the IMF estimated a rate of "only" 115,000% for that month, and 150,000% for January 2008. The government then circulated a Z$200,000 note, and reports of extreme shortages of basic foodstuffs, fuel, and medical supplies abounded. The government instituted a six-month freeze on wages on September 1, 2007. Hyperinflation in Zimbabwe began shortly after destruction of productive capacity in Zimbabwe's civil war and confiscation of white-owned farmland.  Food output capacity fell 45 %, manufacturing output 29 % in 2005, 26 % in 2006 and 28 % in 2007, and unemployment rose to 80 %. During the height of inflation from 2008–09, it was difficult to accurately account and monitor for Zimbabwe's hyperinflation because the government of Zimbabwe stopped filing official inflation statistics. This cessation in filing made it difficult to accurately observe how severe inflation was in the country. However, Zimbabwe's peak month of inflation is estimated at 6.5 sextillion percent in mid-November 2008. In 2009 Zimbabwe abandoned its currency; at present in 2012 a new currency has yet to be introduced, so currencies from other countries are used.

Hanke Hyperinflation Index for Zimbabwe (HHIZ)
DateIndexMonthly Inflation RateAnnual Inflation Rate
5-Jan-071.0013.70%
2-Feb-071.7877.60%
2-Mar-073.1476.70%
5-Apr-076.9056.20%
4-May-076.75-2.15%
1-Jun-0720.70207.00%
6-Jul-0753.0060.40%
3-Aug-0749.10-7.29%
7-Sep-0782.5070.60%
5-Oct-07219.00165.00%
2-Nov-07642.00193.00%
28-Dec-072,010.0061.50%215,000%
25-Jan-082,250.0011.80%
29-Feb-088,260.00259.00%
28-Mar-0817,700.00115.00%
25-Apr-0857,100.00222.00%
30-May-08442,000.00498.00%
26-Jun-0823,600,000.005,250.00%41,400,000%
4-Jul-0849,200,000.003,740.00%93,000,000%
11-Jul-0881,800,000.002,080.00%167,000,000%
18-Jul-08122,000,000.001,030.00%250,000,000%
25-Jul-08157,000,000.00566.00%317,000,000%
29-Aug-086,330,000,000.003,190.00%9,690,000,000%
26-Sep-08794,000,000,000.0012,400.00%471,000,000,000%
3-Oct-083,570,000,000,000.0015,400.00%1,630,000,000,000%
10-Oct-0832,300,000,000,000.0045,900.00%11,600,000,000,000%
17-Oct-081,070,000,000,000,000.00493,000.00%300,000,000,000,000%
24-Oct-08124,000,000,000,000,000.0015,600,000.00%26,100,000,000,000,000%
31-Oct-0824,600,000,000,000,000,000.00690,000,000.00%3,840,000,000,000,000,000%
7-Nov-084,890,000,000,000,000,000,000.0015,200,000,000.00%593,000,000,000,000,000,000%
14-Nov-08853,000,000,000,000,000,000,000.0079,600,000,000.00%89,700,000,000,000,000,000,000%
Sources: Imara Asset Management Zimbabwe and author’s calculations

Wednesday, January 21, 2009

BARACK OBAMA SAYS ECONOMY TO WORSEN BEFORE RECOVERY..!

The year 2009 started in the midst of a crisis unlike any that all of us have seen in our lifetime. US President-elect Barack Obama, who sworn-in , has warned that the economy will get worse before it improves. Meanwhile, Wall Street ended the week on a positive note; financials, however, continue to wilt.
Obama said, “The need for us to act is now; it has never been more urgent. We started this year in the midst of a crisis unlike any that we have seen in our lifetime. If nothing is done and we continue on our current path this recession could linger for years, and America could lose the competitive edge that has served as the foundation for our strength and standing in the world.”

YOU KNOW WHAT WARREN BUFFET SAYS ABOUT OBAMA......? READ THIS

This is what he says and I am quoteing this from one of media reports---
As the President-elect Barack Obama gets all set to walk into the Oval Office as the 44th President of the United States of America now more than 24 hours, Warren Buffet, Chairman of Berkshire Hathaway and Kirby Daley, Senior Strategist of the Newedge Group, comment on Barack Obama and the challenges he will have to deal with as the president.
Warren Buffet said, “He's the absolute right Commander-in- Chief. That's another thing American people seem to do is we elect people that are right for the times, whether it was Lincoln or Roosevelt, you could not have anybody better in charge.”
Buffet added, “He's smart, got the right values, but he also understands our economics very well. He's cool, he's analytical, but then when he gets it all thought through he can convey to American people what needs to be done. Not to expect miracles, that is going to take time. But we are going to get to the other end.”
Even Kirby Daley said, “It will be a great speech. This guy is nothing if he isn’t a walking-talking speech machine.” Daley added, “He has built up so much hope in this nation. This speech is going to be of massive importance. What he should do and what he's going to do are two very different things. He should walk out there and he will go down in history if he prepares the country for what is inevitable and what is coming and that is severe belt tightening.”

Tuesday, January 20, 2009

9% FOR 2009 ? I HOPE WE CAN.........

The New Year for the Indian economy is an uncertain one. The highs that the markets reached a year ago have inadvertently led to the lows that it finds itself in. The euphoria from the Bull Run that lasted for four years has been wiped away in a matter of twelve months and has given birth to a Bear Market not seen in over half a century. For the Finance Department, getting the economy on track remains priority number one. In one sense it’s a good thing that India has not crept into a recession but the fact does remain that the magical growth rate of 9% will somehow not be that easy to achieve.
If 2009 was just another year then we could perhaps expect the government to finely balance the need of public sector units and private industry needs. A balancing act that has worked well for sometime in the past. The spanner in the works is the General Election of 2009.
An event where the world’s largest democracy will go to polls. For most parts the issue that is the incumbent point of contention is the one of Internal Security even more after the Mumbai terrorist attacks .In such a case other issues like the economy are being pushed aside. Perhaps the overwhelming sentiment for the Indian government is to somehow stay in power. The Rhetoric of anti terrorism is one way of winning seats.
From an economic point of view it’s hurting the country not to have a full time Finance Minister. With the Prime Minister also handling the Finance Portfolio, much of the finance work is being performed by senior bureaucrats of the government. With a very important Union Budget coming up in less than two months time the question that should be asked is will the finance department deliver a mini-budget to tide things over till the general election or will it deliver a full scale budget that addresses important issues?
There is also the question of growth for 2009.As said before a 9% growth is not achievable but the task of stimulating growth is paramount. In this aspect the government needs to make sure that interest rates come down for private players so that their projects aren’t stonewalled. At the same time if the rate cuts do not reflect appropriately in cheaper rates for average consumers then the problem will not have been fully solved.
Inflation is one area that seems to be under control but much of this too has come from consumers going into a saving shell. The drop in the price of crude oil has also helped the Indian economy to curb inflation as it is an importer of oil.
Were the trends to be reversed, will the Indian economy still be able to control inflation?
There are clearly many sectors that have been hit by the economic crisis of 2008.Real Estate, Infrastructure, Banking, Outsourcing and the like. Much of 2009 will be spent in cleaning up the mess of 2008.
In that sense it might not be such a Happy New Year after all.

Friday, January 9, 2009

THE SELF DESTRUCTION OF SATYAM & SPELL BACKWARDS MAYTAS

As many know the biggest scam in the history of India’s corporations has come to light. Satyam Computers, the country’s fourth largest IT Company stands on the brink of termination. More recently in the news for the failed takeover attempt of its sister company Maytas; Satyam is now staring into an abyss of anger and shame. Shareholders have dumped the stock left, right and centre. In every sense Satyam has managed to become India’s ENRON. It has cooked its accounts to show non existent revenues. We take a look at how this scam came about.
In a letter addressed to the Board of Directors of Satyam the former Chairman Ramalinga Raju whilst delivering his resignation has accepted total responsibility for the fudging of the company’s accounts. That was however of little concern as the damage has already been done.
In less than 24 hours the company could be sold to zero levels rendering it out of business. The National Stock Exchange has already removed Satyam from its Nifty index with the BSE likely to also remove it from the Sensex.
The fudging of accounts is indeed a criminal offence which if proved could very well lead to serious jail time for everyone involved in this fiasco. And upto 10 years
For now the only culpable offender seems to be Mr.Raju himself who has accepted all the blame himself in his letter. However, it is indeed difficult to believe that only he is guilty of this offence.
At some point earlier Satyam starts to make lesser and lesser profits. In order to maintain the same pace and acquire newer clients it starts to overstate its revenues and operating margins.
Profits reduce even more leading to Mr.Raju overstating his company’s revenues. While the revenues are in tens of crores, he manipulates the accounts to show them in the thousands.
Since the promoters and Mr.Raju’s family members hold minority equity stakes of Satyam Computers, Mr.Raju feels that if he reported the real figures his company could easily be a victim of a takeover. Therefore he continues to fudge figures and shows overstated numbers in quarterly reports and accounts.
Things start to become even more desperate and the fudging continues.
Mr.Raju realizes that he can’t continue to fudge figures anymore and decides to throw the dice one last time.
This time he decides to acquire Maytas Infra, A family owned company. The acquisition of Maytas could explain the discrepancies between the non-existent assets of Satyam and the existent ones. Due to massive shareholders oppositions the Maytas deal is called off. More allegations of corruption arise within the Satyam fold and the World Bank, an important client of Satyam decides to ban Satyam from doing business with the World Bank for eight years.
Finally, the writing is on the wall.Ramalinga Raju resigns realizing there are no other options left.

Monday, January 5, 2009

GOLD RESERVES AS ON DEC 2007

Gold reserves (or gold holdings) are held by central banks as a store of value. In 2001, it was estimated that all the gold ever mined totaled 145,000 tonnes.
1. One tonne of gold equated to a value of US$25.75 million as of October 2008 ($730/troy ounces)
2. The total value of all gold ever mined would be $3.39 trillion at October 2008 prices.
At the end of 2004, central banks and official organizations held 19% of all above-ground gold as a reserve asset.
3. About one percent of all above-ground gold (370 metric tonnes) was mined in the first five years of the California Gold Rush (worth approximately $11 billion at July 2008 prices).
4. IMF gold reserves refers to 3,217 tonnes of gold held by the International Monetary Fund. It is currently priced at $42 a troy ounce ($1,370/kg) for accounting purposes, a price that was fixed in 1971 just before the Nixon administration officially delinked the U.S.dollar from gold and instead allowed market forces to set the dollar's worth. An attempt to revalue the gold reserve to today's value has met resistance for different reasons. For example,Canada is against the idea of revaluing the reserve, as it would flood the market with gold and therefore depress its price.
5. It is also not clear whether the gold reserve is the property of the IMF or of member countries. As of September 2008, gold exchange-traded funds held 1,039 tonnes of gold in total for private and institutional investors.
6. The United States' holding of gold is worth approximately $241 billion (July 2008). Although the United States has the largest reserves of individual countries, in total the Eurozone gold holdings are greater (11,065 tonnes as of December 2007).
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