Silver---Time to Buy ???

The silver bubble busted badly and came down to 32 level. Few days before it was trading at 49 level which was marked as 52 week high at that moment. Currently it is trading at its 52 week low level, taking the clues from the global market. The fear of monetary policy tightening in China & the strengthening of Dollar index has led the free fall of the global commodity market without any big rally. China, being the biggest importer of commodities, are likely going to hike their interest rate to tackle inflation which is well above their comfort zone.  

The news directly affected commodity market as demand of Silver & other commodities will go for a toss if China production dampens. 

Hence the question rises whether it is the right time to but silver or not?

According to my view this is the best time to enter into silver market. If silver breaches 32 level then it may came down to 26-28 level. So buying in every dips is advisable because the price level is offering an attracting price to enter. A further averaging can be done in down level if price breaches 30-32 level keeping in mind that the upside potential is huge for this particular metal.

Impact of Foreign & Domestic Inflow in Indian market

The net fund inflow from the Foreign Institutional Investors (FII) as well as from the Domestic Institutional Investors (DII) in equity and debt segment is one of the leading fundamental indicators of market movement in India. Being a part of BRICS countries, India is always been one of the favorite market to invest for the FIIs. Until USA & China market recovers properly from the recession affect, India is going to be the one of the favorable hunting ground for these investors.

This paper is an attempt to show the relation between FII & DII inflows and change in Nifty for the year ended 2010-11.

·        Correlation between Nifty & FII net inflow in the year 2010-11

	Month	FII investment(in cr)	Nifty( As on 31st)	Change in Nifty(MoM%)
2010	Apr	2667.37	5278	0.552486188
	May	-12071.1	5086	-3.637741569
	June	7713.95	5312.5	4.453401494
	July	8541.06	5367.6	1.037176471
	Aug	7537.3	5402.4	0.648334451
	Sep	22475.64	6029.95	11.61613357
	Oct	14388	6017.7	-0.203152597
	Nov	5350.87	5830	-3.119131894
	Dec	-722.19	6134.5	5.222984563
2011	Jan	-8903.6	5505.9	-10.24696389
	Feb	-7213.39	5333.25	-3.135727129
	Mar	7976.89	5833.75	9.384521633

                                                 Data Source: www.moneycontrol.com

Correlation(FII,Nifty)

0.715183

Inference: The degree of correlation between net FII inflow & change in NIFTY is around 71% which is a fairly high degree of correlation.

·        Correlation between Nifty & DII net inflow in the year 2010-11

	Month	DII investment(In cr)	Nifty( As on 31st)	Change in Nifty(MoM%)
2010	Apr	2190.66	5278	0.552486188
	May	6361.19	5086	-3.637741569
	June	-4777.05	5312.5	4.453401494
	July	-6271.92	5367.6	1.037176471
	Aug	-4552.68	5402.4	0.648334451
	Sep	-11886.63	6029.95	11.61613357
	Oct	-11812.9	6017.7	-0.203152597
	Nov	2468.82	5830	-3.119131894
	Dec	634.99	6134.5	5.222984563
2011	Jan	5237.14	5505.9	-10.24696389
	Feb	6030.9	5333.25	-3.135727129
	Mar	-37.93	5833.75	9.384521633

                                                                      Data Source: www.moneycontrol.com

Correlation(DII,Nifty)

-0.58372

Inference: As shown above, the correlation between DII net inflow & change in NIFTY is - 58%. The correlation is fairly significant and it shows nonetheless, an inverse relation between DII buying-selling and market movement.

·        Correlation between FII & DII investment in the year 2010-11

	Month	FII investment (In cr)	DII investment(In cr)
2010	Apr	2667.37	2190.66
	May	-12071.12	6361.19
	June	7713.95	-4777.05
	July	8541.06	-6271.92
	Aug	7537.3	-4552.68
	Sep	22475.64	-11886.63
	Oct	14388	-11812.9
	Nov	5350.87	2468.82
	Dec	-722.19	634.99
2011	Jan	-8903.6	5237.14
	Feb	-7213.39	6030.9
	Mar	7976.89	-37.93

                                               Data Source: www.moneycontrol.com

Correlation(FII,DII)

-0.914964334

                 

Inference: As shown above, the correlation between FII & DII investment is - 91%. The correlation is highly significant and it shows nonetheless, an strictly inverse relation between FII & DII cashflow.

The study reveals the fact that India is still a safe market to invest because of the highly negative correlation in between FII & DII movements which reduces panic in market. At the same point of time, it is to be noticed that retail investors are more biased towards FII movements than that of DIIs because of the volume and effectiveness & global valuation of the FII investment.

Do not sale demat & Trading...Sale the essence of Equity......

The financial advisory business is going through a fundamental change in its mode of operation.Almost all financial institutions are looking for certified professionals, not the fresh graduates, for their sales vertical.The positive aspect in this move being a reduction in mis-selling & an increase in customized product selling.

This product knowledge at the time of selling is most important in case of equity selling.Investment in equity offers high return with high risk.The risk varies with customer's age, profession, dependents and investment time horizon.Now it is to be remembered that if properly tracked and rightly reshuffled, an equity portfolio can become an inheritable all rounder in your investment basket giving both capital appreciation and tax efficiency  under one roof.The beauty of equity investment lies in the fact that it can enrich your portfolio by beating inflation by quite a large margin.

To increase standard of living after having a high inflation in a  country like India,a exposure in equity is must for all young individuals.A middle aged person at his mid 30, can think for a equity as an investment for his retirement. A person aged anywhere between 40-50, should invest a part of his surplus to equity for his/her child's higher education & marriage.A retired person also should have a minimum exposure in shares after assuring his monthly income from other debt instruments, to take care of his vacations and other desires.But , keep in mind that this kind of long term thinking doesn't mean that you are not going to give revenue to your broker by reshuffling his equity basket on a regular basis.Obviously you will do that.

To summarize, if a professional knows the importance of equity in his customer's life and if he can deliver the same knowledge to his/her customer, then the Demat & Trading a/c opening becomes just a mere paper work which relates the client with the equity market.So it is always advisable to sell what equity can do( than selling what your broker can do), and assuring your client that you are going to help him to track his investment and to reach the target return from the investment.

Ongoing NFO

Mirae Asset India-China Consumption Fund
               (An open ended equity oriented scheme)

An open ended equity oriented scheme that seeks to generate long term capital appreciation through an actively managed portfolio investing in equity and equity related securities of companies that are likely to benefit either directly or indirectly from consumption led demand in India/China. The scheme does not guarantee or assure any returns. 

Asset Allocation:

• Indian Equities and Equity Related Securities of companies that are likely to benefit either directly or indirectly from consumption led demand: 65 - 90%.

• Chinese Equities and Equity Related Securities of companies that are likely to benefit either directly or indirectly from consumption led demand: 10 - 35%

• Money Market Instruments (including CBLO) / Debt Securities Instruments: 0 -25%

Minimum Investment: Rs 5000

NFO Dates: 09.03.2011-23.03.2011

NFO Price: Rs 10 Per unit

Limitation: Investment is limited in consumption sector only

PTC India Financial Services-IPO Status

Company Profile: Incorporated in 2006, PTC India Financial Services Ltd (PFS) is an Indian non-banking financial institution, a subsidiary of and promoted by PTC India Limited ("PTC"). They are financial institutions in India that provide both equity and debt financing, including short-term and long-term debt, as well as structured debt financing. They are currently focusing on power generation projects in India. Thet also provide fee based syndication and advisory services as well as carbon credit financing against certified emissions reduction (CER) exclusively to the power sector.

Issue Details:    

  Issue Open:       16.03.2011- 18.03.2011
  Issue Type:       100% Book Building
  Issue Size:         156,700,000 Equity Shares of Rs. 10
  Issue Size:          Rs. 407.42 - 438.76 Crore
  Face Value:        Rs. 10 Per Equity Share
  Issue Price:        Rs. 26 - Rs. 28 Per Equity Share
  Market Lot:       250 Shares
  Minimum Order Quantity:      250 Shares
  Listing At:          BSE, NSE

** Discount of Rs 1 to the issue price is available for the retail Individual Bidders

IPO Rating: 

Organisation: CRISIL            Grade: 3 (1-5)                Indication: Average Fundamentals

Organisation: ICRA/CARE            Grade: 4 (1-5)                Indication: Above Avg Fundamentals

Over-subscription detail:

Qualified Institutional Buyers (QIBs): 2.85 Times

Non Institutional Investors: 0.22 Times

Retail Individual Investors (RIIs): 1.18 Times

Total: 1.70 Times

Our Recommendation : Avoid