Today, some large cap stocks and some mid caps have posted their advance tax numbers for FY08 Q4. I find some stocks interesting based on those numbers. That includes Reliance Industries, Indian Hotel, ICICI Bank, L&T, HDFC Bank, State Bank of India, and Bank of Baroda. Yes, you could see more good numbers of other companies but these are simply my picks.

Comparison Of Advance Taxes Q4 FY08 and Q4 FY07

Reliance Industries has paid Rs. 443 crore versus Rs. 118 crore.

Indian Hotel has paid Rs. 44 crore versus Rs. 2 crore.

L&T has paid Rs. 170 crore versus Rs. 80 crore.

ICICI Bank has paid Rs. 250 crore versus Rs. 125 crore.

HDFC Bank paid Rs. 250 crore versus Rs 165 crore.

State Bank Of India has paid Rs. 1418 crore versus Rs 690 crore.

Bank Of Baroda has paid Rs. 50 crore versus Rs 220 crore.

Source: Moneycontrol

I was surprised to see that now a 1 GB Apple iPod costs just Rs. 2,700. Yes, you can get an MP3 player from eBay for less than Rs. 1,000 but it’s an Apple buddy! I was looking for a Macbook in their Apple Store but I didn’t see any model which is priced below 50k. So I decided to choose one from HP, Compaq, Dell, or Sony Vaio (my preferred brand).

So what exactly are you waiting for? Get your Apple iPod today!

Economic Times reports that the current valuations looks reasonable. I’ve analyzed the same and reached into my own conclusions. They says that at the peak of dotcom boom in 2000 SENSEX P/E was around 28. But I have got a chart of the same and it shows that SENSEX’s P/E Multiple during the dotcom boom was as high as 35.

Again they reports that "The BSE Sensex hit the bottom at 2,924 points in April 2003, when its P/E declined to 12.7". So it means that if we were to trade at the same P/E then SENSEX could go way down to 12,000 to 12,500 levels. Marc Faber earlier said that SENSEX may test 14,000 levels before slipping down to 12,000 levels.

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What determines stock prices?

Stock prices are driven by market information in the short term. In the long term, dividends, bonus, capital expenditure plans, mergers and acquisitions, and government regulations affecting the sector together add up to impact stock prices.

How much does a share cost?

The market sets the price and it all depends on how many buyers and sellers think the share is worth that much on that day. Some stocks sell for less than Rs 10 a share, others for more than Rs 1,000 a share. But do not be misled that a Rs 10 share is better than a Rs 1,000 share. The market determines the price of each stock, depending on the company’s potential.

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After you have built a portfolio investment strategy on the basis of your risk-return profile and a time horizon, you have to implement it. Stock trading can be done through two ways, either offline broking or online broking.

Offline investing

Opening accounts

To begin trading, you must first find a broker to execute your trades. Of late, most transactions are carried out in the electronic form. For this, you have to open a ‘demat account’ with a depository who should be registered with the regulatory authority. A depository is an organization which holds securities of investors in the electronic form at the request of the investors through a registered depository participant. It also provides services related to transactions in securities. After opening the demat account you should open a trading account with your broker. The broker issues contract notes detailing purchase and sale transactions, bills containing the charges (stamp duty, brokerage, securities transaction tax and service tax) levied on the purchase and sale transactions. SEBI (Securities and Exchange Board of India) prescribes guidelines for the rate at which charges are levied, the frequency of issuing contract notes and also the format.

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Normally, a stock is bought after going through its fundamentals and its fair value is determined taking into account the investment horizon. So, a sale would be made when the stock approaches its fair value. However, deteriorating business fundamentals or negative earnings revision may also prompt an early exit from the stock. Continuous monitoring and reviewing would enable you to keep track that if the information or expectation does not yield the desired result then you could sell the stock. An investment made with a long-term perspective also needs to be reviewed to check for any unfavourable technical factors, political or economical instability affecting the rationale for holding the stock. On the other hand, improving business conditions, new products or a change in management that might help a company strengthen earnings may require you to increase the holding period for a particular stock. Thus, it might help you to make more returns by reviewing your selling decision.