News reports emerging out of Brazil shows India,s biggest company reliance acting as olden day guy selling ticket in black.
Tuesday, July 8, 2014
Sunday, July 6, 2014
Market Malpractices
It seems that promoters of Indian companies are not convinced of ongoing bull nun in Indian markets.As they are resorting to offloading stocks at every rise as was evidenced by recent plethora of offer for sale or QIP fundings by companies like RCOM, GMRINFRA ,JP ASSOCIATES AND LT INFRA FINANCE.
These offloading s are often done on steep discounts to market prices,it is against the interest of existing shareholders,and are often informed to exchanges one day prior to offloading s.
Moreover these are done in mostly stocks trading in futures and punters,insiders,and big investors make a killing by shorting in futures and subsequently buying in QIP or FPO.
These are very dangerous precedents and are against good corporate governance .
Sebi should take note of these practices as they are detrimental to existing share holders and there is scope for conniving of promoters and punters for quick gains as was recently seen in Lt infra fpo the day it was included in stock future it was quoting at 88 and on second day its future is quoting at 4 Rs discount to cash and on third day company has told exchanges of floor price of Rs.70 for Fpo.
Later it was found that one hedge fund guy has heavily shorted in future and have made a killing.
He was subsequently banned but what about roles of exchange and LT management
These offloading s are often done on steep discounts to market prices,it is against the interest of existing shareholders,and are often informed to exchanges one day prior to offloading s.
Moreover these are done in mostly stocks trading in futures and punters,insiders,and big investors make a killing by shorting in futures and subsequently buying in QIP or FPO.
These are very dangerous precedents and are against good corporate governance .
Sebi should take note of these practices as they are detrimental to existing share holders and there is scope for conniving of promoters and punters for quick gains as was recently seen in Lt infra fpo the day it was included in stock future it was quoting at 88 and on second day its future is quoting at 4 Rs discount to cash and on third day company has told exchanges of floor price of Rs.70 for Fpo.
Later it was found that one hedge fund guy has heavily shorted in future and have made a killing.
He was subsequently banned but what about roles of exchange and LT management
Nifty strategies
Nifty strategies
Although most people,investors are attuned to buying every stock or any asset class in the hope of selling it later at higher price.taking into account historical prospective most of the investors are not right as there is cost of money involved in such things that they forget to factor in their calculations.
My study of nse nifty is based on such prevalent practices. And my findings based on study of last five years of nifty strategies and their performances are
1. Buy nifty every month for 60 month at start of every settlement cycle,you incur cost of carry (premium) of on an average Rs.30 every month.though nifty has risen approximately 3000 points during the period,minus your cost of carry(Rs.30*60 months) you end up earning only 1200 points that to at a greater risk as draw down can be huge sometime of 400 to 500 points
2. Sell nifty every month and wait for expiry,thereby earning cost of carry of rs 30 but due to nifty:rise of around 3000 points you are a loser that to at risk of huge draw-down every month
3. Buy nifty every month and sell a straddle and earn a premium of Rs.290. calculated depending on various implied volatility of different months.You earn 2600 points in sixty months after deducting 1800 points due to cost of carry for sixty months you earn 2600 points maximum draw-down is 392 points.
4.Best strategy although looks odd at first glance is selling nifty every month and selling straddle you earn approximately Rs.290( premium ) and Rs.30 on nifty premium(cost of carry).You earn Rs 4350 points in sixty months i.e Rs 217500(.4350*Rs 50) at maximum draw-down of 332 points.
Cost of inititating strategy is approx Rs 50000/ this is good strategy for retail-investors having moderate risk profile.earning good money over a period of time.If you redeploy your earning your returns can be huge.
Strategy has been drawn on actual nifty settlement rates from June 2009 to June 2014. Actual values of vix has been used for arriving at straddle values.Cost of carry has been assumed on basis of average.Straddle for newbies is call and put of at the money strike price and draw down is maximum loss at a given point.
My study of nse nifty is based on such prevalent practices. And my findings based on study of last five years of nifty strategies and their performances are
1. Buy nifty every month for 60 month at start of every settlement cycle,you incur cost of carry (premium) of on an average Rs.30 every month.though nifty has risen approximately 3000 points during the period,minus your cost of carry(Rs.30*60 months) you end up earning only 1200 points that to at a greater risk as draw down can be huge sometime of 400 to 500 points
2. Sell nifty every month and wait for expiry,thereby earning cost of carry of rs 30 but due to nifty:rise of around 3000 points you are a loser that to at risk of huge draw-down every month
3. Buy nifty every month and sell a straddle and earn a premium of Rs.290. calculated depending on various implied volatility of different months.You earn 2600 points in sixty months after deducting 1800 points due to cost of carry for sixty months you earn 2600 points maximum draw-down is 392 points.
4.Best strategy although looks odd at first glance is selling nifty every month and selling straddle you earn approximately Rs.290( premium ) and Rs.30 on nifty premium(cost of carry).You earn Rs 4350 points in sixty months i.e Rs 217500(.4350*Rs 50) at maximum draw-down of 332 points.
Cost of inititating strategy is approx Rs 50000/ this is good strategy for retail-investors having moderate risk profile.earning good money over a period of time.If you redeploy your earning your returns can be huge.
Strategy has been drawn on actual nifty settlement rates from June 2009 to June 2014. Actual values of vix has been used for arriving at straddle values.Cost of carry has been assumed on basis of average.Straddle for newbies is call and put of at the money strike price and draw down is maximum loss at a given point.
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