Thursday, July 31, 2008

Application Supported by Blocked Amount for IPOs

The Securities and Exchange Board of India (SEBI) has introduced Application Supported by Blocked Amount (ASBA); a supplementary process for applying IPOs. Previously, when investors apply for an IPO, they have to pay the entire money upfront to the registrar/banker and hence stand to lose returns on the money that is locked until the IPO is allocated. The new move will protect the money of investors and will also make the IPO issue process more efficient and less time consuming.

In the new process, banks will block the money in investors’ account when they bid for an IPO and the money is released on the basis of number of shares being allotted. The remaining money will be unlocked by the banks. As a result, the IPO process is expected to be completed within 15 days of the closing date of the issue.

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- Money no longer gets locked in IPOs

Monday, July 28, 2008

What are the 30 Stocks of BSE SENSEX

The SENSEX gives an indicative figure of the trading happened in BSE, which is the chief stock market of India. A group of 30 stocks that represent various industries of the economy are used for the calculation of SENSEX.

The base year for SENSEX calculation is 1978-79 and the base value is 100. It is calculated using Free-float Market Capitalization methodology. The SENSEX value is calculated every 15 seconds when the trade is going on.

Here is the list of the 30 stocks that constitutes the BSE SENSEX.

CodeNameSectorAdj. Factor
500410ACC Ltd.Housing Related0.60
500103Bharat Heavy Electricals Ltd.Capital Goods0.35
532454Bharti Airtel Ltd.Telecom0.35
532868DLF Ltd.Housing Related0.15
500300Grasim Industries Ltd.Diversified0.75
500180HDFC Bank Ltd.Finance0.85
500440Hindalco Industries Ltd.Metal,Metal Products & Mining0.70
500696Hindustan Unilever Ltd.FMCG0.50
532174ICICI Bank Ltd.Finance1.00
500209Infosys Technologies Ltd.Information Technology0.85
500875ITC Ltd.FMCG0.70
532532Jaiprakash Associates Ltd.Housing Related0.60
500510Larsen & Toubro LimitedCapital Goods0.90
500520Mahindra & Mahindra Ltd.Transport Equipments0.80
532500Maruti Suzuki India Ltd.Transport Equipments0.50
532555NTPC Ltd.Power0.15
500312ONGC Ltd.Oil & Gas0.20
500359Ranbaxy Laboratories Ltd.Healthcare0.70
532712Reliance Communications LimitedTelecom0.35
500325Reliance Industries Ltd.Oil & Gas0.50
500390Reliance Infrastructure Ltd.Power0.65
500376Satyam Computer Services Ltd.Information Technology0.95
500112State Bank of IndiaFinance0.45
500900Sterlite Industries (India) Ltd.Metal,Metal Products & Mining0.40
532540Tata Consultancy Services LimitedInformation Technology0.25
500570Tata Motors Ltd.Transport Equipments0.60
500400Tata Power Company Ltd.Power0.70
500470Tata Steel Ltd.Metal,Metal Products & Mining0.70
507685Wipro Ltd.Information Technology0.20

The BSE Index Committee meets every quarter to revise SENSEX constituents. In case a stock is to be replaced by another one, the announcement is made six weeks in advance of the actual change.

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- Online share trading websites of India
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Thursday, July 24, 2008

Friday, July 11, 2008

WPI Inflation of India @ 11.89%

WPI Inflation rate of India continues its upward path and stands at 11.89% for the year ended 28 June 2008. It moved up by 0.26% from 11.63% in the previous week and 4.42% in the corresponding week a year ago.

Despite government's attempt to prevent price increase, inflation rate increased due to higher prices of fruits, vegetable, pulses, spices, and bajra.

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- How is WPI inflation rate calculated in India?
- Inflation rates of India (2009)
- Inflation rates of India (2008)
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- Base year and number of commodities used for inflation calculation in India

Monday, July 7, 2008

How to file Income Tax returns online

Income Tax Department of India facilitates a tax payer to file his Income Tax returns online through their website. It is an easy process and following are the steps involved according to IT department website,

1. Select appropriate type of Return Form from the website (ITR-1/ITR-2/ITR-3/ITR-4)

2. Download and install Return Preparation Software for the selected Return Form

3. Fill return offline and generate XML file

4. Register and create a user id (PAN) and password at the website

5. Login and click on relevant form on left panel and select "Submit Return"

6. Browse to select XML file and click on "Upload" button

7. On successful upload acknowledgement details would be displayed. Click on "Print" to generate printout of acknowledgement/ITR-V Form

8. Incase the return is digitally signed; on generation of "Acknowledgement" the Return Filing process gets completed. You may take a printout of the Acknowledgement for your record

9. Incase the return is not digitally signed, on successful uploading of e-Return, the ITR-V Form would be generated which needs to be printed by the tax payers. This is an acknowledgement cum verification form. The tax payer has to fill-up the verification part and verify the same. A duly verified ITR-V form should be submitted with the local Income Tax Office within 15 days of filing electronically. This completes the Return filing process for non-digitally signed Returns

Here is the link to IT Department's eFiling website.

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Thursday, July 3, 2008

Effects of oil price increase on world trade/globalization

Oil is conquering new heights every day. With 145 dollars a barrel, it is the single largest commodity affecting world economy today. Does its effect confines to an increase in inflation across nations? No. Oil has a much larger impact, especially when it comes to international trade; in a globalized world.

One of the fundamental principles that propelled globalization was a world without boundaries; a world that was seamlessly linked. When we narrow this down, being seamless attributes to low international transportation costs which allowed nations to trade (buy and sell goods) with each other and still have a cost advantage.

The transportation costs were so much low so that there was an incentive to import goods from any corner of the world in spite of the distance it has to be shipped and sell it for less than what is available locally. On the other hand, it also allowed nations to export goods to other countries and sell it for less than the price out there, due to marginal transportation costs. Thus transportation costs had a major hand in the success of globalization.

The increase in oil price has disrupted this pillar of globalization. Transportation costs are increasing world wide due to fuel price increase and it might increase to such a extent that it may not become economically plausible for a country to buy or sell goods outside. The transportation costs may become the deciding factor of the final price of goods and hence would account for an obvious collapse of the cost advantage that nations enjoyed previously.

Thus the oil price increase has a strong impact on the global economy and to globalization. Let’s hope that economies world over would think over it and do something to put an end to growing oil prices.

Inspired by ‘The rebirth of distance’ – Niranjan Rajadhyaksha
Image courtesy: Getty Images

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Wednesday, July 2, 2008

Commodities and their weightages in WPI calculation of India, Part III

In case you are reading this post first, this is the third article of a four part series. Please go to the first part, second part and then read on.

From the first part,
India uses 435 commodities for its WPI based inflation calculation. On a broader level, the 435 commodities are grouped into,
1. Primary Articles
2. Fuel, Power, Light & Lubricants
3. Manufactured Products

This post covers the second of the main groups, Fuel, Power, Light & Lubricants, which has a group weightage of 14.22624%. Fuel, Power, Light & Lubricants are further classified into various sub-groups as shown below.

Fuel, Power, Light & Lubricants

1. Coal Mining
2. Mineral Oils
3. Electricity

Following table shows the sub-groups and individual commodity weightages of the constituents of Fuel, Power, Light & Lubricants.

Group Sub-Group Commodity Weightage Sub-Group
Fuel, Power, Light& Lubricants Coal Mining Coking Coal 0.24148 1.75291 14.22624
Non-coking Coal 1.39670
Coke 0.01115
Lignite 0.10358
Minerals Oil LPG 1.83731 6.98963
Petrol 0.88815
Kerosene 0.68928
Aviation Fuel 0.16953
High Speed Diesel 2.02034
Light Diesel 0.16015
Naphtha 0.41885
Bitumen 0.14900
Furnace Oil 0.49335
Lubricants 0.16367
Electricity Domestic Use 0.96026 5.4837
Commercial Use 0.27690
Agriculture 1.94557
Industry 2.16918
Railway 0.13179

In the next part, we will cover Manufactured Products, its sub classifications, individual commodities and their weightages. Do visit again.

- Commodities and their weightages in WPI calculation of India, Part I
- Commodities and their weightages in WPI calculation of India, Part II
- Commodities and their weightages in WPI calculation of India, Part III

- Office of the Economic Adviser, Ministry of Commerce and Industry, Govt. of India

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- How is WPI inflation rate calculated in India?
- Inflation rates of India
- Base year and number of commodities used for inflation calculation in India
- The magic of Inflation

Tuesday, July 1, 2008

Another ‘road not taken’ story

IIM grads opting out of placements to start their own venture are no great news these days. But when one destines to sell vegetables on the streets of Bihar, with a bigger dream of making Bihar the vegetable hub of India, it demands applause. Especially when the person is an IIM Ahmedabad topper!

Kaushalendra, popularly known as ‘MBA sabziwala’ among his customers, hails from a family of agricultural background. Currently he is on a well set path of achieving his dream, as he has tied up with over 250 vegetable growers in Nalanda and Patna districts of Bihar. He has also come up with a unique push-cart capable of carrying 200 kilos of vegetables, with an attached weighing machine and is ice cooled to keep vegetables fresh for 5 days, sold under the brand name ‘Samridhi’. Kaushalendra says it was his childhood dream to contribute to the development of rural Bihar.

More news here.