Introducing The Indian Indices- BSE Sensex and the S&P CNX Nifty

The BSE is the Stock exchange that pioneered the stock broking activity in India in 1875. The stock market through its life since inception has seen a lot of ups and downs, but till 1986, there was no measure to quantify these ups or downs. This is when the BSE Sensex was compiled in 1986. Trading on the NSE began in 1994. In 1998, NSE and CRISIL formed a JV named India Index Services & Products Ltd. (IISL), which was formed with the objective of concentrating on the formation and maintenance of only indices as a product of this JV. This is when the CNX Nifty was launched, where CNX stands for CRISIL NSE Indices. This index is owned by IISL. Later on Standard & Poor’s, which owns the S&P 500 Index endorsed the CNX Nifty and then it begun to be called as the S&P CNX Nifty.

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Ever since the stock market crashed I began to pick stocks. Here is the my latest portfolio update. These are some quality stocks which you can consider after a careful analysis.

I guess you read the first part of my Guide To Investing In Stock Market (Part 1). If you haven’t read that yet then I request you do so. Before investing in stock market I really recommend you to read the life of Warren Buffet (World’s Greatest Investor of all times).

Warren Buffett’s Secrets of Success

If you are an investor and don’t know who Warren Buffett is then Warren Edward Buffett (born August 30, 1930, Omaha, Nebraska) is an American investor, businessperson and philanthropist. He is the third richest person in the world according to Forbes Magazine with an estimated current net worth of around US$56.9 Billion. He known as the world’s greatest investor or “Oracle of Omaha”.

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The sharp appreciation of the rupee against the USD of late has caught the fancy of investors and corporates at large. We tried to look at the impact that this sharp appreciation actually has on the various sectors.

The rupee has appreciated very sharply over the last one year against all the major currencies, especially against the dollar. Against the dollar, the rupee has appreciated 12.8% from the peak USD/INR rate and 5.1% since the beginning of FY08. Against the Euro and the GBP it has appreciated 9% from the peak rate and 5.5% since the beginning of FY08.  It is therefore very important to understand the impact that it will have on different sectors as each sector has some or the other exposure in foreign currency. Some have revenues coming in a foreign currency, where some may have foreign currency denominated expenses and some have balance sheet items, which relate to foreign currency. Below, we take the sectors and try to understand the factors where they stand to lose or gain in this rupee-appreciating environment.

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I’ve started investing in Indian Stock Market back in June 2005 when I was 19. The Indian Stock Market continue to hit new highs since then. But I didn’t gain anything but I learned a lot. I believe that I picked the right stocks at the right time but I was wrong in selling those stocks. I sold some of the stocks at a 10 to 50% profit and I sold some at a loss of 10 to 30%. But since then those stocks reached the sky.

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Indian Equity Market Round Up

In line with the recent correction in global markets, Indian equity markets also corrected sharply in the last one month. Inspite of weakening global markets, Indian markets showed resilience in the initial part of the month as two major IPOs were open for subscription and there was huge retail as well institutional interest in equities at that point in time. From a closing of 20287 on 31st Dec’07, Sensex remained range bound and touched a high of 21207 on 10th Jan’08. As soon as these IPOs closed for subscription Indian equity markets also corrected sharply in line with the other global markets. Sensex corrected by 27.7% in 8 trading sessions to touch a low of 15332 on 22nd Jan’08. In the later part of the month, Sensex recovered sharply by 20% to touch a high of 18406 on 25th Jan’08. Markets in the past have been holding on and touching new highs on back of huge interest shown by global investors in India. India in the recent past emerged as preferred investment destination globally and India as part of asset allocation has gained prominence in global investor’s portfolio. Continued foreign investments in the past led domestic investors to be confident and increase their exposure in equities and this trend led to huge F&O and leveraged positions in the market. Recently sell off by FII investors on back of concerns on slow down in global economies especially US further triggered unwinding of these F&O positions which led to sharp decline in Indian equity markets.

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First of all thank god that I sold off the stock yesterday itself. No Profit, No Gain as I sold off for Rs. 435 (I got 17 Shares @ Rs. 430). It was one of the most anticipated IPO in the Indian IPO Market yet it failed to give a premium for investors. Well, maybe its because of investor’s greed. I applied for the IPO only because of its demand I have read that lakhs of demat accounts have been opened just to apply for Reliance Power and many have applied under different names too. It was primarily due to its demand in the grey market where it was trading at a 100% premium.

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