Prajna Capital - An Investment Guide

It’s important to consider both qualitative & quantitative aspects when it comes to assessing the health of your bank. THIS is a typical nightmare sequence these days. You see an endless line of people spilling out of the bank, anxiously withdrawing their deposits and carrying money away in bags and suitcases. In a fit of worry, you join the line. But when you reach the front, the cash teller tells you they have stopped dispensing cash. In shock, you wake up, thankfully to realise that it was only a dream. There are numerous rumours that are going around about whether Bank A or Bank B is on a shaky ground. You’re wondering if you’re making the biggest mistake by not taking your money out. But before you take any hasty step, remember that you need to base your decision on something other than rumour. While this may be slightly tedious, HEALTH BAROMETER When it comes to assessing the health of a bank, it’s important that you take both qualitative and quantitative aspects into a...

CRISIL IPO (Initial Public Offering) Grading is an opinion on the fundamentals of the graded issue that reflects CRISIL's independence and expertise. This opinion is expressed as a relative assessment in relation to other listed equity securities in India. The assessment is based on a grading exercise carried out by industry specialists from CRISIL Research. A CRISIL IPO Grade 5/5 indicates strong fundamentals and a CRISIL IPO Grade 1/5 indicates poor fundamentals. CRISIL IPO Grading reflects its assessment of the graded company's equity fundamentals as distinct from an assessment of debt fundamentals. A CRISIL IPO Grade should not be construed to mean a comment on the price of the graded security nor is it a recommendation to invest or not to invest in the graded security. However, this grade is not an opinion on whether the issue price is appropriate in relation to the issue fundamentals. The grade is not a recommendation to buy / sell or hold the graded instrument, or a comm...

THIS could be the first instance of policy makers in India learning lessons from the Wall Street collapse. The finance ministry and regulators are looking at the possibility of banning credit rating agencies (CRAs) from providing allied services to clients whose debt instruments they rate. The government feels that when ancillary services such as consultancy and financial advisory are offered by the rating agency to the client which it rates, the former may be constrained to please the latter — a favour that would help in developing the market for their allied services. This would lead to the rating agency compromising on rating and make investors misjudge the worth of the securities they buy. This is in addition to the larger conflict of interest involved in accepting fee from the same entity whose instruments they rate. The proposed regulatory framework for credit rating agencies would explicitly address the conflict of interests grappling these entities, which is highlighted b...

The interest rate of company fixed deposits varies from company to company and investment tenure. Generally, the rate of interest given by the company is one to two per cent more than what is given by the Bank Fixed Deposits (FDs). But unlike Bank FDs, which are risk-free, the company FD is not risk-free and carries a high risk of default. Company Deposits are rated by different rating agencies like ICRA, CRISIL etc. Higher the rating safer the investment is. One can invest in FMPs, which are more like an FD, but are more tax efficient. Debt funds with low average maturity could also be considered as they carry lesser interest rate risk.

It's time to visit your portfolio and weed out investments whose inflation-adjusted returns is low or negative On June 4, the central government announced a price hike of Rs 6 per litre of petrol, Rs 3 on diesel and Rs 50 per LPG cylinder, together with customs and excise duty cuts in an attempt to save the oil marketing companies from bankruptcy. Oil marketing companies buy crude oil from the international markets and distribute it in India. India imports 73 percent of its petroleum needs as the production of crude oil here is very little. The price of crude oil in the international markets has nearly doubled from a low of $60 per barrel in May 2007 to $130 a barrel in May 2008. The retail price of crude in India, administered by the government, has not been raised since 2004. Hence, these oil marketing companies have been running a very unprofitable business of buying crude at high prices and selling it to domestic consumers at low prices. In this process, they have accumulated m...