Saturday, 30 November 2013


Theme for this fortnight: DIVIDENDS

An arrangement under which those financing a project agree to contribute, as equity, any prior dividends received from the project to cover any cash shortages.
When there is no cash shortfall, those investors who provided funding are able to keep their dividends. A dividend clawback arrangement provides incentive for a project to remain on budget so that investors do not have to return dividends received prior to a cost overrun.

Monday, 25 November 2013


Today's word: DIVIDEND DRAG
Theme for this fortnight: DIVIDENDS

A disadvantage of the dividend structure of unit trust exchange-traded funds (ETFs) that results from SEC rules that stipulate that passively managed ETFs cannot reinvest dividends back into the portfolio. ETFs must instead accumulate the dividends in cash and pay them to holders at periodic intervals. During periods of rising markets, the dividends would be better served being reinvested in securities rather than held in cash. This leads the ETF to lag a portfolio that would be able to reinvest.

Sunday, 24 November 2013


Theme for this fortnight: DIVIDENDS

A type of incoming cash flow that an investor creates with certain financial securities to produce a dividend-like payment stream that resembles the periodic cash receipts from a dividend-paying stock.
For example, suppose an investor owns shares in a company that does not pay a quarterly dividend. In order to create a cash-flow stream from the shares, the investor could write covered call options on the underlying stock. By doing so, he or she would receive the option premiums as an incoming cash flow, but would be obligated to sell the shares to the option-buyer should that person choose to exercise the options.
This situation, while limiting the potential price appreciation the investor can realize from his or her own shares, creates a dividend-like cash flow stream.

Thursday, 21 November 2013


Theme for this fortnight: DIVIDENDS   

A type of dividend in which the payment year and the taxable year occur at different times. Most often, this occurs when the dividend has been declared near the end of the calender year (during the fourth quarter), but the actual distribution date of the dividend payment does not occur until the first quarter of the following year.

Tuesday, 19 November 2013


Today's word: LOOK THRU
Theme for this fortnight: DIVIDENDS

A complex provision defined in section 954(c)(6) of the U.S. Internal Revenue Code that lowered taxes for many U.S. multinational companies. The look thru rule gave qualifying U.S. multinationals a lower global effective tax rate by providing a special accounting method for calculating taxes owed on income from controlled foreign corporations. The rule was originally effective from Jan. 1, 2006 through Dec. 31, 2009, but the 2010 Tax Relief Act extended the rule through Dec. 31, 2011.

Saturday, 16 November 2013


Theme for this fortnight: DIVIDENDS

The question concerning why companies pay dividends. According to some theorists, investors should not need dividends as an incentive to purchase stock in a company. Thus the question of why some firms pay dividends is a puzzle.

Wednesday, 13 November 2013


Theme for this fortnight: DIVIDENDS

A form of investment income that comes from the sale of a portion of shares held by a shareholder. This differs from dividends that shareholders receive from a company according to the number of shares the shareholder has.
The existence of homemade dividends is the reason some financial analysts believe that looking at a companies dividend policy is not important. If investors desires an income stream they will either sell their shares when they want the income or they will invest in other income-generating assets.

Tuesday, 12 November 2013


Today's word:  CUTTING A MELON
Theme for this fortnight: DIVIDENDS

A slang term used to describe when a board of directors declares an additional dividend in addition to the regular distribution. The additional dividend can be in the form of cash, stock or property. The board of directors (BOD) is responsible for deciding how it will share the company's earnings with shareholders in the form of dividends. In most cases, dividends are issued in accordance to a set policy and are paid on preset schedule, such as annually or quarterly.
                The BOD is cutting a melon when the company has earned additional income, this is the melon and distributes a portion of it to shareholders. The bigger the melon, the sweeter it tastes to investors!

Sunday, 10 November 2013

VRITTAM (03 NOV 2013 - 09 NOV 2013)


Twitter stock slipped 7.24 percent to close at $41.64 -- a day after a stunning gain of 72.69 percent on its first day of trading on the New York Stock Exchange after a $1.8 billion initial public offering. Some analysts said the debut was helped in part by a shortage of Twitter stock, and that most of the 70 million shares were reserved by the underwriters. 

Twitter's market capitalization, based on its stock price, fell back to around $22.6 billion after topping $24 billion on Thursday.

How's QE tapering a bad thing for Indian markets? Well, it would dry up liquidity, which means FIIs would be pulling out, leaving investors run for cover. However, analysts are of the view that even if the US tapers $85-billion-a-month bond purchase programme, it'll be to the tune of $10-20 billion, something that does not contribute to drying up of liquidity from the market. Amidst chances of QE tapering next year, big domestic event to unfold would be general election results, which may give big sentimental boost to the markets on a favourable outcome.

It is not clear if Zomato will live happily ever after but, right now, this company, which lists restaurants city- and locality wise and counts on restaurant advertisements for its revenues, is in the midst of a fairy tale. In five years' time, its founders, a couple of young graduates from the Indian Institute of Technology, Delhi, have created a company valued at Rs900 crore. It has produced huge value for the entrepreneurs and the fund that backed them and created 600-odd jobs. It is expanding to other geographies at a breakneck speed. And it has created this value on the basis of a service of rising utility to urbanising, ever more prosperous Indians. 

Zomato, which lists restaurants city- and locality wise and counts on restaurant advertisements for revenues, is currently valued at Rs900 cr.

Standard & Poor's today affirmed 'BBB-' long-term and 'A-3' short-term unsolicitedsovereign credit ratings on India, keeping outlook on long-term rating negative.The news came as a grinch on Dalal Street, with the Sensex losing more than 300 points from its intraday high.The markets may have reacted negatively to the news, and some experts may start to raise red flags on India's long-term story, but then there's another take on it.

The S&P’s negative outlook is marginally positive, as the rating agency has almost ruled out a downgrade before the elections

In times of unpredictability, though with a positive standpoint, here's a bad news. The rate of interest that you pay for your home and auto loans is now a tad higher. The State Bank of IndiaBSE -3.40 % (SBI) today raised its base rate by 20 basis points to 10% per annum from the earlier figure of 9.8%.HDFC Bank hiked its base rate by 20 basis points to 10 per cent. This automatically translates into a hike in consumer loans, though earlier banks used to come out with a separate release announcing the rate hike for consumers. Other banks are likely to follow suit. 

India is likely to become the third largest economy by 2030 behind China and the USA, a Standard Chartered report said while projecting that the world is in the midst of an economic "super-cycle". A super-cycle is a period of historically high global growth, lasting a generation or more, driven by opening up of new markets, increasing trade, high rates of investment, urbanisation and technological innovation. India is likely to be the third largest economy with a GDP size of USD 15 trillion by 2030, says Standard Chartered's Super-Cycle Report. China with a GDP of USD 53.8 trillion is projected as the biggest economy, followed by the US at USD 38.5 trillion. 

Benchmark indices have failed to gather momentum at higher levels and have consolidated in a narrow range so far in this week. The 50-share Nifty has slipped below its psychological level of 6,300, whileSensex struggled to hold onto 21,000 levels. According to analysts, markets are consolidating at this point in time and there is a 50-50 chance that the market rally is over.
Most analysts see levels of 6,080 on the Nifty as a make-or-break for the index.


By Saurabh Tripathi 

Unless government musters the will to push through some bold reforms, they could lose value irredeemably.


To know how economic indicators can affect your financial life,click on the slide show below

Monday, 4 November 2013


Today's word:  BIRD IN HAND
Theme for this fortnight: DIVIDENDS
The belief that investors prefer stocks that are currently paying dividends to stocks whose value may grow through capital appreciation. The belief is based on the assumption that most people prefer certainty (dividends) to speculation (capital appreciation).