Festival of Stocks – 169th Edition

This week I have the honor of hosting the 169th edition of the Festival of Stocks.  This is the second time TIPBlog.in is hosting the festival. According to the festival’s original sponsor, ValueInvestingNews, The Festival of Stocks is a blog carnival dedicated to highlighting bloggers’ best articles on stock market related topics. This will include research and commentary on specific stocks, industry analysis, ETFs, REITs, stock derivatives, and other related topics.

Now, on to this week’s submissions. There are a lot of good posts included in this festival from writers and thinkers. I hope you enjoy reading all of them as much as I did!

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Telecom Companies Following Path Airlines Did – Digging Their Own Graves

riskLately, we are seeing telecom companies cutting voice and SMS rates in an attempt to keep up with one another. The main focus in these rate cuts is to ensure that they maintain (or increase?) their market share. The rates are now being calculated in paisa per second for voice and one paisa for one SMS message. Coming from the consumer side these are best times to be using cellular phone for communication. To me, pricing these services in terms of paisa and seconds means this is practically free, relative to what a rupee can buy in today’s market. More so, when you start thinking about the capital expenditure in developing these communication networks and licensing fees involved.

As an investor, I believe these telecom companies are digging their own grave. These do not seem to make any economic sense. You will not find Rs 5 cutting tea on the roadside, but you can use a high tech wireless communication network for 30 minutes for less than Rs 5. Something is missing here. The rates for making calls were already among the lowest in the world. Now, this mad race will bring it down further, and will perhaps make them the lowest in the world. I am passing few of the publicly traded companies through my stock screen to see if it generates interest in me.

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Hyderabad Industries: Stock Analysis for Long Term Investments

http___www.hilHyderabad Industries Ltd (BSE:HYDIND) sells products in the building and construction industry. Its product range include Fibre Cement roofing sheets in the name of CHARMINAR, Autoclaved Aerated Concrete Blocks and Panels called AEROCON, Calcium Silicate insulation product called HYSIL, joining material for Gaskets, Plant and machinery for these products.

HYDIND is a part of C.K.Birla group of Companies. This group of Birla’s also owns the waning Hindustan Motors (i.e. Ambassador brand). My objective in this analysis to see if HYDIND is a good fit for my portfolio.

Trend Analysis

The whole reason for any business to exist is to generate sales revenue and make more profits. At a minimum, the parameters listed below should have continuously increasing trends. All the data below is based on last 10 years i.e. from 2000 to 2009.

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Investing Strategy for NIFTYBeES ETF

1212912_growing_graphMy objective of investing in index based ETF is to have a total return that is somewhat similar to the market performance as a whole. It also acts as my benchmark for other long term portfolios. As mentioned in earlier post, if I cannot beat the market by stock selection, I should just close my long term portfolio and invest everything in these index ETFs.

My initial thought process was I would be investing upto 30% of my long term portfolio into index funds. However, after spending some time reading and understanding the various available funds, I have come to realize that there is not much choice available to individual investors. This is not to say, I do not like ETFs. I am still a fan of ETF assuming that they are structured properly and have reasonable expenses. In general, most of the ETFs have low liquidity and high expenses. I do not want my investments to get stuck in the low liquidity funds.

As of now, I will continue to remain under allocated to index ETFs. I do not know what be would the targeted allocation. I will let readers know when I make a decision.

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Selecting NIFTY Index-Based ETF

ETF_imageI have been trying to understand the options available for the index based investments that include index based mutual funds or exchange traded funds. In principle, I am fan of exchange traded funds because (a) they follow a given index; (b) no manager involvement; and (c) low cost structure. Index based fund investments are very good vehicle if an individual wants to avoid stock selection and just wants to follow the index performance. In general, for last 10 years, the NIFTY index has returned an average of 15.5% per year. This return excludes the dividend payments.

The objective for my investment in ETF index fund is to follow the index performance. It will also act as a benchmark for my long term investments. I invest in individual stocks for long term wealth generation hoping to exceed the market performance. At a very minimum level, I would like my long term portfolio to beat the market by some percentage points. If I cannot do that, then it would make sense for me to close my long term portfolio, and invest all my money in index funds.

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Voltamp Transformers: Good Small Cap Stock for Long Term

Voltamp_Transformers_logoVoltamp Transformers Limited (VOLTAMP) is one of the leading player in customized transformers for industrial applications. It has a niche in 132kV market segment and now looking to expand upto 220kV market segment. The key aspect that I like about Voltamp Transformers is its focus on niche market. It has created a space for itself in industrial segments, has zero debt, and focus of controlled growth.

Trend Analysis

The whole reason for any business to exist is to generate sales revenue and make more profits. At a minimum, the parameters listed below should have continuously increasing trends. All the data below is based on last 8 years i.e. from 2001 to 2009.

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Carnival of Indian Stocks – November 15, 2009

Welcome to Carnival of Indian Stocks. This edition of the carnival includes 11 articles for fellow bloggers. Some of the articles presented here may be contrary to the topics I discuss on this blog; however, it provides a view from a different window. I hope you enjoy reading some of the diverse set of articles as much as I did.

That concludes this edition. If you would like your best article to be included here, then submit your blog article to the next edition of Carnival of Indian Stocks. If any blogger(s) is interested in hosting this carnival, then please contact me.