Blog Posts by Simplus Information Services

  • Why Wipro tumbled when Sensex hit new high


    While stock market indices touched a new peak over the past two days, shares of Wipro – a key index component – tumbled nearly 10%.

    Here are three reasons why:

    1.       Q1 guidance:

    A key reason for the stock’s slump is the disappointing guidance for revenue growth in the first quarter of FY15. Wipro expects a -0.3-2% growth in its revenues in the quarter ending June 2014. This is mainly due to a weakness in the India business. However, this Q1 guidance disappointed analysts, especially because the quarter is usually strong for the IT industry.

    “The sequential weakness in India IT business also does not completely explain the low growth guidance,” IIFL said in a note. Moreover, Wipro’s peers TCS and HCL Tech expect a higher growth in sales in the quarter. This means that it is likely to underperform the industry in the quarter. “With a weak start, Wipro is also likely to underperform industry growth in FY15 also,” the brokerage firm said.

    2.       Attrition and hiring:

    Employees are an

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  • How to understand stock market recommendations


    Picking a stock to buy is like searching for a needle in a hay stack. You may not be able to buy the stock most in demand – it may be very costly. Off the cheaply available stocks, which one should you choose?
    In such cases, stock broker recommendations come handy. They tell you which stocks to buy or sell. Some even advise you to hold stocks which you may already own.

    However, beyond these notes, there are many terms used, which are complex and difficult to understand.
    Here are a few terms you need to know to understand stock recos:

    1) Price target: While trading in the stock market, it is not only important to get your stock right. You also need to ensure you buy or sell at the right price. When the price of a stock soars 5%, what is the guarantee if won’t rise further? So, when should you sell? This is where a price target helps. When an analyst says the price target is 1000, it means that in the near-term (or long term if specified), the share price is unlikely to exceed Rs 1000. If

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  • Scared of stock market swings? 5 things to note

    A falling stock market is always a cause of concern for retail investors. This is because the value of their stock falls. This is especially so, if the fall happens just after buying shares.

    Share prices fell on Friday after hitting a new lifetime high over the past few days. Bank stocks led the fall after rallying for many days. This may come as a bad news for investors who bought shares.

    So, here’s what to do if you are in such a fix:

    1) First step - Identify: The stock market works in a cycle. It goes through periodic trends of jumps and falls. Some cycles are purely sentimental – based on investor sentiment about the near future. Some cycles are based on short-term technical trends – based on short-term correction in stock prices due to profit-booking. However, it is the fundamentals that dictate the market trend in the long term. This is because, if companies grow in the future, the market is sure to rise along with it. So, if the stock market is down, the first step is to identify

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  • Why you should trade carefully this election season

     




    The stock markets bet on the future profitability of the listed companies. This depends on a lot of factors, some economic, some financial, and many political. All these affect whether the market rises or falls.

    Now, India has started voting for a new government. The general election will be conducted in nine stages.

    Ahead of the elections, the markets hit new lifetime highs repeatedly. It is safe to assume that the Street is anticipating a pick-up in the economy post the election, and hence betting for a brighter future.

    However, it makes sense to trade carefully this election season, and not get carried away with the optimism. Here’s why:

    Market expectations:The stock markets have surged on the back of fund inflows from foreign investors. This has led to new all-time peaks in the equity market. The rupee too has appreciated to 8-month high of Rs-59-to-a-dollar levels. Many are betting on a stable government after elections. However, India’s political system is complicated with multiple

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  • Sun Pharma-Ranbaxy merger: What this means


    Sun Pharma, a large Indian drug maker, has announced acquisition of Ranbaxy Laboratories, another Indian pharmaceutical company. Over the past 5 days, Ranbaxy shares jumped 22%, while Sun Pharma shares rose 2% on Monday.

    If you are a shareholder of either, here is what it means:

    1.       The deal: Every Ranbaxy Laboratories shareholder will receive 0.8 shares of Sun Pharma. So if you own 10 shares of Ranbaxy, they will become 8 shares of Sun Pharmaceuticals. This is because Sun Pharma is bigger than Ranbaxy Laboratories in terms of sales, profits and stock market value. The market cap of Sun Pharma is Rs 1,22,000 crore, while that of Ranbaxy Laboratories is just over Rs 18,800 crore.

    2.       What it creates: The two companies combine to become the fifth biggest generic drug company in the world. Generic drug makers create approved versions of original drugs of big pharma companies like Pfizer, Merck or Glaxo. America will be the biggest market for the merged entity, accounting for 47% of

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  • Why Infosys shares tumbled


    Infosys spoke to investors about prospects for business going forward on Wednesday. In its interaction, the company said that it could report a revenue growth closer to the lower end of the revenue growth guidance it gave last year. It is a warning to investors that they should keep expectations low from the financial performance for the year ending March 2013.
     
    What is guidance: Many companies choose to disclose their assessment of the business environment by putting out a guidance range of the sales or revenue growth. Infosys had indicated last year that it expects overall sales to grow at 11.5 to 12% for the year ending March 2014.  It has now told investors that the business environment is tough and the revenue growth could be near the lower end of this range. If revenue growth would slow then the profit growth would too. Hence, share prices fall. Analysts build expectations of the profit growth based on these estimates. They now have to reset the company’s profit growth estimate.

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  • Basics explained: How is PMI different from IIP

    Stock markets use different barometers to assess the performance of businesses. While company specific developments matter to investors, it is also important to look at the overall performance of the industry.

    Every month, you see that the stock market awaits the monthly industrial production data. There are two indicators that are used actively. These include the index of industrial production or IIP and purchase managers Index or PMI.

    ·         IIP: The IIP is an indicator of manufacturing in India. It includes 682 products from 16 agencies covering sectors like mining, electricity and other manufacturing activities. Each industry is attached a weight. Mining has a weight of 14.2%, manufacturing has a weight of 75.5% and electricity has a weight of 10.3.

    ·         PMI: The Purchasing Managers’ Index is a composite index constructed on the basis of survey responses collected from over 500 private manufacturing companies. The purchasing executives of these companies are questioned on new

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  • Telangana issue: 10 things to know

    Amidst an uproar, the Indian Parliament passed a Bill approving the formation of a new state of Telangana. Andhra Pradesh will now be reorganized Telangana, which literally means the ‘land of Telugus’.
    Here are a few facts about the impact of the new state:
    •  The nine districts of Telangana, which includes Hyderabad, account for 60% of the tax revenue of undivided Andhra Pradesh. These districts have a per capita income of Rs 69,000 per year. The growth in the gross domestic product (GDP) of the nine districts was 7% between 2007-08 and 2011-12.
    •  In contrast, people in the other 13 districts of Andhra Pradesh earn lesser than those in Telangana at Rs 65,000 per year. The growth too is slower at 6.8%. This means Telangana is better off financially.
    •  Hyderabad will be the joint capital of the two new states for 10 years. With a high per capita income of Rs 3.4 lakh per year, Hyderabad’s economy grew 10.2% between 2007 and 2012.
    •  Andhra Pradesh will have to build a new capital.

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  • 5 tax saving rules you must know

    We want our investments to give good returns. We worry that together with inflation, tax payments will erase most of our gains.

    However, the government is considerate of these worries. It has put in place investment instruments that will are exempt from taxation. However, the IT Act limits the tax rebate on such investments to Rs 1,20,000. Nevertheless, this helps bring down overall taxable income by a significant amount.

    Here are 5 tax-saving options:
    1) Section 80C: This section of the Income Tax Act mentions various tax-saving schemes. However, it imposes a limit of Rs 1 lakh every financial year. Some of the schemes mentioned are -
    a. Public Provident Fund (PPF) a low-risk, long-term savings instrument operated by the government of India;
    b. Employee’s Provident Fund (EPF), a mandatory retirement planning fund where every employed individual has to save minimum 12% of his/her basic salary;
    c. Equity-Linked Saving Scheme (ELSS), diversified equity mutual funds where  investors enjoy

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  • Why India's economy is still stuck in a rut

    The Indian economy has seen a prolonged slowdown over the past many quarters, especially since the US Financial Crisis in 2008. From a peak of 9%, the growth in India’s Gross Domestic Product (GDP) – a measure of the economy – is down to 5%. This is the lowest in a decade.


    What’s more, the situation seems to not be improving. The economy may have bottomed out, but the signs of pick are very bleak.

    Here’s why the Indian economy is still stuck in a rut, according to a report by HSBC:

    ·         Elections: 2014 is a crucial year for India. General elections will be held this year. Many opinion polls suggest that the Narendra Modi-led Bharatiya Janata Party (BJP) is taking the lead. However, there is also a likelihood that a coalition party will head the new government. In such cases, decisions are postponed and everything comes to a standstill. “Bureaucrats too appear to have stopped signing off on new infrastructure contracts, as they wait to find out who their new leaders will be. It is as

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