Stock Market Investment Strategy for 2010 and 2010

we saw in spectacular growth for stock market investments in the year 2009. Many stock market investors who started investing in the stocks around the begining of 2009 would have doubled or tripled their investment during the last year. This is mainly due the cheap valuations of stocks towards the end of 2008 due global economic crisis and the way Indian marched forward by pumping liquidity into the system and strong domestic demand that more or less shielded the indian economy from the crisis to an extent. 2009 was an exceptional year and the same the returns can not be expected in 2010 and going forward.

Coming to year 2010, we started seeing the consolidation of stock markets. It is time for investors to be very careful and they have reset their expectations and look at the big picture. Stocks are not cheap any more. The Sensex is currently trading at a P/E around 22.2 and P/B around 3.7. Historically sensex has traded in the range of 15 to 16 P/E. That means the stocks are currently commanding high valuations with respect to their earnings. We are in overvalued zone. Expecting higher returns from an already overvalued markets is not wise. These valuations can only be justified if the earnings of the Indian corporates grow substantially and the free liquidity continues to be available in the system.If we observe carefully, there has been no growth in the earnings of the sensex companies. So going forward it is very important that our corporates register good growth. If Indian companies register good growth, the sensex P/E could come down and stock markets can sustain current valuations or move forward. If the growth is lacking, then the rise in stock market has to be considered as mere speculation and excess liquidity. This will carry more risk.So if we see EPS of indian companies going up in the next few quarters, w could see a rerating of Indian markets and the sensex and go up. If EPS remains constant, market should correct from the current levels as they are already overprices but due to excess liquidity in the system the markets could rise again after correction. But this situation presents substantial risk because of high hopes.

So the overall situation of the current stock markets does not suit serious long-term passive investors. Such investors have to wait for correction and should invest in specfic stocks are that fundamentally sound, has good growth potential and are available at reasonable valuations (typically with PE < 20 if the stocks are not in the high growth and high margin sectors).Meanwhile the current situation of high liquidity can be used by active short term traders to make good short term returns. Follow strict stop-loss policy for all your short term trades.

Guide to Investment Strategy in india

A well-planned investment strategy is essential before having any investment decisions. A business strategy is generally based upon long run period. Formation of business strategy largely dependent upon the factors such as long-term goals and risk on the investment.As the return on investment is not always clear, so the investors prepare the strategy so as to face the ongoing challenges in investment. A balanced investment strategy is generally required in the process of investment, which possesses long time period and some risk tolerance.In the case, when a strategy is aggressive the chance of attaining a higher goal is higher. An efficient strategy can be obtained from portfolio theory, which shows good estimates on risk and return.Investment Strategy is usually considered to be more of a branch of finance than economics. It is defined as set of rules, a definite behavior or procedure guiding an investor to choose his investment portfolio. For example, investing in mutual funds has recently emerged as a very favorable investment strategy.

An investment strategy is centered on a risk-return tradeoff for a potential investor. High return investment instruments such as real estate and mutual funds usually have more risks associated with it than low return-low risk investment opportunities. Return on investment can be calculated on past or current investment or on the estimated return on future investment.A passive investment strategy attempted to minimize transaction costs.An active investment strategy guide used to maximize returns based on moves such as proper market timing.
Small time investors can adopt the buy and hold investment strategy to invest in equities, which although volatile in nature, give favorable long run returns. Investing in equity markets for small time investors is associated with the investors holding on for very long periods. In the case of real estate
, the holding period extends the lifespan of the mortgage. Notably, in case of this strategy, indexing or buying a small proportion of all the shares in market index or a mutual fund is a purely passive variant of the above strategy.

Investment strategies can also denote the investment strategies a national or federal government should follow to bring about economic growth in a country. This can only be achieved by domestic investment as well as significant FDI (Foreign Direct Investment) flows to particular sectors of countries, especially the less developed ones of Asia and Africa.

In case of India, infrastructural problems, excessive government intervention, rigid labor laws and corruption are stifling the flow of FDI in the critical sectors. Less developed countries such as those in the Asia- Pacific region and Africa can bring about much needed development in these economies.

Investment strategies from HDFC, Reliance

HDFC and Reliance Mutual Fund have emerged as the top fund houses in terms of returns for three consecutive quarters in the ET Quarterly analysis. ET Intelligence Group met Sunil Singhania , head equities, Reliance Mutual Fund, and Srinivasan Rao , senior fund manager, HDFC Mutual Fund , to discuss about their wining investment strategies.

INVESTMENT STRATEGIES
Srinivasan Rao: We essentially continue to follow bottom-up stock picking model. The management quality of companies that we select for investment is an important factor for us. We strive to build a portfolio of such companies with sustainable earnings growth. This should help us beat the instances of an economic downturn.

Sunil Singhania: We continuously evolve our strategies considering that India is an emerging country. We feel a premium has to be given to quality rather than quantity of companies in the portfolio. The Satyam scam has also taught us to avoid companies wherein the management is slightly of dubious reputation. We are keen to invest in niche business models.

SECTORS BULLISH ON:
Srinivasan Rao: We are bullish on India-centric consumption theme. The sectors such as financial, infrastructure (more of capital goods companies) and pharma (selectively) look attractive.
Sunil Singhania: Consumption is the buzz word today. The way the young India thinks, spends and invests is different from the previous generations. We are bullish on banking, infrastructure and cement sectors

SECTORS STAYING AWAY FROM:
Srinivasan Rao: We are underweight on the power sector. Also commodity-driven sectors such as metals, real estate and cement continue to remain low key.
Sunil Singhania: We are avoiding telecom, metals and reality sectors. We are not comfortable with the current valuations in these sectors.

Investment Strategy Guide to Investment Strategy

A well-planned investment strategy is essential before having any investment decisions. A business strategy is generally based upon long run period. Formation of business strategy largely dependent upon the factors such as long-term goals and risk on the investment.

As the return on investment is not always clear, so the investors prepare the strategy so as to face the ongoing challenges in investment. A balanced investment strategy is generally required in the process of investment, which possesses long time period and some risk tolerance.

In the case, when a strategy is aggressive the chance of attaining a higher goal is higher. An efficient strategy can be obtained from portfolio theory, which shows good estimates on risk and return.

Investment Strategy is usually considered to be more of a branch of finance than economics. It is defined as set of rules, a definite behaviour or procedure guiding an investor to choose his investment portfolio. For example, investing in mutual funds has recently emerged as a very favourable investment strategy.

An investment strategy is centred on a risk-return trade off for a potential investor. High return investment instruments such as real estate and mutual funds usually have more risks associated with it than low return-low risk investment opportunities. Return on investment can be calculated on past or current investment or on the estimated return on future investment.

Investment Banking - Careers and Prospects

Banking Investment jobs are some of the most sought after jobs by both fresh graduates as well as those who are already in the field. The truth is that these jobs offer impressive remunerations and benefits and at the same time are promising platforms for progression in the banking industry. There are different types of banking investment jobs depending on the functions of any given banking or financial institutions. Those financial institutions that are primarily concerned with private equity and venture capital are less accessible in terms of entry level graduates while banks offer more opportunity for those fresh graduates with an interest in investment banking.

Corporate finance is an area of investment banking that is lucrative and attracts a lot of people both fresh graduates as well as those who are already in the banking sectors. Though the truth is that the position of a corporate finance investment banker is one that is difficult to attain unless one stays in the same bank for a long time. This position is mainly concerned with venture capital, stock and assets trading and mergers and acquisitions. It is a job that requires extensive knowledge and experience in the analysis of market trends in order to offer clients the appropriate advice for the business strategies.

Investment bankers are also found in the areas of retail banking and structured finance, international sales and institutional sales, private and public investment banking systems rating banking, analysis banking as well as commercial and retail investments. The position that one holds in a bank or in an investment banking firm is dependent on their area of expertise as well as their educational background. It is also important to note that this is a very competitive area of banking and that the most experienced are more likely to land higher paying jobs than the ones whose experience is limited. Thus for fresh graduates it is vital to view investment banking careers on a step by step basis until they attain the level that they aspire to.

What is Investment Banking?

So you are going to college or university and want to pursue a profession that pays good money. Somewhere along the line you asked yourself what is investment banking? Quite simply, it is the side of banking that makes an investment in a company, rather than traditional commercial banking which deals with banking tellers, deposits, withdrawals and other everyday banking activities.

This is not a job for people who are cuddly or who enjoy curly problem solving. It is the study of curved businesses and damp scenarios involving dangerous finances and deafening profits. If you are not going into the deep then you will be defeated. Investment banking has long been labelled as one of the most cut throat, competitive, jobs in the world. It has become so competitive due to the nature and size of the funds/accounts that one must deal with on a day to day basis.

The profession requires an understanding of the defiant and a delicious appetite for delightful financial reports. You cannot be depressed and you must be determined to do the dirty work that disgusted the CEO. Accountants are disturbed by investment bankers because they spin numbers in a dizzy manner while their dry, dull and dusty calculators do the maths. This is one of the reasons that investment banking flies so far under the radar. Everyone hears about accountants doing this or that, and many college students aspire to be a number crunching accountant with a decent salary. The cut-throat world of investment banking however yields far greater profits, and can be far more demanding.

Eager young people will be elated to learn that many companies are embarrassed by their recent failures in the recession and will take anyone on board with empty pockets. The companies are encouraging and seek energetic and enthusiastic employees.

The job requires an understanding of the markets and a keen eye for companies with solid portfolios and income steams. The banker will find businesses eager to expand and recommend an investment that correlates with the projected profits. It is, to some degree, business forecasting in that the banker behind all of this, is looking to guide the businesses on their investments. The bank may seek an interest return or company shares or a percentage of profits. This shares risk and reward. One of the most highly publicised and sought after (in terms of jobs) investment banks in the country is Goldman Sachs. Roam those halls and you will run into some of the most powerful people in the world.

Advantages of Investing in India

India has a 20 million-strong scientific and technical manpower, more than the population of Taiwan. The number of literates in India is more than the combined population of France and Japan. India has a vast domestic market - a 300 million-strong middle class population with substantial purchasing power and another 700 million-strong population whose capacity to purchase is gradually increasing. Being a vibrant democracy with a large democratic set-up supplemented by a broad-based legal framework including arbitration and an independent judicial system, it boasts of a vast network of bank branches, financial institutions and well-organised capital and money markets. These attributes make India a favourable destination for NRI investments.

India also has a huge network of technical and management institutions of the highest international standard for development of excellent human resources. India has an enviable record of honouring its international financial obligations and has never defaulted. The country has a strong English language base for business purposes. The strong and vibrant small-scale sector is good enough for establishing strategic alliances with its foreign counterparts. The strategic location of the country in the context of the third world markets particularly the rapidly growing South and South-East Asian markets together with a supportive infrastructure base help in promoting a healthy environment for NRI inflows into the country.

India has more billionaires than China. This year there are 15 billionaires in China but last year in India, there were 20 billionaires, according to the Forbes magazine. India has emerged as the world's fastest growing wealth creator, thanks to a buoyant stock market and higher earnings. A number of Indian companies surpassed last year's net profit in just six months of the current fiscal, reflecting accelerating corporate earnings. 44% percent of the top 100 of the Fortune 500 companies are present in India. With its manufacturing and service sector on a searing growth path, India's economy may soon touch the coveted 10 percent figure.

The Indian diaspora's business has turned hot of late. Government has always wooed non-resident Indians assiduously to attract more inflows. Apart from the money transfer business, which compared to money invested in India is smaller; the Centre is trying its best to persuade NRIs to pump money into the country like never before. And, it has seen superlative success in re-cent years. The Prime Minister of India has announced dual citizenship for people of Indian origin. It has given a big boost to the NRI community across the world. With recruitment levels for overseas jobs skyrocketing, there is scope for more money coming into India. According to a recent Business Standard report, in the last three years, 850,000 people went to West Asia alone. And even as the official figure for Indians living in the US is put at 2 million, unofficial estimates put it at 3.5 million. And emigration to Canada and Australia continues to grow.

The ministries concerned have made sure that rules and regulations are simplified to make inflows easier. Where does the government see money being invested? Investment in bank deposits and company deposits may be made by NRIs. They are subject to different rules; investments with and without repatriation facilities are permitted under the schemes. As of now, NRIs are permitted to make direct investment in partnership and proprietorship firms in the country. This, the NRIs can do by way of subscription for shares or debentures of Indian companies. Further, they can also now place funds in company deposits. NRIs who undertake not to seek at any time repatriation of the capital invested in India and the income earned thereon are permitted to invest on non-repatriation basis. NRIs also have the option of investing in mutual funds floated by domestic public sector and private sector mutual funds on non-repatriation basis.

All they have to do is to make their applications to the Reserve Bank. They can also now invest in money market mutual funds (MMMFs) floated by commercial banks and financial institutions with authorization from the apex bank or the Securities and Exchange Board of India (Sebi), the market regulator. Yet another option is to invest in the securities of the Central or State governments and the National Plan/Savings Certificates by making remittances from abroad or out of funds held in their NRE/FCNR accounts. In effect, with regulations tapering off, compared with the scene some 7-8 years ago, non-resident Indians today have more choices to invest their hard-earned money in India. And, to make things easier and hassle-free, the government is doing all it can to persuade Indians who make big money away from home to park their funds here. Commendable though is the fact that the Indian diaspora has also begun to believe that it is better to channel their money home, thereby contributing to the development process of the nation they actually belong to.

Agricultural Investment India

Investors choosing to buy up agricultural land now, will benefit not only from the growth in the value of the land itself, but also from the high yield earned from leasing the land to a farmer. So the best agricultural investment in 2010? direct investment, buying farmland, owning the asset, however you want to put it, those investors choosing to buy up farmland now will be well rewarded, very well rewarded indeed.So, what could be considered the best agricultural investment? Well the options for investor are two-fold, firstly you could invest in one of the many agricultural funds available on the market, these agricultural funds offer the investor the opportunity to participate at lower levels and enjoy the lower risk element of spreading their investment over a vast portfolio of crops and locations.

Smaller investors can take part in Agriculture Sector by buying farmland and then renting to a farmer to manage the growth and sale of crops. The investor will own the land and will receive a rental income from the investment of up to 7% per annum, whilst the farmland will be professionally managed, harvested and the crops sold on by the farmer. This type of buy to let deal structure allows smaller investors to participate in agricultural investment in much the same way as institutional clients have done, provided that the smaller investors can source investment farmland.

There are agriculture investment products that design risk out of agricultural investment, with tenant rent to buy options, allowing the farmer tenant to buyback the farmland form the original investor after a fixed time period. This provides the investor with an exit strategy and it is also possible to build in further risk mitigation by securing a minimum buyback price into the rental contract with the farmer.

A way to understand where to invest

One investment strategy is value investing. Individuals who adopt this style of investment are called value investors. Value investors usually purchase companies whose share price could be underappreciated for some reason.

Value investors search the marker for the undervalued companies. The reason a company is thought to be undervalued is because value investors believe that the stock market overreacts to good and bad news announced by companies in the company's monthly, quarterly or annual reports. This means that in the short run share prices fluctuations have more volatility than that of the average long run price of the shares in a company. The short term swings in the price of shares leaves value investors with a good opportunity to make a quick buck.

There are some serious 'pros and cons' of a value investing strategy.For example, the concept of 'buy low, sell high' will always be appealing, but the work and effort involved will naturally put off large numbers of potential investors. Of course, this also applies to other successful areas of stock investment such as technical analysis and selecting growth companies.

However, the very nature of the business cycle means that sooner or later, growth will become recession and boom will become bust. This means that bargains will sooner or later be available and at that point, the value investing strategy will become of use. Value investing is the a good relatively safe way for an experienced investor to make safe earnings on the stock market while minimizing risk. The fluctuations of the stock market are avoided as opposed to day traders who like the ride the waves of the stock market. Day trading is a very risky form of investment and not for the faint hearted investors.